Ohio Senator Bernie Moreno has introduced the Halting International Relocation of Employment (HIRE) Act of 2025, a legislative proposal aimed at discouraging U.S. companies from outsourcing jobs abroad. The proposed act might impose a 25% excise tax on bills made to overseas employees for offerings that in the long run gain American consumers.
The legislation would also eliminate tax deductions for these payments, directing the resulting revenue into a newly created Domestic Workforce Fund. This fund is designed to finance apprenticeship programs, reskilling initiatives, and workforce development projects run by the U.S. Department of Labor. Grants would also be provided to states, particularly in regions hit hardest by job losses due to outsourcing.
Under the HIRE Act, “outsourcing payments” include fees, premiums, royalties, or service charges paid to foreign entities for labor or services serving U.S. consumers. If a payment relates to both U.S. and international clients, the tax would apply only to the portion benefiting Americans. The bill defines a “foreign person” as anyone who is not a U.S. resident, excluding corporations or partnerships formed under U.S. territory laws, and authorizes the Treasury Secretary to require businesses to report these transactions.
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The legislation proposes a dramatic increase in penalties for non-compliance, raising the monthly rate from 0.5% to 50% and removing the usual 25% cap. Companies would also be prohibited from deducting this excise tax as a business expense.
If passed, the HIRE Act’s provisions would apply to payments made on or after January 1, 2026, potentially reshaping how U.S. companies manage overseas contracts and reinforcing efforts to strengthen the domestic workforce.
At the same time, U.S. companies that rely heavily on Indian or other foreign workers could face significant changes in how they operate. Any payments to overseas employees for services that ultimately benefit American customers would be subject to a 25% excise tax, making outsourcing considerably more expensive.
Companies serving both U.S. and international clients would need to calculate the tax only on the portion tied to American consumers, adding complexity in reporting and compliance. The legislation also dramatically increases penalties for late payments, up to 50% per month, with no cap and bars companies from deducting these taxes as business expenses.
This shift could directly impact India’s IT giants, including TCS, Infosys, Wipro, HCLTech, and Tech Mahindra, which derive over half of their revenues from U.S. clients, according to The Economic Times. Similarly, global capability centers (GCCs) of Fortune 500 firms in finance, retail, healthcare, and technology rely heavily on Indian talent. The combined effect of the 25% surcharge and the loss of deductibility would significantly raise the cost of offshoring, potentially prompting U.S. companies to reconsider their reliance on foreign labor and invest more in domestic hiring and workforce development.
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Analysts caution that the proposed tax, combined with the loss of deductibility, could raise the cost of outsourcing by nearly 46%. Indian IT firms may be forced to absorb part or all of these additional expenses, putting pressure on their profit margins. U.S. companies could pass the extra costs onto clients, potentially driving up the price of outsourced services. Existing strategies, such as setting up subsidiary operations in India, may no longer provide relief, as these structures could fall under the bill’s anti-abuse provisions.
Explaining the intent behind the legislation, Moreno said, quoted by Firstpost, “while college grads in America struggle to find work, globalist politicians and C-Suite executives have spent decades shipping good-paying jobs overseas in pursuit of slave wages and immense profits – those days are over.”
He added, “It’s time to fight for working class Americans and ensure they can work and retire with dignity. If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks.”