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There is a lot of buzz in the Indian media outlets regarding the bill ‘‘Halting International Relocation of Employment“(HIRE) Act that was introduced by Senator Bernie Moreno, who is a Republican Senator from Ohio. While the Bill introduced by him is a fact, it has a very long way to go. There is little information available on who will back it, the latest status, and what we can expect.
In this article, we will review the key points of the HIRE Act Bill, what it means, and whether it will pass the US Congress and become a law, as well as its current status and chances of success.
What is the HIRE Act 2025?
Senator Bernie Moreno from Ohio introduced a Bill in the Senate late last week with the title “Halting International Relocation of Employment(HIRE) Act”, which is aimed at reducing the outsourcing of American Jobs. Below are the key points from the Bill:
25% Excise Tax for Outsourcing work
- If US companies outsource, they will need to pay a 25% extra tax (Excise Tax) for the same.
- For example, let’s take a US Company that currently pays $100 for a call center in India that acts as outsourced customer service. Now, according to the bill’s text, the US Company would have to pay a 25% tax on the $100 to the US Government, which is an additional $25 in tax. The total cost for the company would now be $125 instead of $100.
- The goal of this 25% tax is to discourage companies from outsourcing work outside of the US.
- Below is the exact text that is taken from Bill Text
Outsourcing Tax payments is not tax-deductible
The US Company that makes the 25% outsourcing tax payments cannot use that payment as a business expense for tax deduction. This is aimed at closing the loophole, as companies may try this route to show this as an expense and get benefit out of this.
Below is the screenshot of the actual language from the Bill’s text:
Domestic Worforce Fund to collect these taxes
The US Government will establish a fund called “Domestic Workforce Fund” to collect these additional excise taxes and use them for Workforce Development and Training programs to be used by the US Department of Labor, including apprecitiship programs, partnerships with industry for domestic employment and other puposes.
Below is the screenshot of the actual language from the Bill text.
The primary aim of the Bill is to protect American workers with employment and reduce outsourcing.
Current Status of HIRE Act 2025
As of now, we do not even have an entry in the US Congress Website that lists HIRE Act as a Bill. It may take few days for it to appear. We do not have any details on who all are are the co-sponsors of the bill to understand the kind of support it can get.
Below are the official details we have so far on the HIRE Act 2025:
Will the HIRE Act 2025 Pass? Chances?
As per a report by Mordor Intelligence, just the US IT Outsourcing Market stood at $191 Billion. If we add up other areas of outsourcing, it will be few tens of Billions of dollars. The stakes are very high and companies cannot afford to pay 25% excise tax on the same.
Also, the World Trade Organization(WTO) has an agreement with its members for many years, where there is a moratorium on imposing any duties(additional tax) on outsouricng of the Digital Services. This moratorium is in effect until March 2026, when it will be reviewed again and likely renewed.
Considering the significant impact this bill could have on the outsourcing industry and the moratorium in place, this bill may not pass both the chambers in its current form.
Next Steps, what to expect for HIRE Act 2025?
There is a very long way to go for this bill. For now, it does not even have a number on the US Congress website. All we can expect in the next few months is, if it makes it past the committes and comes to the Senate floor for voting. Then it goes to the US House for the same. It has to go through so many hoops to get to the president’s desk.
You can read How Bill Becomes a law in the US for full information. Below is a chart that shows the process of next steps.
What do you think of the HIRE Act of 2025? Will it go forward?
