New 15% Tax on Money Sent Abroad Kicks Off in 2026: Who Pays and Who Gets a Refund?

The Requiring Excise for Migrant Income Transfers Act—or the REMIT Act—is looking to slap a brand-new, hefty 15% excise tax on nearly every electronic money transfer sent from the U.S. to another country (a remittance transfer). The tax is supposed to be paid by the sender, and the transfer company has to collect it and send it to the IRS. This massive change is scheduled to take effect for transfers made after December 31, 2025.

The 15% Tax and the Citizenship Loophole

Here’s the core mechanism: If you send $500 to family abroad, an extra $75 (15%) gets added to that transfer and goes to the government. This tax applies to everyone unless the sender is a verified U.S. citizen or national, and the transfer company has an agreement with the IRS to confirm that status. Basically, if you can prove your U.S. citizenship to the transfer company, the tax doesn’t apply to your transaction at all. However, if you are a citizen and pay the tax anyway (maybe the transfer company wasn't set up to verify you yet), the bill creates a fully refundable tax credit. This means you can claim the full amount of tax you paid back on your annual tax return—even if it results in a refund check from the IRS. The intent is clear: non-citizens pay the tax, and citizens are shielded from the cost.

The Real-World Cost for Non-Citizens

For the millions of people who are not U.S. citizens but send money home—whether they are legal permanent residents, visa holders, or undocumented—this bill creates a significant, immediate financial burden. Imagine a construction worker who sends $600 home every month to support family. Right now, they pay a small transfer fee. Under REMIT, that person will suddenly have to pay an extra $90 in tax on that $600 transfer. That 15% tax is a massive surcharge on essential financial support, directly impacting the budgets of low-income workers and immigrant communities who rely on these services to support family abroad. This isn't a tax on profits or income; it's a tax on the transfer itself.

The New Paperwork Nightmare for Transfer Companies

This bill places a huge administrative burden on companies like Western Union, MoneyGram, and smaller digital platforms. To qualify for the tax exemption, these providers must sign an agreement with the IRS, setting up procedures to verify a sender’s U.S. citizenship. If they fail to collect the 15% tax when they should have, they become financially responsible for paying it themselves. On top of that, they now have strict new reporting duties (Section 6050AA). They have to report the total value of all tax-exempt transfers, and for taxable transfers, they must report the sender’s name, address, and Social Security Number (SSN) to the IRS. This means transfer providers are now acting as mandatory IRS compliance officers, which adds complexity, cost, and potential liability to every single transaction.

The Catch for Claiming the Credit

While U.S. citizens are technically protected by the refundable credit, claiming it isn't automatic. To get that tax money back, you must include your SSN on your tax return and prove that you paid the tax and provided the transfer company with the necessary certification. If you’re a citizen but didn't successfully provide the right paperwork to the transfer company, you’ll have to wait until tax season to get your money back—and you better have kept all your receipts and documentation. This reliance on SSNs and strict reporting could create hurdles, even for citizens, if the IRS procedures are complicated or if the transfer companies mess up the required reporting.