What is the US remittance tax? Complete guide

The One Big Beautiful Bill now includes a 1% tax on certain remittances from the US. Starting January 1, 2026, this new tax will apply to certain international money transfers sent from the US that are funded by physical instruments such as cash, checks or money orders.

We take a look at everything you need to know about the Big Beautiful Bill Act, including when remittance tax applies and any exceptions.

We’ll also look at how you can ensure compliance with the law, considering exactly how the new US remittance tax will be collected and its effective start date. Let’s dive in!

Note: This article is provided for informational purposes only. This information is accurate as of the final version of the OBBB Act signed July 4, 2025 and is subject to change.

What is the remittance tax?

The One Big Beautiful Bill Act is a US law signed by President Trump. It introduces a new remittance tax for those living in the US, placing a 1% tax on certain types of money transfers sent from the US.¹

The bill stands to affect those living in the US who regularly send money abroad to friends and family and pay via cash, checks, or money orders.

For example, international students who send money to their families back home, or non-US citizens who regularly pay for services abroad.

The One Big Beautiful Bill Act has gone through numerous iterations before landing at its current 1% rate. It was originally proposed at 5%, then the House of Representatives reduced it to a 3.5% tax.

Finally, the US Senate capped the tax rate at 1% for certain physical types of global money transfer.

Where does the remittance tax apply?

The One Big Beautiful Bill remittance tax only affects certain physical forms of transaction, including:

• cash
• money orders
• cashier’s checks

The law outlines that the new remittance tax will only affect payments initiated by “physical instrument” via a remittance provider. This is as determined by the Treasury Department.¹

This means the One Big Beautiful Bill Act will not apply to money transfers withdrawn from a US account or funded with a debit card or a credit card issued in the US.

However, additional foreign transaction fees and exchange rate charges may apply to any transfers outside the US.

What are the exceptions to the remittance tax?

There are some exceptions to the new US remittance tax. You can still make a regular digital payment through your bank or online provider without incurring the tax.

The remittance tax also doesn’t apply if you use a credit or debit card that was issued to you in the US.

This is good news for those who regularly send money abroad to family, friends, or service providers, as this tax does not apply to certain popular digital transfer methods.

Who collects the remittance tax?

The new US remittance tax will be collected by the remittance service provider itself. This is the bank or money transfer provider you use for your money order, cash payment, cashier’s check, or other physical transfer type.

The provider should make you aware of whether your transaction will be subject to remittance tax or not.

They will then report the total amount they’ve collected to the US Treasury Department. This will likely take place every quarter, and it will include any transactions initiated after December 31, 2025.¹

When will the remittance tax start?

The new Big Beautiful Bill remittance tax is effective from January 1, 2026. From this date, you’ll pay a 1% remittance tax to the government every time you use one of the specified physical money transfer methods.¹

The tax covers cash, cashier’s checks, money orders, and any other physical payment types. It won’t include US-issued credit or debit card payments or direct withdrawals of funds from a bank account.

Summary

The new One Big Beautiful Bill Act foreign remittance tax bill is a big change for US taxation of international money transfers.

It stands to affect anyone who regularly sends money abroad for goods or services, including non-citizens, foreign students, service members and their families.

However, there are a few key exemptions. You can still make online payments to recipients overseas, and the bill doesn’t come into effect until January 2026.

Whether you’re sending money to your family or paying for goods online, it’s important to do your research. Always compare money transfer providers and choose a platform that’s transparent about fees or taxes.

US Remittance Tax FAQs

What is the remittance tax for NRIs?

The remittance tax is currently set at 1% for all physical transfers outside the US, including cash payments, money orders, and cashier’s checks.

This will affect Non-Resident Indians (NRIs) who regularly send money abroad to their families in India unless they use a method that is exempt from the tax, such as an online bank transfer.

Are remittances to Mexico taxed?

The new bill taxes all remittances made outside the US, which may affect payments to Mexico. However, the tax does not apply when withdrawing money from your bank account or a US-issued credit or debit card.

Does the remittance tax apply to money transfer apps like Wise?

When you send money with Wise, your transfers will not be subject to the new tax as it doesn’t apply to the payment methods we offer.

Make sure to check with your bank or money transfer provider before going ahead with your transaction.

Is the remittance tax bill passed?

Yes, the new remittance tax has now been passed by the United States Congress and signed into law by President Trump on July 4, 2025.

A remittance tax of 1% will come into effect from January 1, 2026 for all money transfers initiated by a physical payment method, such as cash.

Sources

1. Congress.gov - Text: H.R.1 - One Big Beautiful Bill Act