Renouncing US citizenship in 2026
In April 2026 the State Department cut the fee for renouncing from $2,350 to $450. The paperwork got cheaper. The tax analysis did not get simpler, and it is the part that decides what renouncing actually costs you.
What it costs
There are three separate costs, and conflating them is how people get surprised.
- The consular fee: $450. Reduced from $2,350 effective 13 April 2026, under a final rule published in the Federal Register on 13 March 2026. This is what the government charges to process your Certificate of Loss of Nationality.
- Getting compliant: varies. You must certify five years of tax compliance. If you are behind, that means filing the missing years first, usually through the Streamlined Filing Compliance Procedures.
- The exit tax: covered expatriates only. It applies only if you meet one of the three covered-expatriate tests, and even then only to net gain above the exclusion.
There is also a separate IRS route worth knowing about. The Relief Procedures for Certain Former Citizens allow some people who have already renounced to become compliant without paying back taxes or penalties at all. The gates are specific: net worth under $2 million, aggregate tax liability of $25,000 or less across the expatriation year and the five before it, non-willful conduct, no prior filing history as a US citizen or resident, and expatriation after 18 March 2010. It is narrow and it applies after expatriation rather than before, but for those who qualify it is a materially cheaper path than the standard sequence. See accidental Americans for who tends to fit.
The order matters more than the price
Form 8854 asks you to certify, under penalty of perjury, that you complied with all US federal tax obligations for the five years before you expatriate. If you cannot make that certification, you become a covered expatriate on that basis alone, no matter how modest your assets are. Someone with $60,000 in savings who has never filed is treated the same way as someone worth millions.
That is why compliance comes before the consulate. Where unfiled years exist, the usual sequence is to catch up first, commonly through the Streamlined procedures where their conditions are met, then expatriate, then file Form 8854. Doing it in the other order forecloses an option you cannot get back.
Are you a covered expatriate?
Three tests. Meeting any one of them makes you covered, and the consequences follow from that status rather than from which test you met.
| Test | Threshold | Notes |
|---|---|---|
| Net worth | $2,000,000 or more | Statutory and not inflation-adjusted. Unchanged since 2008, so it catches more people every year. |
| Average annual net income tax | More than $211,000 | Averaged over the five years before expatriation. $206,000 for a 2025 expatriation; the figure is indexed annually. |
| Compliance certification | Cannot certify 5 years | Independent of wealth. This is the test most people fail, and the only one you can still fix. |
Two narrow exceptions. Certain dual citizens from birth (still a citizen and taxed as a resident of the other country, and US-resident for no more than 10 of the last 15 tax years) and certain people who expatriate before age 18½ (US-resident for no more than 10 tax years) are exempt from the net worth and income tax tests. They are not exempt from the third one: they must still file Form 8854 and certify five years of compliance, or they are covered anyway.
This is not only about citizenship. Long-term permanent residents, broadly a green-card holder in at least 8 of the last 15 tax years, are subject to the same section 877A rules and the same Form 8854 obligation when they give up US residency.
What the exit tax actually does
If you are covered, section 877A treats you as having sold everything you own at fair market value on the day before expatriation. You are taxed on the resulting net gain, with the first $910,000 excluded for a 2026 expatriation ($890,000 for 2025). Gains beyond the exclusion are taxed at the rates that would have applied to a real sale.
It is a tax on unrealized gain, not on net worth, so a $2.5 million net worth built mostly from savings rather than appreciation can produce little or no exit tax.
Retirement and deferred accounts sit outside the deemed sale, and this is where the common assumption is wrong. They are not simply deferred:
- IRAs, HSAs, Coverdell ESAs, 529 plans, ABLE accounts and Archer MSAs are "specified tax-deferred accounts" under section 877A(e)(2). Your entire interest is treated as distributed to you on the day before expatriation and goes on that year's return. The tax is due then, not later. SEP and SIMPLE IRAs are the exception: the statute carves them out, so they are not deemed distributed. They are instead treated as deferred compensation items, eligible or ineligible depending on the plan and whether you notify the payor, under the rules immediately below.
- Ineligible deferred compensation is also taxed immediately: the present value of the accrued benefit is included on the same return.
- Eligible deferred compensation (broadly, a US payor you notify on Form W-8CE) is the item that is genuinely deferred. Distributions are subject to 30% withholding, and claiming that treatment requires irrevocably waiving any treaty reduction in withholding. The notification is time-limited: Form W-8CE must reach the payor on the earlier of the day before the first distribution on or after your expatriation date, or 30 days after that date. Miss it and the plan is treated as ineligible, which pulls the whole present value into your expatriation-year return.
- Interests in non-grantor trusts attract 30% withholding on taxable distributions, unless you obtain an IRS letter ruling valuing the interest and elect the alternative treatment.
The practical consequence: someone whose wealth sits mainly in an IRA can face a large, immediate tax bill on expatriation even though nothing was sold and no cash was received.
What happens if a covered expatriate later gives money to an American?
Covered-expatriate status does not expire when you expatriate, and this is the part most people never hear about. Under section 2801, a gift or bequest you later make to a US citizen or resident is taxed at the highest estate tax rate, currently 40%, on the amount above the annual gift-tax exclusion. The tax is paid by the American who receives it, not by you, and it is reported on Form 708. Final regulations took effect on 14 January 2025 and apply to covered gifts and bequests received on or after 1 January 2025. Transfers that would qualify for the marital or charitable deduction are excluded, as is credit for foreign gift or estate tax paid on the same property.
