Foreign Earned Income Tax Calculator

Foreign income taxation for US citizens is one of the most complex areas of international tax law. Unlike most other countries, the United States taxes its citizens and permanent residents on worldwide income, even income earned entirely in a foreign country, paid by a foreign employer, and never touching US soil.

Foreign Earned Income Exclusion (FEIE) formula:

US Taxable Foreign Income = Foreign Earned Income − FEIE Exclusion Amount

US Tax Owed = Tax on (Total Income − FEIE) calculated via "stacking method"

Foreign Tax Credit (FTC):

Net US Tax = US Tax Liability − Foreign Taxes Paid (limited to US rate)

Variable definitions:

• FEIE: Foreign Earned Income Exclusion, indexed for inflation every year. The calculator lets you pick the year, since expats routinely file late or amend a prior return:

• Stacking Method: the excluded income is not taxed, but your remaining income is taxed at the rates it would have faced had the exclusion never happened. The exclusion removes income from the bottom of the stack, not the top
• Foreign Tax Credit: a dollar-for-dollar credit for taxes paid to a foreign government, which stops the same income being taxed twice
• Bona Fide Residence Test: genuine residency established in a foreign country for an entire tax year
• Physical Presence Test: physically present in a foreign country for at least 330 full days in any consecutive 12-month period

Stacking is the part that surprises people. It is tempting to think that excluding $132,900 of a $185,000 salary leaves $52,100 taxed as though you earned $52,100, at 10% and 12%. It does not. Section 911(f) computes your tax on the full amount and then subtracts the tax that would have applied to the excluded portion alone, which means the money you still pay tax on sits in the 22% and 24% brackets rather than the bottom two.

The exclusion is still worth having, it just saves less than the headline number suggests. The calculator below shows the tax with and without it so you can see the real figure.

Worked example: An American expat earns $185,000 in Germany in 2026, with no other US income, filing single.

• FEIE exclusion: $132,900
• Standard deduction: $16,100, so taxable income is $168,900
• Tax on the whole $168,900: $33,134
• Tax on the excluded $132,900 taken alone: $24,494
• US tax after stacking: $8,640

That works out at 16.6% on the $52,100 that was not excluded, rather than the 11% or so it would have paid if the exclusion had simply lopped the income off the top. German income tax on a €170,000-ish salary comfortably exceeds $8,640, so the Foreign Tax Credit on Form 1116 would typically clear what is left. You cannot claim the FTC on income you already excluded under FEIE, only on the remainder.

FEIE qualification checklist:

• ☐ Have foreign earned income (wages, self-employment, freelance: not investments)
• ☐ Tax home is in a foreign country
• ☐ Meet either the Bona Fide Residence Test or Physical Presence Test
• ☐ File Form 2555 with your US tax return (Form 1040)

Key pitfalls:

• Self-employment income abroad still carries US self-employment tax at 15.3%, even when the FEIE removes it from income tax entirely. This is the single most expensive surprise for freelancing expats, and the exclusion does nothing about it. A totalization agreement with the country you live in is the only usual escape, and the US has them with about 30 countries
• The FEIE does not apply to passive income (interest, dividends, capital gains)
• Some US expats must also file FBAR (FinCEN 114) if foreign bank accounts exceed $10,000 at any point during the year
• FATCA reporting may be required for foreign financial assets above $50,000

This is a simplified overview. Expat taxation is highly fact-specific, so consult a qualified international tax professional for personalized advice.