2026 US Exit Tax Calculator & Complete Guide for Covered Expatriates

Instant Answers: 2026 Exit Tax at a Glance

Quick answers to the most common questions about US exit tax thresholds, rates, and rules for 2026.

All figures reflect 2026 IRS guidance as of June 2026. Exclusion amounts and tax liability thresholds are adjusted annually for inflation.

2026 Key Figures

These are the official IRS figures that determine whether you are a covered expatriate and how much tax you may owe.

Total exit tax rate: 23.8% (20% capital gains + 3.8% Net Investment Income Tax).
Renunciation fee (2026): $450 (down from $2,350 in previous years).

What Is the US Exit Tax?

The US exit tax is a federal tax imposed on certain US citizens and long-term green card holders who renounce their citizenship or surrender their permanent resident status. The tax is governed by Internal Revenue Code Section 877A, which treats your worldwide assets as if they were sold on the day before expatriation.

This is called a "deemed sale" or "mark-to-market" tax. You don't actually sell anything — but the IRS taxes your unrealized gains as if you did. The tax applies only to the net gain above the annual exclusion amount.

Important: Most people who renounce US citizenship or surrender a green card do NOT owe the exit tax. You are only subject to the tax if you qualify as a covered expatriate under one of three tests.

How the Exit Tax Works

• Deemed sale: The IRS treats all your worldwide assets as sold on the day before expatriation.
• Unrealized gain: The difference between each asset's Fair Market Value (FMV) and your tax basis.
• Netting: Gains and losses from all assets are combined. Losses offset gains.
• Exclusion: The $910,000 exclusion (2026) is subtracted from your net gain.
• Tax: The remaining taxable gain is taxed at 23.8% (20% capital gains + 3.8% NIIT).

Special Asset Rules

• Retirement accounts (IRA, 401(k)): Treated as lump-sum distributions. The full balance is taxed as ordinary income. The $910,000 exclusion does NOT apply.
• Deferred compensation: Subject to 30% withholding on future payments under IRC 877A(d).
• Primary residence: The Section 121 home sale exclusion (up to $250,000 for single filers or $500,000 for married couples) does NOT apply under exit tax rules.
• Foreign trusts: Special rules apply under IRC 877A(f) for nongrantor trusts.

Who Is a Covered Expatriate? The 3 Tests Explained

You are a covered expatriate if you meet ANY ONE of the three tests below. The calculator at the top of this page includes an interactive checklist to help you determine your status.

Test 1: Net Worth Test ($2,000,000)

If your total worldwide assets exceed $2,000,000 on the day before you expatriate, you are a covered expatriate. This includes all assets:

• Real estate (US and foreign)
• Stocks, bonds, mutual funds, and ETFs
• Business interests and partnerships
• Retirement accounts (IRAs, 401(k)s) — full balance counts toward net worth
• Cryptocurrency and digital assets
• Cash and bank accounts
• Personal property (art, jewelry, collectibles)
• Deferred compensation and vested stock options

Important: The $2,000,000 threshold is statutory — it is NOT adjusted for inflation. It remains fixed at $2M regardless of inflation.

Test 2: Tax Liability Test ($211,000 for 2026)

If your average annual US income tax liability for the 5 years before expatriation exceeded $211,000 (2026 threshold), you are a covered expatriate.

What counts as "tax liability"? Your total US tax liability before credits and withholding — not just what you owed after refunds or payments. This includes:

• Income tax (Form 1040)
• Self-employment tax
• Alternative Minimum Tax (AMT)
• Net Investment Income Tax (NIIT)

The threshold is adjusted annually for inflation. For 2026, the threshold is $211,000.

Test 3: Compliance Test (5-Year Certification)

If you cannot certify that you have filed all required US tax returns and paid all taxes for the 5 years before expatriation, you are a covered expatriate.

This test is often overlooked but can be the most dangerous. Even if you pass the net worth and tax liability tests, failing the compliance test makes you a covered expatriate.

What you must certify on Form 8854:

• All required US tax returns were filed for the 5 years before expatriation
• All taxes owed were paid
• All required information returns (FBAR, FATCA) were filed
• No material misstatements or omissions

Penalty for failing to file Form 8854: A $10,000 penalty applies for failure to file the initial expatriation statement. Additional penalties may apply for inaccuracies.

Long-Term Resident Rule (Green Card Holders)

If you are a green card holder who has been a US resident for 8 of the last 15 years, you are treated as a long-term resident and may be subject to the exit tax. This applies regardless of whether you formally renounce your green card or let it expire.

