Trump&rsquo;s Remittance Tax Plan Threatens to Cost Indian Americans Over $1.6 Billion Annually
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The Trump administration is reportedly considering a 5% excise tax on international remittances, a move that could disproportionately impact millions of immigrants in the United States, particularly Indian Americans. If enacted, the proposal&mdash;part of President Donald Trump&rsquo;s broader legislative agenda&mdash;could cost Indian households and businesses an estimated $1.5 to $1.6 billion annually.
The proposed tax would apply to all outbound remittances unless the sender qualifies as a &ldquo;verified US sender,&rdquo; defined as a US citizen or national. Green card holders, H1B visa holders, and other non-citizen residents&mdash;many of whom regularly send money back to family members in India&mdash;would fall within the taxable bracket. This levy would be collected at the point of transfer by remittance service providers, including banks and financial platforms, who would then remit the collected tax to the US Treasury on a quarterly basis.
Significantly, the bill includes no minimum threshold for transactions, meaning even small-value transfers would attract the tax unless the sender holds the status of a verified citizen. However, the draft does propose a refundable tax credit for individuals with valid Social Security numbers, though the mechanisms and accessibility of such credits remain unclear. An anti-conduit rule has also been introduced to deter circumvention through intermediaries.
Remittances&mdash;typically personal transfers made by individuals to support family members back home&mdash;constitute a vital economic lifeline for many developing countries. For India, which topped global remittance inflows in 2024 with an estimated $129 billion, the United States accounts for nearly 28% of total remittance receipts, or approximately $32&ndash;33 billion annually. A 5% levy on this stream could result in billions being diverted from Indian beneficiaries into US government coffers.
Critics argue the measure could undermine the financial stability of transnational families and reduce inflows to India, particularly at a time when remittances have consistently outpaced foreign direct investment (FDI) and official development assistance (ODA) as a source of external financing.
Beyond India, other major recipients&mdash;such as Mexico ($68 billion), China ($48 billion), the Philippines ($40 billion), and Pakistan ($33 billion)&mdash;could also feel the ripple effects if similar taxation frameworks are introduced or replicated.
Should the proposal pass through Congress, Indian-origin professionals and workers in the US may be compelled to reassess the frequency and volume of their financial contributions to families back home, altering a long-standing economic dynamic between the two nations.

Trump’s proposed 5% levy on money transfers could drain $1.6B from Indian-origin senders annually

Indians in US May Pay $1.6B in Remittance Tax

Trump’s proposed 5% levy on money transfers could drain $1.6B from Indian-origin senders annually

May 17, 2025 | 19:49 IST

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