Digital Nomad
Digital Nomads and U.S. Tax: What’s New in 2025-26
Cross-border workers and remote nomads: key changes and planning opportunities for foreign earned income, HSAs, credits and filing distinctions.
By NomadicTax Research Team • 5-8 min read • March 4, 2026
## U.S. Taxes for Digital Nomads: What’s Changed Under OBBB
For Americans working abroad or remote from abroad, the One, Big, Beautiful Bill has introduced changes that affect foreign income exclusions, Health Savings Account eligibility, and more. ([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 is increased to **$132,900**, up from **$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))
- Nomads with rental or gig income abroad should confirm that income qualifies under “earned income” (for FEIE) vs “passive income.” Only earned income counts.
### Health Savings Account Flexibility and Eligibility
- **Bronze** and **catastrophic** health insurance plans will be treated as HSA-compatible starting **Jan 1, 2026**, even if purchased outside the exchange. ([eitc.irs.gov](https://www.eitc.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
- **Direct Primary Care (DPC)** fees may also be paid with HSA funds if the plan qualifies. Good news for nomads seeking generalized, remote care. ([eitc.irs.gov](https://www.eitc.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
### Reporting U.S. Source and Foreign Income
- Even if you qualify for FEIE, all income must still be **disclosed**, and foreign tax credits properly claimed to avoid double taxation.
- New inflation adjustments raise phase-outs or limits on MAGI-based deductions and credits; if living abroad, foreign housing exclusion or credit might help reduce U.S. taxable income.
### Other Changes to Know for 2025 Filing Season
- The **standard deduction** increases (as noted above). If working abroad, compare itemizing foreign taxes vs using standard deduction. ([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))
- **Child Tax Credit**, **Adoption Credit**, other credits—make sure SSNs or ITINs are valid by filing deadline including extension, or credit claims may be denied. ([irs.gov](https://www.irs.gov/newsroom/prepare-to-file-in-2026-get-ready-