Cross-Border Remittance Tax Rules Give Opening for Prepaid Cards

Proposed IRS rules on a new GOP tax on money transferred abroad creates a silver lining for companies: potential profits from prepaid cards.

Banks, credit unions, and money transmitters must comply with the 1% excise tax on outbound money transfers from US accounts starting Jan.1, a provision from the 2025 tax-and-spending law.

The proposal makes exceptions for types of cash where the tax doesn’t apply, including prepaid cards. The carveout creates a window for financial institutions to start selling these cards if they don’t already, also offering a potential workaround for people trying to avoid the tax. Comments on ...