The 1% US remittance transfer tax

What the law says

Section 4475 of the Internal Revenue Code puts a 1% tax on remittance transfers, measured by the amount of the transfer ¹. It was added by Public Law 119-21 on 4 July 2025 and applies to transfers made after 31 December 2025 ¹. The IRS refers to the law as the One, Big, Beautiful Bill ².

The terms remittance transfer, remittance transfer provider and sender take their meaning from the Electronic Fund Transfer Act ¹. The Consumer Financial Protection Bureau (CFPB) describes a remittance transfer as an electronic transfer of more than US$15 sent by a consumer in the United States to a person or company abroad ⁵.

Which transfers are taxed

The law taxes a transfer only when the sender gives the provider cash, a money order, a cashier's check or a similar physical instrument ¹. The IRS describes the tax the same way in its October 2025 release ².

Under the proposed regulations, traveler's checks are added to the list ³. Cash means US dollars or foreign banknotes and coins issued by a government or central bank ³. A personal or business check that the provider or its agent cashes and uses to fund the transfer is treated as cash ³.

• Taxed: cash ¹.
• Taxed: money orders and cashier's checks ¹.
• Taxed under the proposal: traveler's checks ³.
• Not taxed: money taken from an account at a covered financial institution ¹.
• Not taxed: a debit or credit card issued in the United States ¹.
• Not taxed under the proposal: cards issued abroad, ACH transfers, personal or business checks sent to the provider, and general-use prepaid cards ³.

How much you pay

The rate is 1% of the amount of the transfer ¹. Under the proposed regulations, the tax is charged on the amount actually sent to the recipient ³. Provider fees and state taxes are left out of that amount, and promotional bonuses are counted in it ³.

The CFPB says providers must show fees and taxes they collect before you pay, along with the exchange rate and the amount expected to arrive ⁵.

What providers must do

The provider collects the tax from the sender and pays it to the Treasury each quarter ¹. If the tax is not collected when the transfer is made, the provider must pay it ¹.

Providers make semimonthly deposits and file quarterly returns on Form 720, the Quarterly Federal Excise Tax Return ². The first semimonthly deposit was due on 29 January 2026 ². The Form 720 instructions, revised June 2026, list the remittance transfer tax as IRS No. 155 ⁴.

In Notice 2025-55 the IRS gave limited relief from failure-to-deposit penalties for the first three calendar quarters of 2026 ². To qualify, a provider must make timely deposits, even if they are calculated wrongly, and pay any shortfall in full by the Form 720 due date for that quarter ².

Status of the rules

The tax itself is in force for transfers after 31 December 2025 ¹. The detailed IRS rules are proposed, not final ³. The notice of proposed rulemaking, titled Excise Tax on Remittance Transfers, carries RIN 1545-BR98 ³. It says taxpayers may rely on the proposed rules for transfers made after 31 December 2025 if they follow them in full and consistently ³.

The proposal does not adopt the Regulation E safe harbor for providers that make 500 or fewer transfers a year ³. That safe harbor exempts small providers from the CFPB remittance rules ⁵.