Kenyans living and working abroad sent home a record Sh325.4 billion ($2.519 billion) in the first half of 2025, marking a 5.8% increase compared to the same period last year, according to fresh data from the Central Bank of Kenya (CBK). This growth reinforces diaspora remittances as Kenya’s leading source of foreign inflows outpacing tourism, agriculture exports, and even foreign direct investment.
However, this positive trajectory faces looming challenges, particularly from the United States, Kenya’s biggest remittance source. A new US law signed earlier this month is set to impose a 3.5% excise tax on non-commercial money transfers including remittances sent by individuals to family members starting January 1, 2026.
The proposed tax could see Kenyans in the US pay tens of billions of shillings annually in additional charges, potentially reducing the amount of money sent back home. The move is expected to disproportionately affect low- and middle-income earners supporting families in Kenya.
The US currently contributes over half (57%) of Kenya’s total diaspora inflows, with remittances from the country hitting $2.63 billion (Sh339.8 billion) in 2024 alone. The CBK, however, did not specify the US share in its June 2025 update.
Since returning to office in January 2025, US President Donald Trump’s administration has adopted a hardline stance on global migration and remittance flows under the revived “America First” agenda. The new excise tax is part of broader efforts to curtail capital outflows and prioritize domestic economic activity. It also comes alongside heightened immigration crackdowns, which analysts warn could lead to increased deportations and further affect remittance volumes.
The policy shift has sparked concern among global economists, who view diaspora inflows as crucial to stabilizing developing economies. In Kenya, remittances are a lifeline for millions, supporting household consumption, real estate investment, education, and small business growth.
While the Kenya Kwanza government has promoted labor export as a strategy to curb local unemployment and boost foreign inflows, the impending US policy changes could dent the benefits. Economic experts are urging Kenya to diversify its labor migration destinations and enhance domestic policy responses to cushion against external shocks.
As the countdown to the US tax implementation begins, all eyes will be on how Kenya navigates the challenge to sustain its hard-earned gains from the diaspora economy.
