The Foreign Earned Income Exclusion, in real numbers.
The FEIE removes a six-figure slice of salary or self-employment income from US tax. Whether it is your best route depends on what you earn, what the UK already taxes, and what you plan next.
Figures on this page are stated for tax year 2025/26 UK · 2025 US. Thresholds change annually.
What the exclusion actually removes
The exclusion applies to earned income only — salary and self-employment, not dividends, rent or gains — and requires either 330 days abroad in any 12-month window or bona fide residence for a full calendar year. Housing costs above a base amount can extend it further.
In a high-tax country like the UK, foreign tax credits often beat the exclusion: they cover all income types, generate carryforwards, and keep IRA contributions and child tax credits available. Revoking the FEIE later locks you out for five years, so the first-year choice matters most.
- Earned income only; investment income never qualifies
- 330-day physical presence or bona fide residence required
- Credits often win for UK residents — model both before filing
What the exclusion removes from your US calculation
A quick orientation, not advice — real positions have edges this cannot see.
Enter your earned income to see the split.
Questions we get about this
You need to meet either the bona fide residence test or the physical presence test, and have foreign earned income rather than investment income.
Travel patterns matter for the physical presence test, so the day count is worth tracking through the year.
Treat it as a starting point. If it says an obligation applies, the next question is what the filing actually involves and whether earlier years are affected.
If it says nothing applies, it is worth re-running whenever your circumstances change - a move, a property, a new account.
No. In a high-tax country foreign tax credits often cover your liability entirely and leave you more flexibility.
The exclusion tends to do more work in low-tax countries. This calculator shows the exclusion side; the credit comparison is worth doing before choosing.
It can apply to the earnings, but it does not remove US self-employment tax, which catches a lot of freelancers out.
Where a totalisation agreement assigns you to the other country's social security system, that is usually the cleaner route.
It covers the common cases and will tell you reliably whether the basics apply to you. It is a guide, not a filing position.
Edge cases - trusts, business ownership, unusual residence patterns - can change the answer, which is why the result flags when a position is worth checking properly.
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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