Excise Tax · IRC §4475 · Proposed regs 2026-04-13
The 1% Remittance Transfer Tax: Who Actually Pays It
Does the 1% remittance tax apply to my transfer?
Only if you fund the transfer with cash, a money order, a cashier's check, or a similar physical instrument. Transfers funded from a bank account, a debit card, or a credit card are not subject to the §4475 excise tax, so for most senders the tax is $0. Where it does apply, the rate is 1% of the amount sent, collected by the provider at the counter.
- Effective for transfers made after December 31, 2025 (2026/01/01 onward).
- Only transfers to a designated recipient located in a foreign country are reached — a domestic transfer is outside §4475 no matter how it is funded.
- The proposed regulations exclude small-value transactions of $15.00 or less from the definition of a remittance transfer, so nothing is taxed.
- Cash, money orders, and cashier's checks are taxable funding methods.
- Bank account, debit, and credit funding are exempt.
- The provider collects the tax and remits it quarterly; the sender bears it.
Exemption table
Once the transfer is in scope, the taxable event turns on funding method — which country the money goes to and who receives it do not change the answer. Two threshold questions come first, though: the designated recipient must be located in a foreign country (a domestic transfer is outside §4475 entirely), and a transaction of $15.00 or less is not a remittance transfer at all under the proposed regulations. If either is true, the funding-method table below never comes into play.
| Funding method | Taxed | Why |
|---|---|---|
| Cash handed over at a counter or agent location | 1% | Cash is the core taxable funding method named in §4475. Walk-in transfers paid in cash are the transactions this tax was written for. |
| Money order | 1% | A money order is a physical cash-equivalent instrument named in the statute, so the 1% applies. |
| Cashier's check | 1% | A cashier's check is a cash-equivalent instrument named in the statute, so the 1% applies. |
| Bank account / ACH transfer | Exempt | Transfers funded from an account held at a financial institution are outside §4475. No excise tax is due. |
| Debit card | Exempt | Debit-card funding draws on a bank account rather than a cash-equivalent instrument, so no excise tax is due. |
| Credit card | Exempt | Credit-card funded transfers are not cash-equivalent funding under §4475. No excise tax is due (your card issuer's own cash-advance fees are a separate matter). |
| App or wallet balance funded from a linked bank account or card | Exempt | A stored balance loaded from a linked account or card is not cash-equivalent funding. If you loaded the wallet with physical cash at a retail location, treat that leg as cash funding and ask the provider how they are reporting it. |
How it is collected
You do not file anything. The remittance transfer provider is the collecting agent: it adds the tax at the point of sale, shows it on the receipt, and pays it over to the Treasury on a quarterly basis. If the provider fails to collect it, liability shifts to the provider, not to you.
Because the charge shows up as a line item, the practical advice is to read the receipt. A 1% line on a cash-funded transfer is the excise tax. A 1% line on a bank-funded transfer is the provider's own margin, and it is worth shopping around.
Timeline
- July 4, 2025 — P.L. 119-21 enacted, adding §4475 at a 1% rate.
- January 1, 2026 — the tax applies to transfers made after December 31, 2025.
- 2026-04-13 — proposed regulations, which set out the cash-equivalent funding limitation relied on here.
- Pending — final regulations. Treat the funding-method rules as proposed until they are finalized.
Check your own transfer
Open the remittance tax calculatorFrequently asked questions
What is the 1% remittance tax?
An excise tax added by the One Big Beautiful Bill Act as IRC §4475. It equals 1% of the amount of a remittance transfer, collected by the transfer provider from the sender, and it applies to transfers made after December 31, 2025.
Does it apply to every international money transfer?
No. Under the proposed regulations, it reaches only transfers the sender funds with cash, a money order, a cashier's check, or a similar physical instrument. Anything funded from a bank account, debit card, or credit card falls outside the tax.
Is the tax deductible or creditable?
For an individual sending personal funds, no. It is an excise tax on the transaction, not an income tax, and personal-use excise taxes are not deductible on Schedule A.
Does citizenship or immigration status matter?
The statute keys off how the transfer is funded, not who sends it. There is no citizenship test in §4475 for whether the tax applies to a given transfer.
What if the provider charges me on a bank-funded transfer?
Ask them to itemize the receipt. A 1% line on an ACH- or card-funded transfer is not the §4475 tax; it is the provider's own pricing, and you are free to compare providers on it.
Sources & References
Primary references used for this content
Excise tax on remittance transfers
Statutory rate, taxable funding, and provider collection duty
View on law.cornell.edu
One Big Beautiful Bill Act
Enactment and effective date
View on congress.gov
Excise Tax on Remittance Transfers (proposed regulations)
Issued 2026-04-13
View on federalregister.gov
✓3 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.