For anyone who intends to leave assets to children or grandchildren living in the United States, this can be a far larger long-term exposure than the mark-to-market tax, and it is a reason to care about staying under the covered-expatriate line even when the exit tax itself would be small.
Renunciation or relinquishment
Renouncing means appearing before a consular officer and swearing an oath. Relinquishment means asserting that an earlier act, typically naturalizing elsewhere with the intent to give up US citizenship, already ended it at that earlier date. Both end in a Certificate of Loss of Nationality, but the tax consequences follow the date citizenship ended, and that date can sit years apart between the two paths. If you naturalized in another country long ago, this is worth examining before you assume renunciation is your route. One caveat matters a great deal here. For expatriations on or after 17 June 2008, section 877A(g)(4) fixes the date as the earliest of four events: renouncing before a diplomatic officer, furnishing a signed statement of voluntary relinquishment, the State Department issuing a Certificate of Loss of Nationality, or a court canceling a naturalization certificate. There is a separate and stricter rule for anyone who expatriated for immigration purposes between 4 June 2004 and 16 June 2008 and never filed Form 8854: they continue to be treated as US citizens or long-term residents for tax purposes until they do. Either way, the practical point holds. An un-notified relinquishment from years ago does not by itself erase the filing obligations for the intervening years, and until you certify on Form 8854 you are a covered expatriate regardless of your wealth.
Before you book the appointment
Renunciation is irrevocable. The decision is personal and often more emotional than financial, and this page takes no position on whether anyone should do it. What is worth saying plainly is that the tax analysis belongs before the consular appointment, because almost every lever (the compliance certification, the timing of the expatriation date, the treatment of retirement accounts) stops being adjustable once the oath is taken.
Common questions
How much does it cost to renounce US citizenship in 2026?
The State Department fee is $450, reduced from $2,350 effective 13 April 2026 under a final rule published in the Federal Register on 13 March 2026. That fee covers issuing the Certificate of Loss of Nationality. It is separate from any tax you owe, and separate from what a preparer or attorney charges to bring you into compliance and file Form 8854.
Do I have to be tax compliant before renouncing?
To renounce cleanly, yes. Form 8854 requires you to certify under penalty of perjury that you complied with all US federal tax obligations for the five tax years before expatriation. If you cannot make that certification, you become a covered expatriate regardless of your net worth or income, and the exit tax rules apply to you. This is why people who are behind on filings normally complete the Streamlined Filing Compliance Procedures first.
What is a covered expatriate?
You are a covered expatriate if you meet any one of three tests on your expatriation date: your net worth is $2,000,000 or more; your average annual net US income tax for the five preceding years exceeds $211,000 for a 2026 expatriation ($206,000 for 2025); or you cannot certify five years of tax compliance on Form 8854. Meeting any single test is enough.
What is the US exit tax?
If you are a covered expatriate, section 877A treats you as having sold all your worldwide property at fair market value the day before you expatriate. The first $910,000 of the resulting net gain is excluded for a 2026 expatriation ($890,000 for 2025); gain above that is taxable. Retirement and deferred accounts sit outside that deemed sale but are not simply deferred: a traditional or Roth IRA, HSA, Coverdell ESA, 529 plan, ABLE account or Archer MSA is treated as distributed to you the day before expatriation, with the taxable portion included on that return. SEP and SIMPLE IRAs are carved out of that definition and fall under the deferred compensation rules instead, and ineligible deferred compensation is taxed immediately at present value. Only eligible deferred compensation and non-grantor trust interests are deferred, with 30% withholding at distribution.
Can I avoid the exit tax by renouncing before my net worth grows?
Timing matters, but the three tests are independent. Someone with modest assets who has never filed is still a covered expatriate, because they fail the certification test. Conversely, someone worth $3 million is covered on the net worth test no matter how compliant they are. The planning question is which tests you can still affect and by when, and that analysis should happen before you book a consular appointment, not after.
What is Form 8854 and when is it due?
Form 8854 is the expatriation information statement. It carries the five-year compliance certification, reports your net worth and the deemed sale if you are covered, and it closes out your US tax position. It does not itself end your citizenship, which the Certificate of Loss of Nationality evidences. It is filed with your income tax return for the year you expatriate, by that return's due date including extensions, with a copy sent separately to the IRS. If you are not otherwise required to file a return, it is still due by the date that return would have been due. Failing to file it carries a $10,000 penalty under section 6039G(c) unless you show reasonable cause, and you are treated as a covered expatriate until the certification is made.
What is the difference between renunciation and relinquishment?
Renunciation is the formal act of appearing before a consular officer and swearing an oath of renunciation. Relinquishment is claiming that an earlier expatriating act, such as naturalizing in another country with the intention of giving up US citizenship, already ended your citizenship at that earlier date. The tax consequences turn on the date citizenship ended, so the distinction can matter significantly. Both result in a Certificate of Loss of Nationality.
Can I still visit the United States after renouncing?
Generally yes, as a foreign national subject to the same rules as any other citizen of your country. You would use the Visa Waiver Program or apply for a visa, and you lose the automatic right of entry that came with the passport. Renunciation is irrevocable, which is the single most important thing to understand before starting.
Do I lose Social Security if I renounce?
Renouncing does not by itself cancel Social Security benefits you have already earned, though payment rules for non-citizens living abroad vary by country and withholding can change. This is one of the areas people most often get wrong, and it deserves specific advice on your facts rather than a general answer.
Reviewed by Ilya Fayerman, Esq. (NY Bar) on