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3d ago

Senate to Decide 3.5% Tax on Immigrant Remittances in US Spending Bill

Approval of the levy is expected to cut billions in remittances to Indian families, prompting warnings of reciprocal action

Reuters
Image
Representational image of Indian Americans | Pew Research Center

Overview

  • The US House passed the 1,116-page “One Big Beautiful Bill” on May 22, 2025, which includes a 3.5% excise tax on remittances sent by non-US citizens beginning January 1, 2026.
  • The levy targets permanent residents and H-1B visa holders while allowing US citizens to claim a tax credit on verified remittance transfers.
  • India received $32 billion in US remittances during the 2023-24 financial year, and unchanged transfer levels could trigger more than $1.1 billion in annual taxes on Indian senders.
  • Experts warn reduced remittance flows may weaken India’s foreign exchange reserves and strain millions of households reliant on these funds.
  • The Senate is expected to vote on the measure in late June or July, with analysts cautioning that passage could lead India to consider reciprocal financial measures.