Quick Summary
Starting January 1, 2026, the U.S. will introduce a 1% remittance tax on certain outbound money transfers funded by cash, money orders, cashier’s checks or any other similar physical instrument.
Good news: Transfers funded through a bank account, debit card (linked to a regulated bank account), or credit card are not expected to be subject to this tax. That means when you fund your transfers using these methods with Pangea, the 1% remittance tax should not apply.
What is the remittance tax?
Starting January 1, 2026, the United States will implement a 1% excise tax on certain outbound money transfers, also known as remittances. This means that when money is sent from the U.S. to other countries using specific payment methods, an additional 1% tax will apply.
The tax, part of the “One Big Beautiful Bill Act” passed in July 2025, will be collected directly by remittance providers (such as banks or money transfer companies) and deposited with the IRS.
Who pays the remittance tax?
The sender, the person in the U.S. sending money abroad—is responsible for paying this tax. The tax does not affect the recipient, meaning your family or friends will still receive the same amount transferred to them.
What transfer will be taxed?
Not all money transfers will be taxed. According to the law, the remittance tax affects only transfers made via :
- Cash
- Money orders
- Cashier’s checks
- Other Similar physical instruments (as determined by the Treasury Secretary)
Transfers funded through an account at a regulated financial institution—for example, when paying with a bank-issued debit card, credit card, or directly from your U.S. bank account—are not expected to be subject to this tax.
What transfers are exempt from the remittance tax?
Many digital transfers are excluded from this new tax, including:
- Transfers funded by U.S. bank-issued debit cards or credit cards.
- Transfers from accounts at financial institutions subject to Bank Secrecy Act (BSA) reporting, which includes U.S. banks.
- Electronic transfers, such as ACH transactions, bank wires, or app-based transfers.
If you already send money through Pangea, there’s good news: your transfers won’t be affected when you use a bank-linked account or bank-issued debit card or credit card to fund them. The new tax mainly impacts people who still rely on cash-based transfer services.
When will the remittance tax go into effect?
The remittance tax will take effect on January 1, 2026.
Who does the remittance tax apply to?
Originally, early drafts of the law excluded U.S. citizens. However, the final version includes everyone: U.S. citizens, permanent residents, and visa holders. If you live in the U.S. and send money abroad using a taxed method, this law applies to you.
How will the remittance tax be collected?
You won’t need to file anything separately with the IRS. Instead, the remittance provider (bank, money transfer company, or financial institution) will collect the 1% tax from you at the time of transfer. They are then responsible for remitting the tax to the IRS.
For example:
- If you send $500 using a cash-based transfer, an extra $5 will be charged as remittance tax.
- If you send $2,000 using a cashier’s check, the tax would be $20.
How to avoid or minimize the tax?
The simplest way is to use a digital money transfer service like Pangea and fund your transfers with one of the following bank-linked payment methods:
- Send money directly from your U.S. bank account
- Use a debit card linked to a U.S. bank account
With Pangea, you’ll enjoy:
- Competitive exchange rates and low fees
- Fast, reliable transfers to 22+ countries
- Transfers not expected to be subject to the 1% remittance tax when funded through a bank-linked account
Key Takeaways
If you already use digital remittance apps like Pangea, you won’t be affected when using the right payment methods. The tax mainly impacts those who still use cash-based transfer services.
- The U.S. will introduce a 1% remittance tax starting January 1, 2026
- Applies to cash, money orders, and cashier’s checks
- Digital transfers (bank-issued debit card, credit card, bank account, app-based) are exempt.
- The tax applies to all U.S. senders (citizens, residents, visa holders).
- Pangea users won’t be impacted—your transfers should remain tax-free when funded through a bank-linked account or card.
Conclusion
Remittances carry special meaning because behind every transfer is a story of families and friends staying connected across borders. Costs matter, and even small changes can impact how much support loved ones receive.
The new tax is one more reason to go digital. By relying on digital money transfer providers, senders can avoid unnecessary charges, enjoy great exchange rates, and ensure their money reaches family safely and quickly.
At Pangea, we’re here to make the transition easier, helping you keep your transfers tax-free when you send digitally, while still enjoying competitive rates and reliable delivery.
Frequently Asked Questions about the U.S. Remittance Tax (2026)
1. What is the U.S. remittance tax?
It’s a new 1% tax on certain money transfers sent abroad from the U.S. starting January 1, 2026, when funded by cash, money orders, or cashier’s checks.
2. Who has to pay the remittance tax?
The sender in the U.S. pays the tax. Your family abroad still receives the full transfer amount.
3. Are digital transfers taxed?
Transfers funded with debit cards (linked to a regulated bank account), credit cards, U.S. bank accounts, or digital remittance apps like Pangea are exempt.
4. How can I avoid paying the remittance tax?
The easiest way is to switch to digital transfers. With Pangea, you can send money securely, see your rate and fees upfront, and avoid the 1% tax when you send online with your bank-issued debit card, credit card, or bank account.
5. When does the remittance tax start?
The tax goes into effect on January 1, 2026.
About Pangea
Pangea is a trusted digital money transfer platform that makes sending money abroad simple, reliable, and cost-effective. With just a few taps, people can send money to Mexico, the Philippines, and over 22 other countries—delivered directly to bank accounts, debit cards, or more than 70,000 cash pickup locations.
Trusted over 10 million times, Pangea offers a secure, mobile-first experience with low fees, great exchange rates, and fast delivery. Pangea is committed to empowering financial freedom across borders and helping immigrants and cross-border families manage their financial lives with confidence.
DISCLAIMER – This content is for informational purposes only. Pangea and its affiliates do not provide financial, legal, investment or tax advice
