2025 Foreign Earned Income Exclusion Update

For U.S. taxpayers living and working abroad, the Foreign Earned Income Exclusion (FEIE) provides significant tax savings by allowing the exclusion of a portion of foreign wages or self-employment income.

2025 Exclusion Amount

• The foreign earned income exclusion increases to $130,000 (Up from $126,500 in 2024)

To qualify for the FEIE, taxpayers must meet either the bona fide residence test or the physical presence test, and their tax home must be in a foreign country.

Planning Tip: This exclusion can help reduce or eliminate U.S. income tax liability on foreign earnings, but it's important to maintain proper documentation and meet residency requirements.