Foreign Earned Income Exclusion (2026)

Earn abroad without double tax—when the tests are met

U.S. citizens and resident aliens owe U.S. tax on worldwide income. The foreign earned income exclusion (FEIE) removes up to $132,900 of qualifying foreign wages or self-employment income from federal income tax for 2026 if you pass the bona fide residence or physical presence test and maintain a tax home outside the United States.

Enter foreign earned wages or net self-employment, days abroad, test type, filing status, and other U.S. income. The calculator caps exclusion at $132,900 per person and shows remaining taxable income stacked in 2026 brackets (Rev. Proc. 2025-32).

2026 FEIE amount

IRS set the 2026 exclusion at $132,900—up from prior years via inflation indexing. Married couples with two foreign earners can potentially exclude up to $265,800 combined if each qualifies on separate income.

Physical presence: 330 days

Physical presence test requires 330 full days outside the U.S. during any 12-month period overlapping the tax year—not necessarily the calendar year. Travel days count carefully; partial days in the U.S. often count as U.S. days. Compare tests in bona fide vs physical presence calculator.

Bona fide residence

Bona fide residence test looks at intent to remain abroad indefinitely—visa type, family ties, and work contract length matter. One year abroad on a fixed contract may fail bona fide but pass physical presence if day count met.

How to use the calculator

Step 1 — Enter foreign earned income

Salary paid abroad for work performed abroad; Schedule C foreign net if self-employed.

Step 2 — Confirm test and cap

Apply $132,900 cap per qualifying individual; enter U.S. workdays that reduce exclusion if any.

Step 3 — Compare FTC path

High foreign tax countries may favor credit over exclusion—foreign tax credit calculator.

Housing exclusion link

Excess foreign housing costs above base amount may add exclusion via Form 2555—foreign housing exclusion calculator.

Self-employment still owes SE tax

FEIE excludes income tax on foreign earned self-employment but does not eliminate self-employment tax on net earnings in most cases—pair with self-employment tax calculator.

Worked example

Single teacher abroad, $95,000 foreign salary, qualifies FEIE → $95,000 excluded (under $132,900 cap). U.S. interest $2,000 still taxable. If salary were $160,000, exclusion caps at $132,900; $27,100 remains taxable federally.

FBAR and FATCA separate

Foreign bank accounts may need FBAR if aggregate over $10,000—FBAR calculator. Form 8938 thresholds differ—FATCA Form 8938 calculator.

Common mistakes

• Excluding U.S.-sourced remote work for U.S. employer while living abroad
• Missing 330-day count by one travel day
• Claiming FEIE and FTC on same income
• Assuming FEIE removes SE tax on freelance abroad

Related tools

Tests: bona fide vs physical presence. Housing: foreign housing exclusion. Federal: federal income tax calculator.

Contractor vs employee abroad

Foreign employer W-2 equivalents may still be foreign earned income if services performed abroad. U.S. company remote worker abroad may have U.S.-sourced wages if employer is U.S. entity—FEIE does not apply to U.S.-source wages even while living overseas. Dual-status alien year splits complicate first/last year of residency—Form 1040-NR segments may limit FEIE.

Combat zone and certain government employee exclusions follow separate code sections—not modeled here. Peace Corps and NGO workers confirm sourcing with preparer when stipends mix U.S. and foreign funding.

Stacking housing and FEIE caps

Total exclusion including housing cannot exceed foreign earned income earned during year—you cannot exclude more than you earned. Spouse each with separate foreign employers calculates separate $132,900 caps when both qualify independently.

Foreign pension and U.S. remote work

Foreign employer pension contributions may be taxable or treaty-exempt depending on country—outside FEIE earned income bucket. Working remotely for U.S. company while abroad creates U.S.-source wages not eligible for FEIE even if foreign tax credit available on same income in country of residence.

Digital nomad visas do not automatically create bona fide residence—tax tests control not immigration label. Maintaining U.S. state domicile while abroad may continue state tax on remote wages while federal FEIE applies to foreign-source earned income only.

Self-employment tax on foreign earned self-employment continues for U.S. taxpayers unless totalization agreement applies—check SSA totalization list for country you work in; agreement may exempt U.S. SE tax when paying foreign social system.

Reading your results for foreign earned income exclusion

The interactive panel above shows a transparent calculation trace in cents—use it to sanity-check inputs before you rely on any number for decisions. Tax software at filing time may differ when every credit, limitation, and state conformity rule is applied in full. Treat output here as structured planning math aligned to 2026 federal reference data where noted, not as e-file output or professional advice.

When your situation includes items this specialized tool simplifies—multiple entities, prior-year carryforwards, treaty elections, or state nonconformity—layer those facts manually or with a preparer. The goal is to narrow uncertainty enough to ask better questions, not to eliminate the need for review when dollars are material.

Recordkeeping that survives scrutiny

Keep source documents (forms, statements, logs, confirmations) that support every input you typed. IRS and state audits often start from third-party reporting; your job is to reconcile 1099s, K-1s, and broker exports to the story you file. Digital backups with dates beat reconstructed spreadsheets created after an notice arrives.

For foreign earned income exclusion, retain worksheets year to year when carryforwards exist—loss carryovers, credit carryforwards, passive loss suspensions, and basis schedules die silently if you change preparers and lose history.

Related tools on this site

FTC: foreign tax credit calculator. Tests: bona fide vs physical presence. FBAR: FBAR calculator.

2026 federal brackets and payroll context

Ordinary income tax brackets and standard deductions for 2026 follow IRS Rev. Proc. 2025-32 ($16,100 single / $32,200 joint standard deduction; seven marginal rates from 10% to 37%). Social Security tax applies at 6.2% on wages up to the $184,500 wage base; Medicare continues at 1.45% with Additional Medicare Tax above threshold wages. These layers stack independently from specialized rules modeled in this foreign earned income exclusion tool—run the federal income tax calculator when you need the full return picture.

Quarterly estimated tax may be required when withholding does not cover liability—see the quarterly estimated tax calculator. Year-end refund or balance due comparisons belong in the tax refund estimator once withholding and payments are known.

Sources and methodology

FEIE $132,900 from IRS Rev. Proc. 2025-32 and 2026 inflation guidance. Form 2555 rules simplified. Educational expat planning.