Donald Trump’s Diaspora Remittance Tax Takes Effect, But May Not Significantly Affect Nigerian Families
The Oasis Reporters
January 7, 2026
Gross mismanagement and sheer political managerial incompetencehas pushed the Nigerian domestic economy into a tailspin which worsened with the ascesson of Generall Mohammadu Buhari to power in 2015, and for eight years, Nigeria that was the largest growing economy in Africa dropped to number 3, after South Africa and Egypt.
As millions of Nigerian youths emigrated to countries in Europe, the Americas, Australia, Saudi Arabia etc in search of work, they became a lifeline for those remaining in the country.
Then in July 2025, the US president, Donald Trump, signed the Big Beautiful Bill into law in July 2025, introducing an excise tax on remittances The new tax took effect on Thursday, January 1, 2026, and remittance providers are expected to file returns on transactions.
Economists all over Africa have been calming nerves, saying that the tax is unlikely to significantly disrupt the flow of money from the African diaspora in the US to various countries like Nigeria.
The 1% excise tax was implemented on Thursday, January 1, 2026, after Trump signed the Big Beautiful Bill into law in July 2025.
What did the US IRS say?
The US Internal Revenue Service (IRS) noted that remittance transfer providers must make the first semimonthly deposit on Thursday, January 29, 2025.
The 1% excise tax was implemented on Thursday, January 1, 2026, after Trump signed the Big Beautiful Bill into law in July 2025.
“Beginning January 1, 2026, remittance transfer providers must collect the 1% excise tax on applicable remittance transactions when the sender pays with cash, a money order, a cashier’s check, or a similar physical instrument, make semimonthly deposits and file quarterly returns with the Internal Revenue Service ” the IRS stated. The IRS pointed out that providers may avoid deposit penalties if they make timely deposits (even if the amount is later adjusted) and pay any underpayment by the due date of the applicable quarterly return.
What are the implications of the remittance tax? The remittance tax levies a 1% fee on certain money transactions. An additional 1% will be deducted if you send money overseas from the United States using cash, cheques, or money orders.
According to Sendwave, this implies that more money ends up in the taxman’s pocket and less in your family’s pocket.
Geopolitical economist Aly-Khan Satchu told TUKO.co.ke in an exclusive interview that the tax is unlikely to significantly disrupt the flow of money from the Kenyan diaspora in the US to Kenya. “I don’t think the additional 1% tax is going to alter the trajectory of inward remittances into Kenya from North America. The diaspora in North America is, on the whole, well settled and embedded,” Satchu explained.
What applies to Kenya, equally applies to all of Africa.
Nevertheless, Satchu opined that the tax could be part of Trump’s broader policies to restrict immigration. “However, it is clear that the administration is seeking to throttle inward immigration, and I believe that it is the overarching issue,” he added
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What is the value of diaspora remittances to Nigeria from the US?
While specific breakdowns for the US are scarce, Nigeria receives tens of billions in annual remittances, with the US being a primary source; recent figures show total inflows around $20 billion yearly (e.g., $19.8bn in 2022, $20.98bn in 2024), with a significant portion originating from the US, making it a crucial source of foreign exchange, funding essentials like housing and other investments.
Key Figures & Trends:
Total Remittances: Nigeria’s total diaspora remittances hover around $20 billion annually, making it a top recipient globally and second in Africa after Egypt.
US as a Major Contributor: The US is a dominant source, with estimates suggesting a large chunk of these funds come from Nigerian immigrants there, supporting families and investing in real estate.
Economic Impact: These inflows are Nigeria’s second-largest source of foreign exchange, vital for consumption (70%) and investment (30%) in housing, education, and businesses, significantly boosting the economy.
Recent Data Points (Total Inflows):
2022: $19.8 billion.
2024: $20.98 billion.
2021: Over $21 billion.
Why the US is Key:
The large Nigerian diaspora in the US, combined with the dollar’s strength against the Naira, gives remittances substantial purchasing power.
Specific policies by Nigeria’s Central Bank (CBN) to boost formal remittances have further encouraged inflows, as seen by record monthly highs in 2024.
In-house writing
Tuco.co.ke
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