FEIE — Foreign Earned Income Exclusion.
An election on Form 2555 letting qualifying Americans abroad exclude a six-figure amount of earned income from US tax. Popular, often the right answer — and often not, in a high-tax country like the UK.
Figures on this page are stated for tax year 2025/26 UK · 2025 US. Thresholds change annually.
Exclusion versus credit is the real question
You qualify via the physical presence test (330 days abroad) or bona fide residence. But UK tax rates usually exceed US ones, so foreign tax credits alone often wipe the US bill anyway — while leaving excess credits to carry forward and keeping IRA contributions possible. The exclusion covers only earned income, and revoking it locks you out for five years.
It is an election with a five-year memory. We model both routes before filing, every time.
- Covers salary and self-employment income only — not investment income
- Physical presence or bona fide residence required
- Interacts with credits, IRAs and child tax credits
Last reviewed · Figures stated for tax year 2025/26 UK · 2025 US. Thresholds and rates change annually — check figures against the current tax year before relying on them.
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