Exit Tax Calculator (Section 877A) 2026 β Expatriation Tax
Calculate US exit tax for covered expatriates renouncing citizenship or surrendering green card. Mark-to-market deemed sale, $890,000 exclusion, IRA/401k special rules.
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Triggers covered expat if β₯ $2,000,000 $
Triggers covered expat if β₯ $201,000 (2026) $
$
Your total tax basis across all non-IRA assets $
Entire balance treated as distributed (ordinary income) %
LTCG rate: 0/15/20% + 3.8% NIIT = up to 23.8% $0
Total Exit Tax
β
Covered Expatriate?
$0
Mark-to-Market Tax
$0
IRA Deemed Distribution Tax
Exit Tax Calculation
Covered Expatriate Test
| Test | Your Value | Threshold (2026) | Triggers? |
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How to Use This Exit Tax Calculator
Enter your net worth, 5-year average tax liability, asset FMV and cost basis. The calculator determines covered expatriate status, computes the mark-to-market gain after the $890,000 exclusion, and estimates exit tax on both regular assets and IRA/retirement accounts.
This is an estimate only. The actual exit tax calculation requires detailed asset-by-asset analysis, foreign tax credit considerations, and treaty review. Work with an international tax attorney before renouncing US citizenship or surrendering a green card.
The Formula
Covered Expat if: Net Worth β₯ $2M OR 5-yr avg tax β₯ $201K OR failed certification
Deemed Gain = Total Asset FMV β Total Cost Basis
Exclusion = $890,000 (2026, inflation-indexed)
Taxable Gain = max(0, Deemed Gain β Exclusion)
Mark-to-Market Tax = Taxable Gain Γ LTCG Rate
IRA Tax = IRA Balance Γ Ordinary Income Rate (separate)
Total Exit Tax = Mark-to-Market Tax + IRA Tax
Deemed Gain = Total Asset FMV β Total Cost Basis
Exclusion = $890,000 (2026, inflation-indexed)
Taxable Gain = max(0, Deemed Gain β Exclusion)
Mark-to-Market Tax = Taxable Gain Γ LTCG Rate
IRA Tax = IRA Balance Γ Ordinary Income Rate (separate)
Total Exit Tax = Mark-to-Market Tax + IRA Tax
Example
James, renouncing citizenship: Net worth $3M, assets FMV $3M, basis $1.2M, IRA $500K:
Covered expatriate: Yes ($3M net worth β₯ $2M)
Deemed gain: $3,000,000 β $1,200,000 = $1,800,000
Less exclusion: $1,800,000 β $890,000 = $910,000 taxable
Mark-to-market tax @ 23.8%: $910,000 Γ 0.238 = $216,580
IRA deemed distribution @ 37%: $500,000 Γ 0.37 = $185,000
Total exit tax: $401,580
Covered expatriate: Yes ($3M net worth β₯ $2M)
Deemed gain: $3,000,000 β $1,200,000 = $1,800,000
Less exclusion: $1,800,000 β $890,000 = $910,000 taxable
Mark-to-market tax @ 23.8%: $910,000 Γ 0.238 = $216,580
IRA deemed distribution @ 37%: $500,000 Γ 0.37 = $185,000
Total exit tax: $401,580
Extended
Planning Strategies + IRA/401k Special Rules
Model Roth conversion strategies and understand deferred compensation treatment
How pre-expatriation planning can reduce your exit tax burden.
| Strategy | Tax Impact | Limitation |
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Special treatment for IRAs, 401(k)s and deferred compensation under Section 877A.
| Account Type | Treatment | Tax Trigger | Deferral? |
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IRA Pre-Expatriation Strategy: Consider Roth conversions before expatriation to move traditional IRA balances to Roth. Roth distributions after expatriation are still subject to 30% withholding as a non-resident alien, but the Roth balance itself isn't subject to the exit tax deemed distribution rule. This requires careful timing and tax modeling.
Frequently Asked Questions
What is the Section 877A exit tax and when does it apply?
Section 877A of the IRC imposes an "exit tax" on covered expatriates who renounce US citizenship or surrender a long-term green card (held 8+ years). The tax treats the expatriate as having sold all worldwide assets the day before expatriation at fair market value β a "mark-to-market" deemed sale. The tax applies to the gain above a 2026 exclusion of $890,000. IRAs and deferred compensation are subject to special rules rather than the mark-to-market regime.
Who qualifies as a "covered expatriate"?
You are a covered expatriate if, in the year of expatriation, you meet any one of: (1) Net worth of $2 million or more on the date of expatriation; (2) Average annual net income tax liability for the 5 preceding years exceeds $201,000 (2026 threshold); or (3) Failed to certify (under penalty of perjury on Form 8854) that you have complied with all federal tax obligations for the 5 preceding years. Meeting any one test makes you a covered expatriate.
What is the 2026 exit tax exclusion amount?
For 2026, the mark-to-market exclusion is $890,000. This means the first $890,000 of gain from the deemed sale of all your assets is not subject to exit tax. The exclusion is applied against the net gain from all deemed sales, not per asset. The exclusion is indexed for inflation annually. In 2025 it was approximately $866,000.
How are IRAs and deferred compensation treated under the exit tax?
IRAs, 401(k) plans, and other qualified accounts are not subject to mark-to-market. Instead, the entire balance is treated as distributed on the day before expatriation β it's included in income and subject to ordinary income tax. However, you may elect to defer the tax by having a US trustee. Deferred compensation from a US employer is also subject to a special 30% withholding rule rather than mark-to-market, applied at time of payment.
Are there any planning strategies to reduce exit tax?
Yes. Before expatriating: (1) Take Roth conversions to move IRA balances to Roth (distributions not subject to exit tax in the same way); (2) Sell assets with embedded losses to offset gains; (3) Consider gifting appreciated assets (though gift tax applies); (4) Timing matters β if your 5-year average tax drops below $201K, you may not be a covered expatriate; (5) For green card holders, timing surrender before 8 years of permanent residence avoids covered expatriate status. Consult a qualified international tax attorney before renouncing.