Impact of Trump’s “One Big Beautiful Bill” on Non-Resident Indians (NRIs)

Introduction

The “One Big Beautiful Bill,” a cornerstone of U.S. President Donald Trump’s second-term domestic policy agenda, is a comprehensive legislative package passed by the U.S. House of Representatives on May 22, 2025, and awaiting Senate approval as of June 30, 2025. This 1,116-page bill introduces sweeping changes to tax policies, immigration, border security, healthcare, and social programs, with significant implications for Non-Resident Indians (NRIs) and Indian immigrants in the U.S. This article explores the bill’s contents, its impact on NRIs, and the advantages and disadvantages it presents for this community.

Contents of the “One Big Beautiful Bill”

The bill encompasses a wide range of provisions, many of which directly or indirectly affect NRIs. Key components include:

1. Remittance Tax:
   • A proposed 1% tax on international money transfers by non-U.S. citizens, including green card holders and visa holders (e.g., H-1B, L-1, F-1). Initially proposed at 5%, it was reduced to 3.5% in the House version and further slashed to 1% in the Senate draft.
   • U.S. citizens are exempt, but NRIs, including permanent residents, are subject to this tax, with a refundable tax credit available for those with valid Social Security numbers using verified remittance providers.
   • No minimum exemption threshold exists, meaning even small transfers are taxed.
2. Tax Policy Changes:
   • Permanence of the 2017 Tax Cuts and Jobs Act (TCJA), benefiting high-earning NRIs (e.g., H-1B visa holders) with lower federal tax brackets and higher take-home pay.
   • Doubled child tax credit and higher standard deductions, aiding dual-income NRI families.
   • A 20% deduction on qualified income for pass-through entities (e.g., LLCs, S-corps), supporting Indian-owned small businesses like IT consultancies and restaurants.
   • Increased state and local tax (SALT) deduction cap from $10,000 to $40,000 (until 2030), benefiting NRIs in high-tax states like New York and California.
3. Immigration and Border Security:
   • Allocates $46.5 billion for border wall construction, $4.1 billion for hiring 3,000 Border Patrol agents and 5,000 customs officers, and $45 billion for Immigration and Customs Enforcement (ICE) detention and deportation operations, including 10,000 new ICE agents by 2029.
   • Imposes a $1,000 fee on migrants seeking asylum, potentially affecting Indian asylum seekers.
   • Enhances border security measures, which may indirectly impact visa processing and immigration pathways for NRIs.
4. Healthcare and Social Program Cuts:
   • Reduces Medicaid funding, with stricter re-enrollment (every six months) and work requirements (80 hours/month for adults with children over 15).
   • Cuts Affordable Care Act (ACA) premium subsidies, increasing out-of-pocket costs for NRIs on ACA plans.
   • Tightens Supplemental Nutrition Assistance Program (SNAP) eligibility, requiring states to fund 5-15% of costs if error rates exceed 6%, impacting low-income NRI families.
   • Eliminates benefits for 1.4 million undocumented immigrants, potentially affecting mixed-status Indian families.
5. Education and Student Aid:
   • Reduces federal student loan programs and on-campus job opportunities, impacting Indian international students pursuing master’s or PhD degrees.
   • Cuts to SNAP and housing support may affect low-income NRI students and families.
6. Other Provisions:
   • Eliminates taxes on tips, overtime, and interest on U.S.-made car loans, benefiting NRIs in gig economy roles (e.g., Uber drivers).
   • Repeals the $200 excise tax on gun silencers, a minor provision with no direct NRI impact.
   • Modernizes air traffic control and boosts U.S. Coast Guard funding, indirectly supporting NRIs in related industries.

Impact on Non-Resident Indians

The bill’s provisions have far-reaching consequences for the 4.5 million Indian immigrants in the U.S., including 3.2 million Persons of Indian Origin (PIOs). Below is an analysis of its impact, advantages, and disadvantages for NRIs.