Note: If you are a green card holder in year 7, you are NOT yet a long-term resident. However, if you wait until year 8, the exit tax applies. Timing is critical.

Exceptions: Dual Citizens and Minors

Not all covered expatriates owe the exit tax. Two important exceptions exist:

• Dual citizens: You are exempt if you were born with dual citizenship (US and another nationality) and were not a US resident for more than 10 of the last 15 years.
• Minors: You are exempt if you are under 18½ years old at the time of expatriation.

If you qualify for either exception, you are not considered a covered expatriate for exit tax purposes — even if you meet the net worth or tax liability tests.

How Is the Exit Tax Calculated? Mark-to-Market Explained

The exit tax uses a "mark-to-market" method. The IRS treats all your worldwide assets as sold on the day before you expatriate. You don't actually sell anything — but the tax is calculated as if you did.

Here is the step-by-step formula used by the calculator above:

Step 1: Calculate Unrealized Gain for Each Asset

For each asset you own, subtract your tax basis from the current Fair Market Value (FMV).

• Fair Market Value (FMV): What the asset would sell for on the open market on the day before expatriation.
• Tax Basis: What you originally paid for the asset, adjusted for improvements, depreciation, or other tax adjustments.
• Unrealized Gain: The profit you would make if you sold the asset — even though you're not actually selling it.

Example: You bought US stocks for $800,000. On the day before expatriation, they are worth $2,000,000. Your unrealized gain is $1,200,000.

Step 2: Net Gains and Losses

Combine all gains and losses from all your assets. Losses offset gains, reducing your total net gain.

Important: Losses from mark-to-market assets can offset gains. This is a significant advantage — if you have loss-making assets, they reduce your tax liability.

Step 3: Apply the $910,000 Exclusion

Subtract the $910,000 exclusion (2026) from your net unrealized gain. Only the remaining amount is taxable.

The exclusion applies per person. Married couples each get their own $910,000 exclusion — so a married couple can shield up to $1,820,000 of net gain.

Step 4: Apply the Tax Rate (23.8%)

Multiply your taxable exit gain by 23.8% (20% capital gains tax + 3.8% Net Investment Income Tax).

This is the amount you would owe to the IRS. The full calculation example in the next section walks through this with real numbers.

What About Retirement Accounts?

Retirement accounts (IRAs, 401(k)s) are treated differently. The full balance is taxed as a lump-sum distribution at ordinary income rates. The $910,000 exclusion does NOT apply.

• IRA balance: $500,000
• Tax rate (assumed): 37% (for high earners)
• Tax owed: $185,000

This is often the largest surprise for expatriates. Unlike other assets, retirement accounts receive no exclusion and are taxed at higher ordinary income rates.

Deferred Compensation: Special 30% Withholding

Deferred compensation (unvested stock options, restricted stock, non-qualified deferred compensation) is subject to a special rule. Under IRC 877A(d), future payments are subject to 30% withholding — but the tax is not calculated as part of the mark-to-market gain.

If you have deferred compensation, consult a tax professional to understand your specific withholding obligations.

What Assets Are Subject to Exit Tax?

Under IRC Section 877A, almost all worldwide assets are subject to the mark-to-market regime. However, the rules vary by asset type. Below is a comprehensive breakdown.

What Is NOT Subject to the Exit Tax?

Very few assets are exempt from the mark-to-market regime. The primary exclusions are:

• US Treasury obligations (Treasury bonds, notes, bills)
• Certain foreign retirement plans (but complex rules apply)
• Annuities — subject to special rules (consult a professional)
• Social Security benefits — not considered an asset for exit tax purposes

Important: Expatriation does NOT eliminate your US tax obligations. You may still owe US tax on US-source income, Social Security, and other items after renunciation.

Primary Residence: The Section 121 Trap

Many expatriates assume they can use the Section 121 home sale exclusion on their primary residence. This is incorrect.

Under IRC 877A, the Section 121 exclusion (up to $250,000 for single filers or $500,000 for married couples) does NOT apply to the exit tax calculation. Your primary residence is treated like any other asset — the full gain is subject to mark-to-market, and only the $910,000 exclusion applies.

Valuation: How to Determine Fair Market Value

For publicly traded assets (stocks, bonds, ETFs), FMV is straightforward — use the closing price on the day before expatriation.

For other assets, valuation is more complex:

• Real estate: Use appraisals, comparable sales, or tax assessments. A professional appraisal is recommended.
• Business interests: Use a business valuation expert. Methods include discounted cash flow, comparable company analysis, and asset-based approaches.
• Cryptocurrency: Use the market price on the day before expatriation from a reputable exchange.
• Art and collectibles: Use appraisals from certified appraisers.

