2026 Foreign Earned Income Exclusion
The 2026 Foreign Earned Income Exclusion is $132,900.
Effective 2026-01-01Source: Rev. Proc. 2025-32 (IRS)Verified 2026-09-01
Compared with 2025
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Exclusion amount | $130,000 | $132,900 | +$2,900 (+2.2%) |
Who it applies to
The exclusion is available to an individual with income earned abroad who meets the qualifying conditions in § 911, conditions Rev. Proc. 2025-32 cites but does not restate. What the revenue procedure fixes is the ceiling for taxable years beginning in 2026: $132,900. Foreign earned income above that figure is not reached by this provision. The revenue procedure states no separate amount for a joint return, no larger amount for any category of taxpayer, and no foreign housing amount beside it. Because the item is stated for taxable years beginning in 2026 and is not on the list governed by the revenue procedure's calendar year rule, an individual whose taxable year is not the calendar year applies $132,900 to the taxable year that begins in 2026.
What changed this year, and why
The foreign earned income exclusion amount under § 911 goes from $130,000 for the prior year to $132,900 for taxable years beginning in 2026. That is the only change Rev. Proc. 2025-32 makes to the item: it adjusts the ceiling and says nothing further about § 911, leaving the qualifying tests, the meaning of foreign earned income and every other element to the Code. The adjustment is generally determined by reference to § 1(f), and the amount is stated for the Code as in effect on October 9, 2025.
Common questions
- What is the foreign earned income exclusion for 2026?
- It is $132,900 for taxable years beginning in 2026. Rev. Proc. 2025-32 states that figure as the foreign earned income exclusion amount under § 911. The revenue procedure sets the ceiling only, so how much of it an individual can actually exclude depends on meeting the qualifying rules in § 911 and on how much foreign earned income there is for the year.
- How much did the foreign earned income exclusion go up for 2026?
- It moved from $130,000 for the prior year to $132,900 for taxable years beginning in 2026. That is the annual inflation adjustment, which Rev. Proc. 2025-32 states is generally determined by reference to § 1(f). Nothing else about the provision changed in the revenue procedure: the item still consists of a single exclusion amount under § 911 with no additional conditions attached.
- What happens to foreign income above $132,900?
- It sits outside the exclusion. Rev. Proc. 2025-32 fixes $132,900 as the foreign earned income exclusion amount under § 911 for taxable years beginning in 2026, which makes it a ceiling on what the exclusion can cover rather than a point at which anything begins. The revenue procedure does not describe the treatment of income above the ceiling; that comes from the Code.
- Who qualifies for the foreign earned income exclusion in 2026?
- Rev. Proc. 2025-32 does not set the test. It states the inflation-adjusted amount, $132,900 under § 911 for taxable years beginning in 2026, and leaves eligibility to that Code section. Someone checking whether they qualify needs § 911 itself; this revenue procedure is confined to the annual dollar figure and does not restate the conditions an individual has to satisfy.
- Is the $132,900 exclusion per person or per return?
- Rev. Proc. 2025-32 states one foreign earned income exclusion amount under § 911 for taxable years beginning in 2026 and does not break it out by filing status. There is no separate joint figure in the revenue procedure. How the amount works where both spouses have foreign earned income is a question for § 911 rather than for this annual adjustment.
- Does the 2026 exclusion cover foreign housing costs?
- The revenue procedure states no housing amount. Its foreign earned income exclusion item gives a single figure, $132,900 under § 911 for taxable years beginning in 2026, and adds nothing else. Any housing element of § 911 is neither adjusted nor described here, so $132,900 should be read as the exclusion amount by itself rather than as a combined income and housing allowance.
- Which tax year does the $132,900 exclusion apply to?
- Taxable years beginning in 2026. Rev. Proc. 2025-32 states in its effective date section that its 2026 adjusted items apply to taxable years beginning in 2026, and reserves a calendar year rule for a listed group of items that does not include the foreign earned income exclusion. So the figure attaches to the taxable year beginning in 2026, not to a calendar year abroad.
- Where does the 2026 foreign earned income exclusion amount come from?
- From the foreign earned income exclusion section of Rev. Proc. 2025-32, which modifies Rev. Proc. 2024-40 and states inflation-adjusted items for 2026 for the Code as in effect on October 9, 2025. That section gives the amount under § 911 as $132,900. The revenue procedure notes that amendments enacted after that date may call for additional guidance.
