Every Tax Credit and Deduction for US Expats in 2026: The Complete List

Americans living abroad have access to tax benefits that most domestic taxpayers cannot claim — but they also lose access to some credits that domestic filers take for granted. The result is a unique landscape of exclusions, credits, and deductions that can reduce your US tax bill to zero in many cases. This guide catalogs every tax break available to US expats in 2026, organized by category, with the specific dollar amounts, forms, and eligibility requirements for each.

Income Exclusions

1. Foreign Earned Income Exclusion (FEIE) — $132,900

The cornerstone expat tax benefit. Exclude up to $132,900 of foreign earned income from US tax in 2026. Requires meeting the Physical Presence Test (330 days abroad in a 12-month period) or Bona Fide Residence Test (established residence in a foreign country for a full tax year). Applies only to earned income — not investment income, pensions, or Social Security. Claimed on Form 2555. For married couples where both qualify, the combined exclusion is $265,800.

2. Foreign Housing Exclusion — Variable by City

Exclude qualifying housing expenses above the base amount of $21,264 (16% of $132,900) for 2026. The IRS sets city-specific annual limits — for example, London ~$54,000, Tokyo ~$55,000, Hong Kong ~$114,000, Dubai ~$57,000, Singapore ~$56,000, Paris ~$58,000. Qualifying expenses include rent, utilities (not phone/TV), insurance, parking, and furniture rental. Does not include mortgage payments or home purchase costs. Claimed on Form 2555, Part VI.

Tax Credits

3. Foreign Tax Credit (FTC) — Dollar-for-Dollar

Claim a credit for income taxes paid to foreign governments. This is often more valuable than the FEIE for expats in high-tax countries (Canada, UK, Germany, France, Australia, Japan). Unlike the FEIE, the FTC applies to ALL types of income including investment income and capital gains. Excess credits can be carried back 1 year or forward 10 years. Claimed on Form 1116. Note: you cannot claim FTC on income excluded via FEIE — the two tools cover different income.

4. Child Tax Credit — $2,200 per Child

$2,200 per qualifying child under 17 for 2026 (increased from $2,000 under the OBBBA). The refundable portion (Additional Child Tax Credit) is up to $1,700. However, expats who use the FEIE may lose most of the refundable portion because the ACTC is calculated based on earned income that the IRS can "see" on your return — and the FEIE removes that income. If you have children, compare the FTC vs FEIE carefully: the FTC preserves your earned income for CTC purposes while the FEIE reduces it.

5. Earned Income Tax Credit — Generally NOT Available

The EITC (up to $7,830 for 3+ children in 2026) is NOT available to taxpayers with foreign earned income. If you claim the FEIE or have a foreign address, you are disqualified from the EITC. This is one of the credits expats lose by living abroad.

6. Education Credits

American Opportunity Tax Credit (AOTC): Up to $2,500 per student for the first 4 years of post-secondary education. Available to expats if the institution is eligible (many foreign universities qualify if they participate in US federal student aid). Lifetime Learning Credit: Up to $2,000 per return for any post-secondary education. Both phase out at higher incomes ($80K-$90K single, $160K-$180K MFJ for AOTC).

Deductions

7. Standard Deduction — $15,750 / $31,500

$15,750 for single filers, $31,500 for married filing jointly in 2026 (increased under OBBBA). Available to all expats. The standard deduction plus FEIE means a single expat can effectively earn $132,900 + $15,750 = $148,650 tax-free in 2026 (if all income is earned income).

8. Senior Deduction — $6,000 / $12,000

New under OBBBA: taxpayers age 65+ get an additional $6,000 deduction ($12,000 for married couples both 65+). Phases out above $75,000 AGI (single) or $150,000 (MFJ). This stacks on top of the standard deduction.

9. QBI Deduction (Section 199A) — Up to 20%

Self-employed expats and S-Corp owners can deduct up to 20% of Qualified Business Income. For a freelancer earning $100,000, that is a $20,000 deduction — saving $4,000-$7,000 in income tax. Phase-outs apply above $191,950 (single) / $383,900 (MFJ) for specified service trades (consulting, law, accounting, etc.). The QBI deduction does NOT reduce self-employment tax.

10. Self-Employment Tax Deduction — 50% of SE Tax

Deduct half of your self-employment tax from adjusted gross income. If your SE tax is $14,130, you deduct $7,065. This is an above-the-line deduction (reduces AGI) but does not reduce the SE tax itself — it only reduces income tax.

11. Health Insurance Deduction (Self-Employed) — 100%

Self-employed individuals can deduct 100% of health insurance premiums for themselves, spouse, and dependents. This includes international health insurance plans (Cigna Global, Aetna International, etc.) as long as the plan provides medical coverage. Above-the-line deduction.

12. Retirement Contributions

Available to expats even while living abroad:

• Traditional IRA: $7,000 ($8,000 if 50+). Tax-deductible if not covered by an employer plan.
• Roth IRA: $7,000 ($8,000 if 50+). Not deductible but grows tax-free. Note: if you use the FEIE to reduce taxable income below the contribution threshold, you may not be able to contribute.
• SEP-IRA: Up to 25% of net SE income, max $70,000 for 2026. Excellent for high-earning freelancers.
• Solo 401(k): $23,500 employee + 25% employer, max $70,000 ($77,500 if 50+).

13. Itemized Deductions (If Higher Than Standard)

If your itemized deductions exceed $15,750 (single) / $31,500 (MFJ), itemize instead. Key deductions for expats: state and local tax (SALT, capped at $40,000 under OBBBA — increased from $10,000), mortgage interest on US property, charitable contributions (to US 501(c)(3) organizations and certain Canadian/Mexican/Israeli charities under treaty), medical expenses above 7.5% of AGI, and investment interest expense.

Credits and Deductions Expats LOSE

• Earned Income Tax Credit (EITC): Not available with foreign earned income or foreign address
• Residential Energy Credits: Only for US properties you live in (not available for foreign homes)
• First-Time Homebuyer Credit: US property only
• Adoption Credit: Available but complex if adopting from abroad
• Roth IRA contributions: May be blocked if FEIE reduces taxable compensation below contribution limits