If you've been following the headlines surrounding the One Big Beautiful Bill Act (OBBBA), it's time to look past the noise and at the actual numbers for the 2026 filing season. The 2026 filing season brings the biggest expat tax shifts in nearly a decade. While residence-based taxation gains traction in Congress, OBBBA is already law—and it's a mixed bag for Americans abroad.
The Good News: Higher Hurdles for the IRS
The headline win is the permanent extension of the 2017 tax brackets, averting rate spikes. The Foreign Earned Income Exclusion (FEIE) rises to $132,900 for 2026.
Add the increased standard deduction—$16,100 for single filers—and many expats can earn over $149,000 tax-free on foreign income.
The Catch: New 1% Remittance Fee
OBBBA adds a 1% federal excise tax on certain international remittances, targeting cash-based transfers, money orders, or similar non-digital methods. The IRS aims to curb evasion. Avoid it by using qualified electronic transfers or ACH from U.S. accounts.
Why Your Strategy Might Need a Pivot
With the Child Tax Credit now at $2,200 per child (made permanent and index-linked under OBBBA), the old "just claim the FEIE" approach is outdated. In high-tax countries like the UK, Germany, or Japan, the Foreign Tax Credit (FTC) may now yield better results, especially for refundable credits.
The Bottom Line
2026 demands customized tax prep—not copy-paste. New $15M estate tax exemptions and tightened foreign gift reporting enforcement (monitor Form 3520 thresholds) have reshaped compliance. Consult a professional to optimize.