HIRE Act
Definition
HIRE Act
The HIRE Act is a proposed United States bill, not enacted law. Short for the Halting International Relocation of Employment Act, it would tax the payments American companies make to foreign workers and firms whose output reaches consumers inside the United States.
Senator Bernie Moreno (R-Ohio) introduced the bill on 5 September 2025 as Senate bill S.2976 in the 119th Congress. It has not passed. Nothing in it currently binds any US buyer.
Still, the bill matters to anyone budgeting offshore work. Its headline number is a 25% tax on outsourcing payments, and it pairs that with a ban on deducting those same payments.
That combination is what makes finance teams pay attention. A tax you can’t deduct hits harder than the rate alone suggests.
Key takeaways
- The HIRE Act is a proposal. It is not law, and no company owes anything under it today.
- It would impose a 25% tax on “outsourcing payments” to foreign persons whose work benefits US consumers.
- Revenue would flow into a new Domestic Workforce Fund for apprenticeships and workforce training.
- Companies could no longer deduct outsourcing payments, compounding the cost.
- Reported status: no cosponsor, no House companion, no committee movement.
How it works
The bill builds three mechanisms on top of each other: a new excise tax, a lost deduction, and a dedicated fund. Each one is described in Senator Moreno’s announcement of the HIRE Act.
The trigger is the “outsourcing payment” definition. It covers money paid by a US company or taxpayer to a foreign person whose work benefits consumers in the United States.
That wording is broad. It reaches far past the classic call-centre picture and into software, design, finance and back-office work.
RSM’s analysis of the proposed excise tax reads it as a measure that would reshape US offshore outsourcing, applying to payments made after 31 December 2025.
| Mechanism | What the bill proposes |
|---|---|
| Excise tax | 25% on outsourcing payments to foreign persons |
| Deduction | Outsourcing payments would no longer be deductible |
| Revenue use | A new Domestic Workforce Fund |
| Fund purpose | Apprenticeships and workforce development |
| Proposed start | Payments made after 31 December 2025 |
| Legal status | Proposed only — S.2976, introduced 5 September 2025 |
Read the table as a proposal sheet, not a compliance checklist. Every row describes bill text, not current obligation.
The economics are the real story. If the arithmetic behind labor arbitrage narrows, buyers start comparing delivery models rather than just hourly rates.
Critics say that is the wrong lever. The Tax Foundation’s critique of an outsourcing tax argues the approach is misguided for global business.
Examples
Nobody has paid this tax, because the bill hasn’t passed. What you can point to are the concrete facts on the record: the sponsor, the filing, and the two published analyses that shaped how advisers now brief clients.
The filing itself is the first example. Senator Bernie Moreno of Ohio introduced S.2976 on 5 September 2025, in the 119th Congress.
The second is the professional-services read. RSM published an analysis framing the bill as a proposed 25% excise tax that would reshape US outsourcing, keyed to payments after 31 December 2025.
The third is the policy pushback. The Tax Foundation published a critical piece arguing an outsourcing tax is a misguided approach for global business.
The fourth is what buyers do with all this. Some finance teams are running scenario models against business process outsourcing (BPO) contracts to see what a non-deductible 25% charge would do to unit costs.
That modelling usually widens the shortlist. Nearshore outsourcing and domestic delivery get a second look, even though the bill’s definition would not spare nearshore vendors.
As of drafting, tax-press coverage reports the bill has no cosponsor, no House companion, and no movement in the Senate Finance Committee. Treat that as reported status rather than a forecast.
Related terms
The HIRE Act sits inside a cluster of sourcing and tax-policy ideas. These neighbouring terms help you separate where work is done, how it is structured, and which incentives or penalties apply to each arrangement.
- Offshore Outsourcing: the practice of contracting work to providers in distant, usually lower-cost countries.
- Onshore Outsourcing: a delivery model that keeps contracted work inside the buyer’s own country.
- Nearshore Outsourcing: contracted work placed in nearby countries sharing time zones or borders.
- Captive Center: a wholly owned offshore site staffed by the parent company rather than a vendor.
- Tax Incentives and Fiscal Incentives: government reliefs designed to attract or retain investment and jobs.
- Labor Arbitrage: the cost gap between wage markets that makes cross-border sourcing attractive.
FAQ
Is the HIRE Act law?
No. It is a proposed bill, S.2976, introduced on 5 September 2025 in the 119th Congress. It has not been enacted.
What is the 25% tax in the HIRE Act?
The bill would create a 25% tax on “outsourcing payments” — money paid by a US company or taxpayer to a foreign person whose work benefits consumers in the United States. Companies also could not deduct those payments.
Is this the same as the 2010 HIRE Act?
No, and the overlap is pure acronym. The 2010 Hiring Incentives to Restore Employment Act was an enacted payroll-tax-credit measure, and it is unrelated to Senator Moreno’s 2025 bill.
What happens to the money the tax collects?
The bill would route the revenue into a new Domestic Workforce Fund supporting apprenticeships and workforce development programs.
Should I change my outsourcing plans now?
No — the bill isn’t law, so model the exposure and keep monitoring rather than restructuring contracts today.
Buyers weighing offshore, nearshore and domestic options can compare verified providers in the Outsource Accelerator directory.
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