04/01/2026
If You Send Money Abroad, Pay Attention
Starting January 1, 2026, the federal government will begin enforcing a 1% tax on certain international money transfers originating from the United States. This new remittance tax applies to transactions made with cash, money orders, wire services like Western Union or MoneyGram, cashier’s checks, and prepaid reloadable cards funded with cash.
This tax is added on top of any fees already charged by the transfer company. It does not replace those fees.
The tax does not apply to:
•Transfers made using U.S.-issued debit or credit cards
•Bank-to-bank transfers between U.S. and foreign accounts
•Peer-to-peer apps like Zelle, as long as the funding source is a verified U.S. account
This is the first time the U.S. has imposed a federal excise tax on personal remittances. It was signed into law under Donald Trump as part of the One Big Beautiful Bill Act.
-What Is Being Said About It
Proponents of the tax claim it will reduce untracked cash flows and keep more money circulating in the domestic economy. But there is no published evidence showing that this tax will reduce remittances or materially impact overall U.S. economic activity.
What we do know is that remittances are sent using after-tax income. This money has already moved through the U.S. economy via spending on housing, food, gas, utilities, and other taxable activity. In many cases, undocumented workers also contribute to federal programs like Social Security through Individual Taxpayer Identification Numbers.
-What the Tax Targets
This tax does not apply to corporate capital flows, offshore investment transfers, or digital banking systems used by high-income individuals. It targets cash-based systems. The kinds used by people without access to mainstream banking. The kinds used by families who rely on remittances to support relatives abroad.
The average remittance is not a high-dollar transaction. It is often a few hundred dollars per month, used for basic needs like rent, groceries, and medical care. These are not luxury transactions. These are support systems.
The government is not unclear on who uses these services. These methods were chosen precisely because they are traceable and widely used by working-class senders.
-Where the Money Goes
The revenue generated from this tax will go into the general federal fund. It is not allocated to immigration policy, border enforcement, financial education, or social programs. There is no earmark or public accountability tied to how this money will be spent.
This is not a reinvestment. It is a federal revenue collection tool.
-What This Means
Most Americans will not be affected. This tax does not touch most online or card-based transfers. It does not apply to wealthier individuals using traditional banks. It applies to people sending money through cash-based methods. Often the same people with the fewest financial options.
Sending money home is not new. It is not illegal. It is not under-the-table. It is one of the most documented, regulated, and essential forms of global family support.
The remittance tax does not criminalize the act, but it does make it more expensive. And for many families, even a one percent increase on top of existing fees is significant.