HIRE Act 2025: Federal Tax on Offshore Outsourcing Explained

Senator Bernie Moreno (R-Ohio) has introduced the Halting International Relocation of Employment (HIRE) Act of 2025, a federal bill aimed at changing the tax treatment of offshore outsourcing. The proposal would impose a new 25% outsourcing tax on companies that pay foreign workers for services benefiting U.S. consumers. 

Key Provisions 

• 25% outsourcing tax. Payments by U.S. companies or taxpayers to foreign persons whose work benefits U.S. consumers would be subject to a 25% tax. 

• Deduction ban. Companies would be prohibited from deducting these outsourcing payments from their taxes. 

• Domestic Workforce Fund. All revenue would be deposited into a new fund to support apprenticeships and workforce development programs for American workers. 

Why It Matters for Business Owners 

If you outsource services overseas — whether for customer support, IT, back-office operations, or other functions — this proposal could significantly increase your costs. Even companies that rely on offshore vendors for non-core tasks could be affected. The bill is still moving through Congress, and its details may change, but it signals that outsourcing arrangements are under scrutiny at the federal level. 

This also raises compliance and planning questions: which payments would be covered, how would the tax be applied, and what reporting might be required? 

We’re Here to Help 

We follow federal legislation that affects business operations, tax strategy, and sourcing decisions. Our attorneys can help you evaluate your exposure under a proposal like the HIRE Act, model different scenarios, and prepare for potential changes so you’re not caught off guard.