The 1% remittance tax
The One Big Beautiful Bill Act created a 1% federal tax on remittances sent from the United States when the sender pays with cash, a money order, a cashier’s check or a similar physical instrument. It applies to transfers made from January 1, 2026, and the money transfer company collects it at the time of the transaction.
The tax does not apply when the money comes from an account at a US bank or credit union, or when you pay with a US-issued debit or credit card. Switching from cash to an account or card saves $1 for every $100 sent.
The hidden cost: the exchange rate
Many companies advertise “no-fee transfers” and make their money on the exchange rate. If the dollar is worth 18.45 pesos and you are paid 18.10, your family receives 140 pesos less for every $400: about $7.60 of hidden cost. The calculator adds up the fee, exchange markup and tax to show the true cost as a percentage.
What counts as a good price
The United Nations set a target for remittances to cost under 3% of the amount sent. According to the World Bank, the global average is still above 6%, though US-to-Mexico transfers tend to be among the cheapest. Compare at least two providers for the same amount on the same day.
Ways to save
Send larger amounts less often if the fee is flat, pay from your bank account to avoid the 1% tax, and check the rate right before you confirm: many apps only lock it in for a few minutes.