Digital Nomad
Digital Nomads and Foreign Earned Income Exclusion: What’s Current in 2026
With 2026 adjustments, digital nomads should understand standard deductions, foreign earned income exclusion, and changing AMT thresholds to optimize their U.S. tax burdens while abroad.
By NomadicTax Research Team • 5-8 min read • March 15, 2026
## What Digital Nomads Should Know in 2026 Adjustments
While not all policy changes directly target digital nomads, recent inflation-adjusted figures under U.S. tax law and the One, Big, Beautiful Bill (OBBB) affect key thresholds and exclusions that matter to international remote workers. These include standard deduction increases, foreign earned income exclusion amounts, and changes to Alternative Minimum Tax (AMT) phaseouts. ([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))
## Foreign Earned Income Exclusion (FEIE)
- For tax year 2026, the **FEIE** has been increased to **$132,900**, up from $130,000 in 2025. This is the amount U.S. citizens or residents can exclude if they meet the bona fide residence or physical presence test while working 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))
- Housing exclusion/deduction limits also adjust by inflation; check Publication 54 and IRS guidance for updated ceilings.
## Standard Deduction and Tax Brackets
- The standard deduction for single filers for tax year 2026 is **$16,100**; heads of household: **$24,150**; married filing jointly: **$32,200**. These increases reduce taxable income and help many nomads fall into lower brackets. ([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))
- Bracket thresholds also shifted: e.g. 24% rate begins at $105,700 (single), that for married filing jointly is $211,400. Top rate of 37% remains at $640,600 for singles and $768,700 for married joint filers. ([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))
## AMT Exemption and Phase-Outs
- AMT exemption amounts increase to **$90,100** for unmarried individuals in 2026; married filing jointly exemption phase-out begins at $1,000,000. ([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))
- These changes may keep high overseas payers from being forced into AMT earlier.
## Action Tips for Digital Nomads
- Keep meticulous track of days spent in and out of the U.S. to meet physical presence test (330 full-days abroad) or bona fide residence requirements.
- If your employer provides housing or other allowances, ensure documentation for housing exclusion/allowance under foreign earned income rules.
- Use the increased standard deduction strategically: combining deductions with FEIE may often reduce taxable income significantly.
- Consider tax treaty benefits between your U.S. state of residence (if any) and countries where you spend extended time—many treaties address double taxation of wages abroad.
With the newly adjusted thresholds for standard deductions, earning exclusions, and AMT, digital nomads are in a better position than in previous years—but must still stay disciplined in record keeping, residency tests, and understanding entity-structure implications for their work arrangements abroad.