The "One Big Beautiful Bill" passed the US House and proposes a 3.5% excise tax on all outbound remittances from non-US-citizens and non-permanent-residents to foreign countries — including India.
What Is the 3.5% Remittance Tax?
The "One Big Beautiful Bill" passed the US House and proposes a 3.5% excise tax on all outbound remittances from non-US-citizens and non-permanent-residents to foreign countries — including India.
Who Is Affected?
| Visa Status | Affected? | Notes |
|---|---|---|
| H1B visa holders | Yes | All remittances taxed |
| L1 visa holders | Yes | All remittances taxed |
| F1/OPT students | Yes | All remittances taxed |
| H4 EAD holders | Yes | All remittances taxed |
| Green card holders | No | Permanent residents exempt |
| US citizens | No | Citizens exempt |
The Real Cost — What You Actually Lose
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On a $1,500/month remittance to India:
- Tax per transfer: $52.50
- Annual tax cost: $630/year
- Over 5 years: $3,150 gone in taxes alone
On a $3,000/month remittance:
- Annual tax cost: $1,260/year
- Over 5 years: $6,300 in taxes
How Is the Tax Collected?
The tax would be collected at the point of transfer by the remittance provider (Wise, Remitly, Western Union, banks). They withhold 3.5% and remit it to the IRS. You'd see it as a line item in your transaction receipt.
Legal Ways to Reduce the Impact
Option 1: Apply for a Green Card Now
Permanent residents are exempt. If you're in the EB2/EB3 queue, this accelerates the urgency of your green card application.
Option 2: Transfer Through a US Citizen Spouse
If your spouse is a US citizen or green card holder, transfers made from their account may be exempt. Consult a tax attorney before implementing.
Option 3: Gift to Family Members in India
The US gift tax annual exclusion is $18,000 per recipient per year. Gifts may be structured differently — consult a CPA on whether gifts are treated as "remittances" under the new law.
Option 4: Pre-fund Indian Accounts Before the Law Passes
If the Senate passes it with a future effective date, sending larger amounts now may allow you to pre-fund NRE/NRO accounts at today's 0% tax rate.
Option 5: Use NRE Fixed Deposits
Pre-fund an NRE FD in India. Your family draws from the FD for expenses. You top it up less frequently — fewer transfer events = lower total tax.
What Remittance Apps Are Saying
Wise, Remitly, and Western Union have not yet updated their fee structures pending final legislation. Monitor their fee pages weekly once the Senate votes.
Timeline to Watch
- May 2026: Senate floor vote expected
- June 2026: Conference committee if amended
- July 2026: Presidential signature (if passed)
- October 2026: Earliest effective date (typically 90 days post-signature)
Should You Panic?
No. But you should prepare. The bill still needs Senate passage and could be amended. The exemption threshold, rate, and effective date may all change. Focus on:
- Monitoring the Senate vote
- Pre-funding Indian accounts if possible
- Consulting a CPA on your specific structure
- Accelerating green card if you're eligible
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