How Much Is the US Exit Tax? Step-by-Step Calculation With Examples

The exit tax is a difference, not a flat rate. Work out the tax on your final-year return with a pretend sale of your property, subtract the tax on the same return without it, and the gap is your bill. Only covered expatriates run this US exit tax calculation, and for 2026 they skip the first $910,000 of net gain. The rate on the gain above that depends on its character and on your other income. Long-term gain is taxed at 0%, 15% or 20%, short-term gain at ordinary rates of up to 37%, collectibles at up to 28% and the depreciation part of real estate gain at up to 25%, with a further 3.8% when the net investment income tax applies. IRAs count as fully withdrawn at ordinary rates of up to 37%, and employer plans are taxed later through 30% withholding. Other income is taxed first and the gain stacks on top, so the same gain can cost two people different amounts. In the examples below, $1.8 million of gain adds about $180,600 of tax, while a $250,000 IRA alone adds about $62,000. 

Key Takeaways

• What is the formula? Exit tax equals the tax on your final-year return with the deemed items, minus the tax on the same return without them.
• What is free of tax? The first $910,000 of net gain on ordinary property for a 2026 expatriation. It is $890,000 for 2025.
• Which rates apply? Long-term gain is taxed at 0%, 15% or 20% depending on your total income, plus 3.8% above $200,000 for a single filer. Short-term gain and retirement accounts are taxed at ordinary rates.
• What does the exclusion not cover? IRAs and other tax-deferred accounts, deferred compensation and trust interests. They follow their own rules.
• How big can the bill get? In the simple case below, about 6% of a $1.5 million gain, 15% of a $3 million gain and 19% of a $5 million gain.
• Which year's figures count? The year you expatriate. Thresholds and the exclusion change every year.

Most searches for the cost of the exit tax return a flat percentage, and a flat percentage is the wrong tool for a US exit tax calculation. The real figure depends on what you own, what you paid for it, how long you held it, what else you earned that year and which pot each asset falls into. This guide walks through the US exit tax calculation in the order the IRS expects it, then runs three short examples with 2026 numbers. It is updated for 2026.

The Short Answer: What the Exit Tax Costs

For most people leaving the US tax system, the cost is $0. The tax applies only to a covered expatriate, so anyone who passes all three tests owes no exit tax. Even a covered expatriate excludes the first $910,000 of net gain on ordinary property for a 2026 expatriation. Above that, the cost depends on the kind of gain. The table below shows the simplest case, where all the gain is long-term and the top rate is 23.8%, which is the 20% long-term rate plus the 3.8% net investment income tax. Smaller gains cost less because the lower brackets apply first. 

Conditions: single filer, 2026 rates, no other income, all gain long-term and a $16,100 standard deduction. The 0% rate covers taxable income up to $49,450 and the 15% rate covers income up to $545,500. The 3.8% tax applies to the lesser of the taxable gain or the amount by which income exceeds $200,000. State tax, retirement accounts and deferred compensation are not included. Sources: IRS Rev. Proc. 2025-32 for the 2026 brackets, standard deduction and $910,000 exclusion, and IRS Topic no. 559 for the net investment income tax. Links are in the Sources section at the end. 

Your own figure will differ. Other income pushes gain into higher brackets, retirement accounts add tax outside the table, and short-term gain is taxed more heavily. 

The 23.8% figure is a ceiling only for long-term gain. Other kinds of income in the deemed sale are taxed at higher maximum rates, as the table below shows. 

These are maximum rates, and your actual rate depends on your total taxable income. Eligible deferred compensation, such as many 401(k) plans, is not part of the deemed sale. It faces 30% withholding on later payments instead. 

Step Zero: Are You a Covered Expatriate?

No exit tax applies unless you are a covered expatriate. The first part of any covered expatriate tax calculation is therefore the three tests, and meeting any one is enough. The exit tax for covered expatriates is the same whichever test caught them.

• The net worth test. The covered expatriate net worth test adds up everything you own worldwide, including retirement accounts, business interests and crypto, and subtracts what you owe, on the expatriation date. The US exit tax net worth threshold of $2 million has been fixed since 2008, so more people cross it each year as asset values rise.
• The average tax test. It looks at tax owed, not income earned. Someone who paid $118,000, $142,000, $305,000, $262,000 and $201,000 averages $205,600, under the 2026 threshold. The foreign tax credit and the foreign earned income exclusion often keep this average low for Americans abroad.
• The certification test. It has no dollar threshold. If you cannot certify five years of compliance, you are covered whatever your wealth. Missing returns, unfiled FBARs and skipped information returns can all break it.

