2024 Foreign Earned Income Exclusion
The 2024 Foreign Earned Income Exclusion is $126,500.
Effective 2024-01-01Source: Rev. Proc. 2023-34 (IRS)Verified 2026-09-02
Compared with 2023
| Item | 2023 | 2024 | Change |
|---|---|---|---|
| Exclusion amount | $120,000 | $126,500 | +$6,500 (+5.4%) |
Who it applies to
U.S. citizens and resident aliens who live and work abroad and qualify for the foreign earned income exclusion under Internal Revenue Code section 911.
What changed this year, and why
The IRS adjusted the foreign earned income exclusion amount for inflation for taxable years beginning in 2024.
Common questions
- What is the foreign earned income exclusion amount for 2024?
- For taxable years beginning in 2024, the foreign earned income exclusion under section 911(b)(2)(D)(i) is $126,500.
- What does the foreign earned income exclusion do?
- It allows qualifying U.S. citizens and resident aliens living and working abroad to exclude from their gross income up to the stated amount of foreign earned income for the year.
Every amount on this page is a published figure rather than yours. The Foreign earned income exclusion headroom takes the number you enter and works it out against them, showing which published figure it used.
Your tax home has to be in a foreign country
To qualify for the foreign earned income exclusion, you must have a tax home in a foreign country. Your tax home is generally your principal place of business, employment, or post of duty. This requirement applies regardless of where you maintain your family home. If your tax home remains in the United States, you cannot claim the exclusion even if you spend significant time working abroad. The tax home must be in a foreign country throughout your period of bona fide residence or physical presence. This requirement ensures that the tax benefit applies to individuals who have genuinely shifted their work and living arrangements to another country, not those who maintain their primary work location in the United States while traveling or temporarily working overseas.
1. Tax home. You must have a tax home in a foreign country (or countries). Generally, your tax home is your principal place of business, employment, or post of duty, regardless of where you maintain your family home.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
The bona fide residence test
The bona fide residence test requires you to be a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. If you file on a calendar-year basis, that means you must be a bona fide resident from January 1 through December 31. To qualify, you must show that you entered the foreign country intending to remain there for an indefinite or prolonged period and that you are making your home there. The IRS looks at factors such as the type of housing you occupy, whether your family accompanied you, your visa type, and your employment agreement. The requirement of an uninterrupted period refers to the continuity of your residence status, not to physical presence; you may take brief trips outside the country during that time, provided you clearly intend to return to your foreign home without unreasonable delay. U.S. citizens may use this test; resident aliens may use it only if they are citizens or nationals of a country that has an income tax treaty with the United States.
a person must be a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
330 full days in any 12 months
The physical presence test is an alternative to the bona fide residence test for qualifying for the foreign earned income exclusion. Under this test, you must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. The 330 days do not need to be consecutive; you can accumulate them over the 12-month period. Unlike the bona fide residence test, the physical presence test focuses solely on how long you stay in a foreign country. It does not depend on the type of residence you establish, your intentions about returning to the United States, or the nature and purpose of your stay abroad. This makes it a more mechanical test that is easier to apply in some cases. The 12-month period can begin on any day, not necessarily January 1, and it does not have to align with the calendar year or your tax year.
U.S. citizens and res- ident aliens must be physically present in a foreign country (or countries) for 330 full days during a period of 12 con- secutive months.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
The separate foreign housing exclusion
In addition to the foreign earned income exclusion, you may claim a separate housing exclusion or housing deduction. The housing exclusion applies to amounts considered paid with employer-provided income, while the housing deduction applies to amounts paid with self-employment earnings. You must have a tax home in a foreign country and qualify under either the bona fide residence test or the physical presence test to claim either benefit. The total amount you can exclude and deduct for housing is limited by a ceiling based on your foreign location and reduced by a base housing amount. Both the ceiling and the base amount are determined annually by the IRS and may differ from the exclusion of up to $126,500 for earned income. You claim the housing exclusion or deduction on Form 2555, filed with your federal income tax return. The housing benefit is separate from the earned income exclusion and does not reduce the amount of earned income you may exclude.
