Key Takeaways
• OBBB Act imposes a 1% remittance transfer tax on money sent abroad after December 31, 2025.
• The tax applies to all senders, including H-1B visa holders, regardless of joint or separate tax filing.
• Banks will automatically withhold the tax and require documentation like Form W-9 from senders.
A new tax on international money transfers is set to impact many people living in the United States 🇺🇸, including H-1B visa holders and their families. The One Big Beautiful Bill Act (OBBB), which becomes effective for remittance transfers after December 31, 2025, introduces a 1% remittance transfer tax on funds sent abroad from U.S. financial institutions. This change has raised many questions, especially among H-1B households who often send money to family members in their home countries. One common concern is whether filing taxes jointly or separately will affect how much remittance tax they owe. Here’s a detailed look at what this new law means, how it works, and what H-1B households and others need to know.
What Is the Remittance Transfer Tax Under the OBBB Act?
The remittance transfer tax is a new excise tax, which means it is charged on a specific activity—in this case, sending money from the United States 🇺🇸 to someone in another country. The tax rate is 1% of the amount sent, and it applies to all individuals, regardless of their citizenship or immigration status. This includes U.S. citizens, green card holders, and non-U.S. citizens such as H-1B visa holders.
Key facts about the remittance tax:
- Effective Date: Applies to transfers made after December 31, 2025.
- Tax Rate: 1% of the amount sent abroad.
- Who Pays: Anyone sending money from a U.S. financial institution to a recipient outside the United States 🇺🇸.
- How It’s Collected: The tax is withheld automatically by the bank or financial institution at the time of the transfer.
This tax is part of the larger One Big Beautiful Bill Act, which includes several changes to international tax rules. The goal is to raise revenue from cross-border money transfers, especially those sent by non-U.S. citizens living in the United States 🇺🇸.
How Does the Remittance Tax Work?
When you send money from your U.S. bank account to someone in another country, your bank will automatically deduct 1% of the transfer amount as a tax. For example, if you send $1,000 to your family in India 🇮🇳, the bank will withhold $10 as the remittance tax, and your family will receive $990.
Important points:
- The tax is charged at the time of transfer—you do not need to calculate or pay it separately.
- The bank or money transfer service is responsible for collecting and sending the tax to the government.
- The tax applies to all cross-border transfers, whether you are a U.S. citizen, green card holder, or on a temporary visa like the H-1B.
Does Filing Jointly or Separately Affect the Remittance Tax for H-1B Households?
A major question for many H-1B households is whether their income tax filing status—that is, whether they file taxes jointly as a married couple or separately as individuals—will change how much remittance tax they owe. The answer is clear: Filing status does not affect the remittance tax.
Here’s why:
- The remittance tax is an excise tax on the act of sending money abroad. It is not an income tax.
- The tax is triggered by the transfer itself, not by your income, marital status, or how you file your taxes.
- Whether you file your income taxes jointly or separately, the same 1% tax applies to each transfer you make.
Example:
If two spouses, both on H-1B visas, send money abroad from their joint account, the bank will charge the 1% tax on each transfer. If they have separate accounts and send money individually, each transfer is taxed at 1%. Their choice to file income taxes jointly or separately does not change the remittance tax.
Why Was the Remittance Tax Introduced?
The remittance tax was included in the OBBB Act to help the government collect more revenue from money leaving the United States 🇺🇸. Lawmakers noticed that large sums are sent abroad each year, often by people working in the U.S. who support families in their home countries. By taxing these transfers, the government hopes to raise funds and also keep better track of cross-border money flows.
The tax is also part of a broader effort to update international tax rules. The OBBB Act includes other changes, such as new rules for companies with foreign branches and updates to how foreign income is taxed. But for most individuals, the remittance tax is the most direct and noticeable change.
What Does This Mean for H-1B Households?
H-1B visa holders are temporary workers in the United States 🇺🇸, often in specialized fields like technology, engineering, or healthcare. Many H-1B workers send money home to support family members, pay for education, or help with living expenses. The new remittance tax will directly affect these transfers.
Key implications for H-1B households:
- Every international transfer will be taxed at 1%.
- Filing status (joint or separate) does not matter for the remittance tax.
- Banks will require more documentation to process transfers, such as a completed Form W-9 to confirm U.S. residency status.
- Households should prepare for slightly higher costs when sending money abroad.
Practical example:
If an H-1B couple files their income taxes jointly but sends money from one spouse’s account, the 1% tax applies to each transfer. If they file separately and each sends money from their own account, the same rule applies. The tax is based only on the act of sending money, not on how the household files its taxes.
How Will Banks and Financial Institutions Handle the New Tax?
Banks and money transfer services will play a key role in collecting the remittance tax. They will need to update their systems to:
- Automatically withhold 1% of each cross-border transfer.
- Collect and verify documentation such as Form W-9 or similar forms to confirm the sender’s residency status.
- Report the withheld tax to the government.
This means that anyone sending money abroad will likely be asked for more paperwork and may see new questions or requirements when using online banking or visiting a branch.
For H-1B households, this could mean:
- Having to provide proof of identity and residency.
- Answering questions about the purpose of the transfer.
