Remittance Tax in the United States (2026): Federal, State, and Territory Rules

The short answer

The U.S. Remittance Tax is in force. Congress enacted it on July 4, 2025, and it took effect for covered transfers after December 31, 2025. The federal rate is 1% of the amount transferred. It applies when a consumer in a U.S. state, D.C., or U.S. territory sends a qualifying transfer to a recipient in a foreign country and provides cash, a money order, a cashier’s check, or another specified similar physical instrument to the provider. A US$100 covered transfer therefore produces US$1 in federal tax; US$1,000 produces US$10. The tax is based on how the transfer is funded, not the sender’s citizenship or immigration status. The sender owes it and the provider collects it. [1][2]

That answer is incomplete in a few places. Oklahoma charges an additional tiered wire-transmitter fee for covered originations. Nebraska imposes an additional 25% excise tax on certain cash-funded remittances to residents of specified foreign adversary countries. Puerto Rico has a separate 2% charge on covered outbound transfers, including transfers to the mainland United States. The U.S. Virgin Islands imposes 3% on covered transmissions terminating outside the United States and its territories. Tennessee has enacted a further state tax scheduled for January 1, 2027, but a court order blocks its enforcement until litigation ends and provides a further 45-day grace period if the law is upheld. [3][4][5][6][7]

What exactly is being compared?

Every numbered example in the main table assumes one US$100 or US$1,000 personal transfer initiated in the named jurisdiction, paid in physical cash to a licensed nonbank money-transfer provider, and delivered to an individual in an ordinary foreign destination such as Mexico. The amount shown is the federal tax plus any specifically identified state or territorial charge on the transfer amount, subject to the territorial federal-tax uncertainty explained below. Provider fees, foreign-exchange spread, recipient-country charges, and taxes on the provider’s revenue are excluded. For territorial rows marked conditional, the local charge is verified but whether the federal excise tax is collected for an origin in that territory needs further official clarification; the range is the local amount alone through the local amount plus 1%. “No separate charge identified” means no generally applicable additional remittance-principal levy was identified for that jurisdiction under these assumptions; it does not represent a guarantee about every product, fee, or fact pattern.

How to read the table: In an ordinary state, US$100 sent plus US$1 federal tax means the sender pays US$101 before provider fees. In Oklahoma the corresponding figure is US$106; in Puerto Rico US$102–US$103; in the U.S. Virgin Islands US$103–US$104, depending on federal territorial collection. The US$1,000 equivalents are US$1,010, US$1,020, US$1,020–US$1,030, and US$1,030–US$1,040. A Nebraska transfer covered by its special destination rule would cost US$126 or US$1,260 including principal and the two taxes. These totals do not include a transfer fee or exchange-rate markup.

Oklahoma: a flat fee first, then 1% above US$500

Oklahoma’s rule predates the new federal Remittance Tax. For a covered money transmission originating at a licensee or authorized delegate location in Oklahoma, its fee is US$5 up to and including US$500, then US$5 plus 1% of the amount above US$500. Thus a US$100 cash remittance to Mexico attracts US$5 locally plus US$1 federally. On US$1,000, Oklahoma assesses US$5 + 1% × US$500 = US$10, plus US$10 federally. The rule has exceptions, including qualifying bill payments and certain Internet or telephone transfers funded by debit card, credit card, or ACH; the fee is assessed on transfer principal excluding provider fees. It can also attach to qualifying domestic transmissions, where the federal foreign-remittance tax would not. The original Oklahoma income-tax credit applied to tax years ending before January 1, 2017. An older counter notice still appears in the money-transmission statute and rules, but do not assume a current 2026 credit offsets the fee. [3][12]

Nebraska: an unusually high but narrow 25% levy

Effective July 1, 2026, Nebraska added a 25% tax when a licensed provider or delegate makes a qualifying cash-like remittance to a resident of a foreign adversary country as defined by Nebraska’s fixed reference to 15 C.F.R. §791.4 as of January 1, 2026. The statute expressly excepts Cuba and Venezuela and provides an active-duty military/dependent exception. Relevant remaining listed destinations include China (including Hong Kong and Macau), Iran, North Korea, and Russia. The resident criterion matters: the law does not merely say “any transfer routed through one of those countries.” [4][8]

For the US$100 example, US$25 state tax plus US$1 federal tax equals US$26. For US$1,000, US$250 plus US$10 equals US$260. A transfer to Mexico does not satisfy the special destination test, so the ordinary federal US$1/US$10 examples apply. Card or qualifying account-funded transfers are excluded from this Nebraska tax under its statutory terms. Separate sanctions and provider restrictions may independently prevent a particular transfer from being offered; these arithmetic examples are not a statement that every corridor is available. [4]

