One Big Beautiful Bill Act offers no relief for Americans Overseas

On May 22, 2025, the so-called One Big Beautiful Bill Act (OBBBA) was narrowly passed by the U.S. House of Representatives. The extensive bill — now under consideration in the Senate — contains a wide range of fiscal and economic reforms. However, for Americans living abroad, this legislation offers no improvement. On the contrary: existing rules on tax obligations and the reporting of foreign bank accounts remain unchanged.

What does the One Big Beautiful Bill Act include?

Passed with a slim majority in the House on May 22, 2025, the bill is currently being reviewed in the Senate, where changes may still be made. The legislation is a broad fiscal and economic reform package aimed at tax cuts, deregulation, energy policy, and rolling back measures introduced under previous Democratic leadership.

Key elements for Americans abroad:

• Extension of the TCJA: The lowered individual and corporate tax rates introduced in the 2017 Tax Cuts and Jobs Act will become permanent.

• No change to citizenship-based taxation (CBT): The system under which U.S. citizens are taxed regardless of their country of residence remains in place.

• No easing of FATCA and FBAR: Foreign bank account reporting requirements remain fully intact, including the risk of steep penalties for non-compliance.

No relief for Americans living outside the U.S.

For Americans residing overseas, the bill brings no relief. While tax cuts are made permanent for those in the U.S., the burdensome system of citizenship-based taxation is left untouched. U.S. citizens remain fully liable for U.S. taxes, even if they live and work entirely abroad.

Other key issues remain unchanged as well. The reporting obligations under FATCA and FBAR continue to apply. Americans with foreign bank accounts must still report them, and the penalties for errors or omissions remain severe.

• In short: the bill reinforces the existing policy for Americans overseas and fails to address the long-standing tax and administrative burdens they face.

What does this mean for Residence-Based Taxation?

Hope for reform rested on a different bill: the Residence-Based Taxation for Americans Abroad Act (H.R. 10468), introduced by Representative Darin LaHood on December 18, 2024. That proposal aimed to fundamentally change the U.S. tax system for Americans living abroad by shifting from taxation based on citizenship to a system based on residency.

However, the bill did not pass before the end of the 118th Congress and officially expired on January 3, 2025, with the start of the 119th Congress. As a result, a major opportunity for structural relief for Americans Overseas has been postponed — for now.

Get informed at Americans Overseas

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your American tax obligations.

Contact us for more information