Does the New Excise Tax Under OBBB Trigger FBAR for H-1B Holders?

Key Takeaways

• Starting January 1, 2026, a 1% excise tax applies on electronic remittance transfers from the U.S.
• FBAR reporting rules remain unchanged; only foreign accounts over $10,000 trigger FBAR filing.
• H-1B visa holders must pay the excise tax but file FBAR only if owning foreign accounts.

A new law, the One Big Beautiful Bill Act (OBBB), is set to change how people in the United States 🇺🇸 send money abroad. Starting January 1, 2026, a new excise tax will apply to certain electronic remittance transfers. Many immigrants, including H-1B visa holders, are wondering if this new tax or the reporting rules connected to it will affect their Foreign Bank and Financial Accounts Report (FBAR) obligations. Here’s a detailed look at what the OBBB means, how the excise tax works, what FBAR is, and what H-1B holders and others need to know.

Who is affected?
Anyone in the United States 🇺🇸—including citizens, permanent residents, and non-citizens like H-1B visa holders—who sends money electronically to someone in another country will be affected by the new excise tax. However, the rules for FBAR reporting remain unchanged.

What is happening?
The OBBB introduces a 1% excise tax on certain cross-border electronic remittance transfers. This tax will start for transfers made after December 31, 2025. The law also brings changes to some international tax rules, but it does not directly change FBAR reporting requirements.

Where and when does this apply?
The excise tax applies to transfers sent from any U.S. state to a recipient in a foreign country. The new rules take effect on January 1, 2026.

Why is this important?
Many immigrants and U.S. residents send money to family or friends abroad. Understanding if this new tax changes their FBAR obligations is important for staying compliant and avoiding penalties.

How does this work?
The excise tax is collected by financial institutions when someone in the United States 🇺🇸 sends money electronically to someone in another country. The FBAR, on the other hand, is a separate reporting requirement for people who have foreign financial accounts.

The One Big Beautiful Bill Act: What’s New?

The OBBB, passed by Congress in July 2025, is a large tax and spending bill. One of its main features is the 1% excise tax on certain cross-border remittance transfers. Here’s what you need to know:

• Excise Tax Rate: The final law sets the excise tax at 1%. Earlier versions suggested a higher rate, but lawmakers agreed on 1% for the final bill.
• Who Pays?: The tax applies to both U.S. citizens and non-citizens, including H-1B visa holders and other resident aliens.
• What Transfers Are Covered?: The tax applies to electronic remittance transfers sent from a “Sender” in the United States 🇺🇸 to a “Designated Recipient” in another country.
• When Does It Start?: The tax applies to transfers made after December 31, 2025.
• Other Tax Changes: The OBBB also changes some international tax rules, such as those for controlled foreign corporations and foreign tax credits, but these changes are separate from the excise tax on remittances.

FBAR Reporting: What Stays the Same?

The FBAR, or Foreign Bank and Financial Accounts Report, is a long-standing requirement under the Bank Secrecy Act. Here’s a simple breakdown:

• Who Must File?: U.S. persons—including citizens, permanent residents, and resident aliens (such as many H-1B holders)—must file an FBAR if they have foreign financial accounts with a total value over $10,000 at any time during the year.
• What Accounts Count?: This includes foreign bank accounts, brokerage accounts, mutual funds, and other types of foreign financial accounts.
• How to File: The FBAR is filed each year using FinCEN Form 114. This form is separate from your regular income tax return.
• Why File?: The goal is to help the government fight tax evasion and money laundering by making sure people report foreign accounts.
• What Triggers FBAR?: FBAR is required if you own or have signature authority over foreign accounts, not just because you send money abroad.

For more details on FBAR filing, you can visit the official IRS FBAR page.

Does the OBBB Excise Tax or Remittance Reporting Trigger FBAR for H-1B Holders?

This is the big question for many immigrants and H-1B visa holders. The answer is clear:

• The new excise tax on remittance transfers does NOT trigger FBAR reporting.
• FBAR is only required if you have foreign financial accounts over $10,000.
• Sending money abroad, even if you pay the new excise tax, does not mean you have to file an FBAR unless you also own or control foreign accounts.

Let’s break this down further:

• H-1B holders are often considered resident aliens for tax purposes if they meet the “substantial presence test.” This means they are already subject to U.S. tax laws, including FBAR, if they have foreign accounts.
• The excise tax is a separate tax on sending money abroad. It does not create new foreign accounts or give you ownership of accounts overseas.
• FBAR is about account ownership or control, not about sending money. If you do not own or control foreign accounts, you do not have to file an FBAR, even if you send money abroad and pay the excise tax.

As reported by VisaVerge.com, legal and tax experts agree that the OBBB’s excise tax does not change FBAR rules. The FBAR requirement is still based on foreign account ownership or authority, not on remittance activity.

Practical Implications for H-1B Holders and Other Immigrants

Here’s what H-1B holders and others should keep in mind:

• If you have foreign accounts over $10,000, you must still file an FBAR. This rule has not changed.
• If you send money abroad electronically after January 1, 2026, you will pay the new 1% excise tax. This is a new cost to consider.
• Financial institutions may ask for more information. To apply the excise tax correctly, banks and money transfer companies may need to verify your citizenship or residency status. This could mean more paperwork or questions when you send money abroad.
• The excise tax could make sending money home more expensive. For many immigrants who regularly send money to family in other countries, this new tax will increase the cost.

