Important Tax Clarifications for H-1B & F-1 Visa Holders

Updates for remittance tax applied to money sent abroad.

Hey there!

We’re following up on our recent newsletter to clarify one important update regarding the new remittance tax that was included in the One Big Beautiful Bill Act. The final version of the bill has a few key changes that affect how (and if) the new remittance tax applies to you.

Here’s what the updated law actually says:

1% Tax Rate: Not 3.5% as previously expected. The rate was revised during the legislative process.

Applies Only to Certain Methods: The 1% tax only applies to international money transfers made using:

  • Cash

  • Money orders

  • Cashier’s checks

  • Other paper-based transfer methods

What’s Exempt:
Transfers made using U.S. bank accounts, U.S.-issued debit/credit cards, or digital services (like Wise, ACH, SWIFT, and most remittance apps) are not subject to this tax.

Not currently on OPT/STEM OPT? Fill out this quick survey so we can send you tailored content based on where you’re at in your international student journey.

What Reasons Were Stated for the Tax?

Lawmakers cited that the new remittance tax, part of the “One Big Beautiful Bill Act” signed into law on July 4, 2025, is designed to:

  • Generate additional federal revenue from money sent abroad.

  • Discourage illegal immigration by making it more costly to send money out of the U.S.

  • Address concerns that remittance flows may encourage overreliance on U.S. earnings in some foreign jurisdictions

What Changed from the Initial Bill?

Version

Tax Rate

Scope of Taxed Transfers

Who Pays

Key Changes from Initial Proposal

Initial House Bill

5%

All international money transfers by non-citizens

Non-citizens

Broadest scope, highest rate

House-Passed Bill

3.5%

Most international transfers, some exceptions

Non-citizens

Reduced rate, some exemptions added

Final Law (Signed)

1%

Only cash, money order, cashier’s check, or similar means - not bank or digital transfers

Anyone using specified methods (not just non-citizens)

Rate lowered to 1%, scope narrowed to exclude bank, card, and digital transfers; applies to all senders using these methods, not just non-citizens

Key Updates To Note

  • Tax Rate Lowered:
    The rate was reduced from 5% (initial proposal) to 3.5% (House-passed), and finally to 1% in the law signed by President Trump.

  • Scope Narrowed:
    The tax now applies only to remittances sent using cash, money orders, cashier’s checks, or similar paper-based methods. Transfers made through U.S. bank accounts, debit/credit cards, or digital platforms (like ACH or SWIFT) are not subject to this tax.

  • Who Pays:
    Earlier versions targeted only non-citizens. The final law applies the 1% tax to anyone using the specified transfer methods, regardless of citizenship status, though the main impact remains on immigrant communities.

  • Effective Date:
    The tax applies to qualifying transfers made after December 31, 2025.

Why Does This Matter?

Most international students and workers who use banks or digital apps to send money abroad will not be subject to the 1% remittance tax. The tax primarily affects those using cash-based or similar transfer methods, not routine bank or app-based remittances

We appreciate the thoughtful responses from community members who helped clarify this - and we’re committed to keeping our updates as accurate and useful as possible.

As always, we’ll continue to track changes and keep you informed as official guidance rolls out.

Best,
The Roam Growth Team 🧡