NRIs: Beat the 5% U.S. Remittance Tax

According to the One Big Beautiful Bill Act (OBBBA or OBBB), a new law has imposed a 5% US remittance tax on remittances sent by immigrants to their family members living in their home country (India). This tax imposition has directly impacted non-resident Indians (NRIs), international students, H-1B or H-2A employees, and other non-US citizens working and residing in America, including US Green Card holders.

The bill was introduced on May 12 in the US House of Representatives. The outlined provision is expected to be effective from January 2026. Also, no minimum transaction threshold is specified. However, there is an exception for verified US nationals or US citizens. There is another proposition: that the Trump administration has reduced the 5% tax imposition to 3.5%, which is a big relief for Indian migrants. However, unless the final bill becomes law, the final rate cannot be declared.

The Impact of 5% US Remittance Tax Imposition on NRIs

For many expats, remittances are crucial tools for survival or fulfilling basic needs, including supporting elderly parents, repaying education loans, investing in Indian stock or real estate markets, maintaining basic living standards, and staying connected with one’s family back in India. For many families, these remittances are the only source of income, especially when there is only one earning member staying abroad to support their dependents.

Therefore, these remittances are more than just money transfers - they ensure security, comfort, and continuity for innumerable families in India, who are left behind by their younger generations to earn a living. So, the Trump administration’s imposition of a 5% US remittance tax on these remittances has hit the sentiments of many NRIs.

Srishti Oberoi, Practicing Advocate at District Courts Yamunanagar and Punjab & Haryana High Court, has opined that NRIs working in the US are already facing challenges with rising living expenses and visa uncertainties. Now, with such special taxes imposed on remittances, their overall cost of living increases with each transfer of remittances to their Indian beneficiaries.

Srishti further suggested that although the tax imposition might not directly impact the immigration statutes of the NRIs, it could affect how they look to the States for career growth opportunities and handsome salaries. She also added that when this remittance tax law is put into effect, many expats may consider looking for alternative job opportunities in other nations, such as the UK and Canada.

Moreover, the 5% US remittance tax may be overwhelming for young working professionals who have recently shifted to this new land for career-building purposes and are still repaying their education loans. For example, aspiring software engineers borrow hefty loans for master’s degree programs. So, they would be required to send a major portion of their salaries to their family to repay massive loans. As a result, it might make the United States a less attractive option for starting one’s career.

After-Effects on Indian Markets

The ripple effects of the new remittance tax may extend beyond the individual employee’s living costs in the US and the major industries. For instance, the passage of the Bill may also reduce NRI-driven apartment booking demands. This, in turn, may affect the builders, developers, and other real estate professionals who heavily depend on these housing bookings.

Another sector that might be affected by this 5% tax imposition is the startup ecosystem, which relies on NRI immigrants. Many entrepreneurs and startup owners generate earnings from these international sources for lower labour costs, and may also witness a significant hit. They may also experience funding downturns when remittances become burdensome, as they frequently rely on cross-border angel investments.

Impact on the Indian Real Estate Sector

According to the RBI protocols, NRIs are permitted to purchase properties in India. When the remittance tax rule is imposed, US-based expats may want to consider investing in real estate in their homeland. Investing in real estate not only ensures lifestyle security but also strengthens one’s finances.

The real estate market in metropolitan areas, such as Hyderabad, Mumbai, and Delhi, is heavily dependent on NRI investments. Therefore, after the bill becomes law, NRI investment in the Indian real estate market may also experience a major hit. Therefore, this is the right time to tick off your investment bucket list. Consider investing in one of the exotic gated community apartments near ORR, Hyderabad, to ensure security and comfort for your family members.

Furthermore, according to the observations of industry experts, things will gradually normalise, though there may be initial impacts. NRO and NRE accounts are the key financial transaction vehicles for expats investing in Indian equities, real estate, and other financial tools. Although there may be a drop in remittance and investment activities in the initial weeks or months, this would only be short-term.

Start Planning: Make Real Estate Investment Decisions Before the Tax Hits

Now is the time to plan for your fund accumulation and help your family stay prepared for temporary delays in cross-border capital transactions. Consider purchasing one of the sustainable IGBC-certified green homes in Hyderabad to ensure cleaner and greener living standards. It will be a smart financial decision to strengthen your finances before the remittance takes effect on January 1, 2026.

Plan ahead so you can complete the required remittance before this date to avoid this additional 5% tax (the revised rate is 3.5%). Discuss with tax and financial advisors to understand the legalities and implications associated with the tax, allowing you to make informed investment decisions. Summing up, by purchasing property before the tax imposition, you can

Please note: After the tax hits, you will either need to pay the tax or make smaller transactions, which may disrupt your property investment procedures and timeline.

Accomplish Your Financial Goals with Levonor’s Flagship Projects

Wondering which are the best Hyderabad locations for NRIs to invest in real estate? Consider Kollur and its surroundings. For example, our Levonor Egeira is a flagship project that offers a balance between comfort, luxury, and sustainable living. It is known for its smart and extravagant living standards, and its IGBC Gold Pre-certification significantly increases the property value. If you are planning to buy 3BHK apartment in Hyderabad, look no further than Egeira, which spans over 4.7 acres, comprising G+35 stories, 3 towers, and 2 clubhouses.

The Bottom Line

Egeira, being the best property investment in Hyderabad, can ensure comfort and safety for your family members back in India. This way, you can secure your financial health and your future by making the right investment decisions at the right time. Before the remittance tax kicks in, you can lock in the exchange rates, get the best real estate prices, simplify the fund transfer procedures, and save thousands of bucks in taxes.