The 1% excise tax on cash remittances from January 1, 2026 (IRC 4475)
Updated October 2026
Section 70604 of P.L. 119-21 added IRC 4475: “There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer.” It applies to transfers made after December 31, 2025.
1. Check the payment method. The tax applies “only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument.” 2. Find the base. Under the IRS proposed regulations (April 13, 2026) it is everything the recipient will receive, including a provider’s promotional bonus, but not the provider’s fee, state taxes or the federal tax itself. 3. Multiply by 1%.
The IRS example, reproduced. A sender pays cash at a store acting for a provider to send $1,000. The provider adds a $5 bonus and charges a $20 fee; the state charges $12. The base is $1,005 and the tax is 1% × $1,005 = $10.05. At the counter the sender pays $1,000 + $20 + $12 + $10.05 = $1,042.05.
| Payment to the provider | 1% tax? | Rule |
|---|---|---|
| Cash | Yes | IRC 4475(c) |
| Money order or cashier’s check | Yes | IRC 4475(c) |
| A paycheck the provider cashes, then sends | Yes, treated as cash | Proposed regs, Example 3 |
| Transfer from a bank or credit union account | No | IRC 4475(d)(1) |
| U.S.-issued debit or credit card | No | IRC 4475(d)(2) |
| Personal check, general-use prepaid card, store gift card | No | Proposed regs, Example 2 |
| Any transfer of $15 or less | No | Small-value exclusion (Regulation E) |
There is no exemption for U.S. citizens and no credit or refund for the sender in section 4475. The proposed rules also have an anti-abuse rule for providers that hand out prepaid cards to cash customers to avoid the tax.
The sender owes the tax. The remittance transfer provider (a money transmitter such as a storefront agent network or app, or a bank sending on your behalf) must collect it at the time of the transfer and pay it to the IRS. If the provider fails to collect it, the provider is liable. Providers report on Form 720, the quarterly federal excise tax return, with semimonthly deposits; the first was due January 29, 2026. Notice 2025-55 gave limited penalty relief for deposits in the first three quarters of 2026, and Notice 2026-52 extended it.
Enter the amount you are sending, how you pay, and the fee, bonus and any state charge shown on the provider’s prepayment disclosure. Federal rules require providers to show these before you pay. Enter how many similar transfers you make a year to see the yearly cost.
| Sender (2026) | Tax per transfer | Tax per year |
|---|---|---|
| $300 a month in cash at a store counter | $3.00 | $36.00 |
| $300 a month from a bank account in an app | $0.00 | $0.00 |
| $500 a month paid with a U.S. debit card | $0.00 | $0.00 |
| $1,000 by money order, four times a year | $10.00 | $40.00 |
| $800 from a paycheck cashed at the provider, monthly | $8.00 | $96.00 |
| $15 in cash, weekly | $0.00 | $0.00 |
Moving the same $300 a month from cash to a bank account or debit card saves $36 a year in this tax alone.
Provider fees and exchange-rate markups, which usually cost more than the 1% tax; state remittance fees beyond the one you enter; transfers within the United States, which are not remittance transfers; and business-to-business payments. The proposed regulations may change before they are final; providers may rely on them for transfers after December 31, 2025 if they follow them in full.
Thinking all international transfers are taxed. Only cash-type payments are. Computing 1% on the fee too: the fee is not part of the base. Assuming a check is always cash: a personal check is not taxed, but a check the provider cashes for you is. Splitting a transfer into many small ones: only $15 or less is excluded, and the fee for each transfer usually costs more than the tax saved.