What is the US Hire Act Bill 2025? Understanding the Ramifications!

Introduction:

On September 5, 2025, Senator Bernie Moreno of Ohio, USA, introduced the U.S. HIRE Act Bill 2025, which proposes a 25% excise tax on outsourcing payments and disallows related tax deductions. Additionally, the revenue collected would fund the Domestic Workforce Fund for apprenticeship and reskilling. This bill, if enacted, could significantly impact sectors like India’s IT industry, which is currently heavily dependent upon the USA for revenues.

What is the U.S. HIRE Act Bill 2025?

The new legislative proposal, known as the Halting International Relocation of Employment (HIRE) Act, is designed to discourage outsourcing by American companies. It proposes to levy tax on payments made to overseas workers for services that ultimately serve U.S. consumers. Also, the U.S. HIRE Act Bill disallows tax deductions for such expenses. It aims to reshore jobs and fund domestic workforce programs. Here are the key features of the US HIRE Act Bill 2025.

Key Features of the US HIRE Act Bill 2025

• U.S. businesses must pay a 25% excise tax on fees, royalties, or service charges paid to foreign entities if the services benefit U.S. consumers.

• If services benefit both U.S. and non-U.S. consumers, the tax only applies to the U.S. portion.

• A foreign person means anyone not living in the U.S., except companies or partnerships formed under U.S. territorial laws.

• The Treasury Secretary can also require businesses to report such payments.

• Penalties for non-compliance would increase sharply—from 0.5% per month to 50% per month, with no cap.

• Businesses also cannot deduct this excise tax as an expense.

Domestic Workforce Fund

Additionally, the bill proposes that a dedicated domestic workforce fund under the U.S. Treasury be created. The revenue collected from outsourcing taxes, along with surcharges and related penalties, is expected to finance this fund. It would also provide grants to states, particularly those regions that have been heavily impacted by job losses due to outsourcing. If this bill gets passed, the provisions of the HIRE Act would apply to payments made on or after January 1, 2026.

HIRE Act: The Ramifications

This bill aims to discourage U.S. companies from using overseas labor and financially incentivize the reshoring of jobs. Although the bill doesn’t explicitly target India, the Indian technology sector is likely to be among the most affected industries. Today, several Indian IT majors like TCS and Wipro derive more than half of their revenue from U.S. clients. Furthermore, GCCs of Fortune 500 firms, including those in finance, accounting, retail, healthcare, and others, rely heavily on Indian talent to run their global operations. If a 25% surcharge is levied on these services, it could increase the cost of offshoring for American firms and potentially raise service costs in the U.S., leading to inflationary pressure, especially in sectors like banking and customer support.

Read Also: The One Big Beautiful Bill Act: Key Federal Tax Changes for 2025

Conclusion: What Comes Next

Right now, the proposal is only a bill, not a law. For it to pass, it still has to clear many hurdles. It doesn’t have the support of the White House, and Republicans hold only a slim majority in Congress. Still, the bill might be used as a bargaining tool by the U.S. in its ongoing trade talks with India.

Even if it doesn’t become law, the protectionist thinking behind it is clear. The U.S. HIRE Bill reflects a broader trend of protectionist policies in the U.S. While India produces far more STEM graduates than the U.S., such policies could harm not only Indian jobs but also the competitiveness of Indian companies.

American businesses outsource to India not only to save costs but also to ensure smooth operations and scalability. A concentrated reliance on the U.S. market exposes Indian outsourcing firms to potential policy risks. To prepare, India’s outsourcing industry should diversify its client base, strengthen domestic demand, and continue driving innovation. The way forward is clear: diversify clients, invest in domestic opportunities, and continue innovating to stay competitive, even as U.S. protectionism gathers momentum.

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