How Much Tax Do U.S. Citizens Living Abroad Pay?
U.S. citizens living abroad pay U.S. income tax on their worldwide income, at the same 10% to 37% federal rates as people living in the U.S. You can lower that bill in two main ways: the Foreign Earned Income Exclusion, which lets you exclude up to $132,900 of foreign earnings for the 2026 tax year (returns filed in 2027), and the Foreign Tax Credit, which gives you a dollar-for-dollar credit for income tax you pay to another country.
U.S. citizens abroad still file a U.S. return once gross income reaches $16,100 for a single filer, and income you exclude counts toward that. How much expat tax you owe depends on your income: a U.S. bill usually shows up when your salary is above the exclusion in a country with low or no income tax, when you have freelance profit subject to self-employment tax, or when you have investment, pension, or retirement income the exclusion does not cover.
A few dates and limits apply, whatever you owe:
- Tax due: any U.S. tax you owe is due April 15, and interest runs from that date, as covered in the June 15 extension and interest.
- Extension: living abroad gives you an automatic extension to June 15 to file, and filing Form 4868 for a tax extension moves it to October 15.
- FBAR: foreign accounts totaling more than $10,000 at any point in the year need an FBAR, even when no tax is due.
Greenback’s accountants can work out what applies to your return.
How Much Do Americans Abroad Pay at Different Incomes?
The U.S. tax on income earned abroad can be nothing or tens of thousands of dollars, depending on how much you earn, where you live, and whether you work for yourself. These 2026 tax year examples show how.
| Situation | What applies | U.S. tax for 2026 |
|---|---|---|
| $80,000 salary in Germany | Foreign Tax Credit | Fully covered: German tax is higher than the $8,770 U.S. tax |
| $120,000 salary in the UAE | Exclusion | Fully excluded |
| Married couple, each earning $100,000 in the UAE | One exclusion per spouse | Fully excluded |
| $160,000 salary in Saudi Arabia | Exclusion, then the stacking rule | $2,640 |
| $250,000 salary in the UAE | Exclusion, then the stacking rule | $26,810 |
| $90,000 freelance profit in Mexico | Exclusion for income tax; no totalization agreement | $12,717 in self-employment tax |
| $90,000 freelance profit in Portugal, paying into Portugal’s social security | Exclusion plus a totalization agreement and a certificate of coverage | No U.S. self-employment tax |
Examples use the 2026 tax year figures the IRS published, including the $16,100 standard deduction, for single filers (and one married couple) with no other income. Figures are rounded to the dollar.
1. Salaries Under the Exclusion or in Higher-Tax Countries Are Generally Covered
A salary under $132,900 can be excluded in full with FEIE, and in a country with an income tax rate higher than the U.S. tax rate, the Foreign Tax Credit generally covers the U.S. tax on that salary. To use the exclusion, you need to qualify under the physical presence test or the bona fide residence test. The credit can’t exceed the U.S. tax on foreign income in the same category, and it can’t be taken on income you exclude. Our guide to double taxation agreements covers how the U.S. and other countries avoid taxing the same income twice.
2. Salaries Above the Exclusion in Low-Tax Countries Can Leave a U.S. Bill
In a country with no income tax, such as the UAE or Saudi Arabia, there is no foreign tax to credit, so income above $132,900, less your standard deduction, is taxed. Under the stacking rule, the IRS figures that tax as if the excluded income were still there, so the extra income is taxed starting at 24%. The foreign housing exclusion can raise the amount you exclude when your housing costs are high. See what else applies in countries with no income tax.
3. Freelance Profit Carries Self-Employment Tax
Self-employment tax is 15.3%, charged on 92.35% of your net profit, and the exclusion does not reduce it. The 12.4% Social Security portion stops at the annual wage base, whereas the 2.9% Medicare portion does not. You report it on Schedule SE. The U.S. has totalization agreements with 31 countries, including Portugal, Germany, and the UK, but the agreement only removes U.S. self-employment tax once you have a certificate of coverage from the country you pay into. Mexico, Thailand and the UAE have no agreement.
4. Investment and Rental Income Fall Outside the Exclusion
Dividends, interest, capital gains, and rent are not foreign-earned income, so the exclusion never applies to them. They are taxed at the usual U.S. rates, including the lower rates for qualified dividends and long-term gains, with a credit for foreign taxes paid. Read more in our guides to unearned income, foreign capital gains, and foreign rental income. Foreign mutual funds and ETFs are usually PFICs and are taxed under special rules on Form 8621. Higher earners can also owe the 3.8% Net Investment Income Tax once modified adjusted gross income passes $200,000 for a single filer or $250,000 for a joint return, and the Foreign Tax Credit generally does not reduce it.
