What you need to know about the US exit tax

3 min
Published on: 23-11-2022 Last modified on: 18-03-2024

The US exit tax is the last thing you’ll pay for giving up your citizenship.

The US exit tax is a tax on capital gains for US citizens who are deemed to have renounced their citizenship. The tax is also known as the expatriation tax. The US exit tax was introduced in 2008, in response to the growing number of Americans renouncing their citizenship

The exit tax is a tax on the unrealized capital gains of U.S. citizens who give up their citizenship or green card

Who is subject to the American exit tax?

You may be subject to the American exit tax if you meet all the following criteria:

The tax applies to US citizens (US persons) with a net worth of $2 million or more or an annual income of $148,000 or more. It is levied on the capital gains that the person has accrued since they last paid tax in the US. 

The tax is controversial, with some arguing that it is unfair to tax people who are leaving the country and that it will only serve to further discourage citizens from staying in the US. Others argue that the tax is necessary to prevent wealthy citizens from avoiding tax by renouncing their citizenship. 

The US exit tax is complex and controversial, and its impact is yet to be fully seen. However, it is clear that the tax is designed to discourage wealthy citizens from leaving the country, and it may well have that effect.

How is the exit tax calculated?

The American exit tax is calculated by applying a special tax rate to your unrealized capital gains. The tax rate is currently 23.8%. 

When is the tax due?

The exit tax is due when you renounce your citizenship or give up your green card

Are there any exceptions?

Yes, these are. If you were born with two nationalities, you may not have to pay an exit tax/us expatriation tax. Please note: no rights can be derived from this content, please inquire about what applies to your situation.

Need more information about the US exit tax?

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother. When we heard about this 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 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 tax obligations.

If you have more questions about the exit tax and the US tax obligation, you can contact us at Americans Overseas.


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Frequently asked questions

Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.

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