Tamaulipas, Guerrero, Puebla, Oaxaca, and Veracruz top the list of states that would suffer the greatest economic impacts if the proposed 5% tax on remittances from undocumented migrants in the United States is approved, according to an analysis by BBVA Research. In 2024, Mexico will receive $62.5 billion in remittances.
A significant proportion of remittances sent from the United States to Mexico are sent through remittance companies, with a cost per transfer ranging from $5 to $10 for amounts between $300 and $500. With the implementation of the tax, the cost of transferring $350, the average remittance, would increase from $6 to $23.50.
With this information, BBVA Research established a baseline scenario, with no changes in remittance patterns or substitution with informal alternatives, an increase in total remittance spending, and, in the absence of disaggregated data, it was estimated that 50% of total remittances correspond to undocumented migrants. The territorial distribution of the 4.1 million affected was estimated based on consular registrations from the Institute for Mexicans Abroad (IME).
Although this scenario does not capture the true complexity of the phenomenon, under these assumptions, the effect in Mexico of a 5% tax on remittances sent by undocumented migrants ($31.25 billion) would be $1.563 billion by 2026.
The states that could be most affected in monetary terms would be Michoacán, with a reduction of $147.5 million; Guerrero, with $146.6 million less; Oaxaca, with $124.8 million; Puebla, $122.8 million, and Guanajuato, $121.3 million less.
The impacts as a proportion of total remittances received would be observed in Tamaulipas, where remittances projected for 2026 would fall by 4.4% in Tamaulipas, 4.3% in Guerrero, 3.6% in Puebla, 3.6% in Oaxaca, and 3.4% in Veracruz, the analysis details.
Local Effects
Remittances represent 4.1% of Aguascalientes’ Gross Domestic Product, which received $958.2 million in 2024, ranking 21st in this category, said Dafne Viramontes, president of the College of Economists of Aguascalientes.
“Remittances can represent up to 30% of income in recipient households. This means that for a family with a monthly income of 10,000 pesos, approximately 3,000 pesos come from this source,” she said.
Under this local scenario, the municipalities most vulnerable to the tax are not necessarily those that receive the largest absolute amounts, but rather those where the most households depend on these transfers.
In the case of Aguascalientes, Calvillo tops the list with 21% of households relying on remittances, followed by El Llano (18.05%), San José de Gracia (16.62%), Asientos (15%), and Rincón de Romos (14.64%). “Although the state capital receives more remittances in absolute terms, the impact is greater in these municipalities because it affects more families proportionally. For these communities, the potential reduction in remittances would be particularly critical.”
Potential solutions to this tax will have to come primarily from migrants themselves, who will seek alternatives to send money and avoid the tax. Although individual actions could partially mitigate the impact, “the ability to absorb this tax will vary depending on each family’s income, as not everyone will be able to maintain the same amount of remittances.”
Source: eleconomista
