Watch Out For The 2026 Remittance Tax On Overseas Transfers

Starting 2026, One Big Beautiful Bill adds a 1% remittance tax (IRC Section 4475) on certain remittance transfers outside the United States.

The person sending the money is responsible for paying the 1% tax. There are no exceptions in the final law. Prior versions of the draft bill would have exempted U.S. citizens.

The 1% tax shall apply only to any remittance transfer for which the sender provides cash, a money order, a cashier's check, or any other similar physical instrument to the remittance transfer provider.

Therefore, the 1% remittance tax is not applicable to transfers of virtual currency such as cryptocurrencies or digital assets.

The 1% tax shall not apply to any remittance transfer for which the funds being transferred are –

(1) withdrawn from an account held in or by a financial institution subject to the Bank Secrecy Act requirements, or

(2) funded with a debit card or a credit card which is issued in the United States

Tip: Many immigrants, foreign students or Americans with residences or children overseas routinely remit funds overseas. To avoid the 1% remittance tax, the sender should use a U.S. bank (subject to Bank Secrecy Act reporting) or debit or credit card.