Overview: US Proposes 5% Tax on Remittances
The U.S. House of Representatives has introduced a bill titled "The One Big Beautiful Bill," proposing a 5% tax on all remittances sent abroad by non-citizens, including H-1B visa holders, green card holders, and international students. If enacted, this legislation could cost the Indian diaspora approximately $1.6 billion annually .
Impact on NRIs, H-1B Workers & Students
NRIs & H-1B Visa Holders
Non-citizens in the U.S., such as H-1B visa holders and green card holders, who regularly send money to family members in India, will face an additional 5% tax on each remittance. This could significantly increase the cost of supporting relatives back home.
International Students
Indian students studying abroad often send money home for tuition and living expenses. The proposed tax could add financial strain, especially for those on post-study work visas in countries like the U.S., UK, Canada, or Australia .
Strategic Considerations Before 2026
With the potential implementation of this tax, many individuals are considering accelerating their remittances to India before the law takes effect. However, it's crucial to evaluate the timing and amounts carefully to avoid unnecessary tax liabilities.
Frequently Asked Questions (FAQ)
Q1: When will the 5% remittance tax be implemented?
The tax is part of a proposed bill and has not yet been enacted. If passed, it could take effect in 2026.
Q2: Who will be affected by this tax?
Non-U.S. citizens, including H-1B visa holders, green card holders, and international students, who send money abroad will be subject to this tax.@EconomicTimes+2
Q3: How can I minimize the impact of this tax?
Consider remitting funds before the tax is implemented. Consult with a tax advisor to explore legal avenues for minimizing tax liabilities.
Q4: Will this tax apply to all remittances?
Yes, the proposed tax applies to all remittances sent abroad by non-citizens.
Q5: Are there any exemptions or reliefs available?
Currently, there are no exemptions for this proposed tax. It's advisable to stay informed about any changes in legislation.
Published on : May 20, 2025
Uploaded by : PAVAN