Impact of 1% Remittance Excise Tax on H-1B Single-Income Professionals

Key Takeaways

• The One Big Beautiful Bill Act adds a 1% excise tax on remittances starting January 1, 2026.
• H-1B professionals and other senders from the US will face automatic tax deduction by banks.
• Refunds are possible if taxed by mistake; newcomers should keep documents ready for verification.

A new tax on international money transfers is set to affect many people living and working in the United States 🇺🇸, especially those on H-1B visas. The One Big Beautiful Bill Act (OBBB), which is moving through Congress, includes a 1% excise tax on remittances—money sent from the United States 🇺🇸 to other countries. This change, expected to take effect for transfers sent after December 31, 2025, has sparked debate and concern among immigrants, banks, and advocacy groups.

Let’s break down what this tax means, how it will work, and what H-1B professionals and their families should expect.

What Is the One Big Beautiful Bill Act and the 1% Excise Tax?

The One Big Beautiful Bill Act is a large piece of legislation that covers many topics, but one of its most talked-about parts is the new tax on remittances. A remittance is money that someone in the United States 🇺🇸 sends to family or friends in another country. Many immigrants, including H-1B professionals, send money home to help support their loved ones.

The 1% excise tax means that for every $100 sent abroad, $1 will be taken out as a tax. This tax will be collected automatically by banks and money transfer companies before the money leaves the United States 🇺🇸.

The tax was first suggested at 5%, then lowered to 3.5%, and now stands at 1% in the latest Senate version of the bill. Lawmakers made these changes after hearing concerns from the public and experts about the impact on families and the cost of sending money home.

Who Will Be Affected?

The tax applies to both U.S. citizens and non-citizens. This means anyone sending money from the United States 🇺🇸 to another country could be affected, including:

• H-1B professionals (skilled workers from other countries working in the United States 🇺🇸)
• Other visa holders, such as students or temporary workers
• U.S. citizens with family abroad

However, the focus is often on H-1B professionals because they make up a large group of people who regularly send money to support families in their home countries.

How Will the Tax Work?

The process for collecting the tax involves several steps:

1. Financial Institution Registration: Banks and money transfer companies must register with the U.S. Treasury as qualified remittance transfer providers (RTPs).
2. Citizenship Verification: When someone wants to send money abroad, the bank or transfer service will check if the sender is a U.S. citizen or not. This step is important because it helps decide if the tax should be applied.
3. Automatic Tax Deduction: If the sender is not a U.S. citizen, or if their status is unclear, the 1% tax will be taken out automatically before the money is sent.
4. Refund Process: If a sender is taxed by mistake (for example, if they are a U.S. citizen but could not prove it at the time), they can ask for a refund when they file their annual income tax return.

This system is designed to make sure the tax is collected fairly, but it also means more paperwork and possible delays for people sending money.

Why Was the Tax Introduced?

Lawmakers say the tax is meant to raise money for government programs and to make sure everyone pays their fair share. Some supporters believe it could also help track money leaving the country and prevent illegal activities.

However, many people worry that the tax will hurt those who rely on sending money home, especially immigrants and low-income workers. Critics argue that the cost of collecting the tax might be higher than the money it brings in, and that it could create problems for families who depend on remittances.

Immediate Effects for H-1B Professionals

Increased Cost of Sending Money

For H-1B professionals, the most obvious effect is that sending money home will become more expensive. If you send $1,000 to your family, $10 will be taken out as tax. Over time, these costs can add up, especially for those who send money regularly.

More Paperwork and Delays

Banks and transfer companies will need to check the citizenship status of everyone who sends money abroad. This could mean more forms to fill out, longer wait times, and possible mistakes. H-1B professionals may need to show extra documents to prove their visa status or citizenship.

Possible Changes in Service Fees

Financial institutions will have to spend more time and money to follow the new rules. They might raise their service fees to cover these costs, making it even more expensive to send money.

Long-Term Implications

Less Money Reaching Families Abroad

Because of the 1% tax, families in other countries will receive less money. For many, every dollar counts. This could make it harder for families to pay for basic needs like food, housing, and education.

Administrative Burden for Banks

Banks and money transfer companies will need to update their systems, train staff, and keep detailed records to follow the new law. These changes could lead to higher costs and more complicated processes for everyone involved.

Policy Debate and Criticism

Many experts and advocacy groups have spoken out against the tax. They say it could hurt the people who need help the most and that the government might not collect as much money as expected because of the high cost of running the program.

As reported by VisaVerge.com, critics point out that the tax could have a low payoff due to high compliance costs and may disproportionately affect low-income individuals who rely on remittances.

How Will Financial Institutions Comply?