- Waiting longer for transfers to be processed as banks adjust to the new rules.
What About Other Taxes and Reporting Requirements?
While the remittance tax is new, it is separate from other taxes and reporting rules that may apply to H-1B households. For example:
- Income tax filing status (joint or separate) affects how much income tax you pay, but not the remittance tax.
- Foreign Account Tax Compliance Act (FATCA) and other laws may require you to report foreign bank accounts or large transfers, but these are separate from the remittance tax.
- Gift taxes may apply if you send large sums as gifts, but the remittance tax is charged on every transfer, regardless of the amount.
It’s important to keep these rules separate in your mind. The remittance tax is a transactional tax—it applies every time you send money abroad, no matter your income, marital status, or how you file your taxes.
Expert Opinions and Advice
Tax professionals and immigration experts agree that the remittance tax will create new challenges for both banks and individuals. According to analysis by VisaVerge.com, the biggest impact will be on non-U.S. citizens, such as H-1B visa holders, who regularly send money to family members in other countries.
Key points from experts:
- No difference based on filing status: There is no evidence or guidance suggesting that filing jointly or separately changes the remittance tax owed.
- Increased compliance burden: Banks and taxpayers will need to keep better records and may face more paperwork.
- Plan ahead: H-1B households should talk to tax professionals to understand how the new tax fits with their overall financial planning.
Quote from a tax advisor:
“There’s a lot of confusion about whether filing jointly or separately affects the remittance tax. The answer is no—the tax is based only on the transfer, not on your income tax return. But people should be ready for more questions and paperwork from their banks.”
What Should H-1B Households Do Now?
With the new tax taking effect for transfers after December 31, 2025, there is still time to prepare. Here are some steps H-1B households can take:
- Review your current remittance habits: Look at how often you send money abroad and how much you send each time.
- Talk to your bank: Ask about how they plan to handle the new tax and what documents you will need.
- Gather documentation: Make sure you have a completed Form W-9 or similar paperwork ready for your bank.
- Consult a tax professional: Get advice on how the remittance tax fits with your overall tax situation, especially if you have other international financial ties.
- Budget for the new tax: Plan for the extra 1% cost on each transfer starting in 2026.
Broader Impacts: Who Else Is Affected?
While H-1B households are a key group affected by the remittance tax, the law applies to everyone sending money abroad from the United States 🇺🇸. This includes:
- U.S. citizens supporting family overseas.
- Green card holders with relatives in other countries.
- Temporary visa holders (such as F-1 students, L-1 workers, and others).
- People sending business payments or gifts abroad.
The tax is not limited to personal remittances—it applies to any cross-border transfer from a U.S. financial institution to a recipient outside the United States 🇺🇸.
Where to Find Official Information
For the most up-to-date and official details on the remittance tax and the One Big Beautiful Bill Act, visit the IRS International Taxpayers page. This site provides guidance on international tax rules, forms, and compliance requirements.
If you need legal or tax advice specific to your situation, consider reaching out to professionals such as:
- Edward Hild, Government Relations Principal ([email protected])
- Sahel A. Assar, Tax Counsel and Chair of Blockchain and Digital Asset Practice Group ([email protected])
Summary and Takeaways
The One Big Beautiful Bill Act brings a new 1% remittance transfer tax on money sent abroad from the United States 🇺🇸, starting with transfers made after December 31, 2025. This tax applies to everyone, including H-1B households, and is collected automatically by banks at the time of transfer. Filing jointly or separately for income tax purposes does not affect the remittance tax—the tax is based only on the act of sending money, not on how you file your taxes.
Key takeaways:
- Remittance transfer tax is 1% and applies to all cross-border transfers from U.S. financial institutions.
- No difference for H-1B households based on joint or separate tax filing status.
- Banks will handle tax collection and may require more documentation from senders.
- Plan ahead for the new tax and talk to professionals if you have questions.
As reported by VisaVerge.com, the new remittance tax is a significant change for many people who support families abroad. By understanding the rules now and preparing for the changes, H-1B households and others can avoid surprises and keep their financial plans on track.
For more information on international tax rules and compliance, visit the IRS International Taxpayers page. If you need to complete or update your Form W-9, make sure to use the official IRS website.
By staying informed and prepared, H-1B households and others can manage the new remittance tax with confidence and continue supporting loved ones around the world.
Learn Today
One Big Beautiful Bill Act → U.S. law effective after 2025 imposing a 1% tax on international money transfers from U.S. banks.
Remittance Transfer Tax → A 1% excise tax charged on money sent from the U.S. to recipients in other countries.
H-1B Visa Holder → A temporary U.S. worker visa status allowing specialized professionals to work in the United States.
Form W-9 → IRS form used to verify a sender’s U.S. taxpayer identification and residency status for compliance.
Excise Tax → A tax charged on specific activities or transactions, such as sending remittances abroad.
This Article in a Nutshell
Starting in 2026, a new 1% remittance tax on all international transfers from U.S. banks affects H-1B workers and others. Filing jointly or separately does not change this tax, which banks automatically collect, requiring updated documentation like Form W-9 to ensure compliance and proper reporting to the IRS.
— By VisaVerge.com
