United States · Tax regime
US Citizenship-Based Taxation and the §877A Expatriation Regime
Open
Last verified July 2026
The substance is unchanged 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. 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 held at 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 real UHNW story in the United States. The USD 2M net worth test has never been indexed for inflation, and it catches almost every client this site serves. The only real 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 though they had renounced a citizenship they never held.
The facts
- Total landed cost
- The consular fee drops to USD 450 from 13 April 2026, down from USD 2,350. That is trivial next to the tax. The real cost is up to 23.8% federal tax on unrealised worldwide gains above USD 910,000, plus 30% withholding on deferred compensation and on the full value of non-grantor trust interests and specified tax-deferred accounts.
- Route type
- Tax regime, not a visa
- Timeline
- 3–24 months (Consular appointment waits vary by post. Form 8854 is due with the dual-status return for the year of expatriation. Pre-expatriation restructuring realistically takes 12–24 months.)
- Physical presence
- This 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 while the other is not. The USD 2M net worth test applies per person, which makes planning between spouses central
- Permanent residency
- Not applicable
- Citizenship
- Not applicable
- Language test
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- You count as a covered expatriate if any one of these applies. Your net worth reaches USD 2,000,000 or more on the expatriation date. Your average annual net income tax for the 5 years ending before expatriation exceeds USD 211,000, for 2026 expatriations. Or you fail to certify 5 years of federal tax compliance on Form 8854.You must file Form 8854, the Initial and Annual Expatriation Information Statement, for the year you expatriate.The rule treats you as if you sold all your worldwide assets the day before expatriation, marking them to market. For 2026, USD 910,000 of the gain is excluded.Exceptions apply for dual nationals from birth (§877A(g)(1)(B)) and for certain minors who expatriate before age 18½. Both are still subject to the 10-of-15-year residence limit and the 5-year certification.
What can go wrong
- The USD 2,000,000 net worth test has never been adjusted for inflation. It alone makes almost every UHNW expatriate a covered expatriate, regardless of the USD 211,000 income test.
- The 5-year certification is a separate trap. If you fail to certify on Form 8854 that you complied with all federal tax obligations for the five preceding years, you become a covered expatriate even if you have no assets left. Unfiled FBARs, or Forms 5471, 3520 or 8938, are enough to trigger it.
- The 8-of-15-year long-term-resident rule catches green card holders off guard. Any part of a calendar year in which you held a green card counts as a full year. Once you cross into year 8, 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 you file I-407.
- Letting a green card expire, or simply moving away, does not end US tax residency. Only a formal I-407 filing, or a judicial or administrative determination, does that. Abandonment can be treated as effective on the date of that formal act, not the date you actually left.
- The dual-national-from-birth exception under §877A(g)(1)(B) is narrower than it sounds in the marketing. All four conditions have to 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. On top of that, the 5-year certification requirement still applies. A dual national at birth who moved to the US as a child and stayed will fail the 10-of-15 test.
- Section 2801 places 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 shield US-resident children from this. It taxes them directly.
- Deferred compensation, specified tax-deferred accounts and non-grantor trust interests fall outside the USD 910,000 exclusion. They are handled under their own, harsher set of rules.
- The USA does not take part in CRS, but it does run FATCA, and FATCA runs one way. Foreign financial institutions around the world report US persons' foreign accounts to the IRS, while the US reciprocates only partially. Expect account closures and onboarding refusals abroad, simply for holding a US birthplace.
- The Residence-Based Taxation for Americans Abroad Act, known as the LaHood bill, still has not been reintroduced in the 119th Congress as of mid-2026. It has no JCT score. It would need 60 Senate votes, since the Byrd Rule blocks reconciliation. And it would not take effect before 2027 at the earliest. It also includes 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.