Money & Finance › Payments & money movement › Cross-border payments: moving money between countries
Remittances and the 1% US remittance tax (2026)
Tax since Jan 1, 2026· Concept
Fact, law or dataA rule, statute, definition or measured number.
Money migrants send home, mostly small transfers to family; since January 1, 2026 the US taxes cash-funded transfers at 1%.
See it on the Money & Finance map →How it works
Officially recorded remittances to low- and middle-income countries were about $685 billion in 2024 (World Bank estimate), and the US is the largest source. Transfer firms such as Western Union, MoneyGram and Remitly take cash or a card in the US and pay out locally from pre-funded accounts. Sending $200 costs about 6% on average worldwide. A 2025 law added a 1% excise tax when the sender pays with cash, a money order or a cashier's check; bank-account and US card transfers are exempt.
Why it matters
For Honduras, El Salvador and Guatemala, remittances equal roughly a fifth of GDP or more, so fees, taxes and US immigration policy directly move household incomes there.
Facts, rules and data
World Bank and KNOMAD migration briefs, the World Bank's Remittance Prices Worldwide database, central-bank series such as Banxico's, and tax code section 4475 with IRS proposed rules from April 2026.
Debates and risks
How much flows through informal channels the statistics miss, and whether the 1% tax pushes cash senders toward bank accounts, cards, crypto or couriers.
Connections (4)
▸Remittances and the 1% US remittance tax (2026) are the retail side of Cross-border payments: moving money between countriesFact, law or data
The connection
Remittances are the small, frequent end of cross-border payments: often a few hundred dollars from a worker to family. Transfer companies collect in the US, pay out abroad from pre-funded local accounts, then settle with partners in bulk through correspondent banks, so a single $300 transfer rarely moves as its own wire.
When and why
The largest US corridors run to Mexico, Central America, India, the Philippines and China; UN and G20 goals aim to cut average costs to 3% by 2030.
How we know
World Bank remittance data, CFPB remittance-rule exams, and G20 and Financial Stability Board progress reports on cross-border payment targets.
Debates and risks
Whether the 3% cost goal for 2030 is reachable when averages sat around 6% in the mid-2020s.
▸Remittances and the 1% US remittance tax (2026) paid with cash face a 1% tax under One Big Beautiful Bill Act (2025)Fact, law or data
The connection
Section 4475, added by the 2025 law, imposes a 1% excise tax on remittance transfers paid for with cash, a money order, a cashier's check or a similar physical instrument. Transfers funded from a US bank account or a US-issued debit or credit card are exempt. The provider collects it from the sender and passes it to the IRS.
When and why
Applies to transfers after December 31, 2025; earlier House drafts proposed 5% and then 3.5%; the IRS released proposed rules in April 2026.
How we know
Internal Revenue Code section 4475, IRS Notice 2025-55 on deposit penalty relief, and the IRS proposed regulations of April 2026.
Debates and risks
How much it will raise, and whether it mainly pushes unbanked senders into bank accounts or into informal channels, is unknown.
▸Remittances and the 1% US remittance tax (2026) are a growing use for Stablecoins: crypto tokens pegged to a currencyMainstream view
The connection
A sender buys a dollar stablecoin such as USDT or USDC in an app and sends it to the recipient's wallet in minutes; the recipient holds the dollars or sells them for local currency through an exchange or agent. Where currencies are weak or banks costly, this can beat a transfer company, though cash-out fees can erase the gap.
When and why
Strongest in Latin America, the Philippines, Nigeria and Turkey in the 2020s; MoneyGram has offered USDC-based transfers since 2022.
How solid is the link?
Chainalysis crypto-adoption reports, transfer companies' announcements, and central-bank and IMF studies of stablecoin flows; precise remittance shares are estimates.
Debates and risks
How large the stablecoin share of remittances really is, and whether it undermines local currencies and capital controls, as some central banks fear.
▸Remittances and the 1% US remittance tax (2026) are a steady, crisis-resistant part of Global money flows: how capital moves between countriesMainstream view
The connection
Migrants send part of their pay home in small transfers, about $685 billion to low- and middle-income countries in 2024 (World Bank estimate). Unlike hot money, these flows tend to hold up or even rise when the home country suffers a crisis, because families need help. In Guatemala, Honduras and Nepal they exceed 15% of GDP.
When and why
The US is the largest sending country; Mexico received about $65 billion in 2024. A 1% US excise tax on cash-funded transfers began January 1, 2026.
How solid is the link?
World Bank and KNOMAD migration briefs, central-bank data such as Banco de México's, and IMF balance-of-payments records.
Debates and risks
Informal channels like hawala or carried cash go unrecorded, so true totals may be much higher; the 2026 tax's effect is not yet clear.