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.
The 2026 figure
For taxable years beginning in 2026, the amount that would be includible in a covered expatriate's gross income by reason of section 877A(a)(1) is reduced, but not below zero, by $910,000 (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, by multiplying the exclusion by the ratio of that asset's built-in gain to the total built-in gain of all gain assets. The amount allocated to any asset cannot exceed that asset's 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. If a covered expatriate later becomes a US citizen or long-term resident again and expatriates a second time, the exclusion available 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 on a property-by-property basis 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, and 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.