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Work out the federal 1% excise tax (IRC §4475) on money sent abroad from the United States. It reaches cash and similar physical instruments only — see the exact tax, the taxable base, and how much the funding route is worth.
Tax when funded with cash
$5.00
Tax from a US account or card
$0.00
What the funding route is worth
$5.00
Total handed over (cash)
$513.00
The same $500.00 to the same recipient is taxed $5.00 when it is funded with cash and $0.00 when it is funded from a US bank account or a US-issued debit or credit card. The whole $5.00 turns on the funding route — the amount, the corridor and the recipient are identical.
Source: FinCalc server-rendered example using the same formulas as the interactive calculator.
The money that reaches the recipient, before fees and taxes. It is the same line Regulation E calls the "Transfer Amount".
This is the only thing that decides whether the tax applies. The statute reaches cash and similar physical instruments; everything else is outside it.
Adds the World Bank average corridor cost — fee plus exchange-rate margin — so the tax sits next to what sending already costs.
This transfer is taxed $5.00
The tax is $5.00 — 1% of a taxable base of $500.00. Paying the same $500.00 from a US bank account, or with a US-issued debit or credit card, removes all $5.00 of it.
§4475 tax
$5.00
Removed by switching funding
$5.00
Taxable base
$500.00
Total you hand over
$513.00
Regulation E lines, 12 CFR §1005.31(b)(1)–(2). The proposed regulations do not address this presentation, so treat it as expected practice rather than confirmed guidance.
| Line | Amount |
|---|---|
| Transfer Amount | $500.00 |
| Transfer Fees | $8.00 |
| Transfer Taxes | $5.00 |
| Total you hand over | $513.00 |
| Fee and exchange-rate margin on $200.00 | $9.06 (4.53%) |
|---|---|
| §4475 tax on $200.00 | $2.00 |
| Total cost on $200.00 | $11.06 (5.53%) |
| SDG 10.c per-corridor ceiling | 5.00% |
The tax takes Mexico from 4.53% to 5.53%, over the 5% per-corridor ceiling in UN Sustainable Development Goal target 10.c.
The World Bank percentage is measured on $200.00 and embeds a largely fixed fee, so at bigger amounts the corridor figure is illustrative only. The 1% tax, by contrast, is linear and exact.
Free to quote with attribution to FinCalc and a link to this page.
A $500.00 remittance sent from the United States in cash carries a federal excise tax of $5.00 under IRC §4475 — 1% of the amount that reaches the recipient — while the identical $500.00 funded from a US bank account or a US-issued debit or credit card is taxed $0.00.
The remittance tax is charged on what reaches the recipient, not on what the sender hands over: in the IRS's own worked example a $1,000.00 cash transfer plus a $5.00 promotional bonus gives a base of $1,005.00 and a tax of $10.05, while the $20.00 provider fee and the $12.00 state tax stay outside the base. (Prop. Reg. §49.4475-1(e)(2) Example 1)
The $15.00 floor under the remittance tax is a cliff, not an allowance: a $15.00 cash transfer falls outside the definition of a remittance transfer entirely, while $15.01 is taxed on the whole amount — $0.15.
Sending $200.00 in cash from the United States to Mexico costs about $9.06 in fees and exchange-rate margin before tax; the 1% remittance excise tax adds $2.00 on top, taking the total cost to $11.06, or 5.53% of the amount sent. (World Bank Remittance Prices Worldwide, Q3 2025)
Because corridor cost is measured as a share of the amount sent, a cash-funded transfer adds exactly 1.00 percentage point to it — enough to push 4 of the 6 largest US corridors over the UN's 5% remittance-cost ceiling, from between 4.18% and 4.95% before tax to between 5.18% and 5.95% after. (World Bank RPW, Q3 2025; UN SDG target 10.c)
IRC §4475 contains no citizenship or immigration-status carve-out: the same 1% remittance tax falls on a US citizen paying cash at the counter as on anyone else, and the statute provides no credit to claim it back.
Section 4475 imposes 1% on the total amount that will be transferred to the designated recipient — including any promotional bonus the provider or a third party adds. Provider fees, state and local levies, and the 1% tax itself are all excluded from that base, so this is never a tax on the fee and never a tax on tax.
That is why the IRS's own worked example lands where it does: $1,000.00 in cash plus a $5.00 bonus gives a base of $1,005.00 and a tax of $10.05, even though the sender also pays a $20.00 fee and $12.00 of state tax on the same transaction.
Neither the statute nor the proposed regulations prescribe a rounding convention for the 1% computation. This calculator shows the exact figure and rounds to cents only for display; that presentation is our convention, not a legal rule.
The tax reaches a transfer only when the sender provides cash, a money order, a cashier's check or a traveler's check — and, under the proposed regulations, when the provider cashes the sender's personal or business check and that cash funds the transfer. The proposed regulations call that an exclusive list.
Money withdrawn from a US financial-institution account, and transfers funded with a US-issued debit or credit card, are excluded by §4475(d). The proposed regulations extend the same outcome to general-use prepaid cards, store gift cards and a personal check handed straight to the provider. On $500.00 that is the difference between $513.00 and $508.00 at the counter.
Converting cash into another instrument at the provider and sending it straight on does not work: the anti-avoidance rule at Prop. Reg. §49.4475-1(d)(4) lets the Secretary recharacterize the series according to its substance, and the regulation's own example does exactly that to a cash-to-prepaid-card transfer.
