New Delhi, May 15: A new tax proposal introduced by House Republicans on May 12, 2025, could significantly impact Non-Resident Indians (NRIs) living in the United States. The bill includes a controversial provision imposing a 5% tax on all international money transfers made by non-citizens, including NRIs, Green card and H-1B visa holders. If passed, this would mark a dramatic policy shift, as remittances have historically been exempt from US taxation.

Endorsed by President Donald Trump—currently in his second term—the broader legislation aims to make the 2017 Tax Cuts and Jobs Act permanent, while expanding the standard deduction and increasing the child tax credit to USD 2,500 until 2028. According to Republican lawmakers, the 5% remittance tax is intended to help fund these tax breaks and strengthen border security measures, potentially generating billions in revenue. President Donald Trump Proposes Cutting Taxes to 15% for Companies Making Products in US (Watch Video).

How Will It Impact NRIs?

For the Indian diaspora in the US, this proposed tax could prove financially burdensome. India remains the world’s largest recipient of remittances, receiving approximately $83 billion annually—much of it from the US. Under the new law, a transfer of INR 1 lakh (in dollar equivalent) would be reduced by INR 5,000 (in dollar equivalent) as tax before reaching recipients back home. Donald Trump Meets With Apple CEO Tim Cook As China Pauses Tariffs, Says iPhone Maker To Build New Plants in US With USD 500 Billion Investment.

This affects everything from daily family support and education expenses to investments in real estate. The levy applies across all formal channels, including banks and NRE/NRO accounts, leaving few legal avenues for exemption. Financial institutions and money transfer services would be responsible for collecting the tax at the point of transaction.

The House aims to pass the bill by Memorial Day, May 26, with hopes of Senate approval and presidential signing by July 4. If enacted, the tax could be implemented as early as this summer.

NRIs are strongly advised to plan ahead. Consider completing large remittances before July to avoid the tax. Going forward, strategies such as fewer, larger transfers and careful documentation will be essential. The tax would also require tighter compliance with FBAR and FATCA rules for international transfers above USD 10,000.

If passed, the bill will necessitate a full reassessment of financial planning for NRIs, making tax-aware remittance strategies a new priority.

(The above story first appeared on LatestLY on May 15, 2025 11:00 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).