In a major relief for Indian professionals working in the United States and Non-Resident Indians (NRIs) sending money back home, the revised draft of the One Big Beautiful Bill Act (OBBBA) has slashed the proposed tax rate on remittances to 1%, down significantly from the earlier 5% rate that had triggered widespread concern in diaspora communities.
The updated provision in the bill now states: "There is hereby imposed on any remittance transfer a tax equal to 1% of the amount of such transfer," with the sender responsible for paying the tax.
The tax will apply only to remittances made via cash, money orders, or cashier's checks, and excludes bank account transfers and those funded via debit or credit cards issued in the US. This exemption is expected to benefit a large chunk of Indian-origin individuals who use digital and bank-based channels to send money home.
Rollback After Backlash
Initially proposed at 5% in May 2025, the tax was later brought down to 3.5% in the House version of the bill. However, sustained pressure from immigrant groups and business leaders led to a further reduction in the Senate draft to just 1%, which has now been officially included in the latest version of the OBBBA.
Why This Matters to Indians in the US
Remittances form a critical financial lifeline for millions of Indian families, especially in states like Kerala, Uttar Pradesh and Bihar. India remains the world's largest recipient of remittances, receiving a record $129 billion in 2024, according to the World Bank. The United States accounted for 28% of these inflows.
As of 2023, over 2.9 million Indian-born individuals resided in the US, according to the Migration Policy Institute, making them the second-largest immigrant group in the country.
The initial proposal alarmed many Indian-origin workers on H-1B, H-2A, and other temporary visas, as well as Green Card holders, who feared a significant financial burden on sending money back to families.
What's Next for the Bill?
The OBBBA, a flagship legislation backed by former President Donald Trump, narrowly passed a key Senate vote with a 51-49 majority and is now headed for full debate. The bill covers a range of provisions, including $150 billion in military spending, mass deportations, border wall funding, and cuts to social welfare programs.
However, the bill remains controversial. Tesla CEO Elon Musk recently called it "utterly insane," warning that it could "destroy millions of American jobs."
Trump aims to get the bill passed before July 4, but with growing opposition-including from within Republican ranks-its future remains uncertain.
Key Highlights for SEO
- US remittance tax on NRIs
- Trump's One Big Beautiful Bill impact on Indians
- 1% remittance tax for NRIs 2025
- Remittance exemptions for debit/credit card payments
- India: world's largest remittance recipient 2024
- NRIs in US: tax relief on foreign transfers
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