If I renounce my U.S. citizenship, am I free from U.S. taxes?
Renouncing your U.S. citizenship ends your future worldwide tax obligations to the IRS, but you must file a final dual-status return for the year of renunciation and Form 8854 to certify tax compliance for the prior five years (IRS: Expatriation Tax). Covered expatriates also owe a mark-to-market exit tax.
What ends and what continues:
- Ends: U.S. tax on foreign-source income earned after the expatriation date.
- Continues: U.S. tax on U.S.-source income (rent, business income, capital gains on U.S. real estate).
- Continues: 30% withholding on U.S.-source dividends and some interest.
- One-time: exit tax if you are a “covered expatriate” under the net worth or average tax tests.
The three covered expatriate tests for the 2025 tax year:
| Test | Threshold |
| Average annual net income tax | $206,000 (5-year average) |
| Net worth | $2 million |
| Tax compliance | Failure to certify for 5 years |
Meeting anyone triggers the covered status. The exit tax treats your worldwide assets as sold on the day before expatriation, with a $890,000 exclusion (indexed for inflation in 2025).
Renouncing without first becoming tax-compliant can trigger substantial penalties and still leave you on the hook for prior years.
For more, see our Renounce U.S. Citizenship guide.
Last updated on April 29, 2026
