A provision buried in the proposed “Big Beautiful Act” is drawing serious concern among immigrants, expats, and even U.S. citizens: a new 3.5% excise tax on remittance transfers made by non-U.S. nationals to their home countries. The bill, currently pending in the Senate, would directly impact millions of F-1 students, H-1B professionals, green card holders, and non-citizen residents who routinely send money abroad for family support or basic living expenses. In this blog, we unpack what the bill says, who it affects, how it might be enforced, and what you can do to oppose it. For reference, this new provision is found in Section 112104. Excise Tax on Remittance Transfers of the bill.
What the Bill Proposes
The bill introduces a new Section 4475 in the tax code that imposes a 3.5% tax on any “remittance transfer.” The sender is responsible for paying the tax, and remittance transfer providers—including institutions like Western Union, MoneyGram, Remitly, and Bank of America—will be required to collect the tax at the time of transfer and remit it quarterly to the IRS. Providers are held secondarily liable if they fail to collect the tax.
Who’s Exempt?
U.S. citizens and nationals are exempt if they use a “qualified remittance transfer provider” and their U.S. citizenship is verified. The law refers to verification procedures to be outlined by the IRS, but currently, no public infrastructure exists to reliably cross-check U.S. citizenship status outside of employment-related systems like E-Verify.
While banks may build on existing identity verification systems that were established under the USA PATRIOT Act post-9/11, fintech companies like Remitly would likely have to create entirely new processes—potentially requiring users to upload passports or other documents and attest under penalty of perjury. But unless providers can access a secure government database, they may have to rely on self-certification, which raises concerns about both enforcement and misuse.
Who Will Be Affected?
F-1 students, J-1 exchange visitors, H-1B and L-1 professionals, TPS holders, asylum seekers, undocumented residents, and even lawful permanent residents (green card holders) will be impacted, as the exemption applies only to U.S. citizens and nationals.
Cost Example
If you send $24,000 abroad annually, you could owe $840 in additional taxes, on top of standard remittance service fees.
Privacy, Discrimination, and the Rise of Underground Channels
Because of the citizenship verification requirement, legal residents may be deterred from using formal channels. This could push many toward informal systems like Hawala, a traditional transfer method still used in parts of South Asia and the Middle East. Similar networks exist globally: Fei ch’ien in China, Hundi in Pakistan and Bangladesh, and the black market peso exchange in Latin America. These systems are unregulated, difficult to trace, and often tied to money laundering and terrorist financing.
Impact on Companies
Transfers made for business purposes—such as paying international contractors—are likely exempt, since the law targets personal, household, or family remittances.
U.S. Remittance Outflows and Projected Revenue
In 2022, U.S. remittances totaled about $79 billion. India and Mexico received the highest shares. If passed, this provision could generate $2–3 billion per year for the federal government.
Where the Money Goes
There is no designated use for the tax revenue. It will go into the general federal budget.
How Other Countries Compare
India taxes outbound transfers at 5–20% through a Tax Collected at Source (TCS) system, with refunds issued later through annual tax filings. China limits outward remittances to $50,000 per person per year and imposes strict approval requirements. Mexico has no significant restrictions or taxes on outward personal transfers.
Status of the Bill
Former President Donald Trump has urged lawmakers to pass the bill before July 4, 2025. While the bill has cleared House committees, there has been little discussion among Senators specifically about the remittance provision—perhaps because it doesn’t affect U.S. citizens. Unless constituents speak up, there may be little political incentive to amend or remove this section.
Take Action: It Only Takes 2 Minutes
If you’re concerned about this tax, contact your two U.S. Senators based on your state of residence. You can find their information at www.senate.gov.
Here’s a message you can send:
“I am a resident of [your state] and I’m deeply concerned about Section 112104 of the Big Beautiful Act, which would impose a 3.5% tax on remittance transfers by non-citizens. This unfairly targets legal immigrants who support their families abroad. I respectfully urge you to oppose or amend this provision.”
Sending this email takes less than two minutes—but could make a real impact.
Conclusion
The remittance tax in the Big Beautiful Act risks harming millions of law-abiding, tax-paying immigrants who send money abroad out of love and responsibility. If passed, it will not only cost families hundreds or thousands of dollars each year but may also drive remittance activity into unsafe, unregulated channels—such as Hawala, Fei ch’ien, or other underground networks.
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