A new generation of computer terminals allows tab settings to be selected and set by the computer. This feature can be used to reduce the number of characters that are needed to represent a document for transmission and printing. In this note, an algorithm is given for selecting the optimal set of tab stops for minimizing the number of characters transmitted. An implementation of the algorithm has reduced the number of characters transmitted by from 7 to 30 percent, but requires a prepass through the document to compute a matrix used in determining the optimal set of tab stops. The use of fixed tab stops, as a heuristic alternative, can achieve about 80 percent of optimal with no prepass. © 1978, ACM. All rights reserved.