U.S. Remittance Tax Update-Who Has to Pay It?

U.S Remittance Tax Update. On January 1, 2026, a new federal remittance tax will impose a cost on anybody sending some types of money transfers out of the United States. The regulation has been enacted through the One Big Beautiful Bill Act that was signed on July 4, 2025.

The tax will be levied on certain kinds of money transfers, and it will be charged directly by banks, money transfer businesses, and other service providers, where it will be transferred to the treasury of the U.S.

What is the Remittance Tax?

The new regulation introduces a 1% federal excise tax on outgoing monetary transfers when you send the money out of the country with cash, money orders, cashier’s checks, and so forth, paper-based vehicles of transferring the funds.

For example:

When you send $500, you would be paying an additional $5.

In the case you would send $1,000, the tax would be $10.

It does not have a minimum limit, and even smaller transfers made due to emergency or routine family assistance are taxed when they make use of the concerned tools.

Overview of US Remittance Tax

Who Has to Pay It?

The law does not restrict to non-citizens like earlier versions of the draft did, but is applied to anyone sending money back into the U.S., and is applied to:

• American citizens
• Green card recipients
• Immigrants residing or employed in the U.S. légally.

It does not make any difference how often you send money; the tax is imposed in case you use the covered method.

Why Was The Concept Introduced?

The government claims the three main objectives of the tax are:

• Increase federal revenue, which is estimated to be between 4.5 to 10 billion dollars in 10 years.
• Fund the border enforcement programs.
• The money sent to another country would be a little more expensive, thus discouraging illegal immigration.

However, the critics believe that it is more of a financial burden to the common citizens rather than a solution in itself. According to the Tax Foundation and other experts, the tax will land on working families, and it will not have a significant influence on immigration.

Impact on Transfers

When you remit money outside the country by using any of the following, you will be paying the tax:

• Cash transfers
• Money orders
• Cashier’s checks

Such paper types of payment instruments are similar. No payment of tax will be made as long as you transfer money through:

• The U.S. bank transfers between accounts using ACH
• Money sent through wires is supported by debit or credit cards in the U.S.

When you need to avoid paying this tax, remit money to your bank account or a bank transfer financed by your American debit/credit card rather than paying cash on the kiosk.

Yes. Imagine that you are a US citizen and an eligible provider who illegally levies the remittance tax against you. Then you can claim a refundable tax credit on your annual statement of income tax.

Individuals can also request refunds in case the tax was paid incorrectly, but the specific procedure is not yet fully developed. In the meantime, the best solution is:

• Use records to document all the transfers that you make.
• Utilize providers who are compliant with the rules of IRS verification.
• Look out for IRS information on claiming a refund.

Global Implications

The tax will not only impact individuals in the U.S., but it may also have a significant effect on families abroad. Most of the developing nations survive on the money remitted to them by Americans. For example:

• Mexico may stand to lose more than 1.5 billion a year.
• There may be a 0.6% reduction in national income in El Salvador.

This may imply fewer funds for the primary needs, such as healthcare, education, and housing for families in foreign countries. It can also influence the diplomatic relations and foreign investment.

The financial organizations involved in remittance will be obliged to:

• Include additional ID checks.
• Adhere to new guidelines in reporting.
• Adjust it and remit the tax money to the U.S. Treasury after every three months.

Such modifications may imply:

• Increased charges on services.
• Reduced transfer.
• Reduced speed in processing.
• Avoiding Paying the Remittance Tax

When you regularly transfer funds to a foreign country, you may do some things to minimize or not to pay this tax:

• Make use of ACH bank transfers rather than cash.
• When sending money online, pay using a debit or credit card that is issued in the U.S.
• Do not use cash-pay services such as walk-up Western Union or MoneyGram.
• Put aside any receipts so that you may claim a tax credit.

Bottom Line

With a new 1% remittance tax, transferring money out of the U.S. in cash, money order, or cashier’s checks will be more expensive after January 2026. 

It doesn’t matter if you are a U.S. citizen, a green card holder, or a legal resident. The tax is imposed on all people who use these payment options. Alternatively, you should use bank transfers or transfers funded with cards to avoid the additional fee.

This tax will bring in revenues to the government and help finance the border programs. However, it will most probably affect ordinary Americans and the families they maintain in foreign lands. Being aware of how it operates will allow you to make more intelligent decisions and save more of your money in your pocket.

FAQs for US Remittance Tax