Guide
The 877A exclusion amount for 2026: $910,000
Updated
The exit tax is not charged on your whole deemed gain. A fixed slice comes off first, and how that slice is spread across your assets changes the answer.
Talk to a specialist The expatriation date decides the year, the year decides the exclusion.
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How this calculator works
- The three covered expatriate tests are in section 877(a)(2), applied by section 877A(g)(1). First, net worth of $2,000,000 or more (a fixed statutory figure, not inflation adjusted). Second, average annual net income tax above an inflation-adjusted amount. Third, failure to certify 5 years of federal tax compliance on Form 8854 (IRS).
- The income tax test amount is $211,000 for a calendar year 2026 expatriation date, set by Rev. Proc. 2025-32 section 4.37. The IRS expatriation page still lists figures up to $206,000 for 2025; use the year your expatriation date falls in.
- The exclusion is $910,000 for taxable years beginning in 2026 under section 877A(a)(3) (Rev. Proc. 2025-32 section 4.38). It is a once in a lifetime allowance and is allocated pro rata across gain assets, per section 3.C of Notice 2009-85.
- Section 877A treats all property as sold at fair market value the day before the expatriation date. Losses are taken into account, so the input here is the net figure across your whole balance sheet.
- The rate is an input, not computed. Section 877A sets no rate: the deemed gain joins gross income under normal rules, so asset character matters. Long-term gains top out at 20% (IRS Topic 409), collectibles at 28%, unrecaptured section 1250 gain at 25%. Net investment income tax may also apply. Take advice before relying on one rate.
- Deferred compensation items, specified tax deferred accounts such as IRAs and 529 plans, and interests in non-grantor trusts are outside this calculation. They are handled by sections 877A(d), (e) and (f), which impose 30% withholding on eligible deferred compensation and on non-grantor trust distributions to covered expatriates (Notice 2009-85).
- The two statutory exceptions in section 877A(g)(1)(B), for certain dual citizens from birth and for people relinquishing before age 18 and a half, are not modelled here. They disapply only the net worth and income tax tests: the Form 8854 certification test still has to be met (Form 8854 instructions).
The 2026 figure
For taxable years beginning in 2026, the amount includible in a covered expatriate's gross income under section 877A(a)(1) is reduced by $910,000, but not below zero (Rev. Proc. 2025-32 s4.38). The statutory base is $600,000, adjusted for inflation each year since 2008 and rounded to the nearest $1,000 (section 877A(a)(3)).
| Year | Exclusion amount | Source |
|---|---|---|
| 2025 | $890,000 | IRS expatriation tax page |
| 2026 | $910,000 | Rev. Proc. 2025-32 s4.38 |
The IRS expatriation tax page had not been updated with the 2026 figures when this page was last checked. Rev. Proc. 2025-32 is the primary source for a 2026 expatriation date, and it is the one we compute from.
How the exclusion is allocated
It is not simply subtracted from the total. Section 3.C of Notice 2009-85 requires the exclusion to be allocated pro rata to each item of built-in gain property. Each asset's share is the exclusion times the ratio of its built-in gain to the total built-in gain of all gain assets. No asset's share can exceed its built-in gain.
That matters when you elect to defer the tax on some assets and not others under section 877A(b), because the exclusion has already been spread before the election is made. It also means the total charge is the same whether you hold one asset or twenty, but the per-asset numbers on Form 8854 are not.
Once in a lifetime
Notice 2009-85 states that each individual is eligible for only one lifetime exclusion amount. A covered expatriate may later become a US citizen or long-term resident again and expatriate a second time. The exclusion on that second expatriation is limited to the unused portion of the first.
Deferring the tax
Section 877A(b) allows an irrevocable election to defer payment of the mark-to-market tax, property by property, until that property is disposed of. Notice 2009-85 sets the conditions:
- The taxpayer must furnish a bond or other security acceptable to the Commissioner, conditioned on payment.
- Interest is charged for the deferral period at the section 6621 rate applicable to individual underpayments.
- The taxpayer must also waive treaty rights that would prevent collection.