A proposed 3.5% tax on remittances sent from the United States to foreign countries is expected to significantly impact the Nepali community residing in the U.S. The bill narrowly passed the U.S. House of Representatives on May 22, 2025, with a one-vote margin. If approved by the U.S. Senate, the law will take effect on January 1, 2026, directly affecting non-U.S. citizen Nepali immigrants, including green card holders and those on temporary visas. U.S. citizens would be exempt.
Remittances are a cornerstone of Nepal’s economy. In 2023, Nepal received approximately USD 11 billion in remittances, equivalent to 26.6% of its GDP, surpassing the combined total of foreign aid and foreign direct investment. An estimated USD 1.28 billion of this came from the U.S. alone. According to Nepal Rastra Bank, USD 4.73 billion in remittances flowed into Nepal during the first five months of the 2024/25 fiscal year (mid-July to mid-December 2024), with a significant portion originating from the U.S.
The World Bank reported that global remittance inflows to low- and middle-income countries grew by 4.6% in 2024, reaching USD 685 billion. Based on this growth rate, Nepal’s total remittances for 2024 are estimated to range between USD 11.3 billion and USD 11.8 billion.
Data suggests the U.S. contributes over USD 1 billion annually to Nepal’s remittances. If the proposed 3.5% tax is implemented, it would result in an additional USD 35 million in taxes on USD 1 billion in remittances. For 2023’s USD 1.28 billion, the tax would amount to approximately USD 44.8 million, with estimates indicating at least USD 40 million annually paid to the U.S. government. Initially proposed at 5%, the tax rate was later reduced to 3.5%.
For example, sending USD 1,000 to Nepal would incur an additional USD 35 in taxes, increasing the cost of remittances and potentially reducing the frequency or amount of money sent. Currently, the cost of sending USD 200 from the U.S. to Nepal averages 3.64% (USD 13.59 in fees and a 0.3% exchange rate margin), slightly above the United Nations’ Sustainable Development Goal target of less than 3%. The additional 3.5% tax would further elevate these costs, adding to the financial burden on Nepali remitters.
Remittances play a vital role in Nepal, supporting poverty alleviation, education, healthcare, and rural economic development. The tax could also reduce the overall volume of remittances, impacting Nepal’s economy, where remittances are a lifeline for millions.
The proposed tax has sparked significant concern within the Nepali community in the U.S. Many fear that the increased cost of sending money could make it harder to support families in Nepal. There is also a risk that the tax could drive some remitters to use informal and unregulated channels like hundi and hawala, which are less secure and lack transparency, undermining efforts to promote financial inclusion and formal banking systems in Nepal.
The bill’s fate now rests with the U.S. Senate. If passed, it will add a significant financial burden on non-citizen Nepali immigrants sending money to Nepal. The Nepali community in the U.S. is closely monitoring the Senate’s decision, as the outcome will have far-reaching implications for their ability to support loved ones in Nepal.
The proposed 3.5% remittance tax threatens to increase the cost of sending money from the U.S. to Nepal, potentially costing the Nepali community USD 35–45 million annually. As remittances remain a critical driver of Nepal’s economy, this tax could have significant ripple effects, both for Nepali immigrants in the U.S. and for families in Nepal reliant on these funds.
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Kishor Panthi
View More PostsKishor Panthi is the founder and editor-in-chief of Khasokhas and NepYork. He is the author of three books, “Kampan,” "UNTRANSLATABLE" and “Zero Mile.” He writes about social issues, immigration, and politics.
