A controversial provision in US President Donald Trump‘s sweeping “One Big Beautiful Bill” — narrowly passed by the House of Representatives on May 22 — could significantly disrupt global remittance flows, with India, the world’s top recipient, poised to face the harshest impact.
The bill, passed by a razor-thin 215-214 vote, proposes a 3.5% tax on all outbound remittances from the United States. Originally pegged at 5%, the tax rate was lowered following opposition. The provision aims to levy the tax on money transfers sent abroad by foreign workers, including green card holders and temporary visa holders such as H-1B professionals.
Tech billionaire Elon Musk, a vocal critic of Trump in recent months, derided the bill saying, “I think a bill can be big or it can be beautiful. But I don’t know if it can be both.”
India Most at Risk
India received a record $129 billion in remittances in 2024, according to World Bank and Reserve Bank of India data — more than the combined annual budgets of Pakistan and Bangladesh. A large share of these funds originates from Indian workers based in the United States.
Experts warn the proposed remittance tax could drain billions from the earnings sent home by Indian expatriates, potentially disrupting household consumption, especially in states like Kerala, Maharashtra, Uttar Pradesh, and Bihar, where remittances form a crucial part of family incomes.
Between 2014 and 2024, India received nearly $1 trillion ($982 billion) in total remittances, with US-based Indian professionals — mostly in high-income sectors like IT, healthcare, finance, and engineering — accounting for a growing share. In 2023–24, remittances from the US made up 28% of India’s total inflows, up from 23.4% in 2020–21.
“This proposed tax threatens to undermine a critical pillar of India’s foreign exchange reserves and household finances,” said the Global Trade Research Initiative (GTRI), as quoted by PTI.
Migrant Workforce and Economic Fallout
India’s international migrant population has grown substantially, from 6.6 million in 1990 to around 18.5 million in 2024. While Gulf nations still host a larger share, a significant and growing number now reside in advanced economies like the US, where their contributions to the Indian economy via remittances are increasingly vital.
What Else is in the Bill?
The remittance tax is only one component of Trump’s broader legislative package, which combines populist economic promises with deep fiscal and regulatory shifts. Other key measures include:
- Tax relief on income: Overtime and tips would be exempt from federal taxes for individuals earning under $160,000 per year.
- “Trump Savings Accounts”: Newborns would receive a $1,000 initial deposit, with families allowed to contribute up to $5,000 annually.
- Repeal of specific excise taxes: Including those on gun silencers and indoor tanning.
- Higher SALT deduction cap: Raised from $10,000 to $40,000 for joint filers earning under $500,000 — though this faces strong resistance in the Senate.
- Rollback of green energy incentives: Tax credits for electric vehicles and solar panels would be scrapped.
- Education cuts: Significant reductions in federal student loan programs.
The bill now faces a tougher battle in the Senate, where opposition — especially to the remittance tax and green energy rollbacks — is expected to intensify.
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