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A newly approved bill in the U.S. House dubbed the “One Big, Beautiful Bill” includes a controversial 3.5% excise tax on overseas remittances, directly affecting non-citizens such as Non-Resident Indians (NRIs), H‑1B immigrants, and other immigrant workers. The measure, which passed narrowly with a 215‑214 vote on May 22, 2025, could profoundly impact remittance flows starting January 1, 2026
Who Is Affected?
- Global Indians: NRIs and other Indian diaspora sending funds back home.
- Immigrant workers: Including H‑1B, L‑1, L‑2 visa holders, green card holders, and undocumented immigrants.
- Non-resident investors: Individuals transferring capital gains or dividends abroad from U.S. bank/brokerage accounts.
How It Works
- A 3.5% excise tax will be automatically deducted from each eligible transfer by remittance service providers.
- An exemption exists for U.S. citizens and nationals, provided they use an approved provider and supply Social Security numbers.
- Providers face penalties if they fail to withhold or remit the tax correctly.
Potential Ripple Effects
- The tax may drive financial outflows before implementation as NRIs consider early transfers or alternate routes.
- Recipients in countries like India could experience reduced remittance received.
- Firms handling international employee compensation transfers may need to overhaul payroll and compliance systems.
Strategic Implications
- Remittance behavior could shift toward informal or crypto channels to bypass the tax.
- U.S. competitiveness: The levy risks discouraging foreign talent, potentially affecting STEM recruitment and global investment strategies.
- Global tax planning: Advisors must reassess cross-border structures and advise clients proactively before the 2026 effective date.
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