United States · Tax regime
US Citizenship-Based Taxation and the §877A Expatriation Regime
Unchanged in substance for 2026 — the OBBBA (PL 119-21, 4 July 2025) did not touch §877A. The 2026 inflation adjustments come from Rev. Proc. 2025-32 (IR-2025-103, 9 October 2025). VERIFIED 2026 figures: the §877A(a)(3) mark-to-market exclusion is USD 910,000 (up from USD 890,000 in 2025), and the §877(a)(2)(A) average annual net income tax test is USD 211,000 for expatriations in 2026 (up from USD 206,000 in 2025). The net worth test remains USD 2,000,000 and is NOT indexed — it has been USD 2M since 2008 and has lost roughly half its real value. Separately, the State Department cut the Certificate of Loss of Nationality fee from USD 2,350 to USD 450, effective 13 April 2026.
This, not the visa, is the UHNW story in the United States. The USD 2M net worth test is not indexed and is met by essentially every client this site serves, so the only live questions are the 5-year certification, the dual-national-from-birth exception, and — for green card holders — whether you cross 8 years. A family that spends 8 of 15 years on a green card and then leaves is taxed as if they had renounced citizenship they never held.
The facts
- Total landed cost
- USD 450 consular fee from 13 April 2026 (was USD 2,350) — trivial next to the tax. The real cost is up to 23.8% federal on unrealised worldwide gains above USD 910,000, plus 30% withholding on deferred compensation and the full value of non-grantor trust interests and specified tax-deferred accounts.
- Timeline
- 3–24 months — Consular appointment waits vary by post; Form 8854 is due with the dual-status return for the year of expatriation, and pre-expatriation restructuring realistically takes 12–24 months
- Physical presence
- Applies wherever you live — that is the point of citizenship-based taxation
- Family
- each individual is tested separately — one spouse can be a covered expatriate and the other not; the USD 2M net worth test is applied per person, which makes inter-spousal planning central
- Permanent residency
- n/a
- Citizenship
- n/a
- Language test
- n/a
- Dual citizenship
- Permitted
- Requirements
- covered expatriate if ANY of: net worth ≥ USD 2,000,000 on the expatriation date; average annual net income tax for the 5 years ending before expatriation > USD 211,000 (2026 expatriations); or failure to certify 5 years of federal tax compliance on Form 8854Form 8854 (Initial and Annual Expatriation Information Statement) must be filed for the year of expatriationmark-to-market deemed sale of worldwide assets the day before expatriation, with a USD 910,000 exclusion for 2026exceptions: dual national from birth (§877A(g)(1)(B)) and certain minors who expatriate before age 18½ — both subject to the 10-of-15-year residence limit and the 5-year certification
- The USD 2,000,000 net worth test has never been indexed for inflation. Almost every UHNW expatriate is a covered expatriate on this test alone, regardless of the USD 211,000 income test.
- The 5-year certification is an independent trap: failing to certify on Form 8854 that you complied with all federal tax obligations for the five preceding years makes you a covered expatriate even if you are penniless. Unfiled FBARs, Forms 5471, 3520 or 8938 will do it.
- The 8-of-15-year long-term-resident trap catches green card holders. Any part of a calendar year in which you held a green card counts as a full year. Cross into year 8 and filing Form I-407 becomes a full §877A expatriation event. If you have held a green card in 7 or more tax years, run the exit-tax screen BEFORE filing I-407.
- Letting a green card expire, or simply moving away, does not end US tax residency. Only a formal I-407 or a judicial/administrative determination does — and abandonment can be treated as effective on the date of the affirmative act, not the date you left.
- The dual-national-from-birth exception under §877A(g)(1)(B) is narrower than it is marketed. All four conditions must hold: you became a citizen of the US AND another country at birth; you are STILL a citizen of that other country on the expatriation date; you are taxed AS A RESIDENT of that other country; and you have been a US resident for no more than 10 of the 15 taxable years ending with the year of expatriation. The 5-year certification requirement still applies on top. A dual national at birth who moved to the US as a child and stayed will fail the 10-of-15 limb.
- Section 2801 imposes a transfer tax on US persons who RECEIVE gifts or bequests from a covered expatriate — at the highest estate tax rate, payable by the recipient. Expatriating does not protect US-resident children; it taxes them.
- Deferred compensation, specified tax-deferred accounts and non-grantor trust interests are not covered by the USD 910,000 exclusion. They are handled under separate, harsher rules.
- The USA is not a CRS participant but does operate FATCA, which is one-directional: US persons' foreign accounts are reported to the IRS by foreign financial institutions worldwide, while the US reciprocates only partially. Expect account closures and onboarding refusals abroad purely for holding a US birthplace.
- The Residence-Based Taxation for Americans Abroad Act (LaHood) has still NOT been reintroduced in the 119th Congress as of mid-2026, has no JCT score, would need 60 Senate votes (the Byrd Rule blocks reconciliation), and would not take effect before 2027 at the earliest. It also contemplates its own one-time departure tax for high-net-worth electors. Do not plan around it.
- The renunciation fee cut to USD 450 from 13 April 2026 changes nothing about the tax. It lowers the ticket price at the door, not the bill inside.