Puerto Rico: its own 2% charge, including mainland-bound transfers

Puerto Rico’s separate charge is 2% of the money transmitted by a covered money-transmitting business. Treasury guidance states that the special charge is calculated on the transmitted amount, excluding the provider’s service charge; it identifies exceptions such as certain bill payments. Puerto Rico’s law covers qualifying transfers from Puerto Rico to the mainland United States as well as foreign countries. For the table’s cash-funded transfer to Mexico, the certain local charge is US$2 on US$100 or US$20 on US$1,000. If the federal excise tax is also collected for the Puerto Rico-origin transaction, the combined figures are US$3 and US$30. The IRS proposes to include U.S. territories in the federal sender definition, but that proposed definition is not final. [2] For a transfer from Puerto Rico to Florida, the Puerto Rico 2% charge may apply, but the federal foreign-remittance tax does not, because Florida is not a foreign destination. A transfer to Puerto Rico from a mainland state likewise is not a foreign remittance for the federal rule. [5][2]

U.S. Virgin Islands: 3% on qualifying foreign-bound money transmission

The U.S. Virgin Islands’ money-transmission rules provide for a 3% local charge on the amount sent through a covered provider when the transfer originates in the territory and terminates outside the United States and its territories. It began January 29, 2025. The local charge is US$3 on US$100, or US$30 on US$1,000, for the table’s Mexico example. If the federal 1% is also collected on the territory-origin cash remittance, the combined figures become US$4 and US$40. [2] A transfer from the U.S. Virgin Islands to a U.S. state or another U.S. territory does not fit the stated foreign-destination condition for this 3% levy. A later, broader 3% bill passed the local legislature in 2024 but was vetoed; the foreign-destination charge described here is a separate provision. [6]

Tennessee: enacted, but not yet charged

Tennessee’s Public Chapter 1035 provides for US$10 per covered international transmission, plus 2% of the transmitted amount above US$500, with a statutory effective date of January 1, 2027. An August 2026 agreed court order bars the Department of Revenue from enforcing it until a final judicial ruling on constitutionality; if upheld, there is a further 45-day grace period. [13] If enforcement ultimately begins, a US$100 qualifying cash transfer would have US$10 in Tennessee tax plus US$1 federal tax (US$11), and a US$1,000 transfer would have US$10 + US$10 Tennessee tax plus US$10 federal tax (US$30). These are conditional future illustrations, not charges applicable on October 1, 2026 and not a firm January 2027 collection forecast. The law excludes transfers to U.S. territories from the Tennessee levy and has provider-specific provisions. [7]

When is the federal Remittance Tax zero?

Funding changes the result. Under Regulation E, transfers of US$15 or less are excluded from the remittance-transfer definition; the IRS proposed rule adopts that threshold for §4475. The federal statute expressly excludes funds withdrawn from a qualifying financial-institution account and transfers funded with a U.S.-issued debit or credit card. A conventional account-funded digital remittance will therefore ordinarily have US$0 federal Remittance Tax, even if the recipient is abroad. A money order or cashier’s check handed to a remittance provider falls on the taxable side. The April 2026 Treasury/IRS elaboration about traveler’s checks, personal checks, prepaid cards, mixed funding, and tax-base details is a proposed regulation, not a final rule as of this review; the statute remains operative while those details are being resolved. IRS Notice 2026-52 extends limited relief from provider deposit penalties until final regulations apply. That relief neither suspends the tax nor excuses all collection. [1][2][11]

A bank deposit followed by a genuine transfer from the sender’s account differs from handing cash directly to a remittance provider. Still, the IRS proposal contains an anti-avoidance example involving a cash purchase of a prepaid card immediately used for a remittance. Do not market artificial steps as a way to avoid the tax. [2]

The federal tax also hinges on a consumer sender and foreign recipient, using the Electronic Fund Transfer Act definitions. A normal business-to-business payment does not automatically become taxable merely because money crosses a border, and a transfer between U.S. states or between a state and a U.S. territory is not a transfer to a foreign country for this purpose. The April 2026 proposed rule expressly treats the states, D.C., Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, and the U.S. Virgin Islands as domestic destinations, and proposes to count territories as locations from which a consumer can initiate a taxable remittance. The treatment of territory-origin transfers has prompted conflicting public positions, discussed below. [1][2][10]

Why the amount on a receipt may be higher

A tax on the US$100 sent is different from a provider’s transfer fee and foreign-exchange margin. Suppose a provider charges US$4 and funds a US$100 foreign remittance with cash in California. The illustrative checkout amount is US$100 principal + US$1 federal Remittance Tax + US$4 provider fee = US$105. The federal 1% is calculated on the transferred amount, not an assumed US$104 inclusive of the provider fee. Treasury’s proposed examples confirm that amounts not delivered to the recipient, including service fees and state taxes, are excluded from its proposed federal tax base. The actual FX quote, payout currency, and any legally required fee taxes will affect the real receipt. [2]

Frequently asked questions

Did President Trump impose a tax on every overseas wire?

