US tax incentives for expats and nomads: what really exists in 2026

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

Maybe you're a US citizen working from Mexico City, or a foreign founder eyeing a move to Miami. Either way, you want to know which US tax breaks actually exist for mobile people. After reading this, you'll know what you can claim in 2026 and what's a myth.

United States expat and digital nomad incentives in 2026: the key figures

Is this guide for you?

Read on if you…

• are a US citizen or green-card holder living and working abroad;
• are moving to the US and hoping for an expat tax break;
• are weighing Puerto Rico as a low-tax base inside the US system.

Probably not your case if you…

• are a foreign national who never sets foot in the US for work;
• want the full list of taxes rather than incentives – see specific taxes in the US.

Does the US offer a tax break to expats moving in?

Honestly? No. Unlike Portugal, Italy or the UK, the US has no reduced flat rate for newcomers. Once you're a resident alien – a non-citizen who's tax resident – you're taxed exactly like a citizen, on worldwide income.

You become resident by holding a green card or by passing the substantial presence test. That test counts all your days in the current year, a third of last year's days and a sixth of the year before's. Reach 183, with at least 31 this year, and you're resident. Details in tax residency in the US.

What newcomers can still use

• Dual-status year. In your arrival year, you're usually non-resident until your start date. Foreign income before arrival isn't taxed in the US.
• Closer connection exception. Under 183 days this year and a tax home abroad? File Form 8840 and stay non-resident.
• Exempt individuals. Students on F or J visas, and teachers or researchers on J visas, don't count their days for a limited period.
• Tax treaties. Many treaties cut US withholding on dividends and protect visiting researchers.

There's also no US digital nomad visa. A visitor visa or ESTA lets you attend meetings, not work for clients from a US base.

Which incentives exist for Americans abroad?

The US taxes citizens wherever they live. That's rare – only Eritrea does something similar. So the US built tools to limit double taxation.

Foreign earned income exclusion

The FEIE lets you exclude up to $132,900 of salary or self-employment income earned abroad in 2026. A married couple who both work abroad can exclude up to $265,800.

To qualify, your tax home – your main place of work – must be abroad. You must also pass one of two tests:

1. Physical presence test: 330 full days outside the US in any 12 consecutive months. Ideal for nomads.
2. Bona fide residence test: genuine residence abroad for a full calendar year. Better if you travel back often.

Foreign housing exclusion

On top of the FEIE, you can exclude rent and utilities above a base of $21,264. The normal cap is $39,870 a year. Expensive cities like London, Hong Kong or Zurich get much higher caps.

Foreign tax credit

Live in a country with higher tax than the US? The foreign tax credit is usually better. You subtract foreign income tax paid from your US tax. Unused credits carry forward 10 years. You can't claim both on the same income.

What these tools don't cover

Here's the catch. The FEIE does not remove self-employment tax. A freelancer abroad still pays 15.3% unless a social security agreement with the host country applies. Investment income isn't covered by the FEIE either.

Is Puerto Rico a real option?

Puerto Rico is a US territory with its own tax system. A US citizen who becomes a bona fide resident pays no federal income tax on Puerto Rico-source income.

Under Act 60, qualifying businesses pay 4% corporate tax on export services. Resident individual investors pay 0% Puerto Rico tax on capital gains accrued after moving. You must buy a home there within two years, pay a $5,000 yearly fee and donate $10,000 a year to local charities.

The regime is under reform, and new applicants may face different terms. The IRS also runs an active compliance campaign on Act 60 claims. You need a real move: the presence, tax home and closer connection tests all apply.

How do you claim the US expat incentives?

1. Check you're a US person. Citizens and green-card holders file, wherever they live.
2. Track your days. Keep travel records for the 330-day test from day one.
3. Pick FEIE or credit. Compare both each year; revoking the FEIE blocks it for 5 years.
4. File Form 1040 with Form 2555 (FEIE) or Form 1116 (credit).
5. Report foreign accounts. File an FBAR if your accounts total over $10,000 at any time in the year.
6. Plan your exit if you're leaving for good – see ceasing US tax residency.

Common mistakes (and what they cost)

• Thinking the FEIE is automatic → you must file a return and Form 2555; no return, no exclusion, plus failure-to-file penalties.
• Forgetting self-employment tax abroad → a 15.3% bill on profit, plus interest from 15 April.
• Counting partial days toward 330 → travel days don't count, and missing by one day loses the whole exclusion.
• Ignoring FBAR → non-wilful penalties of over $16,000 per year.
• Moving to Puerto Rico on paper only → the IRS reassesses federal tax on income it says was never Puerto Rico-source.

Frequently asked questions

Does the US have a tax regime for new residents or expats?

No. The US has no special regime for people moving there. Once you are tax resident, through a green card or the substantial presence test, you pay normal federal and state income tax on worldwide income. Your arrival year can be split into a non-resident and resident period, which keeps earlier foreign income outside US tax.

How much is the foreign earned income exclusion in 2026?

The FEIE is $132,900 per qualifying person for 2026. If both spouses work abroad and qualify, each can exclude up to that amount. It covers wages and self-employment income for work done abroad, not investment income. You claim it on Form 2555, and you must also meet the tax home test and either the physical presence or bona fide residence test.

Do US digital nomads still pay US taxes?

Yes. US citizens and green-card holders are taxed on worldwide income wherever they live. Digital nomads can often cut income tax to zero with the FEIE or the foreign tax credit, but they must still file a return each year. Self-employed nomads usually still owe self-employment tax unless a social security agreement applies.

Is there a US digital nomad visa?

No. The US does not offer a digital nomad or remote-work visa in 2026. Visitors on ESTA or a B visa can attend meetings but cannot work for a US base. Foreign remote workers who want to live in the US need a work or investor visa, and they become taxable on worldwide income once they are tax resident.

Is the FEIE or the foreign tax credit better?

It depends on the tax rate in your new country. In low-tax countries, the FEIE usually wins because it removes up to $132,900 of income. In higher-tax countries, the foreign tax credit often wipes out US tax completely and builds credits for later. The credit also keeps you eligible for the refundable child tax credit.

Does Puerto Rico still offer tax incentives in 2026?

Yes, but the rules are tightening. Act 60 still offers a 4% corporate rate for export service businesses and capital gains relief for resident investors. Reforms affect new applicants, so check the current terms before moving. You must become a genuine bona fide resident, with a tax home and closer connection to Puerto Rico.

Related guides

• Tax residency in the US: the presence tests
• How to obtain US tax residency, step by step
• Leaving the US for good
• Specific taxes in the US
• US tax landscape overview
• Expat incentives in Ireland, for comparison
• All country tax guides

Sources

• IRS – Foreign earned income exclusion
• IRS – U.S. citizens and resident aliens abroad
• IRS – Substantial presence test
• FinCEN – Report of Foreign Bank and Financial Accounts (FBAR)
• Social Security Administration – International programs
• Puerto Rico Department of Economic Development and Commerce

This guide is general information, not personalised tax advice. See how we research and review.