As of January 1, 2026, a new remittance tax in the US applies to specific types of international money transfers. Created as part of the One Big Beautiful Bill Act, this 1% federal excise tax is aimed specifically at transactions that are funded with cash.
If you send money to people abroad, it’s important to understand what the remittance tax is and what your alternatives are, so you don’t pay more than you need to.
Key takeaways
- New tax: A 1% remittance tax now applies to certain money transfers sent from the US
- Effective date: January 1, 2026
- Tax rate: 1% of the transfer amount
- Payment methods taxed: Cash, money orders, and cashier’s checks
- Exempt methods (not taxed): Bank transfers, debit cards, credit cards, and digital wallets
What is the US remittance tax?
As of January 1, there is a new 1% remittance tax in the US that applies to certain international money transfers. Specifically, this tax applies only when customers pay for their transfers with:
- Cash
- Money orders
- Cashier’s checks
For example, if you send $1,000 abroad and pay with cash at a retail location, you would owe an extra $10 in tax on top of your normal fees. As the person sending the money, you pay this tax, not the person receiving the money.
Since the tax only applies to cash (or cash-like) payments, you do not owe the tax if you fund your international transfer with a different payment method, such as credit card.
Remittance tax calculator: 1% fee examples for 2026
| Transfer Amount | 1% Remittance Tax | Total with Tax (Excl. fees) |
| $200 | $2.00 | $202.00 |
| $500 | $5.00 | $505.00 |
| $1,000 | $10.00 | $1,010.00 |
| $2,500 | $25.00 | $2,525.00 |
*Excl. fees: The total with tax examples exclude other fees or taxes that may be applicable.
Which transfers are exempt from the remittance tax?
These payment methods are exempt from the US remittance tax: Debit card, credit card, bank account, and digital wallet.
Digital funding methods like these mean you can send money easily with a money transfer app without owing a remittance tax. For example, if you choose to fund an international money transfer using money from your digital wallet or bank account instead of physical cash, your transfer would be exempt. The same goes if you pay by credit card or debit card.
| Payment Method | 1% Tax Applied? |
| Cash | ✅ Yes |
| Money Order | ✅ Yes |
| Cashier’s Check | ✅ Yes |
| Debit Card | ❌ No |
| Credit Card | ❌ No |
| Bank Account | ❌ No |
| Digital Wallet | ❌ No |
Remittance tax news: What’s changed recently?
In April 2026, the IRS proposed additional regulations for the new remittance tax. These regulations aim to provide a little more clarity about this tax and how it works, such as:
- Specifying which amount of the transfer the tax applies to
- Defining exactly which cash payment methods (or “similar physical instruments”) are subject to the tax
- Providing examples of how the tax is to be applied
Under the new regulations, remittances paid for with cryptocurrency would not be taxedneither would transfers paid for with prepaid cards.
Remittances are set to be even more expensive in Tennessee, where a new state law was passed that is similar to the new federal remittance tax law. In May 2026, Tennessee joined Oklahoma in levying a state tax on international payments.
When the new law goes into effect in 2027, people in Tennessee who send money across the border would pay a $10 fee for transfers under $500 and an additional 2% fee for amounts over $500. That’s in addition to the US remittance tax and any other money transfer fees.
How to skip the remittance tax on your next transfer
If you normally pay for transfers with cash, money orders, or cashier’s checks, you may have already seen the new 1% tax added to your transactions. But there are easy alternatives:
- Pay with your debit card at retail locations. You can still send money in person but skip the extra tax.
- Send online at WesterUnion.com or through the app. When you pay with a debit card, credit card, or bank account, you won’t be charged the 1% tax. Plus, you can send from the convenience of home.
Will my receiver be impacted by the remittance tax?
Your friends or family abroad will not be impacted by the new US remittance tax. The 1% tax is only applied to the sender’s payment method (when paying with cash, money orders, or cashier’s checks).
This means the amount your receiver gets stays the same. The only difference is whether or not you, as the sender, pay the additional tax based on how you choose to fund your transfer.
Send money without the extra cost
Western Union offers tax-free transfer options so you can continue sending money affordably and reliably. You can support the people who matter most to you and avoid the remittance tax by choosing a different payment method. Use your debit card, credit card, bank account or digital wallet to keep your transfers tax-free.
Download the Western Union mobile app to send money now without the extra cost.
FAQs
You can avoid the tax by paying with a credit card, debit card, bank transfer or digital wallet such as Apple Pay or Google Pay. The remittance tax applies specifically to transfers paid for with cash, cashier’s checks, and money orders.
Yes. The remittance tax is based on the payment method and whether the transfer is international. It applies regardless of whether the sender is a US citizen or not.
The money transfer provider is responsible for collecting the tax and sending it to the Treasury. For example, if you make an international transfer with cash at a Western Union location, Western Union would be responsible for collecting the tax.
