Treasury and IRS unveil 1 percent remittance tax rules. Starting January 1, 2026, a new excise tax will apply to money sent abroad via cash, money orders, or cashier's checks. The sender bears the tax liability, while remittance transfer providers must collect and deposit funds semimonthly. The tax does not apply to transfers funded by credit or debit cards or bank account withdrawals. With roughly 600 money services businesses operating through 500,000 agents nationwide, this impacts a significant market. Foreign remittances averaged 520 billion dollars annually from 2019 to 2024, with recent volumes declining to 365 billion in 2024. Remittance providers, banks, and credit unions must now comply with quarterly IRS reporting requirements for this new regulatory framework.
