How Much Is U.S. Expat Tax in 2025? What Americans Abroad Really Pay
Wondering how much U.S. expat tax you’ll actually owe? Here’s the surprising truth: most Americans living abroad owe $0 in U.S. income tax. That’s because the IRS offers two powerful tools—the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC)—that eliminate double taxation for the majority of expats.
But “how much” often means two things:
- What will your actual U.S. tax bill be?
- How much will it cost to stay compliant?
Let’s break down both with clear numbers and real examples.
What Most U.S. Expats Pay
| Scenario | Tax Liability |
| U.S. salary under $130,000 abroad + paid foreign taxes | $0 |
| Self-employed expat with $95K income | $14,535 in SE tax unless exempt by treaty |
| High income + no foreign taxes paid | Tax owed on amount above FEIE |
| Used FEIE and FTC correctly | Usually $0 |
How Much Will I Actually Owe? (The Real Numbers)
Here’s what catches most Americans living overseas off guard: despite being required to file U.S. tax returns annually, 2 out of 3 expats end up owing absolutely nothing in federal income tax. This isn’t about finding loopholes—it’s about understanding policy specifically designed to prevent unfair double taxation.
How the Foreign Earned Income Exclusion Works (FEIE)
The Foreign Earned Income Exclusion is your first line of defense against double taxation:
- What it does: Lets you exclude up to $130,000 of foreign-earned income in 2025 ($126,500 for 2024)
- How to qualify: Pass the Physical Presence Test (330+ days abroad) or Bona Fide Residence Test
- Form required: Form 2555
- Important: FEIE only applies to earned income like wages, not investment or rental income
Using the Foreign Tax Credit (FTC) to Reduce U.S. Taxes
The Foreign Tax Credit tackles any remaining tax obligation:
- What it does: Gives you a dollar-for-dollar credit for taxes you already paid to a foreign government
- Who benefits most: Expats in high-tax countries like Germany, France, or Sweden
- Form required: Form 1116
Combined Power
When used together (on different income), the FEIE and FTC can cancel out most or all U.S. tax owed.
Real-Life Examples: What You’ll Actually Pay
| Expat Type | Income | Local Taxes Paid | U.S. Tax Owed |
| Marketing pro in Melbourne | $95,000 | $18,000 (AUS) | $0 |
| Software dev in Singapore | $140,000 | Minimal | ~$1,800 |
| Finance manager in Germany | $200,000 | $62,000 | $0 |
| Digital nomad with LLC | $110,000 | None | $16,830 (SE tax) |
The pattern: Your final liability depends on income level and host country tax rates, but roughly 85% of expats owe nothing in U.S. federal income tax.
Who Still Owes Taxes? (Self-Employed, High Earners)
You may still have U.S. tax liability if:
- You’re self-employed → Owe 15.3% self-employment tax on net income (even if using FEIE)
- You earn above $130K → The remainder may be taxed
- You have investment or rental income → Not covered by FEIE
- You live in a no/low-tax country → FTC doesn’t apply without foreign taxes paid
- Your home state wants to tax you → States like California or Virginia may still require filings
Self-Employment: The Hidden Cost
If you own a business or work as an independent contractor, you’ll typically owe the full 15.3% self-employment tax on your business income, even when using the Foreign Earned Income Exclusion. This frequently surprises digital nomads and freelance consultants.
Example: A freelance consultant earning $95,000 abroad would owe approximately $14,535 in self-employment tax, regardless of the FEIE.
How Much Do Expat Tax Services Cost?
If you’re asking “how much is expat tax?” you may be referring to filing costs rather than the tax bill itself.
Greenback’s Transparent Pricing (2025)
| Service | Price |
| Federal Tax Return | $530 |
| FBAR Filing | $115 (up to 5 accounts) |
| State Tax Return | $175 each |
| Foreign Business Reporting | $665+ |
| Streamlined Catch-Up Package | $1,600 |
Most expats spend between $530 and $700/year on tax prep. More complex situations (like business ownership or past non-compliance) may cost more.
Common Mistakes That Increase Your Tax Bill
Several factors can drive up both tax liability and service requirements:
- Missing Key Elections: Not properly electing FEIE or FTC can result in unnecessary tax liability
- State Tax Oversights: Some states maintain aggressive positions about taxing former residents who’ve moved abroad
- Foreign Account Penalties: Missing FBAR or Form 8938 requirements can trigger five-figure penalties
- Self-Employment Tax Surprises: Many expats discover too late that FEIE doesn’t eliminate self-employment tax obligations
The Economics of Professional Tax Preparation
Consider the financial logic behind investing in professional expat tax services:
- Penalty Prevention: FBAR violations alone carry penalties up to $12,921 per account for unintentional mistakes. A single avoided penalty can fund professional preparation for many years.
- Time Value: DIY expat tax preparation typically requires 20-30 hours of research and form completion. Professional services free up this time for income-generating activities.
- Strategic Opportunities: Expat tax specialists identify planning strategies that general preparers often miss, potentially saving thousands through proper timing of elections and treaty benefits.
Expat Tax Calculator: Estimate Your Costs
Want to know how much you’ll owe—or avoid owing? Your best bet is to:
- Use our pricing calculator to estimate professional service costs based on your specific circumstances.
- Consider the total cost of non-compliance: Penalties, interest charges, and stress typically far exceed professional preparation costs.
- Think strategically: Proper tax planning creates a foundation for long-term financial success abroad.
Next Steps: Estimate, File, and Stay Compliant
So, how much is U.S. expat tax? For most Americans abroad:
- Actual tax liability: Usually $0 (due to exclusions and credits)
- Professional compliance investment: $530-$1,600 annually
- Peace of mind value: Considerable when you’re properly compliant and optimized
The key question isn’t whether you can afford professional expat tax assistance—it’s whether you can afford the risks of going without it.
Getting Clear Answers About Your Situation
Ready to understand your specific expat tax circumstances? Greenback is an American company founded in 2009 by US expats for expats. We focused exclusively on expat taxes and always have. Many of our CPAs and Enrolled Agents are expats themselves, living in 14 timezones and experiencing firsthand the challenges of living abroad.
We’ve helped over 23,000 expats file over 71,000 returns while maintaining a 4.9 star average on TrustPilot. We have a rigorous hiring process for both our accountants and customer service reps. We only hire the best. Only an excellent CPA or Enrolled Agent will touch your return from start to finish.
Your logical next steps:
- Estimate your investment with our comprehensive calculator
- Schedule a consultation to explore your unique circumstances
- Begin the process by connecting with your dedicated Greenback accountant
We’ll match you with the right accountant based on your unique situation and guide you through an easy onboarding process. You’ll have direct, one-on-one access and pay a flat price, backed by our Make It Right guarantee.
No matter how complex your expat tax situation may be, we can help. You’ll have peace of mind, knowing that your taxes were done right.
