Internet Condemns Trump's imposition of a 5% USA tax on NRI Remittances. Find out More about the Tax Credits.

Trump’s broader bill is focused on making the Tax Cuts and Jobs Act permanent. It aims to increase the standard deduction and extend the child tax credit to $ 2,500 through 2028. This USA tax can have extensive financial implications for NRIs. At present, India is the world’s top recipient of remittances, with approximately $83 billion provided annually from abroad, largely from the United States.  With The Silicon Journal, explore the “One Big, Beautiful Bill” of US President Donald Trump and learn how it aims at restraining money transfers to foreign countries, affecting the USA tax policy to a large extent.

The House of Republicans recently released the detailed provisions of its fiscal bill. The provision on the bill states about imposing a 5% tax will be imposed on remittances sent abroad with the aim of curbing money transfer to foreign countries. This new shift in the USA tax policy will hit immigrants hard in the country. Foreign workers who run their families and households abroad will be the ones who are going to bear the implications of this change. Although US citizens could apply for tax credits to counterbalance the cost, the immigrants will suffer the most due to this change in tax policy.

The new provision means that for every $1168.48 (₹1 lakh) sent home by the NRI, $58.42 (₹5000) will go to the Internal Revenue Service (IRS) before reaching the recipient. This could affect the family support, educational expenses, and other financial aspects of the immigrants. Until now, remittances were not a part of the US taxation, but with this change, a drastic reversal in US tax policy can be seen here.

Netizens Slamming the Bill: A New Form of Stealing

The bill faced backlash from netizens, especially NRIs, soon after its release. Considering it as a form of stealing, a user on Reddit wrote, “Are the U.S. lawful temporary residents also subjected to this 5% robbery? Or only undocumented, illegal immigrants? Example: Someone on an H-1B or TN visa/status, who is a lawful albeit non-permanent U.S. resident, and also has an SSN. Would it also apply to US-originated outbound international transfers involving a source and destination bank account owned by the same, lawful U.S. non-permanent resident person? This is really a NEW form of stealing people’s hard-earned money (and who contributed fully their fair share into tax revenue and social security contributions), by a rapacious, unaccountable U.S. government!”

Another user wrote, “People with legal status are not impacted by this. So H1, F1, etc., don’t have to worry about this. As long as you can prove legal status to the remittance service provider, you should be fine. Yup, this will mostly impact the entire NRI community living in the states, and sending money back home. Although their definition of US Nationals is something that is not sure yet. And at the same time, adding the 5% tax as a tax credit will also discourage US citizens from sending money abroad, or spending it abroad.”

Expansion of Child Tax Credit

Trump’s bill proposed a substantial expansion of the Child Tax Credit (CTC) with a goal of providing families with up to $5,000 per child. This initiative concerning the tax credits aims to offer financial relief to families irrespective of their economic backgrounds, reshaping the economic landscape for several Americans. This proposed plan in the bill aims to increase the existing CTC from $2,000 to $5000 per child. This has been designed to support families in handling expenses such as education, childcare, and daily necessities.

The expanded CTC is expected to come into effect in the 2025 tax year after getting approval from Congress. As a major shift in the USA tax system, this tax initiative has significant potential to improve the financial status of many American households.

Trump’s Tax-Cut Bill Passes Vote of House Committee

US President Donald Trump’s extensive tax-cut bill passed with a key congressional committee vote, propelling it to passage in the House of Representatives. On 19th May 2025, the bill garnered votes even after getting blocked by the Republican conservatives over a dispute concerning spending cuts to the Medicaid healthcare programme for lower-income Americans and the revoking of green energy tax credits. The bill passed in a 17-16 vote, with Republicans voting in support and democrats voting against it.

As per the Nonpartisan analysts, “the bill, which would extend the 2017 tax cuts that were Trump’s signature first-term legislative win, would add $3 trillion to $5 trillion to the $36.2 trillion national debt over the next decade.”    

Despite the thrashing from the immigrants concerning the 5% USA tax remittances by the Trump proposed bill, it passed with flying colours in the House of Republicans with an aim to transform the economic landscape of the nation.