Possible 1% US Excise Tax on Outbound USD Transfers: What to Know Before It Takes Effect

Overview of the proposed tax

A provision in the “One Big Beautiful Bill Act” (OBBBA), informally known as the Big Beautiful Bill, has sparked discussions among financial institutions and cross-border remittance services. It hints at a 1% excise tax on remittance transfers—specifically targeting cash-based or physical instrument transfers (like money orders or cashier’s checks) initiated in the US and sent abroad, even though electronic transfers such as wire transfers may be exempt. While parts of the bill have become law, this specific provision is not yet fully confirmed or fully operational.

A caveat

At Alpen Partners International we are following the proposed 1% excise tax closely, not only for its immediate implications, but also because some observers may see it as a possible first step toward broader capital controls. We hope this is simply a misunderstanding, but if it is not, some may wish to consider whether it makes sense to move a portion of USD holdings abroad as a precaution.

Legislative context and status

The OBBBA passed through Congress in mid‑2025 and was signed into law on July 4, 2025. In earlier House versions, the remittance excise tax was set at 3.5% and applied to non‑US citizens, but the Senate reduced it to 1%, broadened applicability to all senders, and limited applicability to physical instruments only. The final version passed reflects these adjustments, yet implementation details and confirmation remain pending, particularly regarding whether traditional wire transfers using US bank accounts would be subject to the tax.

What this means for US residents sending money abroad

If the 1% excise tax is enacted as hinted, individuals transferring funds via cash-based methods like money orders or cashier’s checks would see an added cost equal to 1% of the amount being sent, collected at the time of the transaction.

Crucially, wire transfers or electronic fund transfers directly from US bank accounts (e.g. SWIFT bank wires, ACH, or app-based transfers) are not expected to be taxed, making them comparatively more economical. Nonetheless, in the absence of formal guidance, consumers and providers may face uncertainty and potentially unintended withholding.

The revenue rationale and economic implications

The 1% tax, though lower than earlier proposals, is projected to yield roughly USD 10 B over ten years. It is framed by policymakers as a modest revenue measure targeting physical remittances, rather than a broad tax on electronic transfers. Critics argue that even at just 1%, it could disproportionately impact low-income individuals, migrant families, and those without easy access to banking, underscoring concerns about fairness and practicality.

Currently unconfirmed status and what to watch

As of now, the 1% excise tax on physical remittances remains a proposed provision within the enacted OBBBA, but operational clarity is lacking. Key questions remain around its effective date (targets include January 1, 2026) of applicability, and whether wire transfers via banks or other electronic platforms will eventually be included or officially exempted. Financial institutions and consumers should closely monitor IRS or Treasury guidance, as well as updates from remittance providers, to avoid misapplication or confusion.

Alpen Partners International (SEC-registered Investment Advisor)

At Alpen Partners International, we combine our Swiss independence with a global perspective to serve the needs of Americans navigating complex financial landscapes. Changing regulations and evolving market conditions are a reality for many of our US clients, especially in cross-border wealth and asset management. We keep a close watch on such developments and are ready to share insights so clients can make informed decisions.

Source:

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