US Proposes 1% Tax on Cash Remittances Sent Abroad Starting 2026

The US Treasury and the IRS have proposed a new 1% excise tax on outbound remittances involving physical instruments such as cash, money orders, and cashier's checks. Scheduled to take effect on January 1, 2026, this regulation targets specific cross-border transfers established under the "One Big Beautiful Bill Act." While the sender is legally liable for the tax, remittance service providers will be responsible for collecting and remitting the funds to the IRS on a quarterly basis. Notably, the tax does not apply to transfers made directly from bank accounts or via credit and debit cards. This move is expected to increase the cost of sending money for cash-reliant populations, potentially impacting the transaction volumes of major providers like Western Union (WU). Furthermore, the policy could influence currency inflows to emerging markets, particularly those with high remittance dependencies like Mexico and the Philippines.