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November 4, 2026
GWP IMMIGRATION LAW
The 1% Is About How You Pay, Not Who You Are
Which transfers abroad are taxed in 2026, who owes the tax, and the lawful ways families can send money home without it.
The remittance tax 2026 rules took effect on January 1: a 1% federal excise tax on money sent abroad when the sender pays with cash or a similar physical instrument. Transfers funded from a bank account or a card are not taxed.
Updated November 4, 2026 · GWP Law · Las Vegas, NVTHE CONTEXT
Remittance Tax 2026: Who Pays and Who Collects
The remittance tax 2026 was created by the 2025 budget law commonly called the One Big Beautiful Bill Act, Public Law 119-21, signed on July 4, 2025, and codified as a new section of the Internal Revenue Code. It applies to transfers made after December 31, 2025. 26 U.S.C. § 4475
- The sender pays. The law places the tax on the person sending the money.
- The provider collects. The remittance transfer provider charges the tax at the time of the transfer and remits it to the IRS on Form 720, the quarterly federal excise tax return.
- The provider is the backstop. If the tax is not collected at the time of the transfer, the provider becomes liable for it.
- The recipient is not taxed. The tax is computed on the amount to be received abroad, and it is not deducted from that amount.
On April 10, 2026, Treasury and the IRS issued proposed regulations explaining how the tax works. IRS, IR-2026-48
Which Transfers Are Taxed and Which Are Not
Source: Proposed regulations, Excise Tax on Remittance Transfers, 91 Fed. Reg. 18797 (Apr. 13, 2026).
Under the proposed rules, the card exclusion also covers debit and credit cards issued outside the United States. Buying a prepaid card with cash and immediately using it to send money may be treated as a cash transfer.
Apps and digital wallets are not named in the rules. What counts is the source of funds behind them: a bank account or card is excluded, while cash loaded at a counter is not.
How Much Is the Tax?
It is 1% of the amount to be delivered abroad, so a $500 transfer paid in cash carries a $5 tax.
Fees and state taxes are not part of the base, but promotional bonuses added to the amount sent are. The proposed regulations illustrate this with a $1,005 transfer, including a $5 bonus, that owes $10.05 even though the sender also paid a $20 fee.
If a transfer is canceled and the money is returned, the proposed rules allow the sender, not the provider, to claim a refund of the tax.
Does Immigration Status Change the Tax?
No. The tax depends only on how the transfer is funded, not on the sender’s citizenship, status, or destination country.
U.S. citizens, permanent residents, visa holders, and undocumented senders are treated the same way. The tax applies to personal transfers sent from the United States to a recipient located abroad.
That also means paying the tax is not an immigration event. It is an excise tax on a payment method, collected and reported by the provider.
A REAL CASE
Two Hundred Dollars, Every Friday
A client with Temporary Protected Status told me he sent $200 in cash to his mother every Friday from the same neighborhood store.
In January, the store started adding $2 to each transfer. He thought the charge was linked to his status and asked whether to stop sending money altogether.
I explained that the charge was the new federal tax on cash-funded transfers, and that it applied equally to citizens. The tax turns on the payment method, not on who sends the money.
He opened an account at a credit union and now funds the same transfer with a debit card, which is not taxed.
How to Send Money Abroad Lawfully in 2026
THE PATH FORWARD
A Small Tax With Rules Still Being Written
The regulations are still proposed. The comment period closed on June 12, 2026, and taxpayers may rely on the proposed rules, applied consistently and in full, until final regulations take effect.
Congress has seen bills both to limit excise taxes on money transmitters and to raise this tax to 15%; none has become law. For the broader picture, see our guide on how taxes affect immigration status.
If you earn income without a Social Security number, our guide on filing taxes without a work permit explains the ITIN process and current data-privacy rulings.
References
- 26 U.S.C. § 4475, Remittance transfer tax
- IRS, IR-2026-48, Treasury and IRS issue proposed regulations on the remittance transfer tax
- Federal Register, Excise Tax on Remittance Transfers (REG-114499-25)
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Book a Consultation →This article is for informational purposes only and does not constitute legal advice. Consult a qualified immigration attorney before taking any action. · Last verified: October 20, 2026 · Reviewed by: Kathia Quirós, Immigration Attorney · GWP Immigration Law
