One Big Beautiful Bill for Australian Expats

If you’re an Australian living in the U.S. or managing financial ties across borders, the One Big Beautiful Bill (OBBB) could have a real impact on your finances.

This new legislation brings in a mix of tax changes, investment incentives, and compliance updates that expats should be aware of.

This blog will walk you through what the OBBB is, what’s in it, and what you should be doing now to stay ahead.

What Is the One Big Beautiful Bill?

In the U.S., Congress is supposed to pass 12 separate funding bills each year. But when deadlines are missed (which happens often), lawmakers combine everything into one large bill, called an omnibus bill. That’s what the OBBB is.

These bills usually appear at key moments like the end of the fiscal year or after elections. They allow for broad negotiations and fast-track major changes. For expats, this means new rules can be introduced quickly, often with little time to prepare.

Key Provisions Expats Should Know

Section 899 – The “Revenge Tax” That Didn’t Happen

One of the more controversial proposals in early drafts of the bill was Section 899. It would have allowed the U.S. to impose extra taxes on individuals and companies from countries with “unfair” tax practices, like Australia potentially included due to its digital tax policies.

Thankfully, this section was removed after discussions at the G7. That’s good news for Australian expats and superannuation funds, which could have faced higher U.S. tax exposure.

The Remittance Transfer Tax – What You Need to Know

This is one of the most important changes for Australian expats.

Originally proposed at 3.5%, the final version of the OBBB introduces a 1% tax on non-commercial remittance transfers. This means if you send money overseas, say, to support family in Australia, you could be taxed on that transfer.

Here’s what you need to know:

• The tax applies to both U.S. citizens and non-citizens.
• It only affects non-commercial remittances, which are typically personal cash transfers not made through banks or formal financial institutions.
• It comes into effect after 31 December 2025.

If you regularly send money back home, now is the time to review how you do it. Using formal banking channels may help you avoid this tax, and planning ahead could save you money in the long run.

New Markets Tax Credit (NMTC) – Now Permanent

The NMTC encourages investment in low-income U.S. communities. With its permanent extension, Australian expats interested in socially responsible investing may find new opportunities that also offer tax benefits.

Technical Tax Changes That Could Affect You

Several behind-the-scenes changes could impact how you manage your finances:

• Section 958(b)(4) is back, helping prevent foreign companies from being misclassified as Controlled Foreign Corporations (CFCs). This simplifies tax reporting.
• Section 951B introduces new rules for U.S. persons with indirect control over foreign companies. If you own shares in international businesses, this could mean more compliance work, and is a good reminder to seek advice from experienced US expat accountants.
• Section 954(c)(6)(C) keeps a helpful exception in place that makes foreign income reporting easier.
• Section 960(d)(1) increases the credit for foreign taxes paid on passive income from 80% to 90%, which could reduce your U.S. tax bill.

Other Key Changes for 2025

• The Foreign Earned Income Exclusion (FEIE) rises to $130,000 per person.
• The Foreign Housing Exclusion is adjusted for inflation, with higher limits for expensive cities.
• Estate and gift tax exemptions are now permanently higher.
• Key tax cuts from the Tax Cuts and Jobs Act (TCJA) have been extended, avoiding a major tax cliff at the end of 2025.

What’s Still Missing

Some important issues weren’t addressed in the OBBB:

• The Residence-Based Taxation (RBT) proposal hasn’t moved forward yet.
• Promises to end double taxation for Americans abroad remain unfulfilled.
• Tensions around digital taxes, Australia’s Pharmaceutical Benefits Scheme (PBS), and GST could still cause friction with the U.S. in the future.

What Should Australian Expats Do Now?

With the bill now law, the U.S. Treasury will begin writing the detailed rules that explain how these changes will work in practice. This is a critical time to get your financial house in order.

Here are some steps you can take:

• Review your remittance practices to understand if and how the new tax might apply to you.
• Reassess your business ownership structures to ensure compliance with the new rules.
• Stay informed as the Treasury releases guidance.
• Speak with a financial adviser who understands the needs of Australian expats.

Final Thoughts

The OBBB is a clear example of how U.S. legislation can have global consequences. While some potential threats were avoided, new rules are now in place that could affect your financial strategy. Being proactive now can help you avoid surprises later.

If you’d like to stay updated or want a professional review of your financial setup, we’re here to help.

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.