What Trump’s Latest Tax Bill Means for Americans Living Abroad

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President Donald Trump’s One Big Beautiful Bill (OBBB) has several tax provisions that impact Americans residing in the United States. But what does it mean for Americans living abroad?

If you live overseas and file U.S. taxes, you’ll want to pay close attention to some of the changes. There are provisions related to the taxation of foreign income, a new tax on certain transfers of money, provisions for business owners and overall individual tax provisions, according to Lisa Greene-Lewis, tax expert and spokesperson at TurboTax.

She and Chad Cummings, attorney and CPA at Cummings & Cummings Law, broke down what changes — or lack thereof — will affect expats whose finances are anything but simple.

Increased Risks and Higher Taxes

For expats who operate a business abroad, “The new law renames and reforms key international tax provisions, raising the risk of exposure,” Cummings said.

In plain terms, the act:

• Sets a flat 14% tax rate on certain income from foreign companies
• Eliminates an exemption that used to shield earnings tied to physical assets
• Cuts back how much foreign tax can offset U.S. tax

Business-owning expats can expect higher taxes, more reporting requirements and fewer ways to reduce their U.S. tax bill.

Reassess Your Business Structure

The OBBB provisions make it a good time for expats to take a closer look at how they operate their businesses, as well.

“U.S. persons abroad should act now to reassess entity structures, confirm reporting accuracy and re-optimize income flows,” Cummings said.

In everyday terms, that means expats should:

• Check their business setup: Some foreign companies may now fall under tougher Controlled Foreign Corporation (CFC) rules that create new U.S. tax risks.
• Work with a cross-border tax advisor: A professional can help spot risks and suggest fixes.
• Review retirement and investments: Strategies that once saved money may now trigger higher taxes.
• Stay on top of reporting: Expats must file the Foreign Bank Account Report (FBAR) and the Foreign Account Tax Compliance Act (FATCA) forms every year.
• Fix past mistakes: If something was missed or filed incorrectly, the IRS has programs that let expats correct it before penalties pile up.

This Tax Credit May Have Less Impact

Two tax provisions “remain structurally intact but provide no new relief,” including the foreign earned income exclusion (FEIE) and the foreign tax credit, Cummings said.

The FEIE cap remains at about $130,000 for 2025 with no adjustment for inflation or expanded eligibility. While Americans abroad can still use the foreign tax credit, recent changes make it harder to fully offset U.S. taxes.

For expats in low- or no-tax countries, this could mean owing extra U.S. tax even after paying local taxes. It may also mean not receiving a break from the Net Investment Income Tax on dividends, interest or capital gains, he explained.

Retirement Plan Mismatches

If expats were hoping for retirement enhancements, they’ll be disappointed.

“The bill introduces no enhancements for retirement account parity and may complicate cross-border planning,” Cummings said. In practice, that means no new rules to make Roth IRA or 401(k) participation easier for Americans abroad and no recognition of foreign pension plans.

Without portability or deferral options, expats contributing to local retirement systems may face “mismatches” between U.S. and host-country tax rules, especially in countries that only tax pensions when funds are withdrawn.

Expect More Paperwork

Some of the OBBB’s provisions may require more documentation and effort for expats, Greene-Lewis said.

“For instance, the new 1% remittance tax on money transferred from the U.S. via cash, money orders and ACH may require an expat to change their method of transferring money if they want to avoid the new tax.”

She urged expats to make sure they’re set up to transfer via bank accounts, credit cards or debit cards versus cash, money orders and ACH to avoid these taxes.

Additionally, the new provision that cuts the deduction percentage for Global Intangible Low-Taxed Income (GILTI) after Dec. 31, 2025, may require a more involved tax return.

Keep Receipts and Update Withholding

Changes in both individual and business tax provisions mean it’s more important than ever to keep receipts and records of expenses that may be deductible under the new bill, Greene-Lewis emphasized.

“[You] will need to file a tax return regardless of living abroad and you may be eligible for deductions and credits.”

It’s also a good time to update your tax withholdings on U.S. income or pay estimated taxes if you think you will owe $1,000 or more, she advised.

For Anyone Planning To Move Abroad

For anyone planning to move overseas, remember that the U.S. taxes all income earned in the U.S. plus foreign income.

You will have the chance to claim either the foreign tax credit or the increased foreign earned income exclusion to avoid double taxation — but not both. Work with a financial advisor to determine which option will provide the biggest benefit.

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