Banks and money transfer services will need to:

• Register as Remittance Transfer Providers: This means working with the U.S. Treasury to become approved to handle these transactions.
• Verify Citizenship Status: They must check if the sender is a U.S. citizen, a green card holder, or on a visa like the H-1B. This could involve asking for passports, visa documents, or other proof.
• Deduct the Tax Automatically: For anyone who is not a U.S. citizen, or if the status is unclear, the 1% tax will be taken out before the money is sent.
• Handle Refunds: If someone is taxed by mistake, the bank or transfer service must provide information on how to claim a refund when filing taxes.

This process could make sending money abroad more complicated and time-consuming, especially for H-1B professionals who may already face challenges with paperwork and documentation.

What Should H-1B Professionals Do?

If you are an H-1B professional who sends money home, here are some steps you can take:

• Keep Your Documents Ready: Make sure you have up-to-date visa documents, proof of status, and any other paperwork that banks may ask for.
• Ask Your Bank About the New Rules: Find out if your bank or money transfer service is registered as a remittance transfer provider and how they plan to handle the new tax.
• Plan for Higher Costs: Budget for the extra 1% tax and possible higher service fees.
• Check for Refunds: If you think you were taxed by mistake, keep records of your transactions and ask your tax preparer about claiming a refund when you file your taxes.

Broader Impact on Immigrants and Their Families

Remittances are a lifeline for millions of families around the world. According to the World Bank, people living in the United States 🇺🇸 sent over $150 billion abroad in 2023. Many of these transfers come from immigrants working hard to support their loved ones back home.

A 1% tax may not seem like much, but for families living on tight budgets, every dollar matters. The tax could mean less money for food, school fees, or medical bills. Some people may try to find other ways to send money, which could be less safe or more expensive.

Policy Debate: Supporters vs. Critics

Supporters Say:

• The tax will help raise money for important government programs.
• It could help track money leaving the country and prevent illegal activities.
• The 1% rate is lower than what was first proposed, making it less of a burden.

Critics Say:

• The tax will hurt immigrants and low-income workers the most.
• The cost of running the program could be higher than the money it brings in.
• It could push people to use unsafe or illegal ways to send money.
• It adds more paperwork and delays for everyone.

What Happens Next?

The One Big Beautiful Bill Act is still moving through Congress. The tax rate and rules could change before the law is final. Advocacy groups, banks, and other stakeholders are working to make sure the law is fair and does not hurt vulnerable people.

If the law passes as it is now, the 1% excise tax will start for transfers sent after December 31, 2025. Financial institutions are already preparing for the changes, but there may be updates as the law moves forward.

Where to Find More Information

For the latest updates on the One Big Beautiful Bill Act and the 1% excise tax, you can check the official U.S. Congress legislative information website. This site provides up-to-date information on bills, laws, and changes as they happen.

If you need help with your specific situation, you can also talk to a tax professional or an immigration lawyer. They can help you understand how the new rules might affect you and your family.

Key Takeaways for H-1B Professionals

• The One Big Beautiful Bill Act includes a 1% excise tax on money sent abroad, starting after December 31, 2025.
• The tax applies to both U.S. citizens and non-citizens, including H-1B professionals.
• Banks and money transfer companies will automatically deduct the tax and may ask for more documents to verify your status.
• The tax could make it more expensive and complicated to send money home.
• If you are taxed by mistake, you can ask for a refund when you file your taxes.
• Stay informed and keep your documents ready to avoid delays or problems.

Final Thoughts

The new 1% excise tax in the One Big Beautiful Bill Act is a big change for anyone who sends money from the United States 🇺🇸 to another country. For H-1B professionals, it means higher costs, more paperwork, and possible delays. While the goal is to raise money for government programs, many worry about the impact on families who depend on remittances.

As the law moves forward, it’s important for H-1B professionals and other immigrants to stay informed, keep good records, and plan for the changes ahead. By understanding the new rules and preparing early, you can help make sure your money reaches your loved ones safely and with as little trouble as possible.

For more detailed analysis and ongoing updates, VisaVerge.com reports that stakeholders are closely watching the legislative process and advocating for changes that protect vulnerable groups. Stay tuned to official sources and trusted news outlets for the latest information on how the One Big Beautiful Bill Act and the 1% excise tax will affect you and your family.

Learn Today

One Big Beautiful Bill Act → Legislation introducing a 1% excise tax on money sent overseas starting after December 31, 2025.
Excise Tax → A tax charged on specific goods or transactions, here applied to international money transfers.
H-1B Visa → A US visa allowing skilled foreign workers to live and work temporarily in the United States.
Remittance → Money sent by immigrants from the US to family or friends in other countries.
Remittance Transfer Provider → Banks or companies registered with the US Treasury to handle taxed money transfers abroad.

This Article in a Nutshell

Starting January 1, 2026, a 1% excise tax on international remittances will affect H-1B visa holders. Banks automatically deduct this tax before sending money abroad, increasing costs and paperwork. Senders can request refunds if taxed incorrectly. Staying informed and prepared ensures funds reach families smoothly under this new law.
— By VisaVerge.com