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When a new tax law rolls out, it’s all too easy to feel left behind, especially if you’re not a U.S. citizen, or if you’re juggling studies, work, and family overseas. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is getting a lot of attention for its sheer size and ambition. There’s a good reason for that as it changes the rules for a lot of people in America, especially those here on non-immigrant visas or with financial ties abroad.
For international students, nonresident workers, and cross-border investors, the details matter more than most headlines suggest. This law has reshaped what benefits and requirements nonresidents face, from money sent home to everyday credits and paperwork. Let’s walk through what’s changed, what the fine print really means for your next tax return, and how to plan for the year ahead.
How your Tax Status Shapes Everything
Before diving into the specific changes, it's important to understand how the IRS determines your tax status. The IRS uses two primary tests to classify individuals as either resident or nonresident aliens for tax purposes: the green card test and the substantial presence test.
Green card test: If you hold a valid green card, you're automatically considered a resident alien. Alternatively, if you spend at least 31 days in the U.S. during the current tax year and a total of 183 days over the last three years (using a weighted calculation), you'll typically qualify as a resident alien under the substantial presence test.
Substantial presence test: The calculation for the 183-day test can be tricky. For the current year, all days count at full value. For the previous year, only one-third of the days count, and for the year before that, only one-sixth count. Certain days are excluded entirely, including days spent commuting from Canada or Mexico, transit days under 24 hours, days as a foreign vessel crew member, days when medically unable to leave, and days as an "exempt individual" (such as students on F, J, M, or Q visas who comply with their visa requirements).
Tax Credit Restrictions
One of the most significant changes in the new law affects tax credits that many nonresidents with families may have previously claimed. The legislation now requires Social Security Numbers (SSNs) for several major credits, effectively excluding many nonresident taxpayers who only have Individual Taxpayer Identification Numbers (ITINs).
- The Child Tax Credit, Child Care Credit, and Earned Income Credit now mandate that both parents and children have valid SSNs. This is a major shift that will eliminate these benefits for many nonresident families.
- The Premium Tax Credit has now been restricted which means the individuals under Temporary Protected Status (TPS), asylum seekers, or those with other non-permanent statuses are no longer eligible, and applicants must have an SSN authorized for work.
- Those filing with an ITIN are now completely excluded from all child tax benefits, education-related tax credits, and multiple other credits that were previously available.
This change will likely increase the tax burden for many nonresident families who were previously able to claim these benefits.
Benefits Limited to SSN Holders
The new law introduces several income exclusions, but these benefits are restricted to individuals with valid SSNs authorized to work:
- Under the new provisions, tip income up to $25,000 annually is now non-taxable, and overtime pay up to $12,500 is excluded from taxation. However, these exclusions only apply to those with work-authorized SSNs, meaning most F-1 students and other nonresidents won't benefit from these provisions.
- An increase in the state and local tax (SALT) deduction cap to $30,000 (or $15,000 for married filing jointly), though this primarily benefits higher-income taxpayers. The standard deduction remains doubled and permanent, but again, this is only available to U.S. citizens and resident aliens
- Non-itemized charitable deductions return for 2025-2028 at $150 for single filers and $300 for married filing jointly.
- The 1099-NEC filing threshold increases to $2,000, the 1099-K threshold reverts to $20,000 and 200+ transactions (providing relief for those using payment apps), and the backup withholding threshold also increases to $2,000.
However, the law eliminates several common deductions entirely, including personal expenses, itemized deductions over 2% of adjusted gross income, and moving and relocation expenses. These eliminations will affect the overall taxable income for many filers.
New 1% Remittance Tax: A Costly Addition for Money Transfers
One of the most direct impacts on nonresident taxpayers is the introduction of a new 1% excise tax on remittance transfers. This tax applies when sending money abroad, unless you're a verified U.S. citizen or national, or you use a qualified remittance provider with a Treasury agreement to verify citizenship status.
For nonresidents who regularly send money home to support family members, this 1% tax could significantly increase the cost of international transfers. On a $1,000 transfer, this means an additional $10 in taxes. For those sending larger amounts or making frequent transfers, the costs can add up quickly.
This provision particularly affects F-1 students and other nonresidents who may send money home from their U.S. earnings or receive support from family abroad that they later redistribute.
Impact on Foreign Investors
Despite the significant changes affecting other nonresident categories, foreign investors in U.S. markets can breathe a sigh of relief. The final version of the One Big Beautiful Bill does not include significant changes that would affect nonresident investors.
Earlier versions of the legislation included a proposed new Section 899 that would have directly impacted Fixed, Determinable, Annual, or Periodical (FDAP) income – the category that includes most investment income for nonresidents such as dividends, interest, and rents. However, these provisions were removed from the final bill.
This means that nonresident investors will continue to operate under the existing tax framework, with the standard 30% withholding rate on FDAP income (or reduced rates under applicable tax treaties) remaining unchanged. The stability in this area provides certainty for foreign investment in U.S. markets.
Healthcare and Indirect Impacts
While the One Big Beautiful Bill doesn't directly change tuition costs or visa rules, it includes several provisions that could indirectly affect nonresidents, particularly students and their families.
- Medicaid eligibility has been tightened with stricter work requirements and ID verification processes. This could affect nonresidents seeking public health services while studying or working in the U.S.
- Additionally, cuts to Affordable Care Act (ACA) subsidies may not immediately impact most F-1 and J-1 students, who are typically exempt from ACA requirements, but could affect those who transition to H-1B or other resident statuses over time.
These healthcare changes underscore the importance of having adequate health insurance coverage and understanding the evolving landscape of available public health services.
How NSKT Global Can Help Navigate These Changes
The complexity of the new tax law changes makes professional guidance more crucial than ever for nonresidents, F-1 students, and foreign investors. NSKT Global specializes in helping international taxpayers understand and comply with U.S. tax obligations while maximizing available benefits and minimizing costs.
Experienced CPAs
Our team of experienced tax professionals can help you determine your correct tax status under the new law, ensuring you understand whether you qualify as a resident or nonresident alien for tax purposes. We provide comprehensive tax planning services that take into account the new restrictions on credits and deductions, helping you adjust your withholding and estimated tax payments accordingly.
Personalized Tax Planning
For those affected by the new remittance tax, NSKT Global can advise on strategies to minimize the impact of the 1% excise tax on international money transfers. We stay current with qualified remittance providers and can help you explore options that may reduce your transfer costs.
Accurate Tax Filing Services
Our services include preparation of all nonresident tax forms, including Form 1040NR and Form 8843, with careful attention to the new requirements and restrictions. We also provide guidance on dual-status taxpayer situations and can help determine when it might be beneficial to elect full-year resident treatment.
For foreign investors, while the current investment tax rules remain stable, NSKT Global provides ongoing monitoring of potential future changes and strategic advice to optimize your U.S. investment tax position. We also assist with treaty benefits analysis to ensure you're claiming all available reductions in withholding rates.
Conclusion
The One Big Beautiful Bill creates significant changes for nonresidents, particularly restricting tax credits to SSN holders and introducing new costs like the 1% remittance tax. While foreign investors enjoy stability in investment taxation, F-1 students and other nonresidents face increased complexity and potentially higher tax burdens. Professional guidance is essential for navigating these changes and ensuring compliance while optimizing your tax position.
Frequently Asked Questions
- If I'm an F-1 student with an ITIN, can I still claim any tax credits under the new law?
Unfortunately, the new law excludes those filing with ITINs from all child tax benefits, education-related tax credits, and most other credits that were previously available. You may still be eligible for certain deductions, but the major credits now require valid SSNs for both taxpayers and dependents.
- Does the new 1% remittance tax apply to all money transfers abroad, including business payments?
The 1% excise tax applies to remittance transfers, which typically includes personal money transfers to family or individuals abroad. Business-to-business payments may be treated differently, but the specific definitions are still being clarified by the Treasury. It's best to consult with a tax professional for your specific situation.
- I'm currently on an F-1 visa but may switch to H-1B status during the tax year. How does this affect my tax filing?
You would likely be considered a dual-status taxpayer, requiring you to file two separate tax returns for the year – one as a nonresident for the F-1 period and another as a resident for the H-1B period. In some cases, you may elect to be treated as a full-year resident to simplify filing, but this requires careful analysis of your specific situation.
- As a foreign investor, should I be concerned about future changes even though the current law doesn't affect me?
While the current legislation maintains stability for foreign investors, it's wise to stay informed about potential future changes. The fact that earlier versions included provisions affecting FDAP income suggests this area may be revisited in future legislation. Regular monitoring and strategic planning remain important.
- Can I avoid the new remittance tax by using cryptocurrency or other alternative transfer methods?
The law's application to cryptocurrency and alternative transfer methods is still being clarified by regulatory authorities. However, the Treasury has broad authority to define remittance transfers, so attempting to circumvent the tax through alternative methods could be risky. It's advisable to work with qualified remittance providers or consult with tax professionals about compliant strategies.
