Trump’s New 5% Remittance Tax: Understanding the Implications

May 25

3 min read

A new tax proposal in the United States has raised concerns among many Indian professionals living and working there. The Trump-backed legislation aims to impose a 5% tax on all remittances sent to foreign countries by non-US citizens. This includes individuals on H-1B, H-2A visas, and even Green Card holders.

At SS Auditors, experts in NRI taxation, income tax filing, and cross-border financial regulations, we break down what this means for you. Our goal is to help you better plan and protect your hard-earned income.

📌 What Is the New US Remittance Tax?

On May 12, 2025, the US House of Representatives introduced a legislative package called "The One Big Beautiful Bill." A key provision is a 5% excise tax on money transfers (remittances) sent abroad by non-US citizens. This will impact:

Indian professionals on H-1B and H-2A visas.
Green Card holders.
International workers on temporary or permanent visas.

How Will It Affect You?

This bill could have serious consequences. If enacted, sending $1,000 to India would cost an additional $50 in remittance tax. This increase could significantly reduce the amount of money that Indian families receive. Alternatively, it may force senders to pay more to maintain their usual level of support.

💸 Why Should Indian Professionals in the US Be Worried?

India stands as the largest recipient of international remittances, receiving $129 billion in 2024, with 28% of that amount coming directly from the United States. A tax like this could result in:

Reduced remittance flows to India.
Increased financial strain on professionals living abroad.
A potential decline in the Indian rupee’s value.

At SS Auditors, we assist clients in optimizing their tax strategies both in India and internationally. If this bill affects you, consider consulting our team for financial planning that prioritizes your interests.

💔 Economic Impact on India: Trump’s New 5% Remittance Tax

According to the Global Trade Research Initiative (GTRI):

A 10–15% drop in remittances could lead to a $12–18 billion annual shortfall for India.
The Reserve Bank of India (RBI) might need to intervene frequently to stabilize the currency.
The rupee could depreciate by ₹1–₹1.5 per US dollar.

This decline would have direct ramifications for millions of households in states like Kerala, Uttar Pradesh, and Bihar, where remittances are vital for supporting education, healthcare, and housing.

🛑 Double Taxation? Experts Raise Red Flags

Numerous tax experts and economists argue that this tax proposal signifies double taxation. Remittances are made after income tax has already been paid in the US. One chartered accountant estimates that this bill could cost India $1.6 billion annually. In the fiscal year 2023-24, around 45 lakh Indians in the US sent back $32 billion.

If you're worried about double taxation and compliance with regulations in both India and the US, please book a consultation with our international taxation experts.

🧠 What Can You Do?

If you are an Indian professional residing in the US—or have family there—take proactive steps now. Here’s how you can prepare:

Evaluate your remittance plans to consider the 5% tax.
Consult a financial advisor for guidance on restructuring your income and expenses.
Ensure compliance with Indian tax regulations to avoid penalties on foreign income.

Let SS Auditors help you with:

NRI Tax Filing Services.
Foreign Income Reporting.
Cross-border Financial Planning.

🌐 MAGA Politics & Social Media Outrage

This bill has ignited political and social discussions in the US. Some MAGA supporters argue that a 5% tax is "too low," suggesting that it should be increased to 50% or even 100%. The aim is to compel immigrants to “self-deport.”

Mexican President Claudia Sheinbaum has publicly condemned the move as “unacceptable.” She urges countries with large immigrant populations to voice their concerns.

📣 Final Thoughts: Stay Informed, Stay Protected

While the remittance tax remains in the proposal stage, its potential implications for Indian professionals—and their families back home—are substantial. Regardless of your visa status or if you're planning to send money to India soon, it's vital to prepare now.

At SS Auditors, we are here to guide you through these complex global financial regulations.