Definition
A 1% federal tax, starting with transfers after December 31, 2025, on international money transfers paid for with cash, money orders or similar instruments.
What it means
A 2025 federal law added Internal Revenue Code section 4475, a 1% excise tax on certain remittance transfers made after December 31, 2025. The sender owes the tax, and the remittance provider collects it and reports it to the IRS on Form 720. It applies when the transfer is funded with cash, a money order, a cashier's check or a similar physical instrument. Transfers funded from an account at a financial institution or with a U.S.-issued debit or credit card are not subject to the tax. Proposed IRS rules from April 2026 say the tax is figured on the amount transferred, not on fees, and may change when final. If a canceled transfer's tax is not refunded by the provider, the sender may be able to claim it from the IRS.
Example
Paying cash at a store to send $300 abroad adds a $3 federal tax. Sending the same $300 from a U.S. bank account or with a U.S. debit card adds no federal excise tax.
Illustrative numbers only. Your situation will differ.