New Bill Cuts Deep into Kenyans’ Hard-Earned Remittances

Kenyans living and working in the United States may soon see a cut in the money they send home—if a new U.S. law backed by former President Donald Trump’s administration passes.

A Republican-sponsored draft bill, called the “One Big Beautiful Bill,” is proposing a 5% excise tax on all international money transfers made by immigrants in the U.S. This includes those on green cards and temporary work visas—essentially targeting millions of non-citizens, including over 100,000 Kenyans living in America.

Kenyans Abroad to Lose Billions to the Tax

The move is a blow to Kenya where remittances from the U.S. are a lifeline for many families. In 2023 alone, Kenyans in America sent home $2.63 billion (about KSh339 billion), making the U.S. the largest single source of remittance inflows to the country. That’s more than half (53.17%) of Kenya’s total diaspora remittances last year.

If the proposed tax takes effect, it means over $131 million (roughly KSh17 billion) will be cut off from the funds Kenyans want to send to their loved ones.

What the Bill Says

According to the draft, the tax will be deducted automatically at the time of transfer—by banks or money transfer providers.

“There is hereby imposed on any remittance transfer a tax equal to 5.0 percent of the amount of such transfer,” the bill reads.

U.S. citizens are exempt from this tax, raising more questions about its fairness.

Backlash from the Kenyan Diaspora and Experts

The Kenya Diaspora Alliance (KDA) has condemned the proposal, calling it unfair, discriminatory and economically misguided.

“It’s unfair and discriminatory. I haven’t heard of any other place where such a thing happens,” said Dr. Shem Ochuodho, Global Chairman of KDA.

He also pointed out that the tax goes against global agreements such as the UN Global Compact on Migration, which aims to make remittance transfers cheaper, safer and easier for migrant workers.Under Objectives 19 and 20 of the compact, countries are supposed to support migrants in contributing to development and reduce the cost of sending money home. A 5% tax does the opposite.

Economists Trash the Bill’s Logic

Tax experts say the proposed tax violates basic principles of fair taxation.

“You’re taxing the amount of money sent—not the service of transferring it,” said Hadijah Nannyomo, an international tax partner at EY. “Ideally, the five percent should be levied on the service fee, not the entire transfer.”

This, she says, creates loopholes and tax avoidance opportunities, like people sending money through U.S. citizens to circumvent the tax.

Time is Running Out

According to reports, the U.S. House of Representatives plans to pass the bill by the end of this month with enforcement set to begin in July 2025. If passed, it could set a bad precedent and disrupt the flow of remittances from one of Kenya’s biggest income sources.

Why Diaspora Remittances Matter So Much

For many Kenyan families, money sent by relatives abroad goes toward essentials—food, education, medical bills, and rent. A 2021 report by the Central Bank of Kenya (CBK) revealed that the bulk of diaspora money is used for day-to-day family support, not luxuries.

Additionally, the foreign currency inflows have been a stabilizing factor for the Kenyan shilling, helping to cushion the economy from exchange rate pressures.