A new U.S. legislative proposal, titled "The One Big Beautiful Bill," aims to impose a 3.5% tax on remittances sent abroad by non-citizens, including H-1B visa holders and green card holders. This move could significantly impact the Indian diaspora in the U.S., potentially costing the community approximately $1.12 billion annually if remittance volumes remain consistent.
The proposed legislation mandates a 3.5% excise tax on all outbound remittances made by individuals who are not U.S. citizens or nationals. This includes a broad category of non-citizens, such as those on H-1B, L1, F1 (students), OPT visas, and even green card holders who haven't yet naturalized. The tax would be collected at the point of transfer by remittance service providers like Western Union, Xoom, or MoneyGram. If the provider cannot verify the sender's U.S. citizenship status, the 3.5% tax would automatically apply.
India is the largest recipient of remittances from the U.S., with Indian-origin individuals sending back $32 billion in 2023-24. The proposed tax could add a significant financial burden on NRIs who regularly send money to support families, invest in property, or fund education in India. For instance, an H-1B worker sending $1,000 monthly would incur an additional $420 annually in taxes.
● Verification Issues: Remittance providers may need to implement new systems to verify citizenship status, potentially leading to privacy concerns and additional paperwork for senders.
● No Refunds for Non-Citizens: While U.S. citizens can claim a refundable credit for the tax paid, this relief does not extend to green card holders, visa holders, or undocumented individuals.
● Economic Impact:Critics argue that the tax unfairly targets legal immigrants who contribute significantly to the U.S. economy. There are concerns it may discourage foreign talent from working in the U.S., especially in sectors like tech and healthcare.
● Stay Informed: Monitor credible news sources for updates on the bill's progress.
● Financial Planning: Consider consolidating transfers or exploring alternative remittance methods to minimize potential tax liabilities.
● Consult Professionals: Seek advice from tax professionals to understand the implications and explore possible exemptions or strategies.
The proposed 3.5% remittance tax could significantly affect the financial activities of NRIs in the U.S. While the bill is still under consideration, it's crucial for the Indian diaspora to stay informed and prepare for potential changes. Engaging with community organizations and policymakers can also help voice concerns and influence the legislative process.
Talk Directly on WhatsApp
Chat Now