2026 FEIE Limit: $132,900 and the Rules to Qualify

The 2026 Foreign Earned Income Exclusion (FEIE) limit is $132,900, an increase of $2,900 from 2025. This is an exclusion of qualifying income, not a tax credit or a refund. The IRS annual exclusion guidance confirms the amounts and explains part-year proration.

Use the limit for the income's tax year

A 2025 return filed during 2026 still uses the 2025 limit. A qualifying period covering only part of 2026 can reduce the $132,900 maximum. The amount you exclude also cannot exceed your eligible foreign earned income.

Three eligibility questions come before the dollar amount

1. Is the income foreign earned income?

Wages and compensation for services performed abroad can qualify. The location where you perform the services generally controls, rather than the employer's country, payment currency or bank account. Track workdays during U.S. visits separately.

Interest, dividends, capital gains, pensions and Social Security are not foreign earned income. The exclusion also has special rules for business income and other compensation. See the IRS foreign earned income explanation.

2. Do you have a foreign tax home?

Your tax home generally follows the main area of your business or employment. When there is no regular main place of business, the IRS considers where you regularly live; an itinerant worker's tax home can follow the place of work. A U.S. abode can prevent a foreign tax home for FEIE purposes.

Remote work from abroad does not settle this automatically. The length and nature of the assignment, business base and personal ties matter. A visa, foreign bank account or tax-residency certificate is evidence, not an automatic qualification. See the IRS foreign tax-home rules.

3. Do you meet one of the two qualifying tests?

• Physical presence: At least 330 full days in one or more foreign countries within a qualifying period of 12 consecutive months. The days need not be consecutive. A full day runs from midnight to midnight; international waters do not count as a foreign country. See the physical presence test.
• Bona fide residence: A fact-based foreign residence for an uninterrupted period that includes an entire tax year. This test is available to U.S. citizens and certain resident aliens who are citizens or nationals of treaty countries. A residence permit alone does not establish it. See the bona fide residence test.

Meeting a day count does not replace the separate foreign-tax-home requirement. The FEIE guide covers these tests in more detail.

Housing and married-couple calculations

Qualifying foreign housing expenses may produce a housing exclusion for eligible employer-provided amounts or a housing deduction for eligible self-employment income. The calculation uses a base amount, an expense limit, qualifying days and any applicable high-cost locality limit. Do not assume all rent is deductible or that the entire housing amount is added to your FEIE benefit. Use the instructions and locality limits applicable to 2026 when preparing that year's Form 2555.

If both spouses independently qualify and each has sufficient eligible income, the combined 2026 FEIE maximum can be $265,800. Each spouse completes their own Form 2555. An unused amount from one spouse cannot shelter the other's earnings.

Self-employment tax is a separate calculation

The FEIE does not exclude earnings from U.S. self-employment tax. However, it is also inaccurate to apply a blanket 15.3% to every dollar of business profit. The Schedule SE calculation, Social Security wage base, other wages and Medicare rules affect the amount.

An applicable Social Security totalization agreement can assign coverage to one country and prevent dual contributions; documentation such as a certificate of coverage is important. Check the country and work arrangement rather than assuming every self-employed expat has the same result. See the IRS guidance for businesses abroad and self-employment tax explanation.

Compare the exclusion with the Foreign Tax Credit

A country's headline tax rate is not enough to decide between the FEIE and the Foreign Tax Credit. Compare income categories, foreign taxes actually eligible for credit, timing, carryovers, family credits and your existing elections.

Foreign tax attributable to excluded income cannot also be credited. The exclusion can affect the tax rate applied to remaining income. Filing Form 2555 also prevents claiming the refundable Additional Child Tax Credit. Revoking the exclusion election generally prevents re-election for the next five tax years without IRS approval. These interactions can matter more than the annual increase in the limit. See the Form 2555 instructions and IRS Foreign Tax Credit guidance.

Records to prepare for the 2026 return

Keep a travel calendar with full days and transit details, records of where services were performed, income statements, housing expenses, foreign-tax documents and prior Forms 2555/1116. Record changes in your work base and U.S. ties during the year.

The automatic two-month filing extension is conditional, not available simply because a filer identifies as an expat. Eligible taxpayers abroad must attach the required statement, and interest generally runs from the regular payment due date. Confirm the return-year deadlines and any extension needed using IRS guidance for citizens and resident aliens abroad.

Use the FEIE calculator for an initial estimate. For a return that compares eligibility, exclusions and credits, see expat tax filing or start an intake.