Diaspora Remittances Hit Sh325 Billion Amid US Tax Threat, Fueling Concern for Kenyan Families Back Home

Kenyans living and working abroad sent home a record Sh325.4 billion in the first six months of 2025. The sharp increase comes as many rush to beat a looming United States tax targeting cross-border money transfers.

According to the Central Bank of Kenya (CBK), diaspora remittances rose by 5.8 percent to $2.519 billion between January and June. This compares to $2.379 billion over the same period in 2024.

The rise follows the signing of a controversial law in the US that introduces a 3.5 percent excise tax on personal cash transfers abroad. The law takes effect in January 2026.

The tax will apply to non-commercial remittances—mostly funds sent by foreign workers, including Kenyans, to support family members back home. Analysts expect the new measure to cut the amounts received by households in Kenya each year.

The United States remains Kenya’s top source of remittances. It accounted for 57 percent of all inflows in May 2025. Though CBK has yet to release June’s breakdown, US-based Kenyans sent home $2.63 billion (Sh339.8 billion) in 2024 alone.

The law’s passage has sparked concern within the Kenyan diaspora. Many fear a combination of the tax and tighter US immigration rules will hit their financial contributions. President Donald Trump’s administration has stepped up enforcement, including threats of mass deportations.

Malindi-based economist John Mwangi notes that, “Any disruption to remittance flows has ripple effects on family livelihoods, the housing sector, and Kenya’s forex reserves.”

Remittances have remained the country’s top source of foreign income since 2015, surpassing tourism, agriculture, and foreign direct investment. Most of the money supports household needs such as food, education, medical care, and real estate investments.

The Kenya Kwanza administration has continued to expand labour export programmes as part of its strategy to tackle high youth unemployment. The US has remained a preferred destination for skilled Kenyan workers.

However, the upcoming tax threatens to derail recent progress. For years, global campaigns—backed by development agencies—have sought to reduce the cost of sending money home. The US now appears to be taking a different route.

President Trump’s government has framed the tax as part of its “America First” policy. It argues that foreign remittances place an unfair burden on US financial systems and taxpayers.

With the January 2026 implementation date drawing closer, many Kenyan families could feel the pressure. Experts warn that unless mitigated, the policy may disrupt remittance flows and affect the wider economy.