Bills Target Outsourcing With Excise Tax

Senator Bernie Moreno's HIRE Act and a related House bill would penalize US payments for work performed by foreign firms.

Updated on Nov. 2, 2026 in Jobs — General

Bills Target Outsourcing With Excise Tax

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Should American companies pay a higher tax when they outsource work overseas?

Republican Senator Bernie Moreno introduced the HIRE Act in October 2025, proposing a 25 percent excise tax on specified outsourcing payments made by US taxpayers to foreign persons. A related House bill introduced in February 2026 by Representative Austin Scott would deny income-tax deductions for qualifying outsourcing payments, and neither measure has cleared Congress.

Why it matters

The proposals reflect congressional interest in discouraging companies from moving work overseas, a concern Moreno has stated directly. Because both bills remain in committee, the outcome for US employers and foreign service providers is still undetermined.

US purchases of Indian software services reached $119.7 billion in FY26, up from $108.3 billion the prior year, according to the figures cited. Whether the proposed tax penalties would reduce that trade flow remains unresolved, as neither bill has cleared Congress.

The players

Bernie Moreno

Republican senator from Ohio who introduced the HIRE Act to discourage companies from moving jobs overseas.

Austin Scott

Republican representative from Georgia who introduced the related House bill denying income-tax deductions for outsourcing payments.

The details

The Senate HIRE Act would impose a 25 percent excise tax on specified payments by US taxpayers to foreign persons for outsourced work and would fund domestic workforce training and apprenticeships with the revenue. The House bill does not include the 25 percent excise tax, instead disallowing income-tax deductions for qualifying outsourcing payments.

October 2025: Senator Bernie Moreno introduced the HIRE Act.
February 2026: Representative Austin Scott introduced the related House bill.
November 3, 2026: US midterm elections are scheduled.

Market Landscape

The HIRE Act's excise tax approach follows the tax-incentive model used in the Inflation Reduction Act to steer domestic manufacturing investment. Applied to services, the proposals would extend that model to the offshore software and IT services sector that exports billions of dollars annually to the United States.

If enacted, the proposed excise tax or loss of deductions could raise costs for US companies that pay foreign firms for IT and software work, which may be passed to customers. Workers in outsourcing-exposed roles would see whether the training and apprenticeship funding in the HIRE Act materializes.

The takeaway

Outsourcing tax proposals are still at the committee stage, so employers and workers should track whether either bill advances before drawing conclusions about future costs. Companies with significant offshore service contracts can model the potential 25 percent excise and deduction effects now as a planning exercise.