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    FTC vs FEIE Comparison Calculator 2026

    US expats can either exclude foreign earned income from US tax (Form 2555) or credit foreign taxes paid against US liability (Form 1116). Pick the one that cuts your US tax most — and remember the FEIE election locks you in for 5 years if revoked.

    Guidance, not advice. This calculator runs the rules as published, it doesn't assess your circumstances. Your actual tax may be affected by factors it doesn't cover (deductions, credits, filing status nuances, state-specific adjustments). Always seek financial or tax advice from a qualified CPA, Enrolled Agent, or tax attorney, or contact the IRS. Read our editorial scope →

    Two paths to avoid double taxation
    US citizens and green-card holders are taxed on worldwide income. The Foreign Earned Income Exclusion (§911, Form 2555) and the Foreign Tax Credit (§901/904, Form 1116) are mutually exclusive on the same dollar of income — pick the one that lowers your US tax most. Default rule of thumb: low foreign tax → FEIE; high foreign tax → FTC.

    Your situation (TY 2026)

    All amounts in USD. "US tax on worldwide income" is the pre-FEIE/FTC baseline (use the Income Tax Calculator if you don't have it).

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    Effective foreign tax rate on earned income: 12.5%

    FEIE (§911 / Form 2555)

    Recommended

    Exclude up to $132,900 of foreign earned income, plus housing up to $39,870.

    Earned-income exclusion$120,000
    Housing exclusion$0
    Total exclusion$120,000
    Estimated US tax after FEIE$0
    Estimated savings$22,000

    FTC (§901 / Form 1116)

    Dollar-for-dollar credit for foreign income tax, capped by the §904 per-basket limitation. Excess credits carry back 1 year / forward 10 years.

    §904 limitation$22,000
    Credit allowed$15,000
    Excess (carryback/carryforward)$0
    Estimated US tax after FTC$7,000
    Estimated savings$15,000
    Decision framework: FEIE wins
    Low effective foreign tax rate — excluding income from US tax beats crediting low foreign taxes.
    FEIE election is sticky
    Revoking a §911 FEIE election locks you out for 5 tax years without IRS consent. FEIE also requires bona-fide-residence or physical-presence (330 days in 12 months) qualification.
    FTC per-basket limitation
    §904(d) buckets foreign income into separate categories (general, passive, GILTI, foreign-branch, treaty-resourced). The limitation is computed per basket, so this tool's single-basket estimate is a starting point — multi-basket filers need a full Form 1116 per category.