Customers have been asking, “Does the 1% US Federal remittance tax apply to Xoom transfers?


Currently Xoom transfers are not subject to the 1% US federal remittance tax.

If you’ve seen headlines about a new US tax on international money transfers sent from the United States and are worried about your next send, here’s the clear answer: Xoom customers are not affected by this federal tax. Let’s learn about the US excise tax on outbound transfers; the tax applied at the point of sending from the US. Tax rules in recipient countries are separate and vary by destination, but here’s exactly what the US remittance tax is, who it applies to, and why sending money with Xoom remains tax-free on the US sending side.


What Is the 1% US Remittance Tax?

As part of the One Big Beautiful Bill the federal government has imposed, a 1% excise tax (a tax on the sale of specific goods or activities) on certain international money transfers sent from the United States that took effect on January 1, 2026. This is a US-side federal tax and it is applied at the point of sending, by the sender in the United States to a foreign recipient.

It currently does not apply to all outbound transfers. The tax applies specifically to transfers funded by cash or cash-equivalent payment methods. Transfers funded digitally through bank accounts, debit cards, credit cards, or digital wallets are not subject to this tax.

Note: this tax is separate from any taxes, duties, or regulations that may apply to receiving money in another country. Those rules vary by destination and are not covered by this US legislation.



Why Xoom Transfers Are Not Subject to the Tax

Xoom is a digital PayPal service. We do not accept cash, money orders, or any of the payment methods covered by this federal remittance tax. Every Xoom transfer is funded digitally through your available PayPal balance, a linked bank account, a credit card, or a debit card. Because Xoom only processes digital payments, today none of our transfers fall within the scope of the 1% US federal excise tax.


That means:


  • Sending money to India with Xoom? No US federal remittance tax.
  • Sending money to Mexico with Xoom? No US federal remittance tax.
  • Sending money to the Philippines, Colombia, the Dominican Republic, or anywhere else Xoom serves? No US federal remittance tax.


Your transfer amount and fees appear exactly as shown before you confirm. Nothing has changed.



What This Means If You Use a Cash-Based Service

If you currently send money by walking into a physical location and paying in cash, your transfers may now cost 1% more due to this tax on every transaction, indefinitely.

Switching to a digital service like Xoom helps eliminate that added cost, essentially saving you money if you send typically from a physical location with cash. You send from the Xoom app or website, pay with your account with PayPal, or linked bank account, credit card, or debit card, and the 1% US remittance tax does not apply.

The savings can add up. For example, on a $500 transfer, that’s $5 per send, $60 a year if you send monthly.



How to Send Money with Xoom

Sending with Xoom takes three steps:


  1. Enter an amount and choose your destination country
  2. Select how your recipient receives the money: bank deposit, UPI, or cash pickup depending on the country
  3. Pay digitally using your PayPal balance, bank account, credit card, or debit card


The exact fee and exchange rate are shown before you confirm, so there are no surprises. Bank deposits to most major banks in India, Mexico, and the Philippines can typically arrive in minutes. Cash pickup is typically available in minutes at thousands of locations around the globe.



Send with Confidence

Xoom has been trusted by millions of customers since 2001. Backed by PayPal, one of the world’s largest digital payment networks with over 400 million active customer accounts, Xoom combines speed, secure transactions, and transparency in every transfer. Xoom is rated 4.6 on Trustpilot, making it one of the highest-rated major remittance service (as of June 2026).

The US remittance tax does not currently affect Xoom customers. Your transfers remain fee-transparent and fast.


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Still have Questions?


Does the 1% US federal remittance tax apply to Xoom? Currently, Xoom transfers are not subject to the 1% US remittance tax introduced under the One Big Beautiful Bill. Xoom is a digital PayPal service that only accepts digital payment methods, PayPal, bank account, credit card, and debit card. None of these payment methods are covered by the tax.


When did the US federal remittance tax take effect? The 1% excise tax on certain remittance transfers from the United States took effect on January 1, 2026, as part of the One Big Beautiful Bill.


Which transfers does the US federal remittance tax apply to? The tax applies to international money transfers sent from the United States and funded by cash or certain cash-equivalent payment methods to a foreign recipient. Transfers funded digitally are not subject to the tax.


Does this US federal remittance tax affect what my recipient receives? No. This tax applies on the US sending side only. It is a US excise tax on the act of transferring money out of the United States. It does not change what your recipient receives in their country. Separate tax rules may apply in the recipient’s country depending on local regulations, but those are unrelated to this US legislation. With Xoom, the exact amount your recipient will receive is always shown before you confirm your transfer.


Will my Xoom transfer amount change because of this tax? Your transfer amount, fees, and exchange rate are not currently affected. No additional 1% charge applies to Xoom transfers. The fee and the amount your recipient receives are shown exactly as they are before you confirm.


What payment methods can I use with Xoom? You can fund your Xoom transfer with your available PayPal balance, a linked bank account, a credit card, or a debit card. All are digital payment methods not covered by the US remittance tax.


Is Xoom safe for international money transfers? Yes. Xoom is backed by PayPal’s secure transaction infrastructure, including data encryption and 24/7 fraud monitoring. Xoom is rated 4.7 out of 5 on Trustpilot and has been trusted by millions of customers around the globe since 2001.