FTC vs FEIE Expat 2026 Comparison Calculator
Compare the Foreign Tax Credit (IRC §901-908) against the Foreign Earned Income Exclusion (IRC §911) for tax year 2026. Free, private, browser-only — see which strategy or hybrid combination minimizes your US tax bill.
| FEIE Strategy (IRC §911) | |
| FEIE exclusion (prorated) | — |
| Housing exclusion | — |
| Taxable income after FEIE | — |
| US tax under FEIE-only | — |
| FTC Strategy (IRC §901-908) | |
| Pre-credit US tax on all income | — |
| Foreign tax credit allowed | — |
| US tax under FTC-only | — |
| Hybrid (FEIE + FTC on excess) | |
| FEIE on first portion + FTC on remainder | — |
| US tax under hybrid | — |
Expats with foreign earned income face a strategic choice — exclude income under FEIE (IRC §911) or credit foreign taxes paid against US tax under the Foreign Tax Credit (FTC, IRC §901-908). The right answer depends on your foreign effective rate, US bracket, and presence of unearned or US-source income. This tool compares both, plus the hybrid (FEIE + FTC on amounts above the exclusion).
When FTC Beats FEIE in 2026
The FTC wins when your foreign country's effective rate exceeds your US effective rate. Classic FTC countries: Germany (45% top), France (45%), UK (45%), Belgium, Denmark, Norway, Australia (45%), Japan (45% + 10% local). If you live in any of these and earn over $135,400, the FTC typically zeros out US tax AND lets you carry excess credits forward 10 years. FEIE merely excludes income up to the cap but offers zero benefit for the excess — which still gets US-taxed at your full marginal bracket.
When FEIE Beats FTC
FEIE wins in low-tax or zero-tax jurisdictions — UAE, Bahrain, Qatar, Singapore (for the first SGD 320K bracket), Hong Kong, Cayman, certain Caribbean countries. Also wins for self-employed expats in low-tax countries who want to reduce SE tax base indirectly via lowering AGI. Important nuance: once you elect FEIE, revoking it locks you out for 5 years (IRC §911(e)) without IRS permission — choose carefully.
The Hybrid Strategy — Often Optimal
For high earners in medium-tax countries (Spain, Italy, Netherlands, Ireland, Portugal), the hybrid wins: exclude the first $135,400 under FEIE, then credit foreign tax paid on the remainder. The FTC limit is calculated only on the non-excluded portion (per §911(d)(6)), and you cannot credit foreign tax on excluded income. Done correctly, hybrid often reduces US tax to zero while preserving FTC carryforward on any unused credit.
Common Decision Mistakes
(1) Auto-electing FEIE without modeling FTC — most expat tax software defaults to FEIE; high-earners in high-tax countries lose thousands. (2) Forgetting AMT — FEIE-excluded income still counts for AMT purposes in some cases. (3) Mixing FEIE and FTC on the same dollar — IRS disallows credit on excluded income; the software must allocate proportionally. (4) Ignoring carryforward — unused FTCs carry back 1 year and forward 10. (5) Spouse rules — each spouse with foreign earned income files their own Form 2555 separately. Always model both before checking the box on Form 2555 or 1116.
Last updated May 2026. Sources cited in tool output.