Key Takeaways
• The One Big Beautiful Bill Act proposes a 3.5% remittance excise tax starting after December 31, 2025.
• H-1B visa holders must pay the tax on all cash and electronic money transfers abroad.
• Banks must verify citizenship and automatically deduct and report the 3.5% tax to the IRS.
A new proposal in the United States 🇺🇸 Congress has sparked concern among immigrants, financial institutions, and global families. The One Big Beautiful Bill Act, currently under consideration in the Senate as of July 3, 2025, includes a 3.5% remittance excise tax on money sent from the United States 🇺🇸 to people overseas. This tax would apply to many non-U.S. citizens, including H-1B visa holders, and covers both cash and electronic transfers. If passed, the law would take effect after December 31, 2025, and could change the way millions of people send money to their families and loved ones abroad.
This article explains what the remittance excise tax is, how it works under the One Big Beautiful Bill Act, and what it means for H-1B visa holders and others who regularly send money overseas. We’ll also look at the practical steps financial institutions and individuals may need to take, the possible challenges, and what to expect as the bill moves through Congress.
What Is the Remittance Excise Tax in the One Big Beautiful Bill Act?
The remittance excise tax is a proposed 3.5% tax on money transfers from the United States 🇺🇸 to people in other countries. The tax would apply to any transfer made by a “Sender” (the person sending the money) to a “Designated Recipient” (the person receiving the money) outside the United States 🇺🇸. The transfer must be made through a “Qualified Transfer Provider,” which usually means a bank, money transfer company, or other financial institution.
Key points about the remittance excise tax:
- Tax Rate: 3.5% of the amount sent overseas
- Who Pays: Non-U.S. citizens, including green card holders and H-1B visa holders
- What Transfers Are Covered: Both cash and electronic transfers
- Who Collects the Tax: The financial institution or money transfer service
- When Does It Start: If passed, after December 31, 2025
The tax is designed to raise revenue and, according to some lawmakers, to encourage more money to stay in the United States 🇺🇸. However, critics say it could hurt immigrants and their families who depend on remittances for basic needs.
How Does the Tax Apply to H-1B Visa Holders?
H-1B visa holders are foreign workers in the United States 🇺🇸 who have special skills, often in technology, engineering, or science. Many H-1B visa holders send money back home to support their families. Under the One Big Beautiful Bill Act, these workers would be directly affected by the remittance excise tax.
How the tax affects H-1B visa holders:
- Subject to the Tax: H-1B visa holders are not U.S. citizens, so they must pay the 3.5% tax on any money they send abroad.
- No Exemption for Transfer Type: The tax applies to both cash and electronic transfers. It doesn’t matter if the money is sent through a bank, a money transfer app, or in person at a money transfer office.
- Collected Automatically: The financial institution or transfer service will automatically deduct the tax from the amount being sent.
For example, if an H-1B visa holder sends $1,000 home to their family, the remittance excise tax would be $35. The recipient would get $965, and the $35 would go to the U.S. government.
Does the Tax Treat Cash and Electronic Transfers the Same?
Yes. The remittance excise tax in the One Big Beautiful Bill Act applies equally to both cash and electronic transfers. The law targets the act of sending money overseas, not the method used.
What this means:
- Cash Transfers: If you go to a money transfer office and send cash to another country, the 3.5% tax applies.
- Electronic Transfers: If you use a bank’s online service, a mobile app, or any digital platform to send money abroad, the same 3.5% tax applies.
- No Loopholes: The law is written to cover all types of remittance transfers, so switching from cash to electronic (or vice versa) does not avoid the tax.
This approach is meant to make the tax easy to enforce and to prevent people from avoiding it by changing how they send money.
How Will Financial Institutions Enforce the Tax?
Banks, credit unions, and money transfer companies will play a key role in collecting the remittance excise tax. They will need to set up systems to:
- Identify Who Is a U.S. Citizen: The law requires financial institutions to check if the sender is a U.S. citizen. If not, the tax must be collected.
- Deduct the Tax Automatically: The 3.5% tax will be taken out of the transfer amount before the money is sent.
- Report the Tax: Institutions must keep records and report the taxes collected to the Internal Revenue Service (IRS).
How will banks know if you are a U.S. citizen?
Most banks use IRS Form W-9 to confirm if someone is a U.S. resident for tax purposes. However, Form W-9 does not prove citizenship. Under the new law, banks may need to ask for more documents, such as a U.S. passport or birth certificate, to confirm citizenship. This could make the process more complicated for both banks and customers.
You can find the official IRS Form W-9 here.
What If You Are a U.S. Citizen but Can’t Prove It Right Away?
Sometimes, a person may be a U.S. citizen but not have the right documents on hand when making a transfer. In this case:
- The Tax Will Be Collected: If you can’t prove citizenship at the time of transfer, the bank will collect the 3.5% tax.
- You Can Get a Refund: If you later prove you are a U.S. citizen, you can claim a refund when you file your annual income tax return.
- Extra Paperwork: This process may require extra forms and could delay getting your money back.
This system is meant to make sure the tax is collected from everyone who is supposed to pay, but it could also mean more hassle for people who are citizens but don’t have proof with them.
What Are the Practical Challenges for Banks and Individuals?
The remittance excise tax could create new challenges for both financial institutions and people who send money overseas.
For financial institutions:
- New Systems Needed: Banks and money transfer companies will need to update their systems to check citizenship, collect the tax, and report it to the IRS.
