House of Republicans on Monday (May 12) released the detailed tax provisions of their fiscal bill. The package is the centerpiece of President Donald Trump’s “One Big, Beautiful Bill” — and comes after weeks of tense negotiations among GOP lawmakers. As per the provisions listed on the bill, it imposes a 5% tax on remittances sent abroad, a measure aimed at curbing money transfers to foreign countries. US citizens could apply for credits to offset the cost, but the tax will hit immigrant households hardest. This development depicts a significant shift in U.S. tax policy, especially for foreign workers who regularly send money to their families abroad. The broader bill aims to make the 2017 Tax Cuts and Jobs Act permanent while increasing the standard deduction and extending the child tax credit to $2,500 through 2028.For NRIs, this tax could have profound financial implications. Currently, India is the world’s top recipient of remittances, with around $83 billion sent annually from abroad, much of it from the United States. The new provision would mean that for every ₹1 lakh (in dollar terms) sent home, ₹5,000 (in dollar terms) would go to the IRS before reaching the intended recipients. This change affects everyday family support, property purchases, educational expenses, and more. Until now, remittances were not subject to U.S. taxation, making this a stark policy reversal.
“This is really a NEW form of stealing”
Netizens, especially NRIs swiftly reacted to the proposed bill. A reddit user noted, ” Are the U.S. lawful temporary residents also subjected to this 5% robbery? Or only undocumented, illegal immigrants? Example: Someone on an H-1B or TN visa/status, who is a lawful albeit non-permanent U.S. resident, and having also a SSN.Would it also apply to US-originated outbound international transfers involving a source and destination bank account owned by the same, lawful U.S. non-permanent resident person? This is really a NEW form of stealing people’s hard-earned money (and who contributed fully their fair share into tax revenue and social security contributions), by a rapacious, unaccountable U.S. government!.” Another noted, “People with legal status are not impacted by this. So H1, F1 etc don’t have to worry about this. As long as you can prove legal status to the remittance service provider you should be fine.” “Yup, this will mostly impact the entire NRI community living in the states, and sending money back home. Although their definition of US Nationals is something which is not sure yet. And at the same time, adding the 5% tax as a tax credit will also discourage US citizens to send money abroad, or spend it abroad,” stated a user.
