Will Excise Tax on Remittances in OBBB Deter H‑1B Holders From Sponsoring Family?

Key Takeaways

• The One Big Beautiful Bill Act proposes a 3.5% excise tax on remittances starting after December 31, 2025.
• H-1B holders sending money home may face extra costs up to $420 annually if the tax passes.
• Senate proposes exemptions for transfers via insured banks and U.S. debit/credit cards to reduce tax impact.

As of July 3, 2025, the United States 🇺🇸 Congress is debating The One Big Beautiful Bill Act (OBBB), a sweeping piece of legislation that could reshape how people send money abroad. One of the most talked-about parts of this bill is a proposed excise tax on remittance transfers. This tax could directly affect H-1B holders—high-skilled foreign workers—who often send money to support family members in their home countries. Lawmakers, financial experts, and immigrant communities are watching closely to see how this tax might change the way H-1B holders manage their finances and family responsibilities.

What Is the One Big Beautiful Bill Act and the Excise Tax on Remittances?

The One Big Beautiful Bill Act is a large legislative package that covers many areas, including taxes, immigration, and financial regulations. One of its most important and controversial features is a new excise tax on remittances—money sent from the United States 🇺🇸 to people in other countries.

Excise tax is a type of tax charged on specific goods or transactions. In this case, it would apply to money transfers sent abroad. The House of Representatives first proposed a 3.5% excise tax on these remittances, set to take effect after December 31, 2025. There have also been discussions about a lower 1% tax, but the 3.5% rate is the main focus in recent updates.

How Would the Excise Tax Work?

• Who Pays? Anyone sending money from the United States 🇺🇸 to another country could be affected, including H-1B holders.
• How Much? If you send $1,000 to your family abroad, you would pay an extra $35 in taxes at the 3.5% rate.
• When? The tax would start after December 31, 2025, if the bill passes in its current form.

Why Does This Matter for H-1B Holders?

H-1B holders are foreign workers in specialty jobs, such as technology, engineering, or healthcare. Many come from countries like India, China, and the Philippines and often send money home to help their families with living expenses, education, or medical bills.

The Financial Burden

For H-1B holders, the excise tax could mean:

• Higher Costs: Sending money home becomes more expensive. For someone sending $1,000 each month, the tax adds up to $420 per year.
• Budget Changes: H-1B holders may need to cut back on remittances or find other ways to support their families.
• Family Sponsorship: Some H-1B holders help family members immigrate to the United States 🇺🇸. The extra cost could make it harder to save for sponsorship fees or support relatives during the process.

Real-Life Example

Imagine Priya, an H-1B holder from India. She sends $500 every month to her parents for their living expenses. With the new excise tax, she would pay an extra $17.50 each month, or $210 a year. Over several years, this could become a major financial strain, especially if she is also saving to sponsor her parents for a U.S. green card.

Exemptions and Loopholes: What the Senate Is Proposing

The Senate Finance Committee has suggested changes to limit who pays the excise tax. Their proposal would exempt remittance transfers made through certain financial institutions:

• Exempted Accounts: Transfers from accounts at insured banks, commercial banks, credit unions, and broker-dealers registered with the Securities and Exchange Commission (SEC) would not be taxed.
• Debit and Credit Cards: Transfers funded with U.S.-issued debit or credit cards would also be exempt.
• Non-Exempt Methods: Cash transfers or those made through informal channels (like some money transfer shops) could still face the tax.

What Does This Mean for H-1B Holders?

If the Senate’s exemptions become law, H-1B holders who use regular U.S. bank accounts or cards to send money abroad might avoid the excise tax. However, those who use cash or non-bank methods could still be taxed.

Key Takeaway: The final impact depends on which version of the bill passes. H-1B holders should pay close attention to the details and choose their remittance methods carefully.

The Bigger Picture: Why Is the Excise Tax Being Proposed?

Lawmakers say the excise tax on remittances is meant to:

• Raise Revenue: The government collects more money to fund other programs.
• Encourage Formal Banking: By taxing informal transfers, the law pushes people to use banks and registered financial services, which are easier to track and regulate.
• Address Security Concerns: Some believe informal remittance channels can be used for illegal activities. The tax could make it harder for bad actors to move money secretly.

However, critics argue that the tax unfairly targets immigrants and low-income workers who rely on remittances to support their families.

How Could the Excise Tax Change Remittance Behavior?

Possible Outcomes

• Switch to Exempt Methods: H-1B holders may start using only U.S. banks or cards to avoid the tax.
• Reduced Remittances: Some may send less money home, hurting families abroad who depend on this support.
• Increased Use of Informal Channels: If formal transfers become too expensive, some people might turn to unregulated or underground methods, which could be riskier and harder to trace.

Impact on Financial Institutions

Banks and money transfer companies may need to:

• Update Systems: Track which transfers are exempt and which are not.
• Educate Customers: Help people understand how to avoid unnecessary taxes.
• Handle More Compliance Work: Meet new reporting and record-keeping rules.

What Should H-1B Holders Do Now?

With the One Big Beautiful Bill Act still being debated, H-1B holders should start planning for possible changes.