5. Pensions, IRA Withdrawals and Social Security Are Taxed as They Would Be in the U.S.
A retiree abroad pays U.S. tax on pensions and withdrawals the same way a retiree in the U.S. does, because the exclusion covers only earned income. That includes IRA withdrawals, U.S. pensions, and up to 85% of Social Security benefits, depending on your other income. Foreign pensions are taxable too, often with a credit for the foreign tax on them, unless a tax treaty gives the other country the first right to tax them. Greenback’s accountants prepare returns for retirees abroad every year and apply these treaty rules for you.
6. Your Former Home State May Still Tax You
Some states continue to tax former residents who have not cut ties, and some do not comply with the exclusion. The state taxes for expats guide covers which states to watch, and Greenback files state returns alongside your federal one.
What Is the U.S. Expat Tax Rate?
There is no separate U.S. expat tax rate. Americans abroad pay the same federal income tax brackets as Americans at home, from 10% to 37%, on the income left after the exclusion and deductions, less any credits. For the 2026 tax year, the standard deduction is $16,100 for a single filer and $32,200 for a married couple filing jointly.
| Rate | Single filers | Married filing jointly |
|---|---|---|
| 10% | Up to $12,400 | Up to $24,800 |
| 12% | $12,401 to $50,400 | $24,801 to $100,800 |
| 22% | $50,401 to $105,700 | $100,801 to $211,400 |
| 24% | $105,701 to $201,775 | $211,401 to $403,550 |
| 32% | $201,776 to $256,225 | $403,551 to $512,450 |
| 35% | $256,226 to $640,600 | $512,451 to $768,700 |
| 37% | Over $640,600 | Over $768,700 |
The Same Rates Apply to Every U.S. Person Abroad
The tax rate for U.S. citizens living abroad also applies to green card holders and anyone else who counts as a U.S. person for tax purposes. Your filing status sets which column you use. If you are married to a nonresident, you often file as married filing separately. Its brackets match the single-filer ones up to $256,225, and the 37% rate starts at $384,350. Expat tax is also separate from the one-time expatriation tax some people owe when giving up citizenship.
How Does Greenback Keep Your U.S. Tax as Low as the Rules Allow?
Greenback’s accountants help you choose between the Foreign Earned Income Exclusion and the Foreign Tax Credit, and find the other credits and deductions for expats you qualify for. The right choice depends on more than this year’s bill. The credit can make your family eligible for the refundable part of the Child Tax Credit, the housing exclusion can add to what you exclude, and switching away from the exclusion generally means waiting five years to claim it again, as our comparison of the FEIE and the Foreign Tax Credit explains. Because no two expat returns are the same, Greenback prepares each one with careful attention to these details.
Do You Have to File a U.S. Return If No Tax Is Due?
Yes. Filing and paying are separate, so you file Form 1040 once your gross income reaches the filing threshold, even when the exclusion or the credit leaves no U.S. tax due. The threshold drops in two common cases: $400 of net self-employment profit, and $5 if you are married filing separately, which often applies when your spouse is a nonresident. The expat income filing threshold Q&A covers each status, and our guide to why U.S. citizens abroad file explains the rule.
Frequently Asked Questions
U.S. expat tax has two parts: the U.S. income tax on your worldwide income, and the cost of having your expat return prepared. For the 2026 tax year, the Foreign Earned Income Exclusion (up to $132,900) and the Foreign Tax Credit can reduce or fully cover the income tax for many Americans abroad. Preparation fees depend on the forms your return needs, as our guide to how much expat tax preparation costs explains, and Greenback’s pricing calculator gives you a price for your own situation before you start.
A married couple who both live and work abroad can exclude up to $265,800 of foreign earned income for the 2026 tax year, or $132,900 each, if each spouse qualifies for the Foreign Earned Income Exclusion. Each spouse can only exclude their own foreign earnings, so a spouse with no foreign income adds nothing to the total, as our Tax Q&A on both spouses claiming the FEIE explains. The foreign housing exclusion can add to that amount for qualifying housing costs.
Let Greenback Work Out Your U.S. Tax From Abroad
How much tax you pay from abroad depends on which rules fit your income, and Greenback’s accountants look for the combination that keeps your U.S. tax lowest while keeping you compliant. Greenback can handle each piece:
- Your federal return: federal tax return preparation with the exclusion, the credit, or both, compared for you
- Freelancers and business owners: small business tax returns including self-employment tax and totalization certificates
- Foreign accounts: FBAR filing and Form 8938 for FATCA
- State returns: state tax filing if your former state still taxes you
- Catch-up years: the Streamlined Filing Procedures
Want a second opinion first? Book an expat tax consultation.
Same Rates, Different Rules Abroad.
The information in this article is for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are complex and change frequently. Consult a qualified tax professional regarding your specific situation before taking any action.
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