In addition to the foreign earned income exclusion, you can also claim an exclusion and/or a deduction from gross income for your housing amount if your tax home is in a foreign country and you qualify for the exclusions and de- duction under either the bona fide residence test or the physical presence test.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
The election sticks until you revoke it
Once you choose the foreign earned income exclusion election or the foreign housing exclusion election, that choice remains in effect for that year and all later years unless you revoke it. This means you must make the same choice in each subsequent year. If you fail to make the choice in a later year, the IRS treats that omission as a revocation of your election. Once you revoke, you cannot claim the exclusion again for a specified period without IRS approval. This rule ensures consistency in how you treat your foreign income from year to year. If you are uncertain whether to claim the exclusion in a particular year - for example, because you have a net loss from self-employment - you should consider the long-term consequences, since revoking locks you out of the benefit for a number of years. You make or revoke the election by filing Form 2555 with your income tax return or amended return.
Once you choose the foreign earned income exclusion election or foreign housing exclusion election, that choice remains in effect for that year and all later years unless you revoke it.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
What kind of income the exclusion actually covers
For the 2024 tax year, the foreign earned income exclusion covers only income from the performance of personal services abroad - that is, wages and salaries from employment, plus net earnings from self-employment. Investment income such as dividends, interest, and capital gains does not qualify, even if you are physically present in a foreign country when you receive it. Likewise, amounts paid by the United States or its agencies to their employees are not treated as foreign earned income. The $126,500 cap applies to the total of this qualifying earned income; you cannot use the exclusion to shelter passive or investment receipts, no matter how large they are.
No. The only income that is foreign earned income is in- come from the performance of personal services abroad. Investment income isn’t earned income.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
Not meeting a test for the whole year shrinks the exclusion
For the 2024 tax year, the maximum foreign earned income exclusion is $126,500. However, if you did not meet either the bona fide residence test or the physical presence test for the entire year, you must reduce that maximum. The exclusion is prorated based on the number of days during the year that you satisfied one of the tests. For example, if you qualified for only half the year, your maximum exclusion would be roughly half of the full $126,500 amount. This prevents a taxpayer from claiming the full annual exclusion when their period of qualifying status covers only part of the year.
If you didn’t meet either of these tests for your entire tax year, you must prorate the maximum ex- clusion based on the number of days that you did meet ei- ther test during the year.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
Room you do not use does not carry to another year
For the 2024 tax year, the foreign earned income exclusion cannot exceed the lesser of two amounts: $126,500, or your foreign earned income for the year minus your foreign housing exclusion. This means the exclusion is capped at what you actually earned abroad after subtracting any housing costs you have already excluded. Any unused portion of the $126,500 limit does not carry forward to a later year; if your foreign earned income is less than the limit in a given year, the difference is simply lost.
You cannot exclude more than the smaller of: • $126,500, or • Your foreign earned income for the tax year minus your foreign housing exclusion (discussed later).
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
Revoking the choice bars you from re-electing for 5 years without IRS approval
A taxpayer who has previously chosen the foreign earned income exclusion and then revoked that choice faces a significant restriction. If, within 5 years after the revocation, the taxpayer wishes to re-elect the same exclusion, they must obtain advance approval from the IRS. This is done by requesting a ruling from the IRS, which can be submitted by fax, encrypted email, or mail. The requirement serves as a deterrent against repeatedly switching the exclusion on and off and ensures that any re-election within the five-year window receives IRS scrutiny before it takes effect.
If you revoked a choice and within 5 years again wish to choose the same exclusion, you must apply for IRS appro- val.
Publication 54 (2024), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2023-34 (IRS)
- Exclusion amount
.39 Foreign Earned Income Exclusion. For taxable years beginning in 2024, the foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $126,500.