A transfer amount of $15.00 or less is not a "remittance transfer" under 12 CFR §1005.30(e)(2)(i), so §4475 never attaches. One cent more and the whole amount is in scope: $15.01 is taxed $0.15, not a penny of tax on the one-cent excess.
Splitting a larger transfer into sub-$15.00 pieces to stay under that line is exactly the behaviour the anti-avoidance rule addresses, and §4475(f) additionally pulls the §7701(l) anti-conduit rules into the section.
The World Bank measures the total cost of a remittance — the provider's fee plus the margin by which its exchange rate sits above the interbank rate — as a percentage of the amount sent, on a $200.00 transfer. Section 4475 taxes that same amount, so for a cash-funded transfer the tax adds exactly 1.00 percentage point to the published cost ratio.
On the Q3 2025 figures that takes the Mexico corridor from 4.53% to 5.53%, and pushes 4 of the 6 largest US corridors over the 5% per-corridor ceiling in UN Sustainable Development Goal target 10.c. One caveat on that comparison: the SDG ceiling is formally measured on the SmaRT average — the three cheapest qualifying services in a corridor — while the figures here are the corridor-wide averages, which run higher.
Against the global average total cost of 6.36% for sending $200.00, the tax remains the smaller part of what a transfer loses. Fees and exchange-rate margin are the larger and much older problem, and the compounding unfairness is that cash is both the more expensive channel and the only one that carries the tax.
Those percentages are measured at $200.00 and embed a largely fixed fee, so this calculator will not extrapolate them linearly to bigger transfers — above the benchmark it labels the corridor figure illustrative. The 1% tax has no such limitation; it is linear and exact at every amount.
The sender is liable for the tax under §4475(b)(1), but the provider collects it at the counter and remits it quarterly on Form 720 under §4475(b)(2), with semimonthly deposits. If the provider fails to collect it, §4475(b)(3) makes the provider pay it. Senders file nothing.
It should reach the sender as a separate "Transfer Taxes" line on both the pre-payment disclosure and the receipt, alongside "Transfer Fees" (12 CFR §1005.31(b)(1)–(2)). The proposed regulations do not address Regulation E disclosure, so treat that mapping as expected practice rather than as confirmed IRS or CFPB guidance.
Three scope limits catch people out. A transfer to Puerto Rico, the US Virgin Islands, Guam or the District of Columbia is not a remittance transfer, because those are "States" — so it is not taxed. A person who provided 500 or fewer remittance transfers in both the previous and the current calendar year is not a remittance transfer provider at all (12 CFR §1005.30(f)(2)) and does not collect. And the definition reaches consumers: the sender has to be sending primarily for personal, family or household purposes, so business-to-business payments sit outside it.
Values verified 2026-08-01; valid for transfers made on or after 1 January 2026. Corridor data: World Bank RPW, Q3 2025.
Data and assumptions align with official publications. For verification and current figures:
1% of the amount that reaches the recipient, on transfers made on or after January 1, 2026. On $500.00 that is $5.00; on $200.00 it is $2.00. The tax applies only when the transfer is funded with cash, a money order, a cashier's check or a traveler's check.
Fund the transfer from a US bank account or with a US-issued debit or credit card. Those routes are excluded by §4475(d), so the tax is $0.00 instead of $5.00 on $500.00 — the identical transfer to the identical recipient. Converting cash into a prepaid card at the provider and sending it straight on does not work; the anti-avoidance rule recharacterizes it as cash.
No. The base is the amount that will be transferred to the recipient, including promotional bonuses added by the provider. Fees, state taxes and the 1% tax itself are excluded. In the IRS's worked example the base is $1,005.00 and the tax $10.05, with the $20.00 fee and $12.00 state tax outside it.
A transfer amount of $15.00 or less is not a remittance transfer under 12 CFR §1005.30(e)(2)(i), so no tax attaches. It is a cliff rather than an allowance: $15.01 is taxed on the full amount, $0.15. Splitting a bigger transfer into sub-$15.00 pieces falls under the anti-avoidance rule.
Section 4475 contains no citizenship or immigration-status test and no credit. The same 1% applies to anyone who funds a covered transfer with cash at a counter in the United States. Earlier drafts of the bill exempted US citizens and nationals; that provision was not enacted.
No. The recipient has to be at a location in a foreign country. Puerto Rico, the US Virgin Islands, Guam and the District of Columbia count as "States" in the proposed regulations, so a transfer there is not a remittance transfer and carries no §4475 tax.
Exactly 1.00 percentage point, because the World Bank measures corridor cost against the same amount the tax is charged on. On Q3 2025 figures the Mexico corridor goes from 4.53% to 5.53% for a cash-funded transfer, and 4 of 6 large US corridors cross the UN's 5% ceiling. Fees and exchange-rate margin remain the bigger cost.
The 1% rate, the January 1, 2026 start date and the cash-only limitation are in the statute. The finer detail — traveler's checks, prepaid cards, the check-cashing rule and the anti-avoidance examples — comes from proposed regulations published on 13 April 2026 that were not final as of August 1, 2026. Final rules may differ.
These figures are free to quote, republish, and build on — please credit FinCalc and link back so readers can re-run the numbers themselves. Data last verified August 1, 2026.
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