Inaccurate valuations can trigger penalties, interest, and potential criminal exposure. If you have hard-to-value assets, consult a professional.

Special Asset Rules: Retirement, Deferred Comp, and Trusts

While most assets are subject to the standard mark-to-market calculation, three asset types have special rules that can significantly affect your exit tax liability.

Retirement Accounts (IRA, 401(k), 403(b), TSP)

Under IRC 877A(c), retirement accounts are treated as lump-sum distributions on the day before expatriation. The full balance is included in your taxable income as ordinary income.

Key rules:

• The $910,000 exclusion does NOT apply to retirement accounts. You cannot shield any portion of your IRA or 401(k) with the exclusion.
• The full balance is taxed at ordinary income rates — not the 23.8% capital gains rate. For high earners, this means 37% or higher.
• The balance counts toward your net worth test ($2M threshold) — even though it's taxed differently.

Can you avoid the tax on retirement accounts? There is no direct avoidance mechanism. However, you can potentially reduce the impact by:

• Taking distributions before expatriation (spreading income over multiple years)
• Converting traditional IRA to Roth IRA (taxed now, but tax-free later)
• Rolling over to a foreign pension plan (complex, requires professional guidance)

Roth IRAs: Roth IRAs are generally not subject to the lump-sum distribution rule because contributions were already taxed. However, earnings on Roth accounts may be subject to tax if the 5-year holding period hasn't been met.

Deferred Compensation

Deferred compensation includes unvested stock options, restricted stock units (RSUs), non-qualified deferred compensation (NQDC), and similar arrangements.

Special rule under IRC 877A(d):

• Deferred compensation is NOT included in the mark-to-market calculation.
• Instead, future payments are subject to 30% withholding when paid.
• The withholding is in addition to regular tax — there is no offset or exclusion.
• You must report deferred compensation on Form 8854 and Form W-8CE (Notice of Expatriation).

Planning note: If you have deferred compensation, consider accelerating vesting or taking distributions before expatriation to avoid the 30% withholding regime. However, this may trigger ordinary income tax in the US, so the trade-off is complex. Consult a tax professional.

Nongrantor Trusts

If you are the grantor of a trust that will continue after your expatriation, special rules apply under IRC 877A(f).

Key rules for nongrantor trusts:

• If a covered expatriate is treated as the owner of a trust under grantor trust rules, the trust's assets are subject to mark-to-market.
• If the trust is a nongrantor trust (not treated as owned by the expatriate), the trust may be subject to special tax rules.
• Distributions from nongrantor trusts to US persons may be subject to the Section 2801 transfer tax (40% of the distribution).

Trust rules are highly complex. If you have any trust interests, consult a tax attorney with expertise in expatriation trust law.

Section 2801: The Transfer Tax on Gifts and Bequests

Even after expatriation, you may still trigger US tax if you make gifts or bequests to US persons.

Under IRC Section 2801, gifts or bequests from a covered expatriate to a US person are subject to a 40% transfer tax on the amount exceeding the annual gift exclusion ($18,000 for 2026).

How to plan for Section 2801:

• Gift assets before expatriation (while you are still a US person) — gifts during US person status are subject to the standard gift tax, not Section 2801.
• Consider using trusts or other structures to minimize transfer tax exposure.
• Ensure your beneficiaries understand the tax implications of receiving assets from a covered expatriate.

Worked Example: Complete Exit Tax Calculation

Let's walk through a complete exit tax calculation for a covered expatriate. We'll use the same example from the calculator above, but we'll explain every step in detail.

Step 1: Calculate Unrealized Gain for Each Asset

Explanation: The US stock portfolio has an unrealized gain of $1,200,000; foreign real estate loss of -$100,000; primary residence gain of $100,000. Total gain = $1.2M.

Step 2: Net the Gains and Losses

Step 3: Apply the $910,000 Exclusion

Step 4: Apply the 23.8% Tax Rate

Step 5: Consider Additional Taxes (Retirement Accounts)

In this example, there are no retirement accounts or deferred compensation. But if there were:

Summary: What This Means for You

What would change if the individual was NOT a covered expatriate?

If you are not a covered expatriate, you owe zero exit tax. You would still need to file Form 8854 and certify compliance, but no tax would be due. This is why the covered expatriate determination is the most important step.

