How to Renounce US Citizenship in 2026: Process, $450 Fee and Exit Tax

The United States taxes its citizens on worldwide income no matter where they live. Moving abroad doesn't change that. The foreign earned income exclusion softens it, but you still file every year. The only way to fully leave the US tax system is to give up citizenship (or a long-held green card).

Renunciation is permanent and serious: you lose the right to live and work in the US, and you can't undo it on a whim. Done properly, the process is straightforward. Done carelessly, it can trigger an exit tax on assets you never sold. This guide covers the State Department process, the IRS side (Form 8854), and how to tell whether you're a "covered expatriate."

How much does it cost to renounce US citizenship?

The State Department fee is $450, effective April 13, 2026. A final rule cut it from $2,350, a fee that had stood since 2015. You pay it at the embassy or consulate on the day you renounce. It's non-refundable.

Other costs to budget for:

Step 1: Get another citizenship first

The State Department will let you renounce even if it would leave you stateless, but it strongly warns against it, and in practice a stateless person can't travel or open a bank account. So secure a second nationality before you start. Common routes:

• Descent: Ireland, Italy, Poland, Germany, and others pass citizenship through parents or grandparents.
• Naturalisation: after a period of legal residence, which ranges from about 5 to 10 years depending on the country.
• Investment: Caribbean citizenship-by-investment programmes, or a residence-by-investment route that leads to citizenship later. See the golden visa countries and the Panama Friendly Nations visa.

Step 2: Make sure your US tax filings are up to date

To avoid covered expatriate status, you have to certify on Form 8854 that you've complied with all federal tax obligations for the five tax years before the year you expatriate. If you've never filed from abroad, the IRS Streamlined Foreign Offshore Procedures let non-willful filers catch up. You file three years of returns and six years of FBARs, with no penalty. Many "accidental Americans" use this route before renouncing.

Step 3: Renounce at a US embassy or consulate abroad

Under the Immigration and Nationality Act §349(a)(5), you have to renounce in person, before a US consular officer, in a foreign country. You can't renounce by mail or from inside the US. The process:

1. Book an appointment at a US embassy or consulate. Waiting times range from a few weeks to over a year depending on the post. Some posts are faster, so you can choose a different country.
2. First interview (at many posts): the officer confirms that you understand the consequences and are acting voluntarily. You complete Form DS-4079 (questionnaire) and DS-4081 (statement of understanding).
3. Oath of renunciation: you sign DS-4080 in front of the officer, pay the $450 fee, and hand over your US passport.
4. Certificate of Loss of Nationality (CLN): the State Department in Washington approves Form DS-4083. That usually takes a few weeks to several months. Your expatriation date is the date of the oath.

Get the official instructions from the State Department's renunciation page.

Step 4: File your final return and Form 8854

For the year you renounce, you file a dual-status return: Form 1040 for the part of the year you were a citizen, and Form 1040-NR (as a statement) for the rest. You attach Form 8854, the initial and annual expatriation statement, which is due with that return. Also file a final FBAR. If you skip Form 8854, you're treated as a covered expatriate whatever your wealth, with a $10,000 penalty on top.

Am I a covered expatriate?

This is the question that decides whether you face an exit tax. You're a covered expatriate if you meet any one of these tests on the date you expatriate:

There are two narrow exceptions to the first two tests. They don't apply to the compliance test.

• Dual citizens from birth who are still citizens and tax residents of the other country, and who were US residents for no more than 10 of the past 15 years.
• People who renounce before age 18½ and were US residents for no more than 10 years.

Green card holders count too. If you held a green card in at least 8 of the last 15 years, you're a "long-term resident," and giving it up (Form I-407) is an expatriation for these rules.

How does the exit tax work?

If you're a covered expatriate, IRC §877A treats you as having sold everything you own at fair market value the day before you expatriate. That's the mark-to-market regime. Net gain above an exclusion of $910,000 for 2026 ($890,000 in 2025) is taxed at the normal capital gains rates. Some assets get special treatment:

• IRAs, HSAs, and 529 plans ("specified tax-deferred accounts") are treated as fully distributed the day before expatriation and taxed as ordinary income, without the 10% early withdrawal penalty.
• Eligible deferred compensation such as a US 401(k) isn't taxed up front if you waive treaty benefits. Instead, 30% is withheld from future payouts.
• Non-grantor trusts: 30% is withheld from distributions to you.

You can elect to defer the mark-to-market tax until you actually sell, but you have to post adequate security and pay interest. Full mechanics are in our exit tax guide.

Worked example

A US citizen living in Portugal has a net worth of $2.4 million. That's over $2 million, so they're a covered expatriate. They hold a stock portfolio with $1.5 million of unrealised gains and an IRA worth $300,000.

• Mark-to-market gain: $1,500,000 − $910,000 exclusion = $590,000 taxable, at up to 20% + 3.8% NIIT, so roughly $140,000.
• IRA: $300,000 taxed as ordinary income in the final year, roughly $80,000–$100,000 depending on their other income.

If the same person had first given away enough to bring their net worth under $2 million, for example $500,000 to a non-US spouse using the annual exclusion over several years, and had their filings in order, they would not be covered. They'd pay no exit tax at all. That's why planning starts years before the embassy appointment.

What happens after you renounce?

• Gifts and bequests from a covered expatriate to US citizens or residents are taxed to the recipient at the top estate and gift tax rate (40%) under IRC §2801. This applies above the annual exclusion, $19,000 for 2026.
• The Reed Amendment (INA §212(a)(10)(E)) allows former citizens who renounced to avoid tax to be refused entry to the US. It has essentially never been applied in practice. Former citizens visit on ESTA or a visa like any other foreigner.
• Social Security benefits you've earned remain payable in most countries.
• US-source income (US dividends, US real estate) stays taxable as a non-resident alien's income, usually through withholding.
• You stop filing US returns and FBARs once the expatriation year is closed.

How long does the whole process take?

Should you renounce?

It makes sense if you have no plans to live in the US, the annual compliance cost (returns, FBARs, Form 5471 for your companies, banks refusing US clients) is real, and you can leave as a non-covered expatriate. It makes less sense if you might want to retire in the US, or if you're well above the thresholds and the exit tax would be large. Some people renounce after moving to one of the countries with no income tax, where being American is the only tax they pay.

Not tax or legal advice. Fees and thresholds are from the State Department and IRS as of November 2026. Use a cross-border tax adviser before you expatriate.