Which US tax method saves you more money abroad? Enter your numbers for a personalized, side-by-side comparison with 2026 rates.
Important Notice
This calculator provides estimates based on 2026 IRS brackets (Rev. Proc. 2025-32, incl. One Big Beautiful Bill adjustments) and the 2026 FEIE limit of $132,900. It does not account for state taxes, AMT, NIIT, itemized deductions, or complex income structures. Results are for informational purposes only and do not constitute tax or financial advice — always consult a qualified CPA or tax advisor for your specific situation.
Your Personalized Result
Total Tax (FEIE)
Total Tax (FTC)
Foreign Tax Paid
Total Combined Tax
FEIE
FTC
Line Item
FEIE Method
FTC Method
5-Year Projection
See how the FEIE vs FTC decision compounds over 5 years, factoring in the FEIE limit increases and income growth.
Year
FEIE Total Tax
FTC Total Tax
Annual Savings
Cumulative
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Get Your Full 5-Year Projection
See how the FEIE vs FTC decision compounds over 5 years, including line-item breakdowns and what-if scenarios.
Scenario: $180,000 Salary, Single Filer, Moving to Portugal (Standard Rates)
Under the FEIE: The first $132,900 of earned income is excluded. The remaining $47,100 is subject to US federal income tax. Due to the "stacking" rule, this $47,100 is taxed at the marginal rates that apply as if the full $180,000 were being taxed — meaning it falls in the 24% bracket. After the $16,100 standard deduction, the estimated US income tax is approximately $7,700.
Under the Foreign Tax Credit: All $180,000 is reported on the US return. The US income tax on $163,900 (after standard deduction) is approximately $32,400. Portugal taxes the same income at progressive rates up to 48%, resulting in approximately $74,100 in Portuguese tax (at EUR 1 = USD 1.08). Since the Portuguese tax ($74,100) exceeds the US tax ($32,400), the FTC fully offsets the US liability. Net US income tax: $0.
Result: The Foreign Tax Credit saves approximately $7,700 per year compared to the FEIE in this scenario. Portuguese tax is the same under both methods ($74,100). The FTC produces a lower total combined tax bill because it fully offsets US tax, while the FEIE leaves the income above $132,900 exposed to US taxation with the stacking penalty.
Over 5 years (assuming 3% annual income growth), this difference compounds to approximately $42,000 in total savings — and switching from FEIE back to FTC triggers a 5-year waiting period, making the initial choice consequential.
Scenario: $90,000 Salary, Single Filer, Moving to Spain (Beckham Law)
Under the FEIE: The full $90,000 is excluded (under the $132,900 limit). US income tax: $0.
Under the Foreign Tax Credit: US tax on $75,000 taxable income (after deduction) is approximately $9,400. Spain taxes the income at the Beckham Law flat rate of 24%, producing approximately $20,000 in Spanish tax. The FTC offsets the full US liability. Net US income tax: $0.
Result: Both methods produce $0 US income tax. At income levels below the FEIE limit where foreign tax rates exceed US effective rates, the two methods are equivalent. The FEIE is simpler to file (Form 2555 vs Form 1116). However, choosing FTC from the start avoids the 5-year irrevocability penalty if your income later grows above $132,900.
Pre-Computed Scenarios Available
Don't want to run individual calculations? We've pre-computed 96 scenarios across 8 income levels, 3 filing statuses, and 4 tax regimes. See the exact crossover point where FTC beats FEIE and effective rates under every regime in our FEIE vs FTC Decision Matrix.
Methodology & Sources
This calculator uses the following data, all traceable to Tier 1 (government) and Tier 2 (major institutional) sources:
This calculator does not account for: state income taxes, Alternative Minimum Tax (AMT), Net Investment Income Tax (NIIT, 3.8%), itemized deductions, income from multiple countries, foreign social security contributions, treaty-specific provisions, or complex multi-source income structures. Results are estimates intended to inform — not replace — professional tax advice.
IRS, "Foreign Earned Income Exclusion" (Publication 54, Rev. Proc. annual updates)
IRS, "Foreign Tax Credit" (Publication 514, Form 1116 instructions)
IRS, Revenue Procedure 2025-32 (2026 tax year inflation adjustments, incl. One Big Beautiful Bill)
PwC Worldwide Tax Summaries, "Portugal — Individual: Taxes on personal income" (2025)
PwC Worldwide Tax Summaries, "Spain — Individual: Taxes on personal income" (2025)
The Foreign Earned Income Exclusion (FEIE) lets you exclude up to $132,900 (2026) of earned income from US taxation entirely. You use Form 2555. The Foreign Tax Credit (FTC) lets you offset your US tax liability dollar-for-dollar with taxes you've already paid to your destination country. You use Form 1116. The FEIE is simpler but has an income cap and doesn't cover investment income. The FTC has no cap and often produces lower total tax when your destination country's rates exceed US rates — which is typical in Portugal (up to 48%) and Spain (up to 47%).
No. You cannot apply both the FEIE and the FTC to the same income in the same tax year. You must choose one method. However, you can use the FEIE for earned income and separately claim FTC for foreign taxes paid on income types not covered by the FEIE, such as investment income that is taxed in your destination country.
If you elect the FEIE and later decide to revoke it (to switch to the FTC), you cannot re-elect the FEIE for five tax years without IRS approval. This makes the initial choice sticky. Switching from FEIE to FTC is straightforward, but switching back requires a 5-year waiting period. For this reason, many tax advisors recommend starting with the FTC if there's any chance your income could grow above the FEIE limit.
The FTC typically saves more when: (1) your earned income exceeds the $132,900 FEIE limit, since the FEIE can't exclude the excess; (2) your destination country's tax rates exceed US rates at your income level, which is common in Portugal (rates up to 48%) and Spain (rates up to 47%); or (3) you have significant investment income, since the FEIE only excludes earned income. For most US expats in Portugal and Spain, the FTC produces equal or lower total tax compared to the FEIE.
No. The FEIE only excludes earned income from federal income tax. US self-employment tax (15.3% on 92.35% of net self-employment income) applies regardless of whether you elect the FEIE or FTC. Both methods produce the same SE tax liability. The only way to eliminate US SE tax is through a totalization agreement with your destination country — Portugal has one with the US; Spain also has one.
This calculator provides estimates based on 2026 IRS tax brackets (Rev. Proc. 2025-32, incl. One Big Beautiful Bill adjustments), the 2026 FEIE limit, and current Portuguese and Spanish tax rates from government sources. It handles the most common scenario: a US citizen with employment or self-employment income who has moved abroad. It does not account for state taxes, AMT, NIIT (3.8% on net investment income above thresholds), itemized deductions, or complex multi-source income. For a definitive analysis, consult a CPA specializing in expat taxation.
Every guide and tool is independently researched, cites primary sources, and follows our editorial policy →. We may earn commissions from partner links — this never influences our recommendations. Spot an error? Let us know.
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