Ready to calculate your own exit tax? Use the interactive calculator at the top of this page. Enter your assets and see your estimated tax liability instantly.

How to File Form 8854: Step-by-Step Walkthrough

Form 8854 — the Initial and Annual Expatriation Statement — is the primary IRS form for reporting your expatriation. You must file this form in the year you renounce citizenship or surrender your green card.

Who must file? All US citizens who renounce citizenship and all long-term residents who surrender their green card must file Form 8854 — regardless of whether they owe any exit tax.

Deadline: Form 8854 is due with your final US tax return for the year of expatriation. The regular deadline is April 15 (or October 15 with extension).

Part 1: Expatriation Information

You will provide basic information about your expatriation:

• Date of expatriation: The date you renounced citizenship or surrendered your green card.
• Country of new citizenship or residence: Your new nationality or country of primary residence.
• Expatriation type: Whether you are a US citizen or a long-term resident.
• Exception claim: If you are claiming a dual citizen or minor exception, you must provide supporting documentation.

Part 2: Covered Expatriate Tests

You will calculate whether you are a covered expatriate by completing the three tests:

Documentation needed:

• Five years of US tax returns (Form 1040)
• Five years of information returns (FBAR, FATCA, Form 5471, etc.)
• Asset valuations (appraisals, brokerage statements, tax assessments)
• Basis records (purchase receipts, improvement records, depreciation schedules)

Part 3: Mark-to-Market Calculation

This is the section where you calculate your exit tax liability. You must list all your worldwide assets and calculate unrealized gains.

What you need to report:

• Description of each asset
• Fair Market Value (FMV) on the day before expatriation
• Tax basis
• Unrealized gain or loss (FMV − basis)
• Net gain or loss across all assets
• Exclusion amount claimed ($910,000 for 2026)
• Taxable exit gain
• Tax due (23.8% of taxable gain)

Part 4: Special Asset Types

You must separately report special asset types:

• Retirement accounts: Full balance reported as a lump-sum distribution. The exclusion does NOT apply.
• Deferred compensation: Reported but not included in the mark-to-market calculation. Future payments subject to 30% withholding.
• Trust interests: Special rules apply under IRC 877A(f). Consult a tax attorney.

Part 5: Certification and Signature

You must certify that:

• All information is true, correct, and complete
• You have filed all required US tax returns for the 5 years before expatriation
• You have paid all taxes owed for those years
• You have filed all required information returns
• You understand the penalties for perjury and inaccurate filings

Where to file: Form 8854 is filed with your final US tax return. Mail it to the same IRS address where you file your Form 1040, or file electronically through your tax software.

Common Mistakes to Avoid

What Happens After You File?

After you file Form 8854 and your final US tax return:

• The IRS will process your return and issue any refunds or assess any taxes due.
• If you owe exit tax, you must pay it by the tax deadline (April 15 or October 15 with extension).
• If you owe more than $2,000 and cannot pay, you may request an installment agreement (interest and penalties apply).
• You may also be subject to annual filing requirements (Form 8854 continuation statements) in future years if you have deferred compensation or trust interests.

Need help filing Form 8854? Consider hiring a CPA or tax attorney who specializes in expatriation tax. The complexity of the form and the high penalties for errors make professional help a wise investment.

Exit Tax Planning Strategies: How to Reduce or Avoid

If you are considering expatriation, planning ahead can significantly reduce your exit tax liability — or even eliminate it entirely. The best time to plan is 12-18 months before your intended expatriation date.

Strategy 1: Reduce Your Net Worth

The most effective way to avoid the exit tax entirely is to reduce your net worth below $2,000,000. This allows you to bypass the net worth test and potentially avoid covered expatriate status.

How to reduce net worth:

• Gift assets to family members: You can gift up to the annual gift exclusion ($18,000 per recipient in 2026) tax-free. Gifts above this amount may trigger gift tax, but you can use your lifetime gift and estate tax exemption ($13.61 million for 2026) to avoid tax.
• Charitable giving: Donate appreciated assets to charity. You receive a charitable deduction and reduce your net worth.
• Pay down debt: Debt reduces your net worth. Consider paying down mortgages, credit cards, and other liabilities.
• Transfer assets to a spouse who is not expatriating: If your spouse remains a US person, you can transfer assets to them. However, this may have gift tax implications.
• Trust planning: Transfer assets to an irrevocable trust that is not counted in your net worth. Complex and requires professional guidance.

