How the New Remittance Transfer Tax Could Affect Your Business and Personal Transfers
The One Big Beautiful Bill passed earlier this year and introduced several significant tax changes, one of which is the new Remittance Transfer Tax. This tax has implications for individuals and businesses that send money to recipients outside the United States. Although enforcement will not be aggressive until late 2026, it is important to understand how this new tax works and which transactions are affected.
What Is the Remittance Transfer Tax?
The Remittance Transfer Tax is a 1% excise tax applied to certain transfers of funds from individuals or businesses in the United States to foreign recipients. The tax applies specifically when the sender uses:
- MoneyGram or Western Union Transfers
- Money orders
- Cashier’s checks
The tax is paid by the sender, not the recipient.
Who Is Most Affected by This New Tax?
This tax impacts a broad range of taxpayers, including:
Business Owners Who Pay Overseas Workers
Many businesses hire virtual assistants or contractors in other countries for tasks such as:
- Website development
- Administrative support
- Customer service
- Email management
- General virtual assistant duties
Individuals Sending Money to Family Overseas
Immigrants supporting family members in foreign countries will be subject to this tax when sending funds via non-exempt payment methods.
U.S. Citizens Sending Financial Support Abroad
Gifts, contributions, or personal support sent to relatives or friends overseas may also fall under this tax if sent through non-exempt methods.
Businesses Paying Foreign Vendors
Companies making international payments to vendors will also see this tax applied unless the transaction is exempt.
Which Transfers Are Exempt?
Not all international transfers trigger the new tax. Several key types of transactions remain exempt:
- Wire transfers initiated through your bank
- ACH payments
- Transfers made through banking mobile apps
- Transfers of virtual currency or cryptocurrency
These exemptions mean that many modern, bank-based payment methods avoid the excise tax entirely. Exemption does not include transactions through third-party sites such as Wise, Fiverr, Upwork, or other platforms that transfer funds internationally.
How the Tax Will Be Collected
Taxpayers do not need to manually calculate or remit this tax. Instead, the entity facilitating the transfer—such as a online platforms, money service businesses, or other financial institution—will collect the tax at the time the funds are sent.
Enforcement Timeline
While the tax will go into effect starting in 2026, regulators, including the IRS and FinCEN have indicated that heavy enforcement will not begin until the fourth quarter of 2026. This gives individuals and businesses time to adjust their payment methods and ensure compliance.
Final Thoughts
If you send money overseas or work with foreign contractors, now is the time to review how those payments are being made. Switching to exempt methods such as bank-based wire transfers or ACH payments may help you avoid the 1 percent excise tax altogether. As international payments become more common for both personal and business purposes, understanding the Remittance Transfer Tax is an important part of maintaining compliance with the latest federal rules.
If you have recurring payments to foreign individuals or businesses, consider speaking with a tax professional to ensure you are using the most efficient and compliant payment channels.
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