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 claim 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, regardless of where you maintain your family home. This means that even if your family continues to live in the United States, your tax home can still be considered to be in a foreign country if that is where you primarily work. The tax home requirement is separate from the other eligibility tests - you must also live in or be present in a foreign country, have foreign earned income from personal services performed there, and meet either the bona fide residence test or the physical presence test. If your tax home is not in a foreign country, you cannot qualify for the $132,900 exclusion, no matter how many days you spend abroad or how long you have lived overseas.
To claim the foreign earned income exclusion, the foreign housing exclusion, and/or the foreign housing deduction, you must meet the following requirements. 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 (2025), 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. This test is only available to U.S. citizens and U.S. resident aliens who are citizens or nationals of countries with which the United States has an income tax treaty in effect. You do not automatically become a bona fide resident just by living abroad for one year - the nature and quality of your residence matters. The test looks at factors like your intention, the type of housing you maintain, whether you participate in the community, and your ties to the foreign country. If you meet this test, you can claim the foreign earned income exclusion of $132,900 for that tax year, along with the foreign housing exclusion if applicable.
a. Bona fide residence. You must be a bona fide resident of a foreign country (or countries) for an uninterrupted pe- riod that includes an entire tax year. You use the bona fide residence test only if you are either: • a U.S. citizen, or • a U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.
Publication 54 (2025), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
330 full days in any 12 months
The physical presence test requires you to be physically present in a foreign country or countries for 330 full days during any period of 12 consecutive months. The 330 days do not have to be consecutive - you can leave and return to the foreign country, as long as you accumulate enough full days within the 12-month period. Unlike the bona fide residence test, the physical presence test does not require you to establish residence or demonstrate intent to remain abroad. It is based solely on how long you actually stay in a foreign country. The test is available to all U.S. citizens and resident aliens who meet the other requirements, including having a tax home in a foreign country. If you meet this test, you can claim the foreign earned income exclusion of $132,900 for the qualifying period.
Alternatively, 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. The 330 days don’t have to be consecu- tive.
Publication 54 (2025), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
The separate foreign housing exclusion
The foreign housing exclusion allows you to exclude a limited amount of income used for housing expenses from U.S. tax. This is separate from the foreign earned income exclusion and provides an additional benefit for taxpayers living abroad. You can either deduct part of your housing expenses from your income or treat a limited amount of income used for housing expenses as not taxable by the United States. To qualify for either the foreign earned income exclusion or the foreign housing exclusion, you must have a tax home in a foreign country, earn income from personal services performed in a foreign country, and meet either the physical presence or bona fide residence test. The housing exclusion amount is limited and depends on your foreign earned income and the location of your tax home. For 2026, the foreign earned income exclusion is $132,900, and the housing exclusion provides additional tax relief on top of that amount.
These ben- efits are called the foreign earned income exclusion and the foreign housing deduction and exclusion. To qualify, you must have a tax home in a foreign coun- try, earn income from personal services performed in a foreign country, and meet either the physical presence or bona fide residence test.
Publication 54 (2025), Tax Guide for U.S. Citizens and Resident Aliens Abroad (IRS)
The election sticks until you revoke it
The federal foreign earned income exclusion is not a one-time formality that you renew every year. Once you elect the exclusion on Form 2555 with your return, that election continues automatically for that year and every later year until you revoke it. Because the election stays in place, you must make the same choice in each subsequent year; if you decide to claim the foreign tax credit, the additional child tax credit, or the earned income credit instead, the IRS treats that inconsistent choice as a revocation of the exclusion election for that year. You do not need to file a formal revocation if you simply have no foreign earned income or foreign housing costs for the year. You can revoke by attaching a statement to your return or amended return for the first year you no longer wish to claim the exclusion, specifying which choice you are revoking. If you do revoke the election and then want to elect the exclusion again in a later year, you must apply for IRS approval by requesting a ruling from the Associate Chief Counsel (International). The IRS may consider facts such as a period of U.S. residence, a move to a country with different tax rates, a substantial change in the foreign country's tax laws, or a change of employer when deciding whether to allow you to re-elect.
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. This means you must make the same choice in a subsequent year. Otherwise, it will be considered as a revocation of your foreign earned income exclusion elec- tion or foreign housing exclusion election for that year.
Publication 54 (2025), 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. 2025-32 (IRS)
- Exclusion amount
For taxable years beginning in 2026, the foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $132,900.