New 1% Tax on Cash Money Transfers Sent Abroad

A provision of the 2025 budget law created a 1% federal excise tax on remittance transfers sent from the United States to recipients in other countries, effective January 1, 2026. The sender pays it, and the transfer company collects it at the counter and forwards it to the IRS.

The tax applies only to transfers funded with physical instruments — cash, a money order, or a cashier's check. Transfers funded from a US bank account or with a US-issued debit or credit card are exempt. On a $500 cash transfer the tax is $5; on $1,000 it is $10.

If you send money home regularly, funding transfers from a bank account or with a US debit card instead of cash avoids the tax entirely. Compare the total cost including the provider's own fees and exchange rate margin, which are usually far larger than the 1%.

This is a tax rule, not an immigration rule. Paying it does not report your immigration status to anyone, and it applies to everyone sending money abroad regardless of citizenship. Be wary of anyone who tells you the tax means you must give them your immigration documents.