The 1% US remittance transfer tax: does it apply to business payments?

A new 1% federal tax on remittances started on 1 January 2026. It caused worry among companies paying people abroad. In practice it targets transfers funded with cash and similar instruments, and most account-funded business payments fall outside it.

William Sunjo M.Operations and compliance editor

Published: 24 August 2026
Reading time: 2 min read

The One Big Beautiful Bill Act, signed in July 2025, added a 1% federal excise tax on some remittance transfers out of the US. It applies to transfers made from 1 January 2026. Headlines about a "remittance tax" made many businesses that pay people abroad wonder whether every international payment now costs an extra 1%. For most of them, it does not.

What the tax covers

The tax applies to a remittance transfer when the sender gives the provider:

cash,
a money order,
a cashier's check,
or a similar physical instrument.

The provider collects 1% of the amount from the sender and pays it to the Treasury.

What is exempt

The law exempts transfers that are:

funded from an account the sender holds at a financial institution, or
funded with a debit or credit card issued in the United States.

In practice this means walk-in cash remittances are taxed, and transfers sent from a bank or similar account are not.

What this means for businesses

Payment	Taxed?
Company pays a supplier abroad by wire from its business account	Generally no
Company pays contractors abroad in a batch from its account balance	Generally no
Company pays an overseas bill with its US business card	Generally no
Someone hands cash to a money transfer agent to send abroad	Yes, 1%

The rules use a consumer-protection definition of remittance transfer in parts, and detailed IRS guidance governs how providers apply it. If your company sends money in an unusual way, for example by buying money orders, ask your provider how it treats those transfers.

What to check

Fund international payments from your business account, not with cash or money orders.
Read the fee breakdown on your provider's confirmation. A 1% tax line should not appear on account-funded transfers.
Keep payment records showing the source account. That is your evidence the exemption applies.

Our guide to the true cost of international payments covers the fees that do apply to most transfers: the transfer fee, the FX markup and intermediary bank charges.

This article explains the rules in general terms. It is not tax advice.

On Rivet

Payouts on Rivet are funded from your company's account balance, with the full cost shown before you approve. See Payouts.

Questions people ask

What is the US remittance transfer tax?

A 1% federal excise tax on remittance transfers where the sender gives the provider cash, a money order, a cashier's check or a similar physical instrument. It applies to transfers made after 31 December 2025.

Does the remittance tax apply to wire transfers from a bank account?

Transfers funded from an account held at a financial institution are exempt under the law. A wire or international transfer paid from your business bank account is generally not taxed.

Who pays the remittance tax?

The sender, through the provider. The remittance transfer provider collects the 1% when the transfer is made and remits it to the Treasury on a quarterly basis.

Does the remittance tax apply to card-funded transfers?

Transfers funded with a debit or credit card issued in the US are exempt under the law.

Sources

Written by

William Sunjo M.

Operations and compliance editor

William covers what happens once a company starts moving money: getting the business verified, paying contractors and suppliers abroad, and keeping card spend under control. William writes for the founder or finance lead who has to make it work this week, and links every rule cited to the text it comes from.