Understanding the 1% Federal Remittance Tax

Starting January 1, 2026, a new federal law will require a 1% tax on certain international money transfers sent from the United States. Below, we explain when the tax applies, who must pay it, and the options available to customers.

What Is the 1% Federal Remittance Tax?

The 1% Federal Remittance Tax is a U.S. tax that applies to some international money transfers sent outside the country when paid in cash or similar forms, such as money orders or cashier’s checks. The tax is collected at the time of the transfer and charged to the sender.

When Does the 1% Tax Apply?

The 1% tax generally applies if all of the following conditions are met:

  • The money transfer is sent outside the United States
  • The transfer is paid in cash or a cash-equivalent payment method
  • The transaction falls within the scope defined by federal law

Note: Not every money transfer will be subject to this tax. Applicability depends on how you pay and other specific transaction details.

Which Payment Methods Are Subject to the Tax?

The tax may apply if you pay with:

  • Cash
  • Money orders
  • Cashier’s checks
  • Other cash-equivalent instruments

If you use an account-based or digital payment method, the tax does not apply.

Who Pays the Tax?

The person who sends the money is responsible for paying the tax. If the tax applies, it will be clearly displayed and collected when you complete your transfer.

Customer Options Available

You may have different options depending on how you choose to send money:

  • Digital & Account-Based Options — If you use an account-based or digital payment method, such as a Barri/DolEx account, you may avoid the 1% tax if you qualify.
  • Cash-Based Transfers — If you pay with cash and meet the conditions listed above, the tax will apply.

Our team is available to help explain your options so you can choose what works best for you.

Examples

  • Example 1: A customer sends an international money transfer paid in cash. The 1% tax applies.
  • Example 2: A customer sends an international transfer funded through an eligible account-based method. The 1% tax does not apply.

The actual tax you pay will depend on the details of your transaction.

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Important Disclosure

This information is provided for general educational purposes only and does not constitute tax advice. Tax applicability depends on individual transaction details and applicable law. Additional conditions may apply.