In 2026 two things matter when you send money abroad: a new 1% federal tax on some transfers, and long-standing federal rights. Rules are as of October 13, 2026.
What changed in 2026
A federal excise tax of 1% on certain remittance transfers (Internal Revenue Code section 4475) applies to transfers made after December 31, 2025. The sender owes the tax, and the transfer company collects it and reports it to the IRS on Form 720.
The IRS and Treasury issued proposed regulations in April 2026 (REG-114499-25, Federal Register). They are proposed, not final, but senders and providers may rely on them for transfers after December 31, 2025 until final rules apply. Notice 2026-52 extended providers' relief from the failure-to-deposit penalty (first given in Notice 2025-55) until final regulations apply.
Which transfers the tax applies to
The law covers cash, money orders, cashier's checks and similar physical instruments. The April 2026 proposed rules list cash, money orders, cashier's checks and traveler's checks. They also treat a transfer as cash-funded when a check you cash at the provider pays for it. Transfers funded from an account at a financial institution, or with a U.S.-issued debit or credit card, are outside the tax (REG-114499-25).
- Transfers of $15 or less are not remittance transfers under federal rules (Regulation E), and the proposed tax rules keep that exclusion.
- Under the proposed rules, the 1% is figured on the amount sent to the recipient, not on the fees. A cash-funded $100 transfer carries $1 of tax.
Who pays and what you will see
The sender pays, the provider collects. If a provider does not collect the tax, the provider owes it. Federal rules generally require providers to tell you about fees and taxes before you pay and on your receipt (12 CFR 1005.31; CFPB), so check that any tax is listed before you confirm.
Your federal rights when you send money abroad
The CFPB's Remittance Rule (Regulation E, 12 CFR 1005.30 and following) covers consumer transfers sent abroad for personal, family or household purposes.
- Disclosures. Before you pay, the provider must disclose its fees, the taxes it collects, the exchange rate and the amount to be received, and give a receipt showing the date the money will be available and your error and cancellation rights (1005.31). The amount may exclude the recipient bank's fees or foreign taxes, and may be an estimate.
- 30-minute cancellation. You can cancel if the provider gets your request within 30 minutes after you pay and the money has not been picked up or deposited. The provider must refund the money you sent and its fees, and taxes where the law allows, within three business days (1005.34). If the 1% federal tax was not refunded on a canceled or expired transfer, the sender may be able to claim it from the IRS (Form 8849, Schedule 6). Scheduled transfers have a different deadline.
- Error resolution. Report an error within 180 days of the date the money was to arrive. The provider must investigate and has 90 days to decide, then report the result within three business days (1005.33). Errors include a wrong amount charged or money not arriving by the disclosed date, with some exceptions, such as delays outside the provider's control.
Understanding the real cost
The fee is only part of the price. A provider may use an exchange rate that differs from the mid-market rate, and that difference is part of your cost (CFPB).
- Check a daily reference rate (may differ from live rates) on a page such as USD to MXN, USD to PHP, USD to VND or USD to INR, or use the currency converter.
- Multiply what you send by that rate, compare it with the amount promised, and add the difference to the fee and any tax.
Made-up example: 3,400 units at the reference rate but 3,332 promised is a 2% loss, about $4 on $200, plus fees.
To add up the fee, the exchange-rate loss and the 1% tax for your own transfer, and to compare it with World Bank averages from the U.S., use the remittance fee calculator.
Key numbers for 2026
| Item | Figure | Source |
|---|---|---|
| Remittance excise tax rate | 1%, transfers after Dec. 31, 2025 | IRS Form 720 instructions |
| Small-transfer exclusion | $15 or less | REG-114499-25 |
| Cancellation window | 30 minutes after payment | CFPB |
| Error report deadline | 180 days | CFPB |
Complaints and scams
If something goes wrong, tell the provider first, then you can submit a complaint to the CFPB or call (855) 411-2372. To report a scam, use ReportFraud.ftc.gov.
The FTC warns that wire transfers work like cash and are hard to reverse (FTC). Common scams:
- A caller says a relative has an emergency and needs money now.
- A fake check you are asked to deposit and send part back.
- Someone claiming to be from a government agency who demands a transfer. The FTC says government agencies will not ask you to pay by wire transfer.
If you already sent money, contact the provider or bank immediately and ask whether it can be reversed.
What is still pending
Final regulations have not been issued as of 2026-10-13. Final rules would apply from the calendar quarter beginning on or after their publication and could change details above.
Frequently asked questions
Does the 1% tax apply to every transfer abroad?
No. It applies to transfers funded with cash, money orders, cashier's checks and similar instruments (traveler's checks and checks cashed at the provider under the proposal). Account-funded and U.S. debit or credit card transfers are outside it.
Does the person who receives the money pay the tax?
No. The sender owes it and the provider collects it.
Can I cancel a transfer I just sent?
Often yes, within 30 minutes of payment if the money has not been picked up or deposited. The provider must refund the money and fees, and taxes where the law allows, within three business days. An unrefunded 1% tax may be claimable on Form 8849, Schedule 6.
General information only, not legal, tax, financial or immigration advice. CentDaily is not affiliated with any government agency or money transfer company. Rules are as of October 13, 2026 and may change when final IRS rules are issued.
Written by the CentDaily editorial team with AI assistance; facts checked against the official sources listed in this guide and in the Sources box below. General information, not legal, tax or financial advice.