Global Mobility Tax

United States | Proposed excise tax on remittance transfers

May 22, 2025: this alert has been updated to reflect that under the proposal the excise tax rate has changed from 5% to 3.5%.

Summary

As the “One, Big, Beautiful Bill” advances through the US House of Representatives, a proposal within it could have a significant financial impact on foreign nationals who transfer US funds abroad.

Under the proposal, a 3.5% excise tax would be imposed on electronic transfer of funds from individuals who are not US citizens or nationals to recipients in foreign countries. US citizens and nationals would be excluded from this excise tax, either at the point of transfer itself if certain criteria are met or through a refundable credit claimed by filing a return.

Global mobility teams should monitor this proposal closely as it could especially impact non-US citizen employees working in the US.

The detail

The proposal would introduce a 3.5% excise tax on any “remittance transfer”, which is the electronic transfer of funds requested by a sender located in the US. (including US territories, US possessions, and the District of Columbia) to a recipient in a foreign country that is initiated by a remittance transfer provider. A remittance transfer provider is any person or financial institution that provides remittance transfers for a consumer in the normal course of its business, whether or not the consumer holds an account with the person or financial institution.

Specific terminology used in this proposal have meanings assigned in another existing legislation dealing with electronic funds transfer. If the proposal is enacted into law, it would be interesting to see if further clarifications or regulations are issued, as this tax could not only impact remittances overseas to family members or others, but potentially to the individual’s own accounts overseas, i.e., when they themselves are the sender and recipient.

It is also unclear at this stage whether relief is available under any of the non-discrimination articles in income tax treaties that the US has with other countries, since such an excise tax may not be covered by these treaties. 

If enacted, this excise tax would be applicable for transfers made after December 31, 2025.

Collection of tax

• The 3.5% tax would be collected by the remittance transfer provider at the time of transfer from the sender and paid to the US Treasury.
• If the provider fails to collect the tax, liability shifts to the provider itself.
• In practice, this means the transfer amount is expected to be reduced by the 3.5% excise tax, with only the net amount reaching the recipient in the foreign country.

Exceptions for US citizens and nationals

1. At the point of transfer: No excise tax applies if the sender is verified by a qualified provider as a US citizen or national.
2. Via refundable credit: If the individual was unable to qualify under the first exception above, (e.g.,transfer through an unqualified provider), the individual may still claim a refundable tax credit upon filing a return, subject to certain documentation including proof of citizenship and a valid SSN.

Importantly, it is clear that the first exception does not apply to individuals who are not US citizens or nationals, regardless of their immigration status or US residency. Though the language for the second exception is not very clear as to its applicability to non-US citizens or nationals, based on the accompanying explanation by the Joint Committee on Taxation, the second exception also seems to apply only to US citizens and nationals.

What this means for global mobility

This entire bill is still at the proposal stage, and changes could be made in the House or Senate including elimination of this or any provision.  Even after the legislation passes, if it does, there may be further clarifications needed in regards to the application of these rules.

If enacted into law, this provision could have financial implications for the broader foreign national population in the US. For global mobility programs, this could negatively affect employers recruiting efforts for foreign talent to move to the US or take up assignments in the US.

Additionally, foreign national employees who relocate to or are assigned to work in the the US by their employer and are paid on a US payroll may seek the following assistance from employers:

• Employees on relocation packages to the US, may request reimbursement of this additional cost as part of their relocation assistance.
• While most tax equalization policies cover income taxes and not excise taxes, employees on tax equalized assignments to the US may consider themselves tax protected on this.
• Some employees may ask to have all or a portion of their pay directed overseas from the outset to mitigate remittance-related tax exposure. 

Even for US citizen employees who are globally mobile, while not ultimately subject to this excise tax for the transfer of funds overseas, there could be an additional administrative burden leading to employer support requests.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

David Austin
Partner

Mike Branca
Partner

Julie Baron
Partner

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