Digital Nomad
Digital Nomad Considerations: US Tax Updates & Canada’s Move Toward Automatic Filing
Recent policy shifts in the US and Canada change how remote workers and nomads are taxed, offering both challenges and opportunities—especially around residency, credits, and simpler filing.
By NomadicTax Research Team • 5-8 min read • March 28, 2026
## US Updates Relevant to Digital Nomads
### Foreign Earned Income Exclusion (FEIE)
The FEIE threshold increased to **$132,900 for 2026**, up from $130,000 in 2025. Digital nomads earning abroad should ensure their foreign earned income remains under limits or plan around it. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
### Premium Credits, Self-Employment, and Health Accounts Adjustments
Changes to health FSAs, out-of-pocket maximums, deduction thresholds and credits under OBBB affect nomads with US income, especially if contributing to HSAs or FSAs, or if managing health care costs abroad. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
## Canada’s Filing Simplification & Admin Shifts
### Pre-filled Returns & Automatic Filing
Beginning with the 2026 tax year, CRA will prepare **pre-filled returns for about 1 million low-income Canadians with simple tax situations, scaling to 5.5 million by 2028**. This helps nomads and Canadians abroad reduce filing complexity. ([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai))
### GST on New Homes & Fuel Charge Repeal
Canada eliminates GST on new homes for first-time buyers, and phases out the federal Fuel Charge framework, simplifying tax burdens for residents and possibly non-residents. ([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai))
## Tips for Digital Nomads & Remote-First Workers
- **Track tax residency status** for both US and host countries—many treaties hinge on days spent in each country.
- For US citizens abroad: adjust for FEIE threshold changes; also watch for deductions or credits lost if income exceeds threshold.
- Use the CRA’s simplified filing if eligible—set up MyAccount, file early, and prepare documentation to match pre-filled inputs.
- Monitor travel or work location to take advantage of treaty benefits or foreign tax credits if paying tax in multiple jurisdictions.
## Example Scenario
A digital nomad earning US‐source income of $140,000 while living abroad in 2026 will exceed FEIE and must report surplus income. Meanwhile, a Canadian nomad with under $30,000 income and simple sources can use CRA’s future automatic return, avoiding taxable return filing at all if no tax owing.
## Action Plan
- Assess 2026 income vs FEIE limit if working for US clients abroad.
- Collect documentation (expenses, foreign taxes paid) to support credits or exclusions.
- Check eligibility early for Canada’s automatic/pre-filled systems to take advantage.
## Conclusion
Between the US inflation adjustments and Canada’s administrative streamlining, digital nomads have reason to revisit tax strategies now—not just at filing season—to avoid surprises and leverage simplification where available.