Strategy 2: Reduce Your Tax Liability

If you are in the top tax bracket ($211,000+ average liability), reducing your tax liability for the 5 years before expatriation can help you avoid the tax liability test. Strategies like the FEIE vs FTC Optimization Engine can help you compare the Foreign Earned Income Exclusion and Foreign Tax Credit to minimize your US tax burden.

How to reduce tax liability:

• Income deferral: Defer income to future years (after expatriation). Common methods include deferred compensation plans, installment sales, and delaying realized capital gains.
• Income shifting: Shift income to family members in lower tax brackets (e.g., through gifts or income-producing assets).
• Tax credits and deductions: Maximize tax credits (education, childcare, etc.) and deductions (mortgage interest, charitable contributions, etc.).
• Retirement contributions: Contribute more to retirement accounts (IRA, 401(k), SEP) to reduce taxable income.
• Business tax planning: Accelerate deductions, delay revenue, and use business tax strategies (Section 179 depreciation, etc.).

Strategy 3: Timing Your Expatriation

When you expatriate can significantly affect your tax liability. Consider these timing factors:

Strategy 4: Asset Restructuring

Restructuring assets before expatriation can reduce unrealized gains or change how assets are taxed.

Approaches to consider:

• Sell assets with losses: Realize losses before expatriation to offset gains. Losses can be used to reduce your net unrealized gain.
• Harvest gains: Realize capital gains in a year when your tax rate is lower (e.g., during a year with lower income).
• Step-up basis planning: Assets inherited from a US person receive a step-up in basis at death. If you inherit assets before expatriation, your basis is higher, reducing unrealized gains.
• Convert ordinary income to capital gains: Capital gains are taxed at 23.8% (exit tax), while ordinary income is taxed at up to 37%. If possible, convert ordinary income to capital gains before expatriation.
• Consider holding assets in a trust: Some trust structures can help reduce tax exposure, but complex and requires professional guidance.

Strategy 5: Professional Help — When to Hire

Exit tax planning is complex, and the stakes are high. Consider hiring a professional if:

What to look for in a professional:

• Experience: Look for a CPA, tax attorney, or enrolled agent with specific experience in IRC 877A expatriation tax.
• Credentials: CPA (Certified Public Accountant), EA (Enrolled Agent), or JD (Juris Doctor) with tax specialty.
• References: Ask for testimonials or case studies from other expatriates.
• Fees: Expect to pay $2,000-$10,000+ for comprehensive planning and filing, depending on complexity.

Realistic Planning Timeline

Key Takeaways

Ready to start planning? Use the calculator at the top of this page to estimate your exit tax liability, then consult a qualified professional to create a personalized plan.

Why This Is the Only Real Exit Tax Calculator on the Internet

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Here's what you get here that you won't find anywhere else:

How We're Different From the Competition

Take a look at what the top-ranking pages actually give you:

What That Means for You

• No more guesswork. Enter your assets and get a number — not a wall of text.
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This is the calculator you actually searched for. The one that gives you a number, not a reading assignment.

Frequently Asked Questions About the US Exit Tax

Quick answers to the most common questions about the US exit tax, covered expatriate status, and Form 8854 filing.

Methodology: How This Calculator Works

This calculator estimates US exit tax liability under IRC Section 877A using the mark-to-market method. All calculations are based on official IRS guidance, current 2026 figures, and publicly available tax rates.

Data sources used:

• IRS Form 8854 — Initial and Annual Expatriation Statement instructions
• IRC Section 877A — Expatriation tax statutory framework
• IRS Revenue Procedure — Annual inflation adjustments for 2026 (exclusion amount and tax liability test)
• IRS Publication 519 — U.S. Tax Guide for Aliens
• Current IRS guidance — as published for the 2026 tax year

Calculation Formula

Special Asset Treatment

Covered Expatriate Determination

The three covered expatriate tests are applied exactly as defined in IRC Section 877A:

Accuracy and Limitations

This calculator provides an estimate only. Actual tax liability depends on:

• Accurate asset valuations (FMV) on the day before expatriation
• Correct tax basis calculations (including adjustments for improvements, depreciation, and corporate actions)
• Applicable tax treaties between the US and your new country of residence
• State tax implications (California, New York, and other states may have their own rules)
• Specific rules for trusts, partnerships, and other complex structures
• Changes in IRS guidance or legislative updates after the publication date

Update Frequency

This calculator is updated annually to reflect:

• Inflation adjustments to the exclusion amount and tax liability test
• Changes to tax rates (capital gains, NIIT, ordinary income)
• New IRS revenue procedures and guidance
• Legislative changes to IRC Section 877A

Last updated: June 2026

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