The Big Beautiful Bill and American Expat Taxes

The One Big Beautiful Bill Act became law on July 4, 2025. It permanently extends the 2017 tax cuts, raises the child tax credit, and locks in a higher estate tax exemption. For the millions of Americans living abroad, the picture is more complicated. Some provisions help. Others create new compliance burdens. And the one thing expats actually wanted, an end to citizenship-based taxation, didn't make the cut.

The remittance tax

Starting January 1, 2026, a 1% excise tax applies to certain outbound money transfers from the U.S. The tax started as a 5% proposal, dropped to 3.5% in the House, and landed at 1% in the Senate.

The scope is narrower than the headlines suggest. It applies to transfers funded by cash, money orders, and cashier's checks. Transfers from a U.S. bank account, debit card, or credit card are exempt. For most expats who wire money between their own U.S. and foreign bank accounts, the tax likely doesn't apply. But if you're using cash-based remittance services like Western Union for any reason, you'll feel it. The remittance provider is responsible for collecting and remitting the tax quarterly.

Foreign gift reporting threshold

The bill lowers the Form 3520 reporting threshold for foreign gifts and inheritances from $100,000 to $50,000. That's a meaningful change for expats who receive gifts from foreign-national spouses, in-laws, or family members. A $60,000 inheritance from a foreign relative previously required no reporting. Now it does.

Penalties for failing to file Form 3520 are steep: 25% of the unreported gift amount per year. The bill also tightens penalties for unreported foreign accounts and increases scrutiny of income tied to foreign inheritances.

Foreign earned income exclusion

The FEIE was not specifically changed by the bill. It remains at $130,000 for tax year 2025, rising to $132,900 for 2026 through standard inflation adjustments. This is fine, but it's worth noting that the exclusion hasn't received a meaningful boost since the Tax Cuts and Jobs Act in 2017. For expats in high-cost cities like London, Zurich, or Tokyo, it doesn't cover much.

Child tax credit and estate tax

The child tax credit increases to $2,200 per child starting in 2025, made permanent and indexed for inflation. This helps expat families, though many expats already owe zero U.S. tax after claiming the FEIE and foreign tax credit, which limits the CTC's practical value.

The estate and gift tax exemption is permanently set at $15 million per person ($30 million for married couples) starting in 2026, indexed for inflation. Without this bill, the exemption would have dropped back to roughly $7 million in 2026. For expats with property in multiple countries, the higher exemption reduces the risk of a U.S. estate tax bill on worldwide assets.

Citizenship-based taxation stays

The U.S. remains the only major country that taxes its citizens on worldwide income regardless of where they live. Despite campaign rhetoric about helping Americans abroad, the bill does nothing to move toward residency-based taxation. Every American abroad still files a U.S. return every year, still reports foreign bank accounts via FBAR, and still navigates the overlap between two countries' tax systems.

Some expat advocacy groups are calling the bill a missed opportunity. Others are blunter: the compliance burden just got heavier while the core problem went unaddressed.

tl;dr

The Big Beautiful Bill permanently extends the 2017 tax cuts, raises the estate tax exemption to $15M, and bumps the child tax credit to $2,200. For expats, the 1% remittance tax on cash transfers is new but narrow. The foreign gift reporting threshold dropping to $50,000 is the bigger compliance headache. The FEIE got a routine inflation bump. Citizenship-based taxation, the thing expats actually want fixed, didn't change.