Trump renews promise to end double taxation for Americans abroad
President Donald Trump’s campaign pledge to end the long-standing practice of double taxation for Americans living overseas is gaining new momentum as he begins his second term in office.
With Republican majorities in both the House and Senate, many overseas Americans hope this effort finally results in meaningful reform.
Here's a breakdown of the proposal, the new legislation it has inspired, and what it could mean for US citizens abroad.
The unique tax burden on Americans abroad
Unlike nearly every other nation, the US taxes its citizens based on citizenship, not residency.
This means that Americans living outside the US must file tax returns with the IRS – even if they already pay taxes in their country of residence.
Key pain points include:
- Double taxation: Individuals may pay income tax, capital gains tax, and Social Security/Medicare tax in both countries.
- Compliance challenges: Navigating two tax systems creates financial and legal complexity.
- FATCA burdens: Foreign banks often refuse US clients due to strict IRS reporting rules under the Foreign Account Tax Compliance Act (FATCA).
Some Americans are even forced to renounce their citizenship due to the difficulty of maintaining banking access and filing annual US tax returns.
Trump’s campaign promise: Ending double taxation
During his 2024 campaign, Trump pledged to end double taxation for overseas Americans, saying, “You’ve wanted this for years...and you deserve it.”
A potential shift toward residence-based taxation
This move would align the US with global norms and shift to a residence-based taxation (RBT) system, where individuals are taxed based on where they live, not their citizenship.
Trump’s stance marks the first time a US president has openly embraced such a change, prompting renewed optimism among the estimated 5–9 million Americans living abroad.
Legislative progress: The LaHood bill
In December 2024, Representative Darin LaHood (R-IL) introduced the Residence-Based Taxation for Americans Abroad Act, which aims to:
- Allow tax-compliant US citizens abroad (residing overseas for at least 3 years) to opt out of US tax filings on foreign income.
- Exempt such individuals from FATCA-related banking restrictions.
- Maintain US tax obligations only on American-sourced income (like US investments, retirement distributions, and rental property income).
The bill is supported by organizations like Tax Fairness for Americans Abroad (TFAA) and Republicans Overseas, and is expected to be reintroduced in the current session.
Who would benefit from ending citizenship-based taxation?
This policy change could drastically improve the lives of:
Long-term expats
Americans living and working abroad permanently would no longer have to file with the IRS annually or fear noncompliance penalties.
"Accidental Americans"
People born in the US to non-citizen parents (who left the US shortly after) often don't have ties to the country – but still face tax obligations and FATCA restrictions.
Small business owners and middle-class expats
Contrary to misconceptions, many expats are not wealthy tax evaders.
In fact, many face high local taxes, limited US tax credits, and costly reporting requirements.
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Concerns and criticisms
Despite growing support, not everyone agrees with the proposed changes:
- Critics argue that filing a US tax return provides access to benefits such as the Additional Child Tax Credit and stimulus payments.
- Others fear the IRS could delay implementation if given too much discretion.
- Some advocates worry the legislation doesn’t go far enough and could still leave Americans abroad partially exposed to US tax reporting.
Also read – How US expats can claim stimulus checks in 2025
Nevertheless, advocacy groups such as American Citizens Abroad (ACA) and the Association of Accidental Americans are campaigning vigorously, calling this an “easy win” that could boost US exports and economic ties by removing barriers for Americans working overseas.
Will Trump follow through?
The bill has bipartisan potential and public momentum, but passage is not guaranteed. The Republican majority in Congress is narrow, and similar efforts have stalled in the past.
Still, early signs are hopeful. Trump’s team has remained in close contact with lobbying groups and legislators, and advocates hope the proposed changes can be folded into broader tax reform–especially when the Tax Cuts and Jobs Act (TCJA) provisions come up for renewal.
What’s next?
As the 100-day push from advocacy groups continues, overseas Americans are watching closely.
If passed, the shift from citizenship-based to residence-based taxation would mark the most significant reform for expats in generations.
Whether you're a long-term expat, a dual citizen, or an "accidental American," the outcome of this legislative push could directly impact your financial future.
