The Foreign Earned Income Exclusion (FEIE) for the 2026 tax year is $132,900 per qualifying person, up from $130,000 in 2025 and $126,500 in 2024. That limit is inflation‑indexed and provided annually in IRS guidance; this applies separately to each taxpayer who qualifies under the FEIE rules.
2026 FEIE Amount (And What It Means)
For the 2026 tax year (returns filed in 2027), the FEIE allows you to exclude up to $132,900 of qualifying foreign earned income from U.S. federal income tax. Married couples where both spouses independently qualify for the FEIE can exclude up to $265,800 in combined foreign earned income ($132,900 each).
The exclusion is never more than your actual foreign earned income; if you earn less than $132,900 abroad, you can only exclude the amount you actually earned. You still must qualify under either the Physical Presence Test or the Bona Fide Residence Test and claim the exclusion on Form 2555; it is not automatic.
FEIE Limits Over The Years
Here’s how the FEIE limit has moved with inflation adjustments since the passage of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), showing the inflation adjustments that led to the 2026 number:
| Tax Year | Maximum FEIE per person | Notes |
|---|---|---|
| 2006 | $82,400 | Indexing adjusted under the TIPRA, with the FEIE limit increased from a planned $80,000 to $82,400. |
| 2007 | $85,700 | First post‑TIPRA inflation adjustment; exclusion set at $85,700. |
| 2008 | $87,600 | 2008 instructions. |
| 2009 | $91,400 | 2009 instructions. |
| 2010 | $91,500 | 2010 instructions. |
| 2011 | $92,900 | 2011 instructions. |
| 2012 | $95,100 | 2012 instructions. |
| 2013 | $97,600 | 2013 instructions. |
| 2014 | $99,200 | 2014 instructions. |
| 2015 | $100,800 | 2015 instructions. |
| 2016 | $101,300 | 2016 instructions. |
| 2017 | $102,100 | 2017 instructions. |
| 2018 | $103,900 | 2018 instructions. |
| 2019 | $105,900 | 2019 instructions. |
| 2020 | $107,600 | 2020 instructions. |
| 2021 | $108,700 | 2021 instructions. |
| 2022 | $112,000 | 2022 instructions. |
| 2023 | $120,000 | 2023 instructions. |
| 2024 | $126,500 | 2025 instructions. |
| 2025 | $130,000 | 2025 instructions. |
| 2026 | $132,900 | 2026 guidance. |
The FEIE limit is tied to annual inflation adjustments under Internal Revenue Code section 911, which is why it usually increases a bit each year. From 2025 to 2026, the jump from $130,000 to $132,900 reflects these inflation updates rather than a policy change.
How the 2026 Change Affects Your Taxes
For a single qualifying taxpayer earning entirely abroad, the higher 2026 limit means a bit more income can be fully excluded before any U.S. tax applies.
- If you earn $120,000 abroad in 2026, all of it can be excluded, just as in 2025, because your earnings are below the FEIE ceiling.
- If you earn $140,000 abroad in 2026, you can exclude $132,900, leaving $7,100 as taxable foreign earned income before considering the standard deduction or other items.
For married couples filing jointly where both spouses qualify, the combined limit of $265,800 in 2026 gives more room for two middle-class expats to stay fully or nearly fully covered by FEIE. If one spouse does not qualify, only the qualifying spouse’s income can be excluded, and the other spouse’s income remains fully taxable, stacking with the standard deduction and regular brackets.
Even when FEIE wipes out all your foreign earned income for U.S. tax purposes, you may still owe self‑employment tax on net earnings if you are self‑employed and not protected by a totalization agreement. FEIE also does not apply to passive income such as interest, dividends, or most rental income, which remain taxable and can instead be addressed with the Foreign Tax Credit where appropriate.
Key Qualification Rules
The 2026 changes are about the amount you can exclude, not who qualifies for the FEIE.
The core framework remains:
- You must have foreign earned income (salary, wages, bonuses, or self‑employment income from services performed while physically present or living in a foreign country).
- Your tax home must be in a foreign country, and you must pass either:
- the Physical Presence Test (330 full days in one or more foreign countries in a rolling 12‑month period), or
- the Bona Fide Residence Test (a full, uninterrupted tax year as a bona fide resident of a foreign country).
- You must file Form 2555 with your Form 1040 to claim FEIE; failing to file can mean losing the exclusion for that year.
Days in certain countries, notably Cuba in many situations, may not count toward FEIE eligibility due to U.S. sanctions, so you need to be careful if your travel pattern includes restricted destinations.
Track Your FEIE Eligibility
Precisely tracking your eligibility and being able to prove it is essential for claiming the FEIE. That’s where Nationly comes in, allowing you to easily track your locations in the background, export Form 2555‑ready, and an audit-ready report your tax pro can use. Download for iOS today.
