Foreign Earned Income Exclusion Table
| Item | 2026 amount |
|---|---|
| Foreign earned income exclusion | $132,900 |
| Qualification path A | 330 full days abroad in 12 months (physical presence) |
| Qualification path B | bona fide residence in a foreign country |
| Form | Form 2555, filed with the 1040 |
Americans working abroad can exclude $132,900 of 2026 foreign earned income from federal income tax - but the exclusion comes wrapped in qualification tests and two walls that catch nearly every first-year expat: self-employment tax still applies in full, and a handful of states keep taxing their former residents anyway.
The number is verbatim from Rev. Proc. 2025-32, and qualification runs through one of two doors set by section 911: the 330-day physical presence test or the bona fide residence test - the date math for the first one has its own calculator here.
How to use
- Enter your foreign earned income to see the excluded amount and what remains federally taxable above the $132,900 cap.
- Check the two qualification paths in the table; the 330-day date math has a dedicated calculator linked in the note.
- Budget for the walls: self-employment tax survives the exclusion, and your ex-state may still claim you.
Frequently asked questions
Do I still pay self-employment tax abroad?
Yes - the exclusion wipes income tax on foreign earned income but never touches self-employment tax: 15.3% on net freelance earnings applies even at $50,000 of excluded income. Employees avoid it via employer withholding; freelancers budget for it from day one, which is why many incorporate and take wages instead.
Which states still tax expats after they leave?
States with domicile-based taxation - California and Virginia are the classic examples - can keep taxing your worldwide income until you sever domicile: new license, homestead, bank accounts, and an intent paper trail. The federal exclusion changes nothing for them; moving states before moving countries is part of expat tax planning.
What is the difference between the two qualification tests?
Physical presence is arithmetic: 330 full foreign days in any 12 consecutive months, best for people on assignments or with travel-heavy lives. Bona fide residence has no day count - it asks where your life actually is - and lasts as long as the residence does. You qualify through one or the other, never a blend.
Does the exclusion apply to investment income?
No - the exclusion covers earned income only: wages, salary and self-employment earnings for services performed abroad. Interest, dividends, capital gains and rental income stay fully taxable, which is why expats with brokerage accounts still owe federal tax every April.