Indians may benefit as Trump plans to reduce remittance tax to 1%
Washington, DC: The United States Senate is set to debate the latest version of the One Big Beautiful Bill Act (OBBBA), which now proposes a 1 per cent tax on remittances sent abroad. This marks a significant reduction from the originally proposed 5 per cent rate, offering relief to Indian professionals working in the US and non-resident Indians (NRIs) transferring money to India.
“There is hereby imposed on any remittance transfer a tax equal to 1 per cent of the amount of such transfer,” states the revised draft. It also specifies that the sender is responsible for paying the tax, which will apply to remittances made via cash, money orders, or cashier’s cheques. The House of Representatives had approved an earlier version in May, proposing a 5 per cent rate. This was later amended to 3.5 per cent before being brought down to 1 per cent in the updated Senate version.
Certain types of remittances have been excluded from the levy. Transfers made from accounts held with financial institutions, or those funded using debit or credit cards issued in the United States, will not be taxed under the new draft.
The proposed tax changes directly affect a large number of Indian nationals in the US, including those on H-1B and H-2A visas as well as Green Card holders. According to the Migration Policy Institute, the US was home to around 2.9 million Indians in 2023, the second-largest foreign-born group in the country.
India continues to be the leading global recipient of remittances. World Bank data for 2024 indicates India received USD 129 billion, with 28 per cent originating from the United States alone. Remittances are an essential financial support for households in states like Kerala, Uttar Pradesh, and Bihar.
Apart from remittance provisions, the bill includes wide-ranging policy proposals such as a USD 150 billion increase in military spending, mass deportation measures, and renewed funding for a border wall. These are expected to be financed by substantial cuts to federal programmes, including Medicaid and clean energy incentives.
The legislation passed a procedural hurdle in the Senate on Saturday with a 51–49 vote. According to Al Jazeera, Donald Trump is pushing for its final approval before 4 July. The bill has stirred sharp debate across party lines. Tesla CEO Elon Musk called it “utterly insane” and warned it could lead to job losses on a massive scale.