No. The law was enacted during his second term in July 2025 and became effective January 1, 2026. Its federal 1% tax is tied to specified cash or cash-like funding of consumer remittances. It does not tax every international wire or every online transfer. [1]

Does citizenship determine whether the federal tax applies?

No. The final enacted provision does not impose a citizenship or immigration-status test. The qualifying transaction and funding method determine the federal tax. [1]

Is the Remittance Tax the same in every state?

The federal rate, where applicable, is uniform. Additional local rules produce different checkout amounts in Oklahoma and, for narrowly defined destinations, Nebraska. Puerto Rico and the U.S. Virgin Islands also have their own territorial charges. Tennessee’s enacted additional tax is scheduled for 2027 but currently cannot be enforced until the court process and grace period conclude. [3][4][5][6][7]

Are Puerto Rico, Guam, and the U.S. Virgin Islands foreign countries for the federal tax?

No. The federal remittance framework treats U.S. territories as domestic destinations; a transfer from California to Puerto Rico does not become a foreign remittance. Origination in a territory is a separate question. IRS proposed regulations define “State” to include territories for the sender location, while Guam officials reported, shortly before enactment, an assurance that the federal excise tax would not apply there. That Guam statement concerned the then-current bill, and I found no final, territory-specific IRS determination resolving the conflict. For Guam, American Samoa, and the Northern Mariana Islands, the table therefore leaves federal collection open. The Puerto Rico and U.S. Virgin Islands local charges remain independently relevant. [2][5][6][10]

Editorial notes and sources

This is a transfer-amount comparison as of October 1, 2026, not a state income-tax, business gross-receipts-tax, sales-tax-on-service-fees, or provider pricing survey. The state rows with no additional levy share the federal formula because federal law is national; the affirmative local deviations were checked against the cited statutes and tax-authority materials. Federal collection on a transaction originating in a U.S. territory remains marked conditional pending clearer final federal guidance. The local 2% and 3% territorial figures are independent charges and must never be erased merely because there is debate about federal application. Proposed bills are excluded from current figures. Confirm the recipient’s residence and the provider’s exact funding and licensing model when applying Nebraska, Oklahoma, Puerto Rico, or U.S. Virgin Islands rules to a live transaction.

1. Internal Revenue Code §4475, U.S. House Office of the Law Revision Counsel; IRS announcement of the operative 1% tax.

2. Treasury and IRS, proposed remittance-tax regulations, Internal Revenue Bulletin 2026-18, particularly the scope, territory definition, and tax-base discussion. Proposed status is material.

3. Oklahoma Tax Commission, OAC 710:95-15-3 and -4; Oklahoma Banking Department rule/statute links.

4. Nebraska Revised Statute §8-2753; Nebraska Department of Revenue, 2026 legislative changes.

5. Puerto Rico Treasury, Administrative Determination 14-26; Puerto Rico money-services special charge, 10 L.P.R.A. §2610.

6. U.S. Virgin Islands Division of Banking, Insurance and Financial Regulation, Rules and Regulations Relating to Money Transmission Fee (government-issued text reproduced here); U.S. Virgin Islands Governor’s 2024 bill dispositions.

7. Tennessee Department of Revenue, 2026 legislative summary of Public Chapter 1035.

8. 15 C.F.R. §791.4, foreign adversaries. Nebraska fixes the referenced version at January 1, 2026.

9. Northern Mariana Islands Legislature, HB 24-72 status (a proposal, excluded from current table).

10. Government of Guam, July 3, 2025 statement on the then-pending bill; compare the later IRS proposed definition of State. The Guam statement is not a final IRS ruling under enacted §4475.

11. IRS Notice 2026-52, extension of provider deposit-penalty relief.

12. Oklahoma Statutes, 68 O.S. §2357.401, income-tax credit limited to tax years ending before January 1, 2017.

13. Tennessee Department of Revenue Notice 26-12, updated August 2026 with the enforcement order.