US immigrants are required to pay a tax on sending money back to their home country. The new ‘immigrant tax’ has been in place since January 1, 2026, on outward remittances made by immigrants living in the US. The new ‘immigrant tax’ imposes a 1% levy on money transfers from the US to foreign countries.
Called the ‘Excise tax on remittance transfers’, the tax rate was initially proposed to be 5%, but later on it was reduced to 3.5% of the amount sent by immigrants to their home countries. Before being passed by the Senate, the ‘remittance tax’ was further reduced to 1%. The remittance tax from the US to India, effective date is January 1, 2025.
For example, if you send $1,000 abroad and pay with cash, you would pay an extra $10 in tax on top of your normal fees. The recipient will get the full amount of $1,000.
However, not all international money transfer transactions will be subject to the 1% immigrant tax. Whether you are a green card holder, a student holding an F-1 visa, or any other immigrant or non-immigrant, you may avoid paying 1% tax to the US Treasury.
How to avoid the tax
Make sure you are not using cash, money orders, or cashier’s checks to remit funds abroad. The 1% tax will now only apply to cash, money orders, and cashier’s checks. Also, ensure you are routing transactions through a qualified remittance transfer provider.
Best Way for Remittance
The impact of remittance tax has been significantly reduced because it exempts remittances made from bank accounts and other financial institutions, as well as those made with debit or credit cards, from the tax. One may also avoid 1% tax on remittance by making international money transfers using Digital wallets, including Google Pay, Apple Pay, and Prepaid cards. These methods allow you to send money to family and friends without additional costs by opting for a different payment method.
US remittance tax is an excise tax’ on international money transfers made by non-US residents residing in the United States, such as NRIs, green card holders, foreign students, and other immigrants in America.
NRIs, H-1B and other foreign workers, and Indian students will be the most affected by the remittance tax, unless they use the tax-exempt ways to send money to their home country, after January 1, 2026.