Tax Planning

Navigating the 1% Remittance Transfer Tax Under OBBB: What Individuals and Businesses Need to Know

A new excise tax under the One, Big, Beautiful Bill (OBBB) now imposes a 1 % charge on certain remittance transfers beginning January 1, 2026—this article breaks down who is affected, how it works, and how to plan to avoid surprises.

By NomadicTax Research Team • 5-8 min read • May 19, 2026

## What is the Remittance Transfer Tax? Beginning **January 1, 2026**, the OBBB introduces a **1 % excise tax** on remittances sent from the U.S. to foreign recipients when the sender uses cash, money orders, cashier’s checks, or similar physical instruments. Under the new rule, the **sender** is liable for the tax. In many cases, remittance transfer providers will collect it at the point of transaction. If they don’t, the provider becomes liable. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) ## Who Must Comply? - Individuals or businesses that send remittances using physical instruments to parties outside the U.S. - Remittance transfer providers who facilitate such transfers—they must collect the tax when applicable, make **semimonthly deposits**, and **file quarterly returns** with the IRS. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) - If the provider doesn’t collect tax, they take on responsibility. Senders can’t shift liability in those cases. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) ## Key Dates & Reporting - Remittances made on or after **January 1, 2026** are subject. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) - First semimonthly deposits due by **January 29, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) - Quarterly returns must be filed on **Form 720** (Quarterly Federal Excise Tax Return). ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) ## Examples to Illustrate - **Example 1**: Maria sends $1,000 cash to a loved one in Mexico via a remittance provider. She pays $10 in remittance tax (1 %). - **Example 2**: John uses his bank to send a cashier’s check overseas. The bank should collect the tax at time of transaction; if they fail to, the bank must remit to the IRS. ## Planning Tips to Avoid Surprises - If you're frequently sending remittances, **budget** for the extra 1 % cost. - Use **electronic transit methods** (wire transfers, ACH) instead of physical payment instruments when possible—they are **not subject** to this tax. - Remittance providers should ensure **systems are updated** to collect the tax appropriately, deposit on time, and file accurate return forms. - Maintain documentation: proof of how payment was made, remittance receipts, and records of any discussions if tax wasn't collected but later owed. ## What Is Still Proposed vs. Effective - **Effective**: Tax applies to remittances sent using qualifying physical instruments from Jan 1, 2026. Sender liability and provider collection/deposit/return filing rules are established. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) - **Proposed Regulations**: The IRS has issued proposed rules to clarify definitions (which physical instruments trigger the tax), scope of what payments are covered, etc. These are **not yet finalized**. Public comments were requested by **June 12, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai)) ## Implications for Digital Nomads & Cross-Border Workers Digital nomads sending occasional remittances to foreign family should check how their payments are sent. If using cash, checks, or money orders, this tax could apply. For frequent senders, better to use bank wire or online payment platforms. Domestic businesses or freelancers contracting abroad should review payment terms: if they pay foreign contractors via checks or money orders, they may have unexpected costs or compliance burden. ## Conclusion This new remittance tax adds a **1 % cost** on many cross-border payments made using physical payment instruments, with the burden falling initially on the sender but frequently collected by providers. Planning ahead—especially with payment methods—can help avoid surprises.