Example Scenario:
Priya is an H-1B visa holder working in the United States 🇺🇸. She sends $5,000 each year to her parents in India 🇮🇳. Starting in 2026, she will pay a $50 excise tax (1% of $5,000) on these transfers. If Priya does not own or control any foreign accounts over $10,000, she does not need to file an FBAR. If she does have such accounts, she must file an FBAR as usual.

How Financial Institutions Are Preparing

Banks, credit unions, and money transfer companies will play a big role in enforcing the new excise tax. Here’s what’s expected:

• Updated Forms: Financial institutions may update forms like the IRS Form W-9 to better determine your tax residency and citizenship status.
• More Compliance Checks: Banks may ask for more documents or proof of status before processing remittance transfers.
• Reporting to the IRS: Institutions will need to track and report excise tax collections to the IRS, which could mean more record-keeping for both banks and customers.

Tax professionals expect these changes to roll out in late 2025, as banks get ready for the new law.

Stakeholder Perspectives: Concerns and Reactions

The new excise tax has sparked debate among advocacy groups, tax professionals, and immigrants:

• Americans Citizens Abroad (ACA): This group worries that the new excise tax will add to the compliance burden for Americans living abroad and for resident aliens. They compare the complexity of the new rules to the challenges of FBAR reporting.
• Tax Experts: Professionals expect the IRS to update forms and guidance to help people understand the new rules. They also expect financial institutions to invest in new systems to track and collect the excise tax.
• Lawmakers: The Joint Committee on Taxation estimates the excise tax could raise $22.2 billion through 2034, showing the government’s strong interest in enforcing the new law.

Background: Why FBAR and the Excise Tax Matter

FBAR has been around for decades. It was created to help the U.S. government find and stop tax evasion and money laundering using foreign accounts. The rules are strict, and penalties for not filing can be high.

The OBBB excise tax is new. Lawmakers added it to raise money and to keep better track of money leaving the United States 🇺🇸. The tax is also meant to close gaps in the tax system and make sure everyone pays their fair share.

While both FBAR and the excise tax deal with money moving across borders, they are separate rules with different goals and requirements.

Looking Ahead: What to Expect in 2026 and Beyond

As the excise tax start date approaches, here’s what H-1B holders and others can expect:

• More Guidance from the IRS and FinCEN: The IRS and the Financial Crimes Enforcement Network (FinCEN) may issue new instructions on how to report remittance taxes and file FBARs.
• Bank and Money Transfer Changes: Financial institutions will likely update their systems, forms, and procedures to collect the excise tax and verify customer information.
• No Changes to FBAR Rules (for Now): There are no current plans to change FBAR thresholds or filing rules because of the OBBB excise tax.
• Increased Awareness: Taxpayers will need to pay closer attention to both the excise tax and FBAR requirements to avoid mistakes and penalties.

What Should H-1B Holders and Other Immigrants Do Now?

Here are some practical steps to stay compliant and avoid surprises:

1. Review Your Foreign Accounts: If you have any foreign bank or financial accounts, check if the total value ever goes over $10,000 in a year. If it does, you must file an FBAR.
2. Plan for the Excise Tax: If you send money abroad electronically, budget for the new 1% excise tax starting in 2026.
3. Keep Good Records: Save receipts and records of your remittance transfers and any foreign accounts.
4. Watch for Bank Notices: Be ready for your bank or money transfer service to ask for more information about your status.
5. Stay Informed: Check the IRS FBAR page and your financial institution’s updates for the latest rules.
6. Consult a Tax Professional: If you’re unsure about your FBAR or excise tax obligations, talk to a tax advisor who understands international tax rules.

Official Resources and Contacts

For more information or help:

• IRS FBAR Information: IRS FBAR page
• FinCEN Form 114: FinCEN Form 114 instructions
• Americans Citizens Abroad (ACA): Advocacy and updates on remittance tax impacts
• Legal and Tax Advice: Contact professionals like Edward Hild ([email protected]) or Sahel A. Assar ([email protected]) for detailed questions about the OBBB

Key Takeaways

• The One Big Beautiful Bill Act brings a new 1% excise tax on electronic remittance transfers starting January 1, 2026.
• This excise tax does not change FBAR reporting rules. FBAR is still required only if you own or control foreign accounts with a total value over $10,000.
• H-1B holders and other immigrants should prepare for the new excise tax but continue to follow existing FBAR rules.
• Financial institutions will likely require more documentation to enforce the excise tax, which may increase compliance steps for customers.

By staying informed and organized, H-1B holders and others can manage both the new excise tax and their FBAR obligations without unnecessary stress. For the most up-to-date information, always check official government resources and consult with a qualified tax professional if you have questions about your specific situation.

Learn Today

One Big Beautiful Bill Act → A 2025 U.S. law imposing a 1% excise tax on some cross-border electronic remittance transfers starting 2026.
Excise Tax → A tax levied on specific transactions like electronic money transfers crossing U.S. borders, set at 1%.
FBAR → Foreign Bank and Financial Accounts Report, a mandatory filing for U.S. persons with foreign accounts over $10,000.
H-1B Visa Holder → A nonimmigrant worker authorized to work in the U.S., often considered a resident alien for tax purposes.
FinCEN Form 114 → The official form used to file FBAR reports to disclose foreign financial accounts annually.

This Article in a Nutshell

The One Big Beautiful Bill Act enacts a 1% excise tax on cross-border electronic remittances starting in 2026, impacting immigrants. This tax does not affect FBAR filing requirements, which depend solely on foreign account ownership over $10,000. H-1B holders must comply with existing FBAR rules while preparing for new tax costs.
— By VisaVerge.com