2025-26 Tax Reform: What Students, Workers, Immigrants Must Know

(UNITED STATES) A sweeping tax package signed on July 4, 2025, is reshaping how students, workers, immigrants, and cross‑border families plan for money and compliance in the coming year. The law, known as the One Big Beautiful Bill Act, sets new levels for the U.S. standard deduction in 2025 and 2026, revises international tax rules that affect multinational employers, and signals tougher enforcement on foreign accounts and digital‑nomad income.

For communities living and working across borders, the changes land quickly: the first round hits 2025 incomes, and more shifts follow in 2026. Colleges, global companies, and immigrant households are already adjusting budgets and payroll plans as Tax Reform 2025–26 takes hold.

Immediate changes: paychecks and 2025 returns

The most immediate change shows up on paychecks and 2025 returns.

• The federal standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly in 2025.
• Those amounts increase further in 2026 to $16,100 and $32,200 respectively.
• The seven federal tax brackets — 10%, 12%, 22%, 24%, 32%, 35%, and 37% — remain in place.

While these numbers can seem technical, they shape real choices for:

• Visa workers deciding whether to accept a relocation package.
• F‑1 and J‑1 students weighing on‑campus jobs.
• Families planning support payments to relatives abroad.

International corporate tax changes and employer impacts

International tax changes under the law will ripple through multinational payrolls and equity plans.

• GILTI (Global Intangible Low‑Taxed Income) is renamed Net CFC Tested Income.
  • The law sets a permanent 40% deduction on active foreign income of controlled foreign corporations, translating into an effective rate near 12.6% for many U.S. groups with overseas profits.
• FDII is renamed Foreign‑Derived Deduction Eligible Income.
  • It locks in a 33.34% deduction and a 14% effective rate for qualifying income.

Implications for global employers that sponsor H‑1B and L‑1 workers:

• Could influence where employers place teams, how they time bonuses, and whether they adjust stock‑based compensation.
• Firms may rework bonus pools and relocation budgets if U.S. companies secure larger deductions under the new foreign income rules.
• Some companies are pausing mid‑year stock grants or accelerating assignments to jurisdictions not subject to a global minimum tax.
• Recruiters and mobility managers report adding clauses to offer letters to reflect potential changes in gross‑ups and tax‑equalization formulas through 2026.

Divergence from global minimum tax efforts

The broader policy direction diverges from many partner countries.

• U.S. officials signaled withdrawal from the OECD/G20 global minimum corporate tax deal, which aims for a 15% floor.
• Reuters reported this as a sign the United States is choosing a different path than many partner countries.

Why this matters:

• Compensation packages — and the tax costs they create — often hinge on how companies weigh foreign tax credits, expense allocation, and intellectual property location.
• Employers are modeling these rules into 2026 budget plans, anticipating assignment terms could tighten in high‑tax jurisdictions (VisaVerge.com).

Compliance pressure: foreign accounts, gifts, and nomad income

Compliance pressure is building alongside the new rules. The IRS has warned of increased audits involving:

• Foreign bank accounts
• Large inbound gifts
• Cross‑border transfers
• Digital‑nomad income streams

Two filings are especially important for many visa holders:

1. FBAR (FinCEN Form 114)
   • Must be submitted if foreign account totals exceed set thresholds.
   • Guidance is published by FinCEN at: Report Foreign Bank and Financial Accounts (FBAR).
2. FATCA (IRS Form 8938)
   • Certain taxpayers must file for specified foreign assets.
   • Instructions are on the IRS page: About Form 8938.

Failing to file can bring steep penalties that quickly outweigh any tax benefit. The IRS has specifically cited foreign bank flows and nomad income as areas of review.

Student and university impacts

Universities say the timing is sensitive for international students arriving this fall and working on campus in 2025.

• Many F‑1 and J‑1 students are nonresident aliens in their first years, though some will claim treaty benefits.
• A subset — such as Indian students — may access the standard deduction under the U.S.–India treaty.
• The higher standard deductions help, but paperwork risk is real if a student has foreign savings or freelance income from home.

Advisers urge students to:

• Keep clear records of bank balances and gig work.
• Consult IRS guidance for foreign taxpayers and visa holders at: International Taxpayers.

Campus offices are planning extra workshops through the spring filing season.

What H‑1B and L‑1 workers should watch

Workers on H‑1B and L‑1 visas are asking how corporate rule changes might affect take‑home pay.