Steps to Take

1. Stay Informed: Follow updates from Congress and trusted news sources.
2. Review Remittance Methods: Use U.S. bank accounts or debit/credit cards for transfers, if possible.
3. Talk to Experts: Consider speaking with a tax professional or immigration lawyer for personalized advice.
4. Budget for Extra Costs: Prepare for the possibility of higher remittance expenses after December 31, 2025.

For official updates and guidance, visit the Internal Revenue Service (IRS) website, which provides information on tax changes and compliance.

How Does This Affect Family Sponsorship?

Sponsoring a family member for a U.S. green card or visa often requires proof of financial support. H-1B holders may need to show they have enough income and savings to support their relatives.

• Higher Remittance Costs: The excise tax could reduce the amount of money available for sponsorship fees or required financial support.
• Proof of Support: If H-1B holders send less money home, it could affect their ability to demonstrate support for family members during the immigration process.

Practical Tip: Keep records of all remittances and use official channels to make transfers. This helps with both tax compliance and immigration paperwork.

What Are Experts Saying?

According to analysis by VisaVerge.com, the excise tax on remittances in the One Big Beautiful Bill Act could discourage H-1B holders from sponsoring family abroad. The extra cost may force some to cut back on support or delay sponsorship plans. However, if the Senate’s proposed exemptions are included in the final law, many H-1B holders could avoid the tax by using compliant financial institutions.

Experts also warn that the tax could have unintended consequences, such as pushing people toward informal money transfer methods that are less safe and harder to regulate.

What Happens Next?

The One Big Beautiful Bill Act is still being debated in Congress. The House and Senate must agree on the final version, including the details of the excise tax on remittances. The Senate is expected to discuss the proposal in the coming weeks, and changes are likely before the bill becomes law.

If the excise tax is included in the final bill, it will take effect after December 31, 2025. H-1B holders and others who send money abroad should watch for updates and be ready to adjust their financial plans.

Frequently Asked Questions

Will all remittances be taxed?

Not necessarily. If the Senate’s exemptions are adopted, remittances sent through U.S. banks, credit unions, or with U.S.-issued debit/credit cards may be exempt. Transfers made with cash or through some informal channels could still be taxed.

How can I avoid the excise tax?

Use a U.S. bank account or a U.S.-issued debit or credit card to send money abroad. Check with your bank or money transfer service to make sure your transfer method is exempt.

Will this tax affect my ability to sponsor family members?

It could, especially if you need to send money home to support relatives or save for sponsorship fees. The extra cost may require you to adjust your budget or remittance habits.

Where can I get more information?

For the latest updates, visit the IRS official website or consult with a tax professional. You can also reach out to immigration lawyers or organizations that support immigrants.

Implications for Stakeholders

For H-1B Holders

• Financial Planning: Must consider the new tax when budgeting for remittances and family sponsorship.
• Compliance: Need to understand which transfer methods are exempt and keep records for tax and immigration purposes.

For Families Abroad

• Reduced Support: May receive less money if H-1B holders cut back on remittances due to the tax.
• Uncertainty: Must prepare for possible changes in financial support from relatives in the United States 🇺🇸.

For Financial Institutions

• Operational Changes: Need to update systems to track exempt and non-exempt transfers.
• Customer Education: Must help clients understand the new rules and avoid unnecessary taxes.

For the U.S. Government

• Revenue Generation: The tax could bring in more money for government programs.
• Policy Goals: May encourage use of formal banking channels and improve tracking of international money flows.

Conclusion and Next Steps

The proposed excise tax on remittances in the One Big Beautiful Bill Act is a major development for H-1B holders and their families. While the tax could increase costs and discourage some from sponsoring family abroad, the final impact will depend on the details of the law as it moves through Congress. H-1B holders should stay informed, review their remittance methods, and seek expert advice to minimize the financial impact.

As the legislative process continues, it is important for all stakeholders to monitor updates and prepare for possible changes. Using official banking channels and keeping good records will help H-1B holders stay compliant and support their families, no matter what the final law looks like.

For more information on remittance taxes and compliance, visit the IRS official website. For personalized advice, consider consulting a tax professional or immigration attorney. As reported by VisaVerge.com, staying proactive and informed is the best way to manage the challenges and opportunities created by the One Big Beautiful Bill Act and its excise tax provisions.

Learn Today

Excise Tax → A specific tax on certain transactions or goods, here charged on money sent abroad as remittances.
H-1B Holder → A foreign worker in the U.S. with a visa for specialty occupations like tech or healthcare.
Remittance → Money sent from one country to recipients in another, often to support family members abroad.
Securities and Exchange Commission (SEC) → U.S. agency regulating broker-dealers and securities industry institutions to ensure compliance.
Formal Banking Channels → Authorized financial institutions like banks and credit unions used for regulated money transfers.

This Article in a Nutshell

The One Big Beautiful Bill Act could impose a 3.5% excise tax on international remittances, impacting H-1B workers. Senate exemptions for bank and card transfers may protect many, but users of informal channels risk higher costs starting after December 31, 2025, affecting family support abroad.
— By VisaVerge.com