Foreign Earned Income Exclusion (FEIE) Guide for 2026

A plain-English overview for Americans abroad, built from current IRS guidance. Use it to understand the issue before deciding whether to self-file or hire specialist help.

2025 and 2026 exclusion limits

The IRS states that the maximum FEIE is $130,000 per qualifying person for tax year 2025 and $132,900 for tax year 2026. The exclusion is limited to qualifying foreign earned income and can be prorated for a partial qualifying period.

You must qualify

Claiming FEIE requires more than simply living overseas. Eligibility generally turns on having a foreign tax home and meeting either the bona fide residence test or physical presence test, plus the detailed rules in Form 2555 and Publication 54.

Excluded income still gets reported

A common mistake is assuming excluded income does not belong on the U.S. return. The IRS specifically notes that qualifying income must be reported and the exclusion claimed on the return.

FEIE vs Foreign Tax Credit

The Foreign Tax Credit can be more useful in higher-tax countries or when preserving certain credits and future planning flexibility, while FEIE can fit other fact patterns. The arithmetic and long-term implications should be compared rather than assuming one is always better.