Key Takeaways
• The One Big Beautiful Bill Act applies from July 3, 2025, without new self-employment taxes for H-1B holders.
• H-1B self-employment requires forming a company that sponsors the visa and follows strict employer-employee rules.
• The bill increases the QBI deduction to 23% and extends bonus depreciation benefits for self-employed H-1B visa holders.
As of July 3, 2025, many H-1B visa holders and their employers are closely watching the effects of the One Big Beautiful Bill Act, especially when it comes to taxes and self-employment. The bill, which brings several changes to the United States 🇺🇸 tax system, has raised questions about whether H-1B self-employed individuals—such as those working through their own consulting companies—face any new self-employment or excise taxes. Here’s what you need to know about how this law affects H-1B visa holders, what changes it brings to self-employment taxes, and what steps H-1B workers should take if they want to start their own business in the United States 🇺🇸.
Who is affected?
H-1B visa holders who are self-employed or considering self-employment, especially those running their own consulting businesses or working through a company they own.
What’s new?
The One Big Beautiful Bill Act does not introduce any new self-employment or excise taxes specifically for H-1B visa holders. However, it includes several tax reforms that could indirectly affect self-employed people, including those on H-1B visas.
When did this happen?
The bill’s provisions are in effect as of July 3, 2025.
Where does this apply?
These changes apply across the United States 🇺🇸.
Why does it matter?
Understanding these changes is important for H-1B visa holders who want to start their own business or work as consultants. It helps them stay compliant with immigration and tax laws and take advantage of any new tax benefits.
How does it work?
The bill extends and changes some tax rules, but does not create new self-employment taxes for H-1B holders. H-1B visa holders must still follow strict rules if they want to be self-employed, including setting up their own company and sponsoring themselves for the visa.
Let’s break down the details, starting with the main changes in the One Big Beautiful Bill Act and what they mean for H-1B self-employment.
Key Tax Changes in the One Big Beautiful Bill Act
The One Big Beautiful Bill Act brings several important tax changes that affect individuals and businesses. While it does not single out H-1B visa holders, some of its reforms could benefit self-employed people, including those on H-1B visas.
Main Tax Provisions
- Qualified Business Income (QBI) Deduction:
The bill increases the QBI deduction to 23% and makes it permanent for tax years beginning after 2025. This deduction allows certain self-employed people and owners of pass-through businesses (like LLCs and S-corporations) to deduct a portion of their business income from their taxable income.
Example: If you earn $100,000 from your consulting business, you could deduct $23,000 before calculating your taxes. - Bonus Depreciation:
The bill extends bonus depreciation, which lets businesses deduct the full cost of certain assets (like equipment or computers) in the year they buy them, instead of spreading the deduction over several years. -
Individual Tax Rates:
The maximum individual tax rate of 37% is made permanent. The standard deduction (the amount you can subtract from your income before taxes) is also increased for tax years 2025 to 2028. -
Self-Employment Taxes:
There are no new self-employment or excise taxes in the bill that specifically target H-1B self-employed individuals. Self-employment taxes remain the same as before for all self-employed people, including H-1B visa holders.
H-1B Visa and Self-Employment: What’s Allowed?
The H-1B visa is a work visa for specialty occupations in the United States 🇺🇸. It usually requires sponsorship by a U.S. employer. Self-employment under the H-1B visa is possible, but only under strict rules.
General Rule for H-1B Self-Employment
- Direct Self-Employment Not Allowed:
H-1B visa holders cannot simply start working for themselves as freelancers or independent contractors. The visa requires a U.S. employer to sponsor the worker. -
Self-Sponsorship Through a Company:
H-1B holders can set up their own company and have that company sponsor their H-1B visa, but this is a complex process. The company must be a real, independent business with its own tax ID and must follow all U.S. immigration and labor laws.
The company must also have the power to hire, pay, supervise, and fire the H-1B worker—even if the worker is the owner. -
Consulting Through a Company:
Many H-1B holders who want to do consulting work set up their own company (such as an LLC or corporation) and have that company sponsor their H-1B visa. This is sometimes called “S-EIN-based consulting,” referring to the company’s Employer Identification Number (EIN) used for tax purposes.
Steps to Set Up H-1B Self-Employment
- Form a Legal Business Entity:
Set up a company (LLC, corporation, etc.) in the United States 🇺🇸. - Obtain an EIN:
Apply for an Employer Identification Number from the IRS.
Apply for an EIN - Ensure Real Employer-Employee Relationship:
The company must have the power to control the H-1B worker’s employment, including the ability to hire, pay, supervise, and fire. - File an H-1B Petition:
The company must file a new H-1B petition with USCIS, showing that it is a real business and can pay the required wage.
Form I-129, Petition for a Nonimmigrant Worker - Comply With All Laws:
The company must follow all U.S. labor and immigration laws, including paying the required wage and keeping proper records.
Self-Employment Taxes: What’s Changed?
Self-employment taxes are taxes paid by people who work for themselves, covering Social Security and Medicare. In the United States 🇺🇸, the self-employment tax rate is usually 15.3% of net earnings.
What the One Big Beautiful Bill Act Does
- No New Self-Employment Taxes for H-1B Holders:
The bill does not create any new self-employment or excise taxes for H-1B self-employed individuals. - Existing Self-Employment Taxes Still Apply:
H-1B holders who are self-employed through their own company must pay the same self-employment taxes as other self-employed people in the United States 🇺🇸.
