Tax Planning
Planning Your Finances Under the New Remittance Transfer Tax Rules
A 1 % remittance transfer tax took effect in 2026 under the One, Big, Beautiful Bill—this article explains who is affected, what counts, and how to optimize your payments.
By NomadicTax Research Team • 5-8 min read • May 21, 2026
## What Is the Remittance Transfer Tax?
The **One, Big, Beautiful Bill (OBBB)** introduced, effective **January 1, 2026**, a 1 % excise tax on remittance transfers sent from the U.S. to foreign recipients when the sender uses *cash, money order, cashier’s check,* or similar **physical instruments**. ([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 Rules
- The **sender** is responsible for the tax. If it's not collected at transfer, the transfer 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))
- Providers must **collect** the tax, **make semimonthly deposits**, and **file quarterly returns** using Form 720. ([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))
- Two important clarifications are now proposed in IRS/Treasury regulations, such as what types of physical instruments trigger the tax and how thresholds are calculated. The public comment period ends **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))
## Who Is Affected?
| Party | Scenario |
|--|--|
| Individual sending a wire transfer using a check | **Yes.** Check is a physical instrument—subject to the 1 % tax. |
| Using an app or wire directly from bank account | **No**, generally excluded unless physical instrument involved. |
| Remittance provider failing to collect tax | Liability shifts to provider. |
## Planning & Compliance Strategies for Individuals
- **Choose electronic methods** like ACH or bank wires when possible—these **avoid** the 1 % excise tax.
- If you use a physical instrument, ask about transparency in how the tax is collected so there are no surprises.
- Keep good records showing when you used a physical instrument, who paid the fee, and confirmations from the provider—even if they collect the tax, in case of later audit.
## What Tax & Remittance Providers Should Do
- Update systems to identify **all physical instrument methods** within scope.
- Train employees and update contracts to ensure collection, reporting, and deposit obligations are met.
- Track semimonthly deposit deadlines and Form 720 schedule for proper filing.
- Monitor proposed regulations to ensure your interpretation aligns with final rules. ([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))
## Practical Example
Sarah sends \$1,000 cash in person to a provider who forwards to a family member abroad. Under the new tax, she owes \$10 (1 %) in tax. If she instead uses a bank wire from her account (no physical instrument), she pays **no excise tax**. |
## Action Steps You Should Take Now
1. Assess your typical remittance methods.
2. Switch to **non-physical** instruments if you regularly send funds abroad.
3. If you're a remittance provider, check or upgrade your system and training to stay compliant.
4. Review the proposed regulations before June 12, 2026, and consider submitting comments if you find any inconsistencies.
Staying ahead of this change will help avoid surprises at tax time. Understanding what triggers the tax, and making smart choices, means keeping more of your funds intact.