• The effect depends on the employer’s global footprint and whether the company can claim larger deductions under Net CFC Tested Income or Foreign‑Derived Deduction Eligible Income.
• Employers may:
  • Rework bonus pools and relocation budgets.
  • Pause mid‑year stock grants while reviewing foreign tax credit limits and expense allocations.
  • Accelerate assignments to favorable jurisdictions.

Workers should talk with recruiters and mobility managers about potential changes to gross‑ups and tax equalization through 2026.

Global tax landscape and practical decision points

The rule shifts come as global tax systems change in parallel.

• The OECD reports 86 jurisdictions adopted or announced major tax reforms in 2024–25.
• This pace complicates life for immigrants managing assets in multiple countries.

Real‑world examples:

• A nurse on a work visa sending money home may face tighter tracking of large transfers.
• A software engineer with foreign startup stock must decide whether to recognize income in 2025 or 2026, as personal and corporate rules reset.

Key decision drivers:

• Date of residency for tax purposes
• Whether a tax treaty applies
• Whether foreign income is passive or active

U.S.–India families and cross‑border reporting

Families between the United States and India face overlapping reporting regimes.

• The U.S. shares data with India under FATCA and common reporting standards.
• Indian remittance rules have tightened in recent years.
• Large tuition or support transfers can trigger reporting in both countries.

On the U.S. side:

• A student or new worker might need to file Form 8938 if certain foreign assets cross thresholds.
• FBAR applies if total across foreign accounts exceeds limits.

Both forms can apply in the same year, so families are increasingly checking balances each quarter rather than waiting until April.

Digital nomads: location changes and residency risks

For digital nomads, the message is clear:

• Working from abroad for a U.S. employer still creates U.S. filing duties for citizens and many residents.
• The audit focus on cross‑border gigs is sharper.
• Short overseas stints can trigger tax residency questions in host countries.

Payroll departments at midsize firms are asking employees to report remote location changes in real time to:

• Avoid accidental permanent establishment issues.
• Prevent surprise withholding bills in 2026.

Political debate and employer responses

The public policy debate remains unsettled.

Supporters say:

• Reworked international rules will keep U.S. groups competitive.
• Fixed deductions and renamed categories (e.g., GILTI → Net CFC Tested Income) ease complexity and better reflect the tax base.

Critics warn:

• Pulling away from the OECD/G20 minimum tax risks disputes with trading partners.
• Could invite retaliatory measures such as digital services taxes impacting U.S. tech employers.

For immigrants whose jobs depend on affected employers:

• Even small shifts in a company’s global tax bill can narrow relocation budgets and reduce support for spousal work authorization or training.

Practical checklist: early actions for immigrant families and students

Accountants recommend these steps:

1. Determine residency status for 2025 (resident vs. nonresident) — this affects standard deduction and U.S. tax reach.
2. Review foreign accounts monthly through year‑end to monitor FBAR and FATCA filing triggers.
3. Ask employers how new foreign income deductions and credit rules might change cash bonus or stock award timing.

These steps are straightforward, but this is a year when small gaps in records can lead to outsized penalties.

Timeline and back‑office adjustments

• Payroll updates for the new standard deduction should appear during 2025.
• Most taxpayers will see the difference when filing returns in 2026 for the 2025 tax year.
• The next round of standard deduction increases arrives in 2026.
• Corporate tax teams must update foreign tax credit models and expense allocations before fiscal year‑ends in late 2025 or early 2026.

That back‑office work shapes offers and moves that determine where global teams sit and how much relocation support employees receive.

Human impacts and daily choices

The human impact is already visible:

• International students ask whether a small scholarship or part‑time job could change treaty status.
• New H‑1B arrivals compare housing stipends in cities where companies can claim better foreign deductions.
• Families scheduling wire transfers earlier to avoid spikes that push them over reporting thresholds.

These are not abstract debates; they’re everyday choices in a cross‑border year.

The forms are plain, but the stakes are high. Officials continue to publish guidance, and agencies expect taxpayers to follow reporting rules even when they change mid‑stream.

According to VisaVerge.com analysis, the wisest course for students, workers, and immigrants is to:

• Keep clean records.
• Ask employers how compensation may shift under the new international deductions.
• File required forms on time.

In a year defined by change, that steady approach could make all the difference.