The US 1% remittance tax: A quick guide for OFWs

Since the beginning of 2026, overseas Filipino workers in the ÉTATS-UNIS have been dealing with a 1% remittance tax on the funds they send to the Philippines.

Introduced by the One Big Beautiful Bill Act on July 4, 2025, the US 1% remittance tax affects physical transfers from the United States to other countries like the Philippines.

Selon la Asian Journal, this is “the first time the U.S. government will directly tax personal remittances.”

But what does that mean for OFWs in America sending money to the Philippines?

Physical transfers are affected by the new US 1% remittance tax.

What does that mean? If you withdraw cash, write a check, or buy a money order to send funds to the Philippines, you will incur an additional 1% charge.

For example, if you send $1,000 home, you will pay $10 in remittance tax.

If you send money home through online banking or by using US debit or credit cards, or if you choose wire transfers or electronic transfers via the Automated Clearing House Network, then your remittances are exempt from the new 1% remittance tax.

Simply put, yes. An OFW who sends money to the Philippines to help their family or to pay bills and/or government contributions in the Philippines may be affected by this new remittance tax if they use more traditional ways to remit.

For example, if you write a check to send money to a loved one back home, your bank will inform you that you will be charged a 1% remittance tax. This would be deducted from the amount you indicated on the check.

The bank would then report the amount they collected from you and from other clients like you to the US Department of Treasury.

Not exactly.

Selon la Asian Journal, “Finance experts have advised remittance senders to review their preferred transfer methods and explore digital options—such as bank-to-bank transfers or regulated apps—to avoid the new tax and benefit from lower fees and added security.”

In short, if you send money to the Philippines online or by using US-regulated electronic transfer methods, then you can still send more home.

To visualize the impact of the US 1% remittance tax, let’s look at this table:

Now that you’re more familiar with the basics, here is a concise action plan to remit to the Philippines while saving on the US 1% remittance tax:

If you’re looking for a sign to open an online bank account, this is it.

Using your US-based bank account to make a wire transfer to the Philippines or pay bills via ACH transfer will be exempt from the new remittance tax because these are counted as regular bank transactions.

On the other hand, using money transfer instruments like a check or a money order will be taxed.

If you’re using a remittance app or e-wallet, your transaction won’t be taxed if your source of funds is a US-based bank account or card.

You could also check if your nearest cash remittance centre accepts fund transfers using your US debit card.

Funding an e-wallet in the Philippines with your US-based digital banking app or with a US credit or debit card is exempt from the US 1% remittance tax. 

Check with your employer if they accommodate remittances through their payroll system, because these are counted as bank-to-bank transfers.

Using a money transfer app to transfer funds from the US to the Philippines is exempt from the US 1% remittance tax if your account on that app is funded by a US-based bank account or card.

Kabayan Remit is a secure online money transfer app that lets OFWs send money from the US, Canada, and the United Kingdom to their loved ones in the Philippines.

Transactions are fully online, so OFWs in America are exempt from US 1% remittance tax when they transfer funds from their bank or card to their loved ones’ bank accounts, e-wallets, or trusted cash remittance centres in the Philippines.

To enjoy Kabayan Remit’s competitive exchange rates and low service fees, simply download the app ici and follow these easy steps:

1. Create a Kabayan Remit account – Enjoy Kabayan Remit’s features by opening a secure remittance account for free.
2. Input your recipient in the Philippines – Type in your loved one’s details on the app, including their full name, mobile number, and how they plan to receive your funds (e.g., bank transfer, e-wallet transaction, cash pick-up).
3. Indicate how much you want to send – Your remittance amount is up to you. To see how much your transfer costs in Philippine pesos, try our free calculator tool ici.
4. Choose a tax-exempt transfer method – Make an electronic transfer using your US-based bank account or card since this is excluded from the US 1% remittance tax.
5. Double check your info – Make sure the details you’ve typed in, including your remittance amount and recipient details, are correct.
6. Confirm – Tap “Send” to send your money to the Philippines.
7. Stay informed – You’ll know when your funds have been received or are ready for pick-up by enabling push notifications from the Kabayan Remit app.

Start your Kabayan Remit journey today and send love to the Philippines at cost-efficient and pocket-friendly rates.