The 2026 US remittance tax: who actually pays the 1%
Verified 2026-07-03 · source: IRC §4475 (One Big Beautiful Bill Act 2025, P.L. 119-21); Treasury/IRS proposed regs, Fed. Reg. 13 Apr 2026
Do I pay tax to send money from the US in 2026?
Only if you fund the transfer with cash, a money order, a cashier's check or a traveler's check — then a 1% federal excise applies to transfers made after 31 December 2025. If you fund from a US bank account or with a US-issued debit or credit card, the transfer is EXEMPT — you pay nothing. Most app-based transfers (funded from a bank or card) are therefore not taxed. There is no exemption based on citizenship, and no credit.
Which funding methods are taxed?
The exemption is the whole story. The 1% applies only to physical, cash-like funding. Fund electronically from a US account or card and you owe nothing.
| Funding method | 1% excise? |
|---|---|
| Cash | Taxed (1%) |
| Money order | Taxed (1%) |
| Cashier's check | Taxed (1%) |
| Traveler's check | Taxed (1%) |
| US bank account (ACH/transfer) | Exempt |
| US-issued debit card | Exempt |
| US-issued credit card | Exempt |
Traveler's checks were added to the taxable list by the April 2026 Treasury/IRS proposed regulations. Source: IRC §4475.
Worked examples ($500 and $1,000)
- Send $500 → 1% = $5 tax → provider collects $505 total
- Send $1,000 → 1% = $10 tax → $1,010 total
- Send $500 → $0 tax
- Send $1,000 → $0 tax
The exemption is the whole story: pay from your bank account or a US-issued card and you owe nothing. The 1% only bites cash-funded transfers. The sender is liable; the provider collects it and files quarterly (Form 720). Using exempt funding is compliance, not evasion. There is no citizenship exemption and no credit.
What social media gets wrong
- "All remittances are taxed" — false. Only cash/physical-instrument funding is; bank and US-card transfers are exempt.
- "It's 3.5% or 5%" — those were superseded House drafts; the enacted rate is 1%.
- "US citizens are exempt" — the citizen carve-out was dropped; there is no citizenship exemption and no credit.
- "It started in 2025" — it applies only to transfers made after 31 December 2025.
What it means for your corridor
On any US→Africa route, the tax question is answered in the engine's answer ④, and applies the same funding rule. See the corridors: