U.S. Eases Proposed Tax on Foreign Remittances, Exempts Card and Bank Transfers

U.S. Eases Proposed Tax on Foreign Remittances, Exempts Card and Bank Transfers

Washington, D.C., June 29, 2025 — In a significant move welcomed by immigrant communities, U.S. lawmakers have softened a proposed tax on money sent abroad. The latest version of the "One Big Beautiful Bill Act," unveiled Friday, reduces the proposed remittance tax from 3.5% to 1% and excludes bank and card-based transfers from its scope.

Under the revised draft, the 1% tax will apply only to remittances sent using cash, money orders, cashier’s checks, or other physical payment instruments. Transfers made from bank accounts or those funded by debit or credit cards issued in the U.S. will be entirely exempt.

“There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer,” the draft states, specifying that the responsibility to pay this tax will lie with the sender.

The earlier proposal had drawn criticism from immigrant groups and international tax experts, who argued it would disproportionately affect working-class individuals sending money to families overseas. The narrowed scope of the tax is now being seen as a compromise that aims to reduce cash-based, informal transfers without penalizing those using formal financial channels.

The U.S. House of Representatives passed the bill in May. The legislation now heads to the Senate, where it is scheduled for debate before a final vote.

Tax professionals say the revised language provides clarity and relief, especially to non-resident Indians and other immigrant communities who frequently use formal banking channels for remittances.

“This is a welcome step. By exempting digital and bank-based transfers, the bill avoids burdening the majority of law-abiding senders while still addressing concerns over untracked cash remittances,” said one international tax consultant.

If passed by the Senate, the measure could set a precedent for how the U.S. approaches taxation on cross-border money flows in the future.