Dual citizens from birth with limited US residence, and certain people who expatriate before age 18½, can skip the first two tests. Neither group skips the certification test.

The US Exit Tax Calculation in Eight Steps

The US exit tax calculation follows the same order every time, and the Section 877A exit tax applies to the net result.

1. Fix your expatriation date and tax year. The date sets the year's thresholds, the day your net worth is measured and the five-year look-back.
2. Build a worldwide balance sheet. List every asset at fair market value and every liability on the expatriation date.
3. Sort each asset into its bucket. Most property goes through the deemed sale. IRAs and similar accounts, eligible and ineligible deferred compensation and trust interests follow separate rules.
4. Value the property on the day before the expatriation date. That is the deemed sale price.
5. Subtract your tax basis asset by asset. Basis is generally what you paid plus improvements, less depreciation, in dollars at the exchange rate when you bought.
6. Net the gains and losses and subtract the exclusion. The exit tax exclusion amount is $910,000 for 2026 and cannot take the result below zero.
7. Tax what is left on your final-year return. Long-term gain gets the 0%, 15% and 20% rates, short-term gain is taxed as ordinary income and the 3.8% tax is added where it applies.
8. Add the separate buckets. An IRA is added as ordinary income, ineligible deferred compensation at its present value, and eligible deferred compensation adds nothing now but carries 30% withholding later.

Then compare the return with and without the deemed items. The difference is the exit tax, because stacking gain on top of your other income changes the rate.

How the Deemed Sale Works

Under the deemed sale on expatriation, all property of a covered expatriate is treated as sold the day before the expatriation date. The Section 877A mark-to-market tax taxes the net gain, and the resulting mark-to-market exit tax goes on the final-year return. A few rules shape the arithmetic:

• Gains and losses net against each other, to the extent the Code otherwise allows, and the wash-sale rule does not apply to losses.
• The exclusion is spread across your assets. It is allocated in proportion to each asset's gain, which matters when you defer tax on some property and not on others.
• Gain keeps its character. Short-term gain is taxed at ordinary rates, collectibles at up to 28% and unrecaptured section 1250 gain on real estate at up to 25%.
• Real estate counts wherever it sits. A home or rental abroad is part of the sale.
• Long-term residents may have a higher basis. Some green card holders can use the value on the date they became US residents for property they already owned. Confirm this with a preparer before relying on it.

Which Rates Apply to the Gain

The gain stacks on top of your other income, so your rate depends on your total taxable income, not on the size of the gain alone. 

The 3.8% net investment income tax is a separate tax added on top of the capital gains rate, and it does not apply to every dollar of gain. It is charged on the lesser of two amounts: your net investment income, or the amount by which your modified adjusted gross income (MAGI) is above $200,000 for a single filer or $250,000 for joint filers. Those thresholds are set by law and are not indexed for inflation. 

• What counts. Net investment income includes interest, dividends, capital gains, rents, royalties and net gains from selling shares, funds and real estate. 

• What does not count. Wages and income from an active business are not net investment income, and neither are most IRA and qualified retirement plan distributions. They still raise your MAGI, which can push your investment gain over the threshold. 

• Why it reaches the deemed sale. The gain is recognized the day before you expatriate, while you are still a US person, so it is generally included, as covered-expatriate calculators commonly assume. Confirm this with your preparer. 

• What it does not touch. Gain on a main home that is excluded from income under the home-sale exclusion is not subject to the 3.8% tax. 

Here is how it works in Daniel’s example below. His MAGI is $950,000, which is $60,000 of wages plus $890,000 of taxable gain. That is $750,000 above the $200,000 threshold, which is less than his $890,000 of net investment income, so the tax applies to $750,000. 3.8% of $750,000 is $28,500. 

A traditional IRA deemed distribution is ordinary income, not capital gain, and the exclusion does not reduce it. It is stacked on top of your other income and taxed on the 2026 single scale below, so a large distribution can run through several bands. In Priya’s example, a $250,000 IRA adds about $62,000 of tax, an effective rate of about 25%, because it is spread across the 12% to 35% bands. 

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US Exit Tax Example 1: Covered by Net Worth

This US exit tax example shows the cleanest case. All three examples use a $16,100 deduction to keep the arithmetic simple, and dual-status returns can limit deductions, so a real return can differ. Daniel is single and renounces his U.S. citizenship in 2026. Before leaving, he earns $60,000 in U.S. wages. His assets and liabilities are as follows:

• Brokerage account: $2.4 million (cost basis: $1 million)
• Lisbon apartment: $900,000 (cost basis: $500,000)
• Cash: $200,000
• Mortgage liability: $300,000

If he sold everything first with no exclusion, the extra tax would be about $397,200, so the deemed sale is cheaper by about $216,600. Selling first can still help if you can realize gain in a low-income year, but run both numbers.

