Nigeria may lose as much as \$215 million following the United States’ move to introduce a new tax on foreign remittances. The proposed law, which has already passed the U.S. House of Representatives, seeks to impose a 3.5 percent tax on all money transfers made from the U.S. to other countries.
The bill will affect an estimated 40 million non-U.S. citizens living in the United States, including green card holders, temporary workers, and undocumented migrants—many of whom regularly send money back home to support their families.
For Nigeria, where remittances are a critical source of foreign exchange, this could deal a serious blow to the economy. In 2023 alone, Nigerians abroad sent back over \$20 billion, making the country one of the top recipients of diaspora remittances globally.
According to the latest figures from the Central Bank of Nigeria (CBN), remittance inflows continued to rise in early 2025, with \$328.76 million recorded between January and April. The CBN has also set an ambitious goal of increasing monthly remittance inflows to \$1 billion as part of efforts to boost the country’s foreign reserves and stabilize the naira.
However, the proposed U.S. tax on remittances could significantly slow that progress. If implemented, the additional 3.5 percent levy could discourage migrants from sending as much money home or push them toward informal transfer methods that bypass the official financial system.
Experts have warned that this could reduce the volume of funds passing through Nigerian banks and licensed money transfer operators, weakening the CBN’s ability to monitor and regulate remittance flows.
“This is a big concern not only for Nigeria but for many developing countries that depend heavily on money sent by their citizens abroad,” said a Lagos-based financial analyst. “A tax like this may appear small, but when you’re talking about billions of dollars, even 3.5 percent becomes a very significant loss.”
The new policy, still awaiting Senate approval and the President’s assent, has sparked debate among migrant communities and advocacy groups in the U.S. They argue that taxing remittances unfairly targets working-class immigrants who are already contributing to the American economy while supporting families back home.
For Nigeria, the impact could extend beyond the immediate financial loss. Remittances are not just a source of foreign exchange; they also support household consumption, education, healthcare, and small businesses across the country.
The CBN and Nigeria’s Ministry of Foreign Affairs have not issued an official response to the U.S. legislation yet, but economic observers are urging the Nigerian government to engage in diplomatic dialogue with U.S. officials to advocate for Nigerian interests.
If no changes are made to the bill, it is expected to take effect later this year, reshaping the way Nigerians abroad send money home and possibly shifting the landscape of diaspora remittances for years to come.
