WASHINGTON, D.C. — Americans who send money overseas using cash or similar payment methods will face a new 1% federal tax beginning in 2026 under proposed rules released Friday by the Department of the Treasury and the Internal Revenue Service.
What This Means for You
- -Cash-based international money transfers will cost more starting January 1, 2026
- The sender—not the recipient—will be responsible for paying the tax
- Money transfer providers must collect the tax and report it to the IRS
The proposed regulations implement a provision of the “One, Big, Beautiful Bill” that creates a new excise tax—a type of tax applied to specific transactions—on certain remittance transfers, meaning money sent from the United States to recipients in other countries.
Under the rule, the 1% tax applies when the sender uses physical payment methods such as cash, money orders, or cashier’s checks. Electronic transfers, such as those funded directly through bank accounts or digital platforms, are not specifically identified in the proposal as triggering the tax.
The person sending the money is legally responsible for the tax. However, companies that facilitate these transfers—known as remittance transfer providers—must collect the tax at the point of transaction, deposit the funds with the federal government twice monthly, and file quarterly reports with the IRS.
If a provider fails to collect the tax, the financial liability shifts to the provider itself.
How the Rule Would Work
The proposed regulations aim to clarify several operational details, including:
- How the taxable amount is calculated
- Which types of physical payment instruments are covered
- Real-world examples showing how the tax applies in different scenarios
Providers will report the tax using IRS Form 720, a quarterly excise tax filing. The first required deposits are due January 29, 2026, shortly after the tax takes effect.
The IRS previously issued guidance in October 2025 offering temporary penalty relief. Under that policy, providers that miscalculate or underpay the tax during the first three quarters of 2026 may avoid penalties as they adjust to the new requirements.
Public Comment Period Open
Federal officials are seeking public input before finalizing the rule. Comments must be submitted through Regulations.gov within 60 days, with a deadline of June 12, 2026.
Additional details about the provision are available on IRS.gov under the “One, Big, Beautiful Bill” section.
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