More Expats Want To Give Up U.S. Citizenship – But What About Taxes?

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American expatriates are more willing than ever to leave the U.S. behind permanently. Many may not realize the potentially heavy tax hit of doing so.

America’s infamous (and deepening) political polarization has long fueled U.S. expatriates’ desire to renounce citizenship and say goodbye to their native country. Lately that notion seems to be becoming more popular.

A recent survey reveals that almost half (49%) of American expats are “seriously considering” renouncing their U.S. citizenship, up from 30% last year. “Political frustration, financial burdens and a sense that America has lost its global standing are driving citizens to contemplate the ultimate breakup with their homeland,” according to The 2025 Expat Trends Survey.

Intensifying since November

The 2024 election results deepened the disconnect, with 63% of expats saying the outcome convinced them to stay abroad permanently (especially younger adult Americans and parents). Most surveyed expats also believe the U.S. has lost ground globally after the election and more than half believe U.S. foreign policy toward their host country has gotten worse.

American expats in India show the most interest in renunciation (93%), followed by those in the UK (53%), France (48%), Australia (47%), Canada (30%) and Germany (27%).

Expats in the survey also call the U.S. tax system “a nightmare,” with American tax laws generally too complex, U.S. reporting of foreign income and assets creating headaches and banking in their new countries made stressful by the U.S. Foreign Account Tax Compliance Act (FACTA). (U.S. citizens living overseas and who have large bank accounts and other accounts in their countries of residence must generally report them to the U.S. Treasury on a Report of Foreign Bank and Financial Accounts [FBAR]).

Tax considerations

U.S. citizens living in another country must file U.S. taxes, including for income tax, estate tax, gift tax and estimated tax. If an American expat, you must file a return if your gross income from worldwide sources exceeds the IRS threshold for your filing status. The U.S. does tax citizens on worldwide income regardless of where a taxpayer lives, but expat status excludes some or all earned income. Regarding complexity, this can compare with nations like Italy, which has a simplified flat tax on global earnings, or Portugal, which offers a straight 10-year tax break on foreign income.

And though filing extensions are available, the U.S. National Taxpayer Advocate’s office recently reported that American taxpayers abroad face problems meeting tax obligations, including declining customer service from an Internal Revenue Service hit by curtailed staff. That customer service can also be important to head off stiff penalties for non-compliance that the IRS can now more easily level after recent cases like Farhy v. Commissioner.

Expatriates’ biggest problem can be the U.S. exit tax. The expat becomes subject to this tax if they have a worldwide net worth of $2 million or more on the date of expatriation; the expat’s average annual net income tax obligation for the five years ending prior to expatriation exceeds the threshold (for 2025, $206,000); or the expat fails to certify that they have complied with all U.S. federal tax obligations for the five years prior to their expatriation.

To calculate the tax for most assets, a “mark-to-market regime” applies as if the expat sold their worldwide assets at fair market value the day before expatriation and gains above an exclusion amount ($890,000 in 2025) are subject to U.S. capital gains tax. 

It remains to be seen how many American expats follow through on supposed intentions of renouncing U.S. citizenship whether because of political or fiscal reasons. If the intensions of surveyed expats are genuine, we can anticipate more attention from American tax authorities and hard lessons for expats looking to leave the U.S. – and its tax system – behind.

Your tax specialist needs to stay on top of this and many other issues of wealth, foreign income and tax enforcement. If we can help, please let us know.

About the Author 

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high-net-worth families and their advisors.

Alicea has more than 20 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm.

Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S.

Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the Global Referral Network (GRN).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession.

In 2021 and 2022, Alicea was the Gold and Silver Winner, respectively, of Citywealth’s Powerwomen Awards in the category USA – Woman of the Year – Business Growth (Boutique). In 2023, she continued her winning streak by receiving the Gold award for Company of the Year Female Leadership (Boutique) and the Silver award for Accountancy Firm of the Year at the Magic Circle Awards. Furthermore, Alicea has consistently secured her position in the Global Elite Directory for four consecutive years, being recognized as a Private Client Global Elite Advisor and is currently listed for 2024 as a Non-Legal Adviser. This exclusive directory annually highlights the world’s elite lawyers and outstanding wealth advisors serving ultra-high net-worth clients.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.