The 1% Remittance Tax in 2026: What Brazilian Families in Massachusetts Need to Know Before Sending Money Home

A New Federal Tax That Touches Almost Every Brazilian Household in Massachusetts

For most Brazilian families I work with in Framingham, Marlborough, Everett, Boston, and Worcester, sending money home is not an occasional event. It is part of monthly life. It pays for a mother's medicine in Goiás, a brother's tuition in Minas Gerais, or a house being built in Espírito Santo. So when Congress quietly added a new 1% federal excise tax on certain international money transfers, the change landed directly in our community's monthly budget.

The tax was created by Section 112105 of the One Big Beautiful Bill Act, Public Law 119-21, signed into law on July 4, 2025, and codified at Internal Revenue Code Section 4475. It applies to remittance transfers made on or after January 1, 2026. The Treasury Department and the IRS published proposed regulations in the Federal Register on April 13, 2026, and the public comment period runs through June 12, 2026.

The good news for many Brazilian families is that the tax has a narrower reach than the first headlines suggested. The harder news is that the structure of the tax falls hardest on the people in our community who can least afford it, namely those who rely on cash and money orders because they do not have full access to the U.S. banking system. This post walks through what the law actually says, who really owes the tax, and the practical steps every Brazilian family in Massachusetts should take before the next remessa.

What the Statute Actually Says

IRC Section 4475 imposes a 1% federal excise tax on the amount of certain "remittance transfers" sent from the United States to a recipient in a foreign country. The tax is calculated on the amount transferred to the designated recipient. Provider service charges, fees, and other amounts not actually paid out to the recipient are excluded from the tax base.

The sender is the person legally liable for the tax. The remittance transfer provider, meaning the money transmitter, bank, or other licensed business that processes the transfer, is required to collect the tax from the sender at the time of the transfer, make semimonthly deposits to the U.S. Treasury, and file Form 720, the Quarterly Federal Excise Tax Return. The first semimonthly deposit obligation began January 29, 2026.

In Notice 2025-55, issued in October 2025, the IRS granted limited penalty relief to remittance transfer providers who fail to deposit the correct amount of the tax during the first three quarters of 2026. That relief applies to providers, and does not change the sender's underlying liability for the tax.

Which Transfers Are Taxed and Which Are Not

This is the single most important section of the law for our community to understand. The 1% tax does not apply to every dollar leaving the United States. It applies only when the transfer is funded with cash or a similar physical instrument handed to the provider.

Transfers that trigger the 1% tax

• Cash handed across the counter at a money transfer agent.
• A money order purchased and presented to a remittance provider.
• A cashier's check or other similar physical instrument used to fund the transfer.

Transfers that are exempt under the proposed regulations

• Transfers funded by a withdrawal from an account held at a Bank Secrecy Act-covered financial institution. This includes U.S. banks and credit unions where the customer is the accountholder.
• Transfers funded by a U.S.-issued debit card or credit card.

The practical takeaway is direct. A worker in Framingham who walks into a storefront on Route 9 with $500 in cash to send to a sister in Belo Horizonte will pay $5 in federal excise tax on top of the provider's service fee. The same worker, sending the same $500 from a checking account at Bank of America, Santander, MetroWest Community Federal Credit Union, or any other U.S. bank or credit union, will not owe the federal excise tax at all under the proposed regulations.

How the Tax Interacts With Brazilian Rules on Incoming Money

Money sent from the United States to Brazil also runs into Brazilian law on the receiving end. Two rules matter most for our families.

First, the IOF, the Imposto sobre Operações Financeiras. Under current Brazilian rules, remittances to your own account in Brazil are taxed at 1.1%. Transfers to a third party, including a relative who is not the sender, are taxed at 3.5%. These rates are charged at the Brazilian end by the receiving bank or institution and are separate from the new 1% U.S. excise tax.