Who Pays Self-Employment Taxes?
- U.S. Citizens and Residents:
All self-employed people pay self-employment taxes on their net earnings. - H-1B Visa Holders:
If an H-1B holder is properly self-employed through their own company, they must pay self-employment taxes on their earnings, just like anyone else.
Indirect Tax Benefits
- QBI Deduction:
H-1B self-employed individuals may benefit from the increased QBI deduction if they qualify as a pass-through entity or sole proprietor. - Bonus Depreciation:
Self-employed H-1B holders can also take advantage of bonus depreciation for business assets.
Practical Implications for H-1B Self-Employed Individuals
While the One Big Beautiful Bill Act does not directly change self-employment taxes for H-1B holders, it does offer some indirect benefits and important reminders.
Potential Benefits
- Larger QBI Deduction:
The increase to a 23% deduction can lower taxable income for those who qualify. - Permanent Tax Rate:
The 37% top tax rate is now permanent, which helps with long-term planning. - Bonus Depreciation:
Self-employed people can deduct the full cost of business equipment in the year they buy it.
Important Reminders
- Strict Immigration Rules:
H-1B holders must follow all immigration rules for self-employment. This usually means setting up a real company and having that company sponsor their visa. - No Direct Freelancing:
H-1B holders cannot simply work as freelancers or independent contractors without a sponsoring company. - Tax Compliance:
Self-employed H-1B holders must pay self-employment taxes and file all required tax forms with the IRS.
What Do Experts Say?
Tax and immigration experts agree that while the One Big Beautiful Bill Act does not target H-1B self-employment taxes, it does create a more favorable tax environment for self-employed people in general.
- Tax Analysts:
The increased QBI deduction and extended bonus depreciation are seen as positive changes for self-employed people, including H-1B holders who qualify. - Immigration Lawyers:
Experts stress the importance of following all immigration rules for self-employment. H-1B holders must make sure their company is a real, independent business and that they have a true employer-employee relationship.
As reported by VisaVerge.com, H-1B visa holders interested in self-employment should work closely with both immigration and tax professionals to make sure they stay compliant and take advantage of any new tax benefits.
What Should H-1B Holders Do Next?
If you are an H-1B visa holder thinking about self-employment, here are some steps to consider:
- Check Your Visa Status:
Make sure you understand the rules for H-1B self-employment. You cannot simply start working for yourself without a sponsoring company. -
Set Up a Real Company:
If you want to be self-employed, set up a legal business entity and obtain an EIN from the IRS. -
File the Right Forms:
Your company must file a new H-1B petition with USCIS to sponsor your visa.
Form I-129, Petition for a Nonimmigrant Worker -
Pay Self-Employment Taxes:
Make sure you pay all required self-employment taxes and file the right tax forms.
Self-Employed Individuals Tax Center – IRS -
Consult Professionals:
Work with immigration and tax professionals to make sure you are following all laws and taking advantage of any tax benefits.
Resources for More Information
- USCIS H-1B Information:
USCIS H-1B Specialty Occupations - IRS Self-Employment Tax Information:
Self-Employed Individuals Tax Center – IRS - Form I-129, Petition for a Nonimmigrant Worker:
Form I-129
Looking Ahead: Possible Future Changes
As of July 2025, there are no pending changes in the One Big Beautiful Bill Act that specifically target H-1B self-employment taxes. However, lawmakers continue to discuss possible changes to both immigration and tax laws. H-1B holders should stay informed about any new developments that could affect their ability to work for themselves or the taxes they must pay.
Conclusion: What This Means for H-1B Self-Employed Individuals
The One Big Beautiful Bill Act does not introduce new self-employment or excise taxes for H-1B visa holders. However, it does include several tax reforms—like the increased QBI deduction and extended bonus depreciation—that could benefit self-employed people, including those on H-1B visas who set up their own companies and sponsor themselves.
Key Takeaways:
- No new self-employment taxes for H-1B holders in the bill.
- Self-employment is possible for H-1B holders, but only if they set up a real company and follow all immigration rules.
- Tax benefits like the QBI deduction and bonus depreciation may help self-employed H-1B holders lower their tax bills.
- Strict compliance with both immigration and tax laws is essential.
For the most up-to-date and detailed information, always check official government sources like the IRS and USCIS. If you are considering self-employment as an H-1B visa holder, consult with both immigration and tax professionals to make sure you are following all the rules and making the most of any tax benefits.
By staying informed and following the right steps, H-1B visa holders can safely explore self-employment opportunities in the United States 🇺🇸 while staying compliant with all laws and taking advantage of new tax reforms.
Learn Today
One Big Beautiful Bill Act → A 2025 U.S. tax reform law affecting deductions and depreciation, impacting self-employed individuals.
H-1B Visa → A U.S. work visa for specialty occupations requiring employer sponsorship and strict employment conditions.
Qualified Business Income (QBI) Deduction → Allows deduction of up to 23% of qualified business income for eligible pass-through entities.
Self-Employment Taxes → Taxes covering Social Security and Medicare paid by self-employed individuals on net earnings.
Employer Identification Number (EIN) → A unique tax ID number assigned to businesses by the IRS for tax filing.
This Article in a Nutshell
Effective July 3, 2025, new tax reforms affect H-1B self-employed visa holders indirectly. No new self-employment taxes exist, but the 23% QBI deduction increase benefits self-employed individuals forming companies sponsoring their visas under strict rules.
— By VisaVerge.com
