In a significant development, the US House Budget Committee voted late Sunday night to advance President Donald Trump’s “One Big Beautiful Bill Act.” This sweeping legislation includes a provision that could substantially increase the financial burden on millions of immigrants, particularly non-resident Indians (NRIs) and other foreign nationals living in the United States. The bill proposes a 5% tax on all international money transfers made by non-US citizens, directly impacting their ability to send money back home to their families and communities.
What the bill proposes
The bill’s remittance provision would impose a 5% tax on all international money transfers made by non-citizens, including non-immigrant visa holders (like H-1B workers) and green card holders. If passed, this tax would be deducted at the point of transfer, with no minimum threshold—meaning even small remittance amounts would be taxed. However, the legislation specifies that US citizens and nationals (referred to as “verified US senders”) would be exempt from this tax, placing non-citizens at a financial disadvantage. For Indian immigrants, this proposal could result in a significant financial strain. According to the Reserve Bank of India (RBI), the US accounted for nearly $32 billion in remittances to India in 2023-24, a portion of the $118.7 billion total remitted globally. If the tax is implemented, Indians in the US could be forced to pay $1.6 billion in remittance taxes annually.
Impact on immigrants and NRIs
The bill is expected to have a considerable impact on the 45 lakh (4.5 million) Indian residents and non-resident Indians living in the US. Many of these individuals rely on remittances as a lifeline for their families back home. The tax also extends beyond traditional money transfers, affecting transfers related to investment income, stock options, and other financial transactions. This broad scope of the tax means that it will hit various segments of the NRI community, from those supporting extended families to those investing in their home country.
Implications for the US immigrant community
The remittance tax is not the only provision in the bill targeting immigrants. It also includes a significant allocation of funds aimed at ramping up immigration enforcement, including the construction of a border wall along the US-Mexico border. The bill provides $46.5 billion for this effort, as well as $4 billion to hire additional Border Patrol agents and $2.1 billion in retention bonuses for enforcement personnel. Additionally, the legislation proposes a $1,000 fee for migrants seeking asylum, marking a new financial hurdle for those seeking refuge in the US. This aspect of the bill aims to remove 1 million immigrants per year, with plans to house 100,000 individuals in detention centers. These provisions reflect a broader anti-immigrant agenda, further tightening the US’s immigration policies.
The proposed remittance tax would have a ripple effect beyond the US borders, particularly in countries that heavily rely on remittances. For nations like El Salvador, Guatemala, and Honduras—where remittances account for a significant portion of the GDP—the tax could be a major economic blow. In 2023, remittances from the US to El Salvador alone accounted for roughly 20% of the country’s GDP. With the proposed tax, these nations could see a reduction in the financial lifeline that supports millions of families. The government of El Salvador, led by President Nayib Bukele, has already voiced opposition to the proposal. Mexico’s Foreign Affairs Minister, Juan Ramón de la Fuente, condemned the tax as “double taxation” for migrant workers who already pay US income taxes.
He also argued that the tax would disproportionately impact the most vulnerable workers, many of whom are already economically disadvantaged. Opposition to the remittance tax is already building both within the US and internationally. Mexico has signaled it will take legal and political action against the proposal, citing concerns over its fairness and potential economic harm. Digital payment providers, represented by the Electronic Transactions Association, also urge lawmakers to reconsider, warning that the tax could disproportionately harm unbanked populations who rely on cross-border payments for essential expenses.
This is not the first time President Trump has attempted to introduce a remittance tax. During his first term, a similar initiative faced logistical and legal hurdles, particularly in distinguishing between worker remittances and commercial payments. While Oklahoma remains the only state with a remittance fee (a $5 charge on wire transfers under $500), the federal government’s push to impose a broader tax on remittances could have far-reaching consequences.
If enacted, Trump’s proposed remittance tax could have profound economic and social consequences for millions of immigrants and their families. While the bill’s supporters argue that it could generate significant revenue, its critics warn that it would disproportionately harm vulnerable populations who depend on these financial transfers. As the legislation continues to move through the House, its fate remains uncertain, but the debate surrounding it is likely to intensify in the coming weeks.