Sending Money Home From the US: How the 1 Percent Remittance Tax Affects Your Family

For millions of families in Mexico, the money a relative sends from the United States pays for rent, school and medicine. So when a new US tax on remittances started on 1 January 2026, many people worried about how much less would arrive each month.

Here is the clear picture. The tax is 1 percent, and it only applies when the transfer is paid for in cash, by money order or by cashier’s cheque. If the money comes from a bank account or a debit or credit card, it is exempt. A small change in how the money is sent can avoid the tax completely.

What the Tax Covers

How Much It Really Costs

On a transfer of 500 US dollars paid in cash, the tax is 5 US dollars. On 300 US dollars a month, it adds up to 36 US dollars over a year. That is not huge for one family, but across Mexico it is significant. Economists at BBVA estimated that Mexico received about 61.7 billion US dollars in remittances in 2025, and that around 3 in every 10 remittances sent from the US go to Mexico.

The tax is collected by the transfer company and paid to the US government. The family receiving the money in Mexico does not pay anything extra on their side because of this tax.

Who Pays It

The tax is linked to how the transfer is paid, not to the sender’s nationality or immigration status. A US citizen sending cash pays it, and so does anyone else who pays in cash. This is why bank access matters so much.

Practical Ways to Plan

1. Ask your relative whether they can send from a bank account or with a debit card.
2. Compare the total cost, including exchange rate and fees, not just the tax.
3. Send larger amounts less often if fees are charged per transfer.
4. Keep receipts, especially if the money supports a visa or study application.

Remittances and Your Visa Application

Many Mexicans applying for visas show remittances as part of their family income. Officers look for steady, explainable money. Regular transfers with clear receipts help. Sudden large deposits with no explanation can raise questions.

• Keep a record of who sends money and why.
• Make sure bank statements match what you say in your application.
• Do not borrow money to show a temporary high balance.

Why Bank Access Matters More Now

For many Mexicans in the US, sending cash has always felt simpler. There is no need for a bank account, and the money arrives quickly. The new tax changes that calculation. A sender who opens a basic bank account or uses a debit card can send the same amount without the 1 percent charge.

This is also a good moment to look at the other costs of a transfer. Exchange rates and service fees often take more than 1 percent. Comparing two or three providers once a year can save a family more than the tax costs.

On the Mexican side, receiving money in a bank account rather than in cash can also help when you later apply for a visa or a loan. A steady record of deposits shows where your money comes from. Officers and banks both prefer income they can see and understand.

If your family relies on remittances for school or medical costs, keep a simple monthly list of what arrives and what it pays for. It takes five minutes and can make future applications much easier.

Before You Rely on Any Figure

The details above reflect the US law in force since 1 January 2026 and reports up to October 2026. This is general information, not tax advice. Rules, fees and dates change, so check the official government website on the day you act. For questions about your own case, speak to a licensed immigration lawyer or an authorised representative. World Visa Academy is a training academy; it does not file applications or guarantee any visa or outcome.

The Honest Summary

The remittance tax is real but narrow. It only hits transfers paid in cash, money orders or cashier’s cheques. Sending from a bank account or card avoids it. Talk to your family about how the money is sent, and keep clear records.

Key takeaways

• Since 1 January 2026, a 1 percent US tax applies to remittances paid for in cash, money orders or cashier’s cheques.
• Transfers funded from a bank account or with a debit or credit card are exempt.
• Mexico is the largest receiver of remittances from the US.
• The tax does not depend on the sender’s immigration status.