US Remittance Excise Tax in Force Since January 2026

The money transfer landscape in the United States shifted on January 1, 2026, when a 1% federal excise tax on certain international remittances took effect. Bundled into the broader "One Big Beautiful Bill Act" passed by Congress, the levy applies to outbound transfers funded with cash, a money order, a cashier's check or a similar physical instrument.

Who pays, and who doesn't?

The tax targets transfers funded with physical cash at agent locations and retail counters. If you walk into a Western Union or MoneyGram branch and pay with banknotes, the provider is required to collect the 1% levy on top of existing fees. Transfers funded digitally — through a linked bank account, debit card, or credit card — remain exempt.

That distinction matters for cash senders. For a $500 cash transfer to Mexico, the additional cost is $5 — not enormous on its own, but enough to erode thin margins for frequent senders.

Industry pushback and IRS relief

Trade groups representing remittance providers lobbied hard against the provision, arguing it disproportionately affects low-income immigrant communities who rely on cash. Separately, the IRS (Notice 2025-55) gave providers limited relief from deposit penalties for the first three quarters of 2026, citing the challenges of implementing the new law.

Remitly published a detailed breakdown for customers on its blog, walking through which transaction types are affected and how to avoid the tax by switching to digital funding methods. Wise noted that its entirely digital model means none of its customers are impacted.

The bigger picture

For a broader view of where global remittances are heading, see our 2026 global remittance trends report.

For consumers, the takeaway is straightforward: funding transfers digitally avoids the tax entirely. Read our complete guide to the US remittance tax for a provider-by-provider breakdown of who charges it and how to avoid it. Our guide to the cheapest ways to send money internationally covers how to reduce costs further, and our best money transfer apps roundup highlights the digital-first providers that are entirely unaffected by the tax. Our comparison tool shows real-time costs across providers, making it easy to find the cheapest option regardless of how you fund the transfer.