On May 22nd, the U.S. House of Representatives narrowly passed the “One Big, Beautiful Bill of 2025” which includes a lesser known but significant provision: a proposed 3.5% excise tax on certain outbound remittances. Known as the “Remittance Proposal” this new tax would apply to electronic money transfers sent from the U.S. to recipients overseas. While initially set at 5%, the rate was reduced following industry backlash. The change could affect a range of individuals, including U.S. expats who still send or receive funds from the States, and non-citizens who work temporarily in the U.S. and transfer money back home.

Under this plan, senders who are verified U.S. citizens or nationals — such as Americans living in the UK — can avoid the tax, but only if they use a remittance service that has a formal agreement with the IRS to verify their citizenship status. Without this verification, even U.S. citizens could inadvertently be charged. On the other hand, non-citizens who send funds abroad after working in the U.S. (even for a brief time) would be subject to the tax unless they qualify for an exemption. IMPORTANT: Those with a Social Security number (and, if married, a spouse who has one) would be able to claim a refundable tax credit to offset the tax burden when filing their U.S. tax return.

The burden of collecting and submitting this tax would fall on banks, money transfer services, and other financial intermediaries. These institutions would need to track sender status and remit the funds to the IRS quarterly. Understandably, many in the financial sector are concerned about added compliance costs and unintended consequences — especially for individuals with complex international financial lives.

Key Takeaways for U.S. Expats and Cross-Border Workers:

• A 3.5% tax may apply to money sent from the U.S. to overseas recipients.
• U.S. citizens / nationals must use IRS-approved providers to avoid the tax.
• Non-citizens who spend workdays in the U.S. and remit money may be affected.
• A refundable tax credit is available for those who are subject to the tax and have a U.S. Social Security number.
• Providers will bear responsibility for collecting and remitting the tax.

If you are unsure of anything or have questions you would like answered, feel free to reach out to your Hansen Sweeney contact. We can help you stay compliant and avoid punitive penalties.