Foreign Earned Income Exclusion Calculator

The Foreign Earned Income Exclusion (FEIE) lets U.S. citizens and resident aliens working abroad exclude up to $126,500 of foreign earned income from U.S. federal income tax in 2026 (IRS Rev. Proc. 2025-32). Add the foreign housing exclusion and a typical expat saves $25,000-$45,000 per year in U.S. tax — but only on earned income from foreign sources, and only if you qualify under the physical presence test or bona fide residence test.

Two Qualifying Tests

Physical Presence Test: present in a foreign country for at least 330 full days during any 12-month period. Travel days count as U.S. days if you're partly in the U.S. that day. Bona Fide Residence Test: established residency in a foreign country for an uninterrupted period that includes one full tax year. Subjective — requires intent to remain.

FEIE vs Foreign Tax Credit

You can only use one method per income source per year. FEIE wins: when your foreign country tax rate is low (Dubai 0%, Singapore 0-22%, Hong Kong 2-17%). FTC wins: when foreign tax rate is higher than U.S. rate (Germany 42-45%, Norway up to 47%) — FTC gives dollar-for-dollar credit plus a 10-year carryforward.

What FEIE Does NOT Cover

FEIE excludes ONLY foreign earned income — wages, self-employment income, professional fees. It does NOT exclude: U.S. wages, investment income (dividends, interest), capital gains, rental income, pension/social security distributions. Self-employed expats also owe SE tax (15.3%) regardless of FEIE.

Last updated May 2026. Sources: IRS FEIE Overview, IRS Form 2555, IRS Rev Proc 2025-32 (2026 limits).