IRS Publishes Remittance Tax Rules: What Senders Need to Know (April 2026)

What did the IRS publish?

On April 10, 2026, the Treasury Department and IRS issued proposed regulations for the 1% excise tax on certain remittance transfers, established under the One, Big, Beautiful Bill Act (signed July 4, 2025). The regulations clarify which transfers are taxed, which are exempt, and how providers must collect and report the tax.

The comment period closes June 12, 2026. The tax has been in effect since January 1, 2026.

Which transfers are taxed?

The 1% tax applies only to remittance transfers where the sender provides a physical instrument to the provider:

• Cash (paying at an agent location like Western Union or MoneyGram)
• Money orders
• Cashier's checks
• Other similar physical instruments (as determined by the Secretary) — the proposed rules name traveler's checks

On a $1,000 cash transfer, the tax is $10.

Which transfers are exempt?

The following are not subject to the 1% tax:

• ✅ Bank account transfers (ACH, wire transfers from checking/savings accounts)
• ✅ Debit and credit card payments, regardless of the country where the card was issued
• ✅ SWIFT bank-to-bank transfers
• ✅ Personal or business checks and general-use prepaid cards (subject to an anti-avoidance rule)

Bottom line: If you send money online through Wise, Remitly, Revolut, or any digital provider funded from your bank account or card — you pay zero tax. The tax specifically targets cash-based agent transfers.

Who collects the tax?

• The sender is liable for the tax
• Remittance transfer providers must collect it at the time of the transaction
• If providers fail to collect, they become secondarily liable
• Providers report quarterly on Form 720 with semimonthly deposits required
• The IRS has granted penalty relief (Notice 2025-55) for deposit errors during the first three quarters of 2026

Revenue and economic impact

The Joint Committee on Taxation estimates the tax will generate approximately $10 billion over 10 years. The tax applies regardless of citizenship, immigration status, or income level.

Key impact projections, from a Center for Global Development analysis that applied 1% to all remittances (so it overstates the tax as enacted, which reaches only cash-type funding):

• Mexico (largest remittance recipient from the US) projected to lose exceeding $1.5 billion annually
• El Salvador projected to lose 0.6% of gross national income
• Central American countries face the greatest relative impact

What should you do?

1. Switch from cash to digital: If you're still paying cash at an agent location, switching to a digital provider eliminates the tax, and digital providers are often cheaper on fees and exchange rates too. See our comparison tool for the cheapest digital option.
2. Fund via bank account or debit card: ACH-funded transfers through Wise, Remitly, or WorldRemit are tax-exempt and typically cheapest.
3. Keep records: If a cash-funded transfer is canceled or expires and the provider refunds it, you may file a claim with the IRS for a refund of the tax.

For corridor-specific advice, see our Mexico guide, India guide, and Philippines guide.