By: Sofia Galvan
FAYETTEVILLE, Ark. (UATV) – A new federal tax on cash remittances took effect this year, targeting immigrant families who send part of their paychecks to relatives who had to stay home.
According to the Department of the Treasury and the Internal Revenue Service, a 1% remittance transfer tax began on January 1st as part of the One Big Beautiful Bill. This tax percentage applies to remittances sent from the United States to recipients in foreign countries, affecting those who send money with cash, a money order, a cashier’s check, or other similar, physical forms. Those methods are most commonly used by low-income and undocumented immigrants. This impact is noticed in Springdale, where Hispanic residents make up 41.6% of the population.
Store Manager at El Ranchito Supermercado in Springdale, Mario Rubio, has seen the impact over the last 30 years and said people are motivated to immigrate to the United States for one reason.
“All of our Hispanic customers have family in Mexico,” Rubio said. “They come here to work and help the families they left behind.”
Irving Esquival has the same story. Every 2 to 3 weeks for 2 years, he walks into his local money transfer store and sends his hard-earned money to his parents in Mexico. He said helping out makes him feel good.
“It feels really nice knowing that they receive the money,” Esquival said. “Being able to help them makes me feel really great, honestly.”
However, the new tax is changing numbers. Melanie Mendoza, a money transfer store worker at El Ranchito, said she has noticed a drop in customers as soon as the tax law took effect.
“There was a decrease because of that,” Mendoza said. “Many people stopped coming in, or they switched to sending money through their phones or online.”
The tax isn’t the only problem. Esquival said the new fear of immigration enforcement holds people back. Due to the frequent enforcement sightings, making a trip to the store for the simple reason of sending money abroad could be the last time they leave their home.
This isn’t only affecting and occurring in Springdale. According to the Niskanen Center, $93 billion in remittances were sent alone from the United States in 2024. University of Arkansas economics professor Arya Gaduh is familiar with those numbers. His research on remittances has found that when transfers reach a household, they keep children from dropping out of school to work at a young age.
“Remittances itself actually tend to reduce child labor,” Gaduh said. “It essentially allows them to have more time to either go to school or actually just enjoy their life as children without having to work.”
According to AidData, migrants cut back on their spending at home rather than on the money they send abroad with this new tax. This would affect the economic activity in the United States.
Despite these challenges, Mario Rubio said his community won’t be going anywhere.
“We’re already here,” Rubio said. “This is where we’re staying, and we just have to keep going.”