After weeks of courting controversy, US President Trump finally signed his Big Beautiful Bill into Beautiful law. Let’s look at some of the crucial provisions in the final bill and how it affects NRIs.
- More Money for Middle and Top Income Brackets
The new law aims to extend Trump’s previous 2017 tax cuts and give more money to those earning above the American median income. The majority of the Indian diaspora falls in this category, so they stand to see more money in their biweekly paychecks. It also increases limits on deductions for state and local taxes. People making up to USD 500,000 a year can now get a bigger tax break, up to USD 40,000, on their state and local taxes for the next five years.
The tax on remittances sent from the US to foreign nations was cut down from the initial 5% to 1%, which will go into effect from January 1, 2026. The reduction offers a significant relief to about 4.5 million Indians in the US. It will be applicable to US residents who aren’t citizens, including green card holders, H1-B and H-2A visa holders, and international students. However, it is crucial to note that the tax will apply to transfer of money through cash, money orders, or cashier’s checks. Transfers made from financial institutions or funded through US-issued debit/credit cards will be exempted.
- No Change to Foreign Income
No changes were made to the existing rules on foreign-source rental income earned by US residents, including NRIs holding a green card or US citizenship. That means tax paid in India can be claimed as a tax credit in the US, so you don’t have to pay tax twice.
- Tough Measures on Immigration
The final version of the bill earmarked billions of additional dollars toward immigration control and national security efforts. Green card holders face particular challenges, as low-income green card holders within the mandatory five-year waiting period for Medicaid would be among those most affected. For Indians waiting in the lengthy employment-based green card queue, these changes add another layer of complexity to an already challenging process.
- Stricter Rules for Staying in the US
The new legislation has increased the fees for work permits, asylum applications, and other humanitarian protections. The cuts to medical aid and other government safety net programs will also have an impact on immigrants and low-income groups.
The Indian American community has always been resilient and entrepreneurial, but how it navigates these evolving challenges in immigration, healthcare, and taxes remains to be seen.
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