Introduction
On September 5, 2025, Senator Bernie Moreno of Ohio introduced the U.S. Hire Act Bill 2025. This proposal seeks to impose a 25% excise tax on outsourcing payments, disallowing related deductions. The bill also establishes a Domestic Workforce Fund to support apprenticeship and reskilling programs. If enacted, the U.S. Hire Act 2025 could reshape the global outsourcing landscape, particularly for industries like IT, finance, and accounting, where India has long been a strategic partner.
At KMK Associates, we work at the intersection of U.S. compliance requirements and global delivery models. That gives us a unique vantage point to evaluate how such legislation could affect U.S. businesses relying on offshore partners for efficiency and scale.
What is the U.S. Hire Act Bill 2025?
The Halting International Relocation of Employment (Hire Act) is designed to discourage outsourcing by U.S. companies. It imposes new taxes and removes deductions for payments made to foreign service providers that benefit U.S. consumers. In short, the bill aims to bring jobs back to the U.S. while funding workforce development initiatives.
Key Features of the US Hire Act Bill 2025
- 25% Excise Tax: U.S. companies would pay an additional 25% tax on outsourcing-related payments (fees, royalties, service charges) if the services benefit U.S. consumers.
- Partial Application: If services benefit both U.S. and non-U.S. clients, the excise tax applies only to the U.S. portion.
- Definition of “Foreign”: Any person or entity outside the U.S., except those incorporated under U.S. territorial laws.
- Reporting Obligations: The Treasury Secretary may require businesses to disclose such payments.
- Severe Penalties: Non-compliance penalties could spike up to 50% per month, with no cap.
- No Deductions Allowed: These outsourcing expenses cannot be deducted, further raising costs for U.S. companies.
Domestic Workforce Fund
The proposed excise tax revenue would flow into a Domestic Workforce Fund, aimed at supporting reskilling and apprenticeship programs in regions most affected by outsourcing. If the Hire Act Bill US passes, these provisions would take effect beginning January 1, 2026.
Ramifications of the Hire Act
While the bill doesn’t single out India, its implications for the Indian outsourcing sector are hard to ignore:
- IT & Technology Services: Indian IT majors like Infosys, TCS, and Wipro derive more than half their revenue from U.S. clients. A 25% surcharge could challenge competitiveness.
- Global Capability Centers (GCCs): Finance, accounting, and tax operations managed from India could see cost escalations, putting pressure on U.S. firms.
- Inflationary Impact: Higher compliance and operating costs could translate into increased service prices in the U.S., particularly in banking, healthcare, and customer support.
- Trade Relations: Even if the bill stalls, it signals protectionist sentiment in U.S. policymaking, potentially influencing future negotiations with India.
What Comes Next?
It’s important to note that the U.S. Hire Act 2025 is not yet law. It faces political hurdles, including a lack of White House backing and a slim Republican majority in Congress. However, the very introduction of such a bill indicates a broader trend toward protectionism that businesses cannot ignore.
For many, keeping track of legislative updates and Hire Act news will be critical over the coming months. For U.S. companies, the question isn’t just whether the bill passes—it’s all about risk preparedness. For Indian firms, the path forward lies in diversifying markets, innovating service delivery, and reducing reliance on a single geography.
How KMK Associates Can Help
At KMK Associates, we understand the complexities that evolving U.S. policies like the Hire Act 2025 USA bring to global outsourcing arrangements. Our role extends beyond compliance, as we assist U.S. businesses in developing resilient finance and tax operations that can adapt to evolving regulatory landscapes.
From outsourced accounting and tax support to end-to-end reconciliation, reporting, and compliance management, KMK provides scalable solutions that reduce dependency risks while ensuring accuracy and efficiency. By acting as a seamless extension of your finance team, we give you the agility to navigate uncertain times with confidence.
Conclusion
The Hire Act reflects more than just a legislative proposal as it underscores the growing protectionist sentiment in the U.S. economy. Whether or not it becomes law, its message is clear: outsourcing strategies must evolve. Still unsure how potential changes might affect your business? That’s where KMK comes in. With our expertise in U.S. compliance and global delivery, we help companies stay future-ready, regardless of shifting policies.
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