Digital Nomad
Digital Nomads and U.S. Tax: Using New HSA Rules & Foreign Earned Income Gains
For remote workers and digital nomads, recent changes under U.S. law offer benefits in HSAs, foreign earned income exclusion, and tax planning via residencies—leverage them wisely.
By NomadicTax Research Team • 5-8 min read • July 2, 2026
## Key Policy Changes Relevant to Digital Nomads
Two recent changes are particularly useful for digital nomads and remote workers:
1. **Foreign Earned Income Exclusion (FEIE)** increased to **$132,900** for tax year 2026, up from about $130,000 in 2025. ([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))
2. Expansion of **Health Savings Account (HSA) eligibility** under the OBBB: plans like Bronze or Catastrophic insurance—even out of Exchange—with certain arrangements like direct primary care (DPC) now count as HSA-compatible beginning Jan. 1, 2026. Telehealth also permanently allowed before HDHP deductible met. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-guidance-on-new-tax-benefits-for-health-savings-account-participants-under-the-one-big-beautiful-bill?utm_source=openai))
## Tax Planning Strategies for Remote Workers
- **Use FEIE smartly:** As a foreign resident or globe-trotting nomad, if you qualify under bona fide residence or physical presence tests, you can exclude up to $132,900 from U.S. federal income. Time travel, citizenship, treaty status, and lodging matter—plan accordingly.
- **Max out HSAs:** Even if your insurance is Bronze or Catastrophic (or you use direct primary care), since Jan 1, 2026, you're eligible under new OBBB rules. Contributions are tax-deductible (or pre-tax), earnings grow tax-deferred, and withdrawals for qualified medical expenses are tax-free.
- **Choose your residency and tax household carefully:** If you live in a foreign country but maintain U.S. domicile, you may still owe U.S. taxes; take advantage of FEIE, foreign tax credits, or treaty provisions.
## Example Use Case
*Leo*, a freelance software developer, splits his time between Colombia and Mexico. During stays abroad exceeding 330 full-days, he meets Physical Presence Test, allowing him to exclude up to $132,900 of foreign earned income. He also has a Bronze ACA plan and pays a monthly fee for direct primary care—now qualifies for HSA. He contributes maximum to HSA and invests those tax savings.
## Compliance and Reporting Tips
- Keep meticulous **travel logs** for FEIE eligibility (dates, locations).
- Save all HSA eligibility certificates, plan documents, and statements proving Bronze or Catastrophic plan qualifies under the new rules.
- Report HSA contributions correctly on Form 8889.
- Foreign bank and asset reporting (FBAR, Form 8938) still required if thresholds met—FEIE doesn’t exempt those.
## Better Use of Treaties
Some treaties reduce U.S. tax on pensions, eliminate dual taxation, clarify residency. Check if host country has a treaty. If so, may exclude certain income or reduce withholding.
## Conclusion
Recent U.S. changes under the OBBB create powerful opportunities for digital nomads, especially with FEIE and HSA expansions. With clear documentation, smart planning, and proper reporting, remote life can be both fulfilling—and tax efficient.