In what’s being pitched as a relief measure for the large NRI community in the United States, a newly passed law has reduced the proposed remittance tax rate from 5% to 3.5%. The US House of Representatives recently passed President Trump’s controversial ‘One Big Beautiful Bill Act’ in a razor-thin 215-214 vote.
Among its many provisions, the bill introduces an “excise tax on remittance transfers,” targeting money sent abroad by immigrants living in the US. Initially proposed at 5%, the tax rate was brought down to 3.5% following a last-minute revision through the Manager’s Amendment.
Notably, the new tax will not affect US citizens or nationals who use qualified remittance providers. However, it will apply to legal immigrants — including Green Card holders and those on F1, H1B, and L1 visas — a significant portion of the Indian diaspora.
The move is especially significant considering the scale of Indian remittances from the US. RBI data shows the US was the top source of inward remittances to India in 2023–24, contributing over $33 billion. The Indian-American community, now numbering over 4.46 million, has been increasingly central to India’s remittance economy — rising from 22.9% of total inflows in 2016 to 27.7% in 2023–24.
“They really do hate us”
The internet was quick to react to the announcement of the revised 3.5% excise tax on remittances by immigrants in the U.S., with many expressing frustration and skepticism. “Some relief, but still not a small tax on already tax-paid money,” one user commented, capturing the sentiment of many who feel the tax unfairly targets funds that have already been taxed once. “Going from 0 to 3.5% is not a relief,” another echoed, criticising the framing of the reduction as a benefit. Concerns also turned toward the economic ripple effects. “Expect a lot of price hikes in the next 6 months. With this 3.5% tax kicking in from 2026 — that’s like ₹3-4 lakhs on a ₹1 crore transfer — many will rush to remit before 2025 ends. More competition for luxury apartments incoming. If I were a realtor, I’d HOLD,” one user warned.
“The remittance tax was cut from 5% to 3.5% at the last minute. They really do hate us,” a user lamented. Others highlighted a broader concern: “Lol! What relief! You know how taxes work, right? They start small to get through the door, then creep up as government spending grows.” There were also attempts at offering practical advice. “You can claim a refund on that when you file your taxes,” said one user, though this was quickly dismissed by others. “Still 3.5% too much. Why are we being taxed again on money that’s already been taxed?” another wrote.