The 1% US remittance tax, and how funding method decides whether you pay it
From January 2026, a 1% federal excise tax applies to money sent abroad from the United States when the sender provides cash, a money order, a cashier's check, or other similar physical instrument. How you pay for the transfer decides whether it applies. The amount, the destination and the provider do not.
What triggers it
The IRS describes the tax as applying when the sender provides cash, a money order, a cashier's check, or other similar physical instrument. That is a statement about the funding method — what you hand over at the point of sending — and not about where the money is going or how much of it there is.
The sender is liable for the tax. The provider is required to collect it, deposit it semimonthly and file quarterly returns; a provider that fails to collect becomes liable itself. In practice that means it appears on the sender’s bill rather than being something anyone files.
| How you pay | Described by the trigger? | Why |
|---|---|---|
| Cash at an agent counter | Yes | The IRS description names cash directly. |
| Money order | Yes | Named directly. |
| Cashier's check | Yes | Named directly. |
| Other similar physical instrument | Yes | The announcement's own catch-all. Its exact boundary is set by the proposed regulations, not by this page. |
| Bank account / ACH | Outside that description | Not a physical instrument, so the trigger above does not describe it. |
| Debit card | Outside that description | Same reasoning. |
| Credit card | Outside that description | Same reasoning. |
What it costs, in the only terms that matter
One percent of the amount sent. On $1,000 — the amount every comparison on this site is expressed at — that is $10. That is larger than the entire advertised transfer fee on most of the corridors we track, which is why it can reorder a comparison table on its own: a cash-funded transfer through a zero-fee provider can end up costing more than a bank-funded transfer through a provider that charges $3.
What this page will not tell you
The IRS announcement of the proposed regulations does not enumerate exclusions, and it does not address whether the sender’s citizenship or immigration status changes the answer. Neither does this page. Those are questions for the regulations themselves or for someone qualified to read them on your behalf — and this is a comparison site, not a tax adviser.
Several providers state publicly that their own transfers fall outside the tax because they accept digital funding only. Where a provider says that, we record it on the corridor page as the provider’s claim, attributed to them. We do not verify tax positions, and no provider pays for how it is described here.
What to do with this
If you fund transfers from a bank account, a debit card or a credit card today, the tax as described does not reach you. If you pay cash at a counter, it does, and switching funding method is the whole of the remedy — the same provider, the same corridor, the same recipient.
Every corridor page on this site shows each provider’s payout methods and fee structure so the comparison stays honest about total cost. Compare a corridor from the USA, or read how we compare providers.
Rate, effective date, funding-method trigger and collection duty are from IRS, proposed regulations under the One, Big, Beautiful Bill. This is general information about a published rule, not tax advice.