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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

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.