A controversial bill recently passed by the US House Budget Committee threatens to upend the flow of remittances from the United States, one of Bangladesh’s largest single remittance sources, putting at risk billions of dollars that support the country’s economy.
Titled the “One Big Beautiful Bill Act”, the legislation, championed by President Donald Trump, the bill passed by the US House of Representatives on Thursday includes a 3.5% tax on remittance transfers made by anyone who is not a US citizen or national.
Initially, the tax had been expected to be levied at a rate of 5%.
It will now go to the Senate, which will leave its own mark on the bill.
However, it has already sparked concern among economists, development experts, and the Bangladeshi diaspora.
Remittance flow at risk
According to data from Bangladesh Bank, remittance inflows from the US totalled $4.27 billion between July and April of the current fiscal year, over Tk52,000 crore, making the US one of the single largest sources of remittance for Bangladesh.
A 3.5% tax on that amount would mean a potential loss of around $149.45 million (Tk1,820 crore), a blow to the country’s foreign exchange reserves.
The World Bank ranked Bangladesh as the sixth-largest remittance-receiving country in the world in 2024, with total inflows reaching $26.6 billion, of which nearly 18% came from the US.
A blow to migrant workers and families
The proposed tax would apply to all non-citizens, including green card holders and H-1B visa workers, with no minimum threshold, meaning even small remittances would be taxed.
Banks and remittance service providers would be required to collect the tax and remit it to the US government.
This move directly threatens the financial stability of thousands of Bangladeshi families who rely on money sent by relatives abroad.
Abul Kalam, a Bangladeshi restaurant worker in New Jersey, said: “If this tax is imposed, people like us will suffer the most, and so will our families back home. I send money to pay for my daughter’s education and my brother’s treatment. A tax on that is unjust.”
Risk of informal channels
Economists warn that such a tax could drive migrants away from legal banking routes, pushing them toward informal remittance channels like hundi.
This would not only reduce official inflows but also undermine the country’s ability to track and manage foreign currency reserves.
Dr Biru Paksha Paul, former chief economist at Bangladesh Bank, said: “Remittances are a vital source of non-debt foreign currency. A 5% tax could significantly boost hundi transactions.
“Instead of relying only on incentives, we must offer competitive exchange rates to keep remittances flowing through official channels.”
Wider global impact
While India, recipient of $118.7 billion in global remittances, is expected to be hardest hit, Bangladesh is among several low- and middle-income countries that could suffer heavily if the bill becomes law.
Other affected nations include Mexico, the Philippines, Egypt, and multiple Latin American economies.
“This proposal doesn’t just hurt migrants and their families,” said Manuel Orozco, director of migration, remittances, and development at Inter-American Dialogue. “It can destabilize whole communities and undermine the US’s own economic and humanitarian interests.”
A wake-up call for policymakers
The Trump administration had already strained US-Bangladesh trade relations with reciprocal tariffs of up to 25%, and the remittance tax could deepen the economic fallout.
Experts say the Bangladeshi government must urgently expand alternative remittance corridors, enhance digital remittance services, and adopt market-based dollar rates to keep legal inflows viable.
Dr Zaid Bakht, a senior researcher at BIDS, added that while higher-income migrants may absorb the cost, low-income workers could be forced to reduce or halt remittances altogether.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said: “Around $300–400 million arrives from the US monthly. A 5% tax means $15–20 million could be lost each month. This sends a negative signal to our economy.”
What lies ahead
With a final congressional vote pending, the future of the bill remains uncertain. However, its potential passage is already shaking confidence in the stability of remittance-dependent economies.
As Rashida Akhtar, a Bangladeshi development activist, said: “Remittances aren’t just money. They are survival. They build homes, send children to school, and keep the lights on. Taxing them is not just bad policy—it’s inhumane.”
