Starting on January 1, 2026, sending money home may become more expensive for some Caribbean-Americans and Caribbean nationals living in the United States, as a new 1 per cent federal excise tax will apply to some international money transfers sent from the US.
For many, these remittances are more than routine transactions. They are essential support which helps cover expenses such as school fees, medical bills, household expenses, and emergency needs for their loved ones.
According to CNW Network, the tax was approved by the US Congress in July 2025 as part of the One Big Beautiful Bill and is codified under Section 4475 of the Internal Revenue Code.
Until now, international remittances from the US were generally subject only to service fees and exchange rates, with no federal tax imposed, though this will change when the new law takes effect in 2026.
Under the legislation, the 1 per cent tax will be charged on remittances paid for using physical cash at in-person locations, money orders, cashier’s checks, and other similar paper-based payment instruments.
The tax is expected to primarily impact individuals who send money by visiting grocery stores, pharmacies, or money transfer agents and paying with cash. Both US citizens and non-citizens using US-based remittance services will be subject to the tax if their transfers are funded with cash or cash-equivalent instruments.
According to IRS Notice 2025-55, the tax does not apply to transfers funded through bank accounts, debit or credit cards, wire transfers, and digital wallets such as Apple Pay or Google Pay.
For Caribbean-Americans who already rely on app-based or bank-linked money transfer services, remittances will remain unaffected by the new tax.
Senders who have a Social Security number may be eligible to claim a credit for the remittance tax on their federal income tax returns, provided the remittance provider properly reports the transaction. However, the IRS has not yet issued final guidance on how this credit will be claimed.