- Higher Costs: These changes could mean higher costs for banks, which might be passed on to customers through higher fees.
- Training Staff: Employees will need training to handle the new rules and help customers understand what documents are needed.
For individuals (including H-1B visa holders):
- Higher Cost of Sending Money: The 3.5% tax makes it more expensive to send money home. For people who send money regularly, this adds up quickly.
- More Paperwork: People may need to show extra documents to prove citizenship or claim a refund.
- Possible Delays: If there are problems with paperwork or systems, transfers could be delayed.
Why Is the Remittance Excise Tax Controversial?
The remittance excise tax has sparked debate among lawmakers, immigrant groups, and financial experts.
Supporters say:
- The tax will raise money for the U.S. government.
- It may encourage more money to stay in the United States 🇺🇸.
- It could help pay for other programs in the One Big Beautiful Bill Act.
Critics argue:
- The tax unfairly targets immigrants, including H-1B visa holders, who often send money home to support families.
- It creates extra work and costs for banks and money transfer companies.
- It could accidentally affect U.S. citizens who can’t prove their status right away.
- It may hurt the economies of countries that rely on remittances from the United States 🇺🇸.
According to analysis by VisaVerge.com, the tax could have a big impact on non-U.S. citizens, especially those who send money home regularly. The extra cost and paperwork could make life harder for many immigrants.
What Do Experts and Advocacy Groups Say?
Several organizations have weighed in on the proposed tax:
- Tax Foundation: This group says the tax could create a heavy burden for both banks and individuals. They warn that even U.S. citizens could get caught up in the tax if they can’t prove their status, and that the tax could hit people making international transfers for reasons other than remittances.
- Anchin (tax advisory firm): Anchin notes that the tax will increase the cost of sending money abroad for non-U.S. citizens, including H-1B visa holders. They also point out that the extra work for banks could lead to higher fees for everyone, not just those paying the tax.
Both groups agree that the tax could have wide effects, not just on immigrants but on the financial system as a whole.
What Happens Next? Legislative Outlook
The One Big Beautiful Bill Act is still being debated in the Senate. The remittance excise tax is just one part of a much larger bill, and it could be changed or removed before the law is final.
Timeline:
- Current Status: The bill is in the Senate as of July 3, 2025.
- Possible Changes: Lawmakers may change the details of the tax, such as who pays it, how much it is, or how it is collected.
- Effective Date: If the bill passes as written, the tax would start after December 31, 2025.
What should you do?
- Stay Informed: Watch for updates from the U.S. Senate and trusted news sources.
- Talk to Your Bank: Ask your financial institution how they plan to handle the new rules.
- Consult a Tax Professional: If you send money overseas, especially as an H-1B visa holder, get advice on how the tax could affect you.
For the latest updates on the bill, you can visit the U.S. Senate’s official website.
What Are the Broader Implications for Immigrants and Their Families?
The remittance excise tax could have a big effect on immigrants, especially those who send money home to support family members. Many H-1B visa holders and other non-U.S. citizens send part of their earnings to help pay for food, education, and medical care for relatives in their home countries.
Possible impacts:
- Less Money for Families Abroad: The 3.5% tax means families will get less money.
- Harder for Immigrants to Save: The extra cost could make it harder for immigrants to save or plan for the future.
- Economic Effects: Countries that rely on remittances from the United States 🇺🇸 may see less money coming in, which could hurt their economies.
Some advocacy groups worry that the tax could push people to use informal or unregulated ways to send money, which can be risky and less secure.
What Should H-1B Visa Holders and Other Non-U.S. Citizens Do Now?
If you are an H-1B visa holder or another non-U.S. citizen who sends money overseas, here are some steps you can take:
- Keep Good Records: Save receipts and documents for all money transfers.
- Ask About Fees: Check with your bank or transfer service to see how the tax will be collected and if there are any extra fees.
- Plan Ahead: If you know you will need to send money, consider the timing and amount to reduce the impact of the tax.
- Stay Updated: Follow news from the U.S. Senate and trusted sources for any changes to the law.
Conclusion: What’s Next for Remittance Senders?
The proposed remittance excise tax in the One Big Beautiful Bill Act could change the way millions of people send money from the United States 🇺🇸 to other countries. H-1B visa holders and other non-U.S. citizens would be directly affected, facing higher costs and more paperwork. Financial institutions will also need to update their systems and train staff to follow the new rules.
As the bill moves through Congress, it’s important for everyone involved—immigrants, banks, and families abroad—to stay informed and prepare for possible changes. For now, the best steps are to keep good records, ask questions, and watch for updates from official sources.
For more information on remittance taxes and immigration policy, you can visit the U.S. Senate’s official website or consult with a trusted tax professional. As reported by VisaVerge.com, staying informed and prepared is the best way to handle the possible changes ahead.
Learn Today
Remittance Excise Tax → A proposed 3.5% tax on money transfers sent from the U.S. to recipients abroad.
H-1B Visa Holder → A foreign worker authorized to work temporarily in the U.S. with specialized skills.
Qualified Transfer Provider → Financial institutions authorized to process overseas money transfers subject to the tax.
IRS Form W-9 → A tax form used to verify U.S. residents’ status for tax purposes.
Designated Recipient → The person or entity abroad receiving the remittance from the sender.
This Article in a Nutshell
A new 3.5% remittance excise tax in the One Big Beautiful Bill targets non-U.S. citizens, including H-1B workers sending money abroad, increasing costs and paperwork starting after 2025.
— By VisaVerge.com
