Proposal 5% remittance tax under President Donald Trump’s

Key Highlights of the Proposal 5% remittance tax under President Donald Trump’s

The proposed 5% remittance tax under President Donald Trump’s “The One, Big, Beautiful Bill” is a significant development that could directly impact millions of Non-Resident Indians and immigrants in the United States, especially those sending money back to India.

What Is the Proposal 5% remittance tax under President Donald Trump’s?

• A 5% excise tax on all international remittance transfers made by non-citizens.
• To be paid by the sender at the time of transfer.
• For example, sending ₹1,00,000 (~$1,200) to India would attract a $60 (~₹5,000) tax payable to the IRS.
• Collected by remittance transfer providers, who must remit it quarterly to the US Treasury.

Who Will Be Impacted 5% remittance tax under President Donald Trump’s?

• Non-citizens only – including:
  • H-1B, L-1, F-1, and other visa holders.
  • Green card holders (until they become US citizens).
• US citizens and nationals are exempt, classified as “verified US senders.”
• Applies to all remittance types: bank transfers, money transfer apps, NRE/NRO account remittances.

No Minimum Threshold

• The tax applies to all remittances, regardless of amount — even small personal transfers.
• This includes support to family, education expenses, gifts, and more.

Exceptions and Refunds

• Refundable tax credit provision exists:
  • Only for individuals with valid Social Security Numbers (SSNs) who file US taxes.
  • Practical benefit for some, but may require annual tax filing to claim.
• Anti-conduit rules are designed to prevent routing transfers through third parties to evade the tax.

Purpose of the bill:

1. • Titled “The One Big Beautiful Bill”
   • It aims to:
     • Make the 2017 Tax Cuts and Jobs Act permanent.
     • Increase the standard deduction.
     • Extend the child tax credit to $2,500 until 2028.
   • The remittance tax is an offsetting measure to finance these extensions.

Legislative timeline:

1. • Target passage by Memorial Day (May 26, 2025) in the House of Representatives.
   • If passed, it moves to the Senate, with an aim to reach President Trump’s desk by July 4, 2025.
   • This fast-track process suggests the bill could become law by July 2025.

Implications for NRIs

• Financial burden: A recurring cost on every remittance, significantly affecting those who regularly send funds home.
• Discriminatory impact: Targets only non-citizens, which may raise legal and ethical concerns.
• Urgency to act: NRIs may want to front-load remittances before July 2025 if the bill seems likely to pass.
• Tax planning: May necessitate review of remittance strategies, investment planning, and consideration of citizenship status.
• Cost Increase for NRIs : ₹1,00,000 remittance → ₹5,000 tax (~$60) and Adds significant cost, especially for regular family support or education funding.
• Accelerated Timeline : House aims to pass by May 26, 2025 (Memorial Day). Bill expected to reach President Trump’s desk by July 4, 2025.

Key Concerns for NRIs and Legal Residents

Concern	Explanation
High cost of support	A $1,000 transfer would now deliver only $950.
No lower threshold	Even small remittances (e.g., $100 or $200) would attract the tax.
Legal status confusion	Many are unsure if H-1B/F-1 visa holders are exempt as “verified senders”.
No exemption for green card holders	Green card holders — who pay full US taxes — are still liable.
Reduced investment in India	NRIs may reduce real estate or market investments due to added costs.
Hardship for dependents	Families relying on monthly remittances for healthcare or daily living would suffer.

Why This Matters for Indians

• India is the largest recipient of remittances globally, receiving $129 billion in 2024.
• Over 27.7% of India’s total remittance inflows in FY 2023-24 came from the US (RBI Bulletin).
• 5.4 million overseas Indians in the US, of which around 3.3 million are PIOs.
• Many are on temporary visas or hold green cards, meaning millions could be subject to this tax.

What Should NRIs Do Now?

Recommended Actions

• Advance any large remittances before July 2025.
• Review financial planning and remittance strategies.
• Evaluate tax credit eligibility if you have an SSN and file US taxes.
• Consult cross-border tax advisors for compliance and optimization.
• Stay Updated: Closely monitor the bill’s progress through Congress.
• Plan Ahead: Consider making larger remittances before July 2025, if needed.
• Review Alternatives: Explore cost-effective ways to transfer funds that could mitigate the 5% impact (e.g., family accounts, investment routes).

If passed, this bill would represent a significant policy shift by taxing outbound remittances for the first time in US history. It would disproportionately affect Indian nationals, who are the largest remittance-sending community in the US.