US Exit Tax Example 2: Covered by Paperwork, With an IRA

Priya held a green card for 11 years and gives it up in 2026. Her net worth is about $850,000: shares of $400,000 (basis $260,000), a traditional IRA of $250,000 and $200,000 of cash and savings. She missed three years of FBARs, so she cannot certify compliance and is covered by that test alone. She earned $40,000 in the US before leaving.

The IRA drives the bill, and the paperwork gap makes it payable. Filing the missing FBARs before she certified could have kept her out of covered status. See NSKT Global's guide to avoiding the green card exit tax legally.

US Exit Tax Example 3: Every Bucket at Once

Elena is single, renounces in 2026 and has a net worth of about $4.7 million. She earned $110,000 in US wages before leaving.

After the $910,000 exclusion, $1,590,000 of gain is taxable. Ordinary income is 660,000(110,000 of wages, the IRA and the pension), or $643,900 after the deduction. 

That is about 11.9% of her net worth. The 401(k) adds nothing today, but full payout would face about $90,000 of withholding. The pieces do not add up neatly alone because the ordinary income pushes every dollar of gain into the 20% band, so always compute the whole return together.

What a US Exit Tax Calculator Can and Cannot Do

A US exit tax calculator gives a useful order of magnitude. Most run the three tests, subtract the exclusion from the gain you enter and apply one flat rate of 20% or 23.8%, which is a fair ceiling for large gains.

Use one to see whether you are near a threshold, then rebuild the US exit tax calculation from the eight steps above.

What Changes the Number

Small differences in facts can move a US exit tax calculation by tens of thousands of dollars.

• Other income. Wages, rent and dividends in the expatriation year are taxed first, and the gain stacks above them.
• Holding period. Property held a year or less, such as recently bought crypto, is taxed at ordinary rates.
• Basis records. Missing records can leave a basis of zero, which raises the gain.
• Currency. Gain is measured in dollars, so a home bought abroad years ago can show a larger dollar gain than its local gain suggests.
• Valuations. Private companies, art and real estate need documented valuations on the day-before date.
• Timing of a real sale. Realizing gain before you leave uses no exclusion, while leaving it to the deemed sale uses it.
• Your main home. Sources disagree on whether the home-sale exclusion can reduce the deemed-sale gain, so ask your adviser to test it.
• State tax. The exit tax is federal, but some states start from federal income, so a state you have not left may tax the deemed gain.

Green Card Holders: Extra Points for the Calculation

The calculation follows the same steps for a long-term green card holder as for a citizen, but three points often change the facts.

• An expired card does not end tax residency. You stay a US tax resident until you formally abandon status, so the expatriation date, which fixes the tax year, the eight-year count and the valuation date, is set by that act and not by the card's expiry. Do not sign Form I-407 under pressure at a border, because signing sets the date.
• Count every partial year. You are a long-term resident if you held the card in at least 8 of the last 15 tax years, and a part-year generally counts as a full year.
• A treaty election can expatriate you. Claiming residence of another country under a treaty can end long-term resident status and trigger the calculation, so take advice before you file a treaty position.

For the year count in detail, see NSKT Global's guide to the green card exit tax.

Paying the Tax and Reporting It on Form 8854

The tax is due with your final-year return, normally a dual-status return because you are a resident until the expatriation date and a nonresident after. Part II of Form 8854 lists each asset, its value, its basis and the gain, and the Form 8854 exit tax figures flow from that schedule to the return. If paying in full would force you to sell an illiquid asset, you can elect to defer payment on property until you sell it, usually with security and interest and an annual Form 8854 afterward.

Three related costs sit outside the calculation:

• The late-filing penalty. A missing or incomplete Form 8854 can bring a $10,000 penalty and makes you covered by default.
• The consular fee. Renouncing costs $450 since April 13, 2026.
• The tax on your family. The US citizenship renunciation exit tax falls on you, but a US recipient of a later gift or inheritance from a covered expatriate can owe a 40% tax under Section 2801.

For the filing steps, see NSKT Global's guide to Form 8854 and its walkthrough of how to file it.

Ways to Lower the Number Before You Leave

Lowering a US exit tax calculation has to start before the expatriation date, because the tests look backward and the balance sheet is measured on one day.

