US Govt Cuts Remittance Tax to 1% on India Transfers; Bank & Card Transfers Exempt

US Govt Cuts Remittance Tax to 1% on India Transfers; Bank & Card Transfers Exempt

There is something to cheer for the NRI community living in the United States (US). US Government in its new draft law has reduced remittance tax to 1% from 3.5%. It has also excluded remittances made from bank accounts and other financial institutions and those made via debit or credit cards from the tax from the purview of this tax.

One Big, Beautiful Bill Act

The US House of Representatives passed the ‘One Big, Beautiful Bill Act’ approving remittance tax of 3.5% on remittance made by Non-US Citizens. Initially the proposed Tax Rate was 5%. The same was been reduced to 3.5% and now has been reduced to 1%.

Applicable Date: This is effective from January 1, 2026.

The Latest version of Act says “There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer”

Who will pay the Tax?

The tax imposed by this section with respect to any remittance transfer shall be paid by the sender with respect to such transfer.

Exemption from Tax:

Remittances made from “an account held in or by a financial institution” and “funded with a debit card or a credit card which is issued in the United States” are exempt from the tax.

1% Remittance Tax is applicable on Non-US Citizens including:

• H-1B and L-1 Visa Holders
• F-1 students and OPT wokers
• Green card Holders unless naturalised
• Other Visa Holders who are not US Citizens

Is there any minimum threshold where the tax is not applicable?

No, there is no minimum exemption threshold, and the Remittance Tax is applicable even on the smallest transaction.

How will it work?

Money will be automatically deducted from your bank/money transfer application at the time of making the transaction. For Example, if you being Non-US Citizens are transferring 100 USD to India, 1% will be deducted, and you will be able to transfer 99 USD only.

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