Advantages for NRIs

1. Tax Benefits for High Earners and Businesses:
   • The permanence of the 2017 TCJA ensures continued lower tax brackets, benefiting high-earning NRIs, particularly H-1B visa holders in tech and other industries. For example, a dual-income NRI household earning $150,000 annually could see significant tax savings.
   • The 20% deduction for pass-through entities supports Indian entrepreneurs, such as those running IT consultancies, restaurants, or franchises, fostering business growth and reinvestment.
   • The increased SALT deduction cap ($40,000) reduces tax burdens for NRIs in high-tax states, enhancing disposable income for families in areas like New Jersey or California.
2. Benefits for Gig Economy Workers:
   • Eliminating taxes on tips and overtime pay benefits NRIs working as Uber drivers, couriers, or in other tipped professions, increasing their take-home pay.
3. Economic Growth Opportunities:
   • The bill’s focus on economic growth, including tax cuts and business incentives, may create job opportunities in sectors like technology and manufacturing, where NRIs are well-represented.
   • The $12.5 billion investment in air traffic control modernization could benefit NRIs in aviation-related fields.
4. Potential for Strategic Financial Planning:
   • With the remittance tax set to begin in 2026, NRIs have a window in 2025 to transfer accumulated savings without the tax, allowing strategic financial planning.

Disadvantages for NRIs

1. Remittance Tax Burden:
   • The 1% remittance tax, though reduced from 5%, will increase costs for NRIs sending money to India. With India receiving $36 billion annually from the U.S. (28% of its $129 billion total remittances in 2024), this tax could cost the Indian diaspora $360 million yearly. For every $1,000 sent, an additional $10 is taxed, impacting families relying on remittances for education, healthcare, or real estate investments.
   • Analysts predict a 10-15% reduction in remittance flows, potentially causing a $3.6-5.4 billion shortfall, weakening the Indian rupee and affecting remittance-dependent households in India.
   • No exemption threshold means even small transfers (e.g., for family support) are taxed, disproportionately affecting lower-income NRIs and students.
2. Healthcare and Social Program Cuts:
   • Reductions in Medicaid and ACA subsidies could leave elderly NRI parents or low-income dependents without coverage, increasing healthcare costs.
   • Stricter SNAP eligibility and state cost-sharing may limit food and housing support for low-income NRI families, particularly in urban centers like New York.
   • Elderly NRIs under family sponsorship risk losing subsidized housing, facing long waitlists or evictions.
3. Impact on Students:
   • Cuts to federal student aid and on-campus job opportunities could increase financial burdens for Indian international students, who number over 300,000 in the U.S. This may lead to higher debt or reduced access to higher education.
   • The remittance tax applies to students sending earnings back to India, further straining their finances.
4. Immigration Challenges:
   • The $1,000 asylum fee and enhanced border security measures may complicate immigration processes for Indian asylum seekers or those seeking visa renewals.
   • Increased ICE funding and deportation operations could create a climate of uncertainty for NRIs on temporary visas, even if legally compliant.
5. Economic and Currency Risks:
   • The bill’s estimated $3.5 trillion increase in the federal deficit over a decade may raise U.S. interest rates and strengthen the dollar, making remittances less valuable in rupees and increasing costs for NRIs.
   • A potential 10-15% drop in remittances could reduce India’s foreign reserves, impacting its economy and NRIs’ investment plans in India.

Broader Implications for India

The remittance tax could reduce India’s annual inflow of $36 billion from the U.S., potentially weakening the rupee and affecting states like Kerala and Punjab, which rely heavily on remittances. Some analysts suggest India could offset the tax with a 1% compensatory bonus for NRIs, though this would require careful fiscal evaluation by the Indian government. Despite the tax, remittances are unlikely to stop entirely, as they support essential expenses like family maintenance and education.

Current Status and Opposition

The bill passed the House on May 22, 2025, and is under Senate consideration, with a target passage date of July 4, 2025. Democrats and some Republican senators (e.g., Rand Paul, Thom Tillis) oppose the bill due to its deficit impact and controversial provisions like Medicaid cuts. Internationally, countries like Mexico have signaled legal action against the remittance tax, citing economic harm. Digital payment providers also oppose it, warning of harm to unbanked populations. Elon Musk has publicly criticized the bill, particularly its immigration provisions, reflecting broader discontent among some stakeholders.

Conclusion

The “One Big Beautiful Bill” offers a mixed bag for NRIs. High-earning professionals and business owners benefit from tax cuts and deductions, while gig economy workers gain from tip and overtime tax exemptions. However, the 1% remittance tax, healthcare and social program cuts, and immigration restrictions pose significant challenges, particularly for lower-income NRIs, students, and families. The bill’s potential to reduce remittance flows could also impact India’s economy. As the Senate debates the bill, NRIs should plan strategically, such as remitting savings in 2025 to avoid the tax. The Indian government may need to explore compensatory measures to mitigate the tax’s impact. The bill’s final passage remains uncertain, but its effects on NRIs are already a topic of intense scrutiny.