Starting January 1, 2026, a new 1% federal excise tax will apply to certain international money transfers sent from the U.S. This development may affect individuals and businesses who frequently send funds abroad, especially through cash or money order payments.
Who Is Affected?
- The tax applies to senders of funds using specific physical payment methods: cash, cashier’s checks, money orders, or similar instruments.
- Electronic transfers funded from bank accounts or by U.S.-issued debit or credit cards are not subject to this tax.
- The recipient of the funds abroad does not pay the tax.
How It Works
- Remittance service providers — including banks and money transfer companies — will collect the tax at the time of transfer.
- Service providers are responsible for reporting and remitting the tax to the U.S. Treasury.
Why It Matters
Even at just 1%, this tax adds a small additional cost to transfers, on top of any service fees or currency exchange costs. For individuals or businesses who send frequent remittances, this can add up over time.
This new remittance tax reflects the U.S. government’s focus on modernizing reporting and collection of cross-border funds.