Digital Nomad Tax (US Person Abroad)

The two mechanisms US persons abroad use

The IRS taxes US persons on worldwide income. Moving abroad doesn't escape US tax — but two specific carve-outs substantially reduce the bite:

• Foreign Earned Income Exclusion (FEIE). Up to $130,000 (2025) of foreign-earned income excluded from US federal taxable income. Requires passing either the Physical Presence Test (330+ days abroad in a 12-month period) or the Bona Fide Residence Test (full tax year of established residence abroad).
• Foreign Tax Credit (FTC). Dollar-for-dollar credit for foreign income tax paid on the same income. Limited to the US federal tax allocable to non-excluded income — excess foreign tax doesn't refund. FEIE and FTC interact: you can FEIE the first $130K and FTC the remainder, but you can't double-dip the same dollar.

The state-tax wildcard. Most states honor FEIE. California, New Jersey, Iowa, New Mexico, and Pennsylvania do not — meaning if you remain "domiciled" there per their rules, you pay state tax on worldwide income even after moving abroad. Domicile is a fact-and-circumstances test based on driver's license, voter registration, primary home, financial accounts. The clean break: full year out + clear domicile evidence in a no-tax state before you go (TX/FL/WA/NV/TN/SD/AK).

Math runs locally. Inputs never leave your browser.Source on github.

Real-world scenarios

• Geo-Arbitrage Calculator — complement the tax math with cost-of-living delta. The savings rate boost from cheaper Lisbon + zero state tax + FEIE is the full geo-arbitrage stack.
• Remote Pay Cut Tradeoff — if your company offers an international remote with a pay cut, this tool plus the pay-cut tool give you the full picture.
• ISO AMT Calculator — ISO exercise abroad has no FEIE benefit (bargain element is preference-item AMT income, not earned income). Keep this in mind before exercising big options abroad.