A 1% federal tax has applied since Jan. 1 to money sent from the United States to recipients abroad when the sender pays with cash, a money order, a cashier’s check or a similar physical instrument, the IRS says, under the tax law President Donald Trump signed in 2025.
A sender’s tax, collected at the counter
The levy is called the remittance transfer tax, and the IRS lists it under section 70604 of the law on its provisions page, which the agency last reviewed on Sept. 25. The page describes a 1% excise tax on applicable remittance transactions, effective Jan. 1, 2026. A 1% rate is $1 for each $100 to which it applies.
Responsibility is split. In an April 10 release, IR-2026-48, the IRS said the sender is liable for the tax, and that remittance transfer providers are required to collect it from certain senders. The provisions page adds that providers collect and deposit the money on a semimonthly schedule, with the first deposit due Jan. 29, 2026.
For an older reader who regularly sends money to relatives overseas, the practical effect appears at the counter of a store, check-cashing outlet or money-transfer agent, where the collection happens as part of the transaction rather than on a tax return.
Which payment methods trigger it
The trigger is the way the sender pays, not the destination alone. The IRS release describes a remittance transfer as a transfer sent from the United States to a foreign recipient where the sender uses cash, a money order, a cashier’s check or another similar physical instrument. The provisions page names the same list: cash, money orders, cashier’s checks or similar physical instruments. The two IRS pages agree on the list of instruments, which leaves little room to read the tax as reaching only cash and none of the paper instruments that resemble it.
A money order and a cashier’s check are paper instruments bought in advance and handed to a provider, which is likely why the IRS groups them with cash. Money orders and cashier’s checks matter for households that do not use a bank account or that prefer paper for security. Those readers are the ones the wording reaches most directly, because a physical instrument is what starts the tax.
What the IRS pages do not say about bank and card payments
Neither IRS page read for this article lists an exemption for transfers funded from a bank account or by card, and neither addresses those payment methods at all. The tax is defined by the physical instrument used, so the pages leave the treatment of other funding sources to the regulations and to the provider handling the transfer.
Several transfer companies have published their own explainers on how the tax applies to their customers, including a Ria blog post six months into the tax and a Remitly guide. Those are company statements about their own services, not IRS guidance, and a sender comparing options can ask the provider directly whether the tax will be added and what appears on the receipt.
Because the sender is the party liable, the amount shows up in the cost of the transfer itself. A sender comparing a cash payment at a counter with another way of funding the same transfer would be weighing a 1% difference in cost against the convenience of paper, and would need the provider to say in writing which treatment applies. The IRS pages give the rule for physical instruments and stop there, so the receipt is the only place the answer for a particular transaction will appear.
The IRS release also lists no dollar threshold below which the tax disappears, and it describes no exception for senders of any age or income.
Nine months from start date to the latest IRS page
The IRS materials lay out a sequence. The tax began Jan. 1, 2026, and the first provider deposit came due Jan. 29, according to the IRS provisions page. On April 10 the agency issued proposed regulations in IR-2026-48, described as rules and definitions for the new excise tax, and set June 12, 2026 as the comment deadline. The provisions page, last reviewed Sept. 25, still lists the tax as effective Jan. 1.
The pages read for this article do not report whether final regulations have been issued. The 1% has applied throughout, so the proposal stage has not paused collection at the counter; the regulations refine definitions rather than switch the tax on.
The provisions page also points providers to Notice 2025-55, which it lists as penalty relief guidance. That relief concerns providers’ compliance with the collection and deposit rules, and the IRS description does not present it as a reduction of the sender’s 1% liability.
The April release names no individual official, so every figure in this article rests on the IRS pages linked here: a 1% rate, cash, money orders, cashier’s checks and similar instruments, and a start date of Jan. 1, 2026.
IRS refund trouble that starts with a notice
A filed return is no assurance that a refund arrives on schedule. When it does not, the IRS notice that follows is often the only clue, and it uses codes and dates that need translating.
The IRS Refund Recovery Kit contains a notice decoder, the refund-trace steps for Form 3911 and a refund status tracker spreadsheet.
Open the notice decoder and refund-trace steps in The IRS Refund Recovery Kit.
This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