Second, the Receita Federal expects Brazilians who have permanently moved abroad to file the Declaração de Saída Definitiva do País and the Comunicação de Saída Definitiva. If you have not formalized your tax exit from Brazil, the Receita Federal can continue to treat you as a Brazilian tax resident and tax your worldwide income, including money you have earned and reported in the United States. This is a Brazilian tax law question rather than a U.S. immigration question, and it shows up constantly in my office because families discover the problem years later when they try to sell property, register a U.S. marriage in Brazil, or claim retirement benefits.

I am a U.S. immigration attorney, not a Brazilian tax advisor. For the Brazilian side, the standard advice in our community is to consult a Brazilian contador or a U.S.-based tax preparer who handles Receita Federal filings. The Consulado-Geral do Brasil em Boston at 20 Park Plaza, Suite 810, can confirm general procedures, although it does not provide individual tax advice.

Does the Remittance Tax Affect My Immigration Case?

This is the question I have heard most often from clients since January. The honest answer has two parts.

First, IRC Section 4475 is a tax statute. It creates a federal excise tax. It does not create an immigration reporting requirement. The statute does not direct providers to send sender information to ICE, USCIS, or CBP, and it does not amend the immigration laws. Bank Secrecy Act rules that already required Currency Transaction Reports for cash transactions over $10,000 and Suspicious Activity Reports for unusual patterns continue to apply exactly as they did before.

Second, the Trump administration's approach to information sharing across federal agencies in 2025 and 2026 has made many community members understandably cautious about creating any new financial paper trail. The IRS-ICE data sharing agreement from April 2025, the federal court orders blocking that agreement, and the conflicting appellate ruling are all reasons our community is paying close attention to how financial records can be reached. Section 4475 records held by providers are different from IRS individual return data, and they sit behind a different set of legal protections. The two issues are related in the public mind, although they are governed by different rules. If you have a pending immigration case or a removal proceeding, talk to your attorney before changing how you send money, because the answer truly depends on the specifics of your case.

Practical Steps for Brazilian Families in Massachusetts

1. Open a U.S. bank or credit union account if you do not have one. A checking account at a BSA-covered institution allows you to fund transfers in a way that is exempt from the 1% excise tax. Many Massachusetts banks open accounts with an ITIN and a passport, including Brazilian passports. The Brazilian Worker Center in Boston (Centro do Trabalhador Brasileiro) can point you to immigrant-friendly institutions.
2. Compare total cost, including all taxes. Remitly, Wise, Remessa Online, Western Union, MoneyGram, and bank wire transfers all price differently. When you compare, include the 1% federal excise tax for cash-funded transfers and the IOF on the Brazilian end. Ask the provider in writing whether your specific transfer is treated as cash-funded or as a bank or card-funded transfer under their compliance system.
3. Keep records of every remittance. Save provider receipts, the sender and recipient names, the amount, and the date. A clean record of how you supported family abroad can matter in a future immigration case, in a green card interview, and in Brazilian tax filings.
4. Do not split transfers to evade the tax or BSA reporting. "Structuring" transactions to stay under reporting thresholds is itself a federal crime under 31 U.S.C. Section 5324, separate from the 1% excise tax. Use legal exemptions, and avoid workarounds.
5. Talk to a Brazilian tax preparer about your saída fiscal. If you have lived in the United States for years and never filed the Saída Definitiva, get this addressed. It is one of the most common preventable problems I see in Brazilian families with U.S. immigration matters.
6. Stay alert for scam "tax exemption" services. The April 10, 2026 proposed regulations are public. No one needs to sell you a special exemption. If a service claims it can make the tax disappear for a fee beyond the standard exemptions in the regulations, treat that as a warning sign.

What to Watch in the Coming Months

The Treasury and IRS proposed regulations went into the Federal Register on April 13, 2026, with a comment period that closes June 12, 2026. Final regulations could narrow or broaden several definitions, including what counts as a "similar physical instrument" and how transfers initiated through hybrid app-and-cash arrangements are treated. Once the final regulations are issued, the practical guidance for our community may need to be revised. I will publish an update on this blog when the final rule appears.

Congress is also considering bills that would either repeal the remittance tax, raise its rate, or add a refundable credit for U.S. citizens and lawful permanent residents. None of those bills has become law as of this writing. Until a change actually passes, plan around the current 1% rate.

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