Proposed Revision to US Remittance Tax in BBB

[NoDisplayName]

A new draft of the "One Big Beautiful Bill", released on June 27, shows big changes from the earlier version passed by the House of Representatives. The tax was originally proposed at 5 per cent in the House bill under the Trump administration before being reduced to 3.5 per cent and now further lowered to 1 per cent in the Senate draft.

   

But crucially, this tax will only apply to cash or similar physical payments handed over to money transfer providers. Transfers done through bank accounts or debit and credit cards issued in the US won’t be taxed. The bill says the tax is “limited to cash and similar instruments… only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument.”

 

https://www.business-standard.com/world-news/us-senate-lowers-proposed-remittance-tax-to-1-spares-bank-transfers-125062800890_1.html

 

 

 

Appears under this revision the tax would only apply to poor migrant workers who use Western Union to send their salaries back to Mexico to feed their kids.

[Jingthing]

I don't approve of soaking those workers or that big ugly bill in general but if this report is true, that is very good news for the typical American expat in Thailand who does remittances.

[gargamon]

So Wise transfers too then?

[NoDisplayName]

2 minutes ago, gargamon said:

So Wise transfers too then?

 

Wise uses electronic transfers not physical cash or cashiers checks, and would be considered a financial institution, so appears to fit the definition to be exempt.

[Jingthing]

I'm actually surprised to hear this good news.

I'm wondering how it happened.

I seriously doubt the change was done out of regard for the well being of American expats.

I think more likely the banking lobby which presumably is very powerful made it clear they don't want to have to deal with the additional work to enforce this.

[Everyman]

Hopefully the “BBB” will die anyway, and the tax cuts will expire. The US needs the increased revenue to balance the budget.

 

We have been hearing for years that the those cuts only applied to wealthy people so it won’t hurt anyone else, right? 

[TedG]

On 6/28/2025 at 7:21 PM, Jingthing said:

I don't approve of soaking those workers or that big ugly bill in general but if this report is true, that is very good news for the typical American expat in Thailand who does remittances.

I’m not sure how this soaking the workers.   Letting the tax cuts expire will increase the workers tax burden.    

[TedG]

7 minutes ago, Everyman said:

Hopefully the “BBB” will die anyway, and the tax cuts will expire. The US needs the increased revenue to balance the budget.

 

We have been hearing for years that the those cuts only applied to wealthy people so it won’t hurt anyone else, right? 

The US saw near record revenue in 2022 and still had a huge deficit.   A balanced budget will require huge spending reductions.

 

You are misinformed claiming these cuts only applied to the wealthy.    

[Everyman]

51 minutes ago, TedG said:

The US saw near record revenue in 2022 and still had a huge deficit.   A balanced budget will require huge spending reductions.

 

You are misinformed claiming these cuts only applied to the wealthy.    

I never said getting rid of the tax cuts by themselves would balance the budget.

 

And I know the cuts didn’t only apply to the wealthy, I’m just wondering how the media will present it after 8 years of telling that lie. 

[Jingthing]

I was talking about workers doing remittances. Even one percent tax on those transfers is cruel considering most are poor people sending money to their poor families to help them just survive.

[khunjeff]

On 6/29/2025 at 6:21 AM, Jingthing said:

I don't approve of soaking those workers or that big ugly bill in general but if this report is true, that is very good news for the typical American expat in Thailand who does remittances.

 

The remittance tax at any level is stupid and pointless, but American citizen senders were exempted in all versions of the bill so far.

 

"There is an exception to the excise tax if the sender is a U.S. citizen or national who uses a qualified remittance transfer provider (QRTP). A QRTP is an RTP that enters into a written agreement with the U.S. Department of the Treasury and agrees to verify that the sender is a U.S. citizen or national."

 

Another Surprise in the One Big Beautiful Bill: Excise Tax on Remittances | Insights | Holland & Knight https://share.google/UpiRI4T2qy1A85m7S

[Jingthing]

1 minute ago, khunjeff said:

 

The remittance tax at any level is stupid and pointless, but American citizen senders were exempted in all versions of the bill so far.

 

"There is an exception to the excise tax if the sender is a U.S. citizen or national who uses a qualified remittance transfer provider (QRTP). A QRTP is an RTP that enters into a written agreement with the U.S. Department of the Treasury and agrees to verify that the sender is a U.S. citizen or national."

 

Another Surprise in the One Big Beautiful Bill: Excise Tax on Remittances | Insights | Holland & Knight https://share.google/UpiRI4T2qy1A85m7S

Exempted but in previous version may have had it withheld for future irs refund. 

[Wrwest]

On 6/29/2025 at 6:54 AM, Jingthing said:

I'm actually surprised to hear this good news.

I'm wondering how it happened.

I seriously doubt the change was done out of regard for the well being of American expats.

I think more likely the banking lobby which presumably is very powerful made it clear they don't want to have to deal with the additional work to enforce this.

I have previously been informed that both "Democrats Abroad" and "American Citizens Abroad' have been lobbying Congress on this and other Expat taxation concerns.

[mudcat]

Per Politico the rate has been lowered but the exemption for U.S. citizens has been removed:

https://www.politico.com/live-updates/2025/06/30/congress/gop-remittance-tax-plan-said-to-raise-a-lot-more-money-despite-lower-rate-00433068

 

 

GOP remittance tax in megabill projected to raise a lot more money, despite lower rate

Lawmakers dropped a plan to compensate U.S. citizens hit by the tax and forecasters determined a lower rate would actually raise more money.

https://www.politico.com/dims4/default/resize/100/quality/90/?url=https%3A%2F%2Fstatic.politico.com%2F35%2F6a%2Fde8815314118b430f99cb5f0633f%2Ffaler-brian-20132.jpg

Brian Faler

06/30/2025, 1:13pm ET

A revised plan by Senate Republicans to impose a new one percent tax on remittances is now projected to bring in a lot more money to the Treasury even though lawmakers have slashed the rate.

One reason: lawmakers are dropping plans to shield U.S. citizens from the tax on money sent overseas, which had been aimed squarely at undocumented immigrants.

 

 

 

The provision, included in the domestic policy megabill before the Senate, is now expected to produce nearly $10 billion — nearly ten times as much money as a previous draft that would have charged 3.5 percent, according to the nonpartisan Joint Committee on Taxation.

That’s partly because Republicans jettisoned provisions that would have compensated American citizens who also pay the levy. Lawmakers had proposed creating a special credit citizens could claim against the charge, though that’s been deleted from the latest version of the tax, defense, immigration and energy package.

It’s also because budget forecasters determined a 3.5 percent rate would be high enough to prompt many people to avoid paying it — by finding other, nontaxable ways of sending money, for example — and that a lower tax rate would actually generate more revenue for the government.

The lowered rate appears to have dampened complaints about the tax, a priority for President Donald Trump who pushed it as a way to add a burden to undocumented immigrants sending money to relatives abroad.

Some had warned it could hit all sorts of other cross-border payments and lawmakers had faced lobbying from banks and others ratchet it back.

Lead Art: President Donald Trump has advocated the tax to deter undocumented immigrants from sending money abroad to family members and others. | Ismael Francisco/AP

 

[NoDisplayName]

3 hours ago, mudcat said:

Per Politico the rate has been lowered but the exemption for U.S. citizens has been removed

 

Sure, but was the all-important provision that the tax only applies to "physical cash", like cash money orders cashiers checks, being sent?

 

Are banks and "financial institutions" still exempt?