Send Money US to India Tax-Free—Bank & Card Transfers Safe

In a major development, the US Senate has passed a bill introducing a 1% tax on international money transfers made by non-US citizens, effective January 1, 2026.

This move directly affects millions of Indian NRIs who regularly send money to their families in India.

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Key Exemptions Offer Relief to NRIs

The most important part of this new rule is that the tax will not apply to remittances made through:

  • Automated Clearing House (ACH) transfers

  • Debit cards

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  • Credit cards

  • Verified US bank accounts

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These exemptions cover most transactions used by NRIs, which means the overall impact will be limited for the Indian community abroad.

Why This Matters for Indian Families

In FY24, India received $33 billion in remittances from the US—about 28% of its global total. A higher tax could have disrupted essential funds sent for family support, education, and medical needs.

Thanks to the reduced rate and exemptions, critical remittances can continue with little to no added burden.

Part of a Larger Economic Plan

This tax is part of a bigger bill called the One Big Beautiful Bill, designed to:

  • Increase federal income

  • Support immigration reforms

  • Improve border security

However, some experts have raised concerns. Ajay Srivastava of the Global Trade Research Initiative called the policy morally wrong, saying it unfairly targets hard-working migrants for additional taxes.

Push Toward Formal Banking Channels

Experts are now urging NRIs to switch fully to formal banking methods in order to:

  • Avoid the 1% tax

  • Ensure safety and transparency

  • Reduce reliance on costly, informal money transfer options

This shift can make cross-border transactions smoother and more secure.

What NRIs Should Do Now

With over five months before the rule takes effect, NRIs are advised to:

  • Review their current remittance methods

  • Move to exempted options like ACH or card payments

  • Seek financial guidance for long-term planning

Though the 1% tax is relatively small, using the right channels can help avoid it entirely and continue sending money home without added cost.

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