Impact of US Remittance Tax on Mexican Household Spending

10 Jul 2025 1 min read No comments News

A new 1% tax on cash remittances from the United States to Mexico could potentially reduce household spending in Mexico by up to 25%, according to the National Alliance of Small Business Owners (ANPEC).

Impact on Mexican Households

ANPEC president Cuauhtémoc Rivera highlighted that about 11.3% of Mexican households receiving remittances would be affected. These funds are typically directed toward essential consumer spending. States that rely heavily on remittance income, such as Chiapas, Guerrero, Michoacán, Zacatecas, Oaxaca, Guanajuato, México state, Puebla, and Mexico City, are expected to face the most severe consequences.

  • Chiapas is particularly vulnerable, with remittances contributing 14.31% to its GDP, the highest percentage nationwide.

Economic Concerns and Reactions

The Confederation of National Chambers of Commerce, Services and Tourism (Concanaco Servytur) has also raised concerns about the potential economic consequences. In 2024, Mexico received over US $65 billion in remittances, which represents approximately 3% of the national GDP.

Potential Sender Adjustments

While some financial experts propose that senders may absorb the tax cost rather than reducing the amounts sent to their families, there is a fear that migrants might turn to informal channels to bypass the tax. Rivera noted that many migrants have temporary jobs and avoid immigration authorities, limiting their ability to increase transfers before the tax implementation.

Government Intervention

President Sheinbaum announced on June 30 that the Mexican government plans to reimburse the 1% US tax on cash remittances. Although cash currently constitutes only 1% of all remittances to Mexico, remittances sent electronically via cash deposit may account for up to 40% of all transfers. The Trump administration has not yet clarified if these electronic transfers will also be taxed.

For more details, you can refer to the full article on Mexiconewsdaily.com.

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