NSKT Global's guide to avoiding the exit tax legally and its comparison of exit tax and capital gains tax cover these in more detail.

Calculation Mistakes That Change the Bill

These errors most often distort a US exit tax calculation:

• Using one flat rate. A flat 20% overstates the tax on a small gain and ignores the 3.8% tax.
• Applying the exclusion to the IRA. The $910,000 shelters property gain only.
• Using the wrong year's figures. A 2025 expatriation uses $890,000 and $206,000, and a 2026 expatriation uses $910,000 and $211,000.
• Valuing on the wrong date. The deemed sale is the day before the expatriation date.
• Ignoring dollar basis. Foreign property needs a basis in dollars at the exchange rate when you bought it.
• Leaving assets off the balance sheet. Form 8854 asks for a worldwide list, including crypto, private companies and trust interests.

Special Situations

• You are an accidental American. You may skip the first two tests as a dual citizen from birth, but not the certification test, and the IRS relief procedures for former citizens may help you catch up.
• You are married. Each person is tested separately, and the exclusion applies to each individual, but how joint property splits depends on ownership and local law.
• You own a private business. Valuation drives the gain, and the tax can arise with no cash to pay it, so deferral may help.
• Part of your wealth is a foreign pension. Treatment depends on whether it is eligible or ineligible deferred compensation, or a foreign trust, so classify it before you leave.
• Your gains are below the exclusion. You may owe nothing, but you still file Form 8854 and certify compliance.

How NSKT Global Can Help

A calculator can tell you whether the exit tax is worth worrying about. It cannot tell you which asset to value first, how your final-year income will stack with the gain, or whether a missing FBAR is about to turn a $0 bill into a $60,000 one. Those answers come from running the US exit tax calculation on your actual return.

NSKT Global's expat tax team prepares exit calculations for citizens and green card holders before they commit to a date. We work from your balance sheet, your basis records and your last five years of filings, and show you the figure under each option. We can help you:

• run the three covered expatriate tests and fix any compliance gap before you certify
• build the worldwide balance sheet and document valuations
• calculate the deemed sale, the IRA and deferred compensation, with and without the exclusion
• compare a deemed sale with selling or gifting before you leave
• prepare the final-year return and Form 8854, including any deferral election

If you are weighing a date, ask for the calculation first. Seeing the figure in dollars, under two or three plans, is usually the fastest way to decide what to do next.

People Also Ask

Q. How much is the US exit tax?

There is no flat amount. For a covered expatriate, it is the extra tax caused by treating property as sold the day before expatriation, after the 2026 exclusion of $910,000. Gain above that is taxed at long-term rates of up to 20%, plus 3.8% in many cases, and retirement accounts are taxed as ordinary income.

Q. How is the US exit tax calculated?

A US exit tax calculation values all property at fair market value on the day before expatriation, subtracts your basis, nets gains and losses, subtracts the exclusion and taxes the rest on your final-year return. It then adds the separate rules for IRAs, deferred compensation and trusts.

Q. What is the exit tax exclusion amount for 2026?

$910,000, up from $890,000 for 2025. It reduces net gain on ordinary property and does not reduce an IRA deemed distribution.

Q. Do I owe the exit tax if my net worth is under $2 million?

Not unless you meet another test. You are also covered if your average tax liability is above $211,000 for 2026 or if you cannot certify five years of tax compliance.

Q. Is the exit tax charged on retirement accounts?

Yes, but differently. An IRA is treated as fully distributed the day before expatriation and taxed as ordinary income. Eligible employer plans are usually taxed through 30% withholding on later payments.

Q. Does the 3.8% net investment income tax apply to the exit tax?

Generally yes for the deemed-sale gain, once your income is above $200,000 for a single filer or $250,000 for joint filers. Confirm with your preparer.

Q. Can I pay the exit tax over time?

You can elect to defer payment on property until it is sold, usually with security and interest and with annual Form 8854 filings.

Sources 

• IRS Rev. Proc. 2025-32: Tax inflation adjustments for tax year 2026, for the 2026 tax brackets, standard deduction, capital gains thresholds and the $910,000 Section 877A exclusion amount. 

• IRS Topic no. 559: Net investment income tax, for how the 3.8% tax is calculated, what counts as net investment income and the $200,000 and $250,000 thresholds. 

• IRS: Net Investment Income Tax, for the statutory thresholds and what net investment income does and does not include. 

• IRS Instructions for Schedule D (Form 1040), for the 28% rate gain and unrecaptured Section 1250 gain worksheets.