Today's Signal
The 1% cash remittance tax is live — and easy to avoid
*The U.S. federal excise tax on cash-funded international transfers has been live since January 1. Funding the same transfer from a bank account or card avoids it entirely.*
Since January 1, 2026, the U.S. has charged a 1% federal excise tax on international money transfers — but only on transfers funded with cash, money orders, or cashier’s checks. IRC Section 4475, signed into the One Big Beautiful Bill Act in July 2025, started in Congress as a proposed 5%, dropped to 3.5%, and landed at 1%.
Transfers funded digitally — bank account, debit card, or credit card — are exempt under the law. Providers collect the tax automatically at the counter, so there’s no separate line item; it’s baked into the cash transaction. On $500 sent in cash that’s $5 lost every single time, money that never reaches the people back home.
For diaspora households still routing through storefront agents out of habit, switching the funding source — not the provider — is the whole move. The tax is small per transfer but it’s a recurring leak: the kind of cost that stays invisible until someone points at it.
Source: TWB analysis, IRC Section 4475 / One Big Beautiful Bill Act, May 28, 2026.