Income earned abroad

2026 Foreign Earned Income Exclusion Calculator

Americans living and working abroad generally still file a United States return. The foreign earned income exclusion is the main relief available, and for 2026 it shelters up to $132,900 of foreign earned income per qualifying taxpayer.

Enter foreign earned income and confirm whether you meet a qualifying presence test. The tool applies the cap and reports the remainder that stays in the United States tax base.

Official 2026 figures used here

How to read the result

The exclusion subtracts from income rather than crediting against tax. That distinction matters when comparing it with the foreign tax credit: an exclusion reduces the base, while a credit reduces the tax itself, and the two interact through a limitation formula that requires the credit to be computed on income treated in a specific way.

Two presence tests can establish eligibility. The bona fide residence test looks at an uninterrupted period spanning a full tax year, while the physical presence test counts days within a rolling twelve-month window. Both require foreign residence or presence rather than merely foreign employment, so a commuting arrangement does not qualify.

The cap applies per qualifying individual rather than per return. Two spouses working abroad can each exclude the amount, which makes the combined shelter twice the headline figure. A spouse who does not work abroad contributes no exclusion, even on a joint return.

Foreign housing costs are addressed by a separate exclusion with its own cap and a location-based adjustment, and it is not modelled here. A taxpayer with substantial housing costs can often shelter more through that route than through the base figure alone, so the number above is a floor on available relief rather than a ceiling.

Filing mechanics deserve a note. The exclusion is claimed on a form attached to the return rather than applied automatically, and the election generally must be made for the first year it is used. Once made it can be revoked only with consent, so the choice carries forward. A taxpayer who later returns to the United States does not unwind prior years, but the current-year amount falls to zero without foreign earned income.

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