The 1% tax that's about to hit every immigrant who sends money home from the US

If you send money home — to Lagos, Manila, Guatemala City, Kampala, Kingston, São Paulo, or anywhere else — January 1, 2026 changed the game. For the first time in American history, the federal government is taxing remittances. A 1% excise tax now applies to cash, money orders, and cashier's checks sent from the US to foreign countries. It's part of the "One Big Beautiful Bill Act" signed into law in July 2025, and the IRS has already issued proposed regulations for enforcement.

One percent sounds small. It is not. The US is the world's largest sender of remittances — an estimated $93 billion went abroad through formal channels in 2024 alone. In New York City, residents send approximately $10 billion to relatives overseas and already pay more than $500 million in transfer fees. This tax adds another $100 million on top of that, just from one city.

Who it hits hardest: this tax applies to everyone — green card holders, visa holders, citizens, undocumented workers. The earlier version targeted non-citizens at 5%, then 3.5%. The final version was reduced to 1% but expanded to all senders. Research from ODI estimates this will reduce formal remittance flows by approximately 1.6%. Mexico faces the biggest hit — over $1.5 billion annually. India, the Philippines, China, Guatemala, the Dominican Republic, and El Salvador will all feel significant impacts.

Here's what matters for you right now: transfers sent digitally through regulated financial institutions under the Bank Secrecy Act are generally exempt. That means if you walk into a Western Union or MoneyGram and pay cash, you will be taxed. If you send through a bank app or regulated digital platform, you may not be. Mexico's President has launched a government-backed card called Finabien specifically to help Mexican nationals in the US avoid the tax.

The Zenzo take: this is not just a policy story — it's your story. Every dollar taxed is a dollar that doesn't reach your mother, your child's school fees, or your family's groceries. Know your exemptions. Go digital. And talk to your community about what's changing — because the people who don't read the fine print are the ones who pay the most.