Only 20 percent will be affected by U.S. remittance tax, says DoF

The Department of Finance (DoF) said only 20 percent of Filipinos in the United States will be affected by a proposed remittance tax being considered by the US government.

“Of the 4.4-million overseas Filipinos in the US, only 20 percent will be affected by the proposed tax, which is seen to take effect on 1 January 2026, if it is passed,” Palace Press Officer Undersecretary Claire Castro said, quoting DoF Chief Economist Domini S.D. Velasquez.

“The tax will affect non-US citizens, including green card holders and those with working visas,” she added.

The figure is equivalent to about 880,000 people.

The DoF noted that 41 percent of remittances from overseas Filipino workers (OFWs) are routed through the US. However, not all of the remittances originate from Filipinos residing there, as some are processed through US-based correspondent banks.

“The expected loss in remittances might only be as much as $100 million out of the projected $36.5 billion in remittances for 2026,” the DoF said.

“The estimated effect is a minimal decline of 0.003 percent of GDP. While we see the estimated effect as minimal on the economy, it may be substantial for many families who rely solely on remittances from a family member in the US — we’re talking about non-US citizens. Based on the BSP survey, about 90 percent of remittances are spent on food and other household needs,” it added.

The proposed legislation, known as the One Big Beautiful Bill, is a budget reconciliation bill under the 119th United States Congress. It was passed by the House of Representatives on 22 May 2025.

Under the bill, the US would impose a 3.5-percent excise tax on remittances sent outside the country, including to the Philippines.

If approved, non-US citizen workers sending money to their families would be subject to higher remittance fees.

The proposed measure also includes stricter verification requirements for remittance centers, which could expose undocumented immigrants.

According to the Bangko Sentral ng Pilipinas, the US remains the largest source of remittances to the Philippines.