Western Disunion: Impact of Trump's Remittance Tax

AST week, the US House of Representatives passed the 1,116-page 'One Big Beautiful Bill', a sweeping tax and immigration reform package whose proposals include a 3.5 percent levy on all outbound remittances sent by non-citizens in the US—including international students, and holders of H-1B visas and green cards.

- TULSI JAYAKUMAR

If enacted, this tax, proposed to take effect at the start of 2026, could have significant ramifications for India, the world's largest recipient of remittances.

Indian immigrants are among the most significant contributors to the American economy. In 2023, there were over 2.9 million Indians living in the US, making them the second-largest immigrant group after Mexicans. Indian immigrants accounted for 6 percent of America's 47.8 million foreign-born residents. Their population has grown rapidly: fivefold from 1980 to 2000, and nearly tripled from 2000 to 2023—outpacing other immigrant groups with a 63 percent growth rate since 2010, compared to 20 percent for foreign-born population.

What makes this demographic noteworthy is not just its size, but its profile. Over half of all Indian immigrants hold a bachelor's or higher degree, and their median income is more than double that of both US-born and overall foreign-born populations. Their poverty rate is half the other immigrant groups'. A vast majority (81 percent) are of working age (18-64), and their labour force participation (74 percent) is much higher compared to US-born workers (63 percent) and the broader immigrant average (67 percent). Notably, nearly 78 percent are employed in high-skilled roles.

This population is also increasingly vital to US labour force growth. While the number of US-born individuals aged 25-54 remained almost unchanged between 2000 and 2022, the foreign-born population in this age group—dominated by Indians—increased by nearly 7 million.