On 4 July, 2025, President Trump signed the One Big Beautiful Bill Act (formerly passed by the House on 22 May and the Senate on 1 July) into law.
The legislation combines tax reform with spending cuts, and while the headlines focus on defense, Medicaid, and border funding, there are important implications for international students, scholars, investors and other nonresident taxpayers in the U.S.
Here’s what you need to know!
Stricter eligibility for credits – SSNs now mandatory
Some nonresident taxpayers (especially those with children or spouses in the U.S.) may have qualified for credits in the past. These credits are now more restricted:
- Child Tax Credit, Child Care Credit, and Earned Income Credit now require SSNs for both parents and the child
- For the Premium Tax Credit, individuals under TPS, asylum, or other non-permanent statuses are no longer eligible and the individual must have SSN eligible for work
Those filing with an ITIN are now excluded from all child tax, education-related tax benefits and multiple other credits.
New exemptions and exclusions
Several new exclusions apply only to those with valid SSNs authorized to work:
- Tip income is now non-taxable up to $25,000;
- Overtime pay is now non-taxable up to $12,500. Everything on top is treated as compensation, so it is taxed at a graduated tax rate.
Other notable updates:
- State and local tax (SALT) deduction cap raised to $30,000 (or $15,000 for married filing jointly)
- Standard deduction remains doubled and permanent – only available to U.S. citizens and nonresidents
- Charitable deductions (non-itemized) return from 2025 to 2028: $150 (single) / $300 (MFJ)
- 1099-NEC filing threshold increases to $2,000
- 1099-K threshold reverts to $20,000 and 200+ transactions (a relief for those using payment apps!)
- Backup withholding threshold also increases to $2,000
So, if you’re a nonresident without a valid SSN, most of these exclusions will not apply.
It should also be noted that several common deductions will be completely terminated, affecting the overall taxable income for many filers:
- Personal expenses
- Itemized deductions over 2% of adjusted gross income
- Moving and relocation expenses
New 1% tax on remittance transfers
Nonresidents often send money home. Under the bill, a 1% excise tax will apply to remittance transfers, unless you’re a verified U.S. citizen/national or you send money through a qualified remittance provider that has an agreement with the Treasury to verify citizenship status.
As a nonresident, you will likely be subject to this new 1% tax when sending money abroad — unless an exception applies. This could significantly increase the cost of international money transfers.
How will the new Bill affect nonresident investors in the U.S.?
The new Bill will have no significant affect on nonresident investors in the U.S.
The early version of the Bill included the introduction of the new Section 899, which would have a direct impact on FDAP income, thus affecting nonresident investors, however, in the final version these changes were not applied.
Healthcare impacts
While there are no direct changes to tuition or visa rules in the bill, some indirect impacts may still matter:
- Medicaid eligibility is tightened, with strict work requirements and ID verification which could affect anyone seeking public health services while studying in the U.S.
- Cuts to ACA subsidies may not affect most F-1 and J-1 students (who are typically exempt from ACA requirements) but could impact those who change to H-1B or other resident statuses over time.
What Sprintax users should keep in mind
If you’re an international student, scholar, or J visa holder in the U.S., here are some key reminders:
- Continue to file Form 8843 each year, even if you have no income.
- If you earned income in the U.S., file Form 1040-NR and check for any treaty exemptions available to your home country.
- Stay compliant with your visa conditions—especially if you’re working under CPT, OPT, or STEM OPT extensions.
- If you’re planning to adjust your status (for example, move to H-1B), be aware of how these changes may affect your tax residency.
As always, Sprintax is here to guide you through your tax obligations and help you file the documents you need.
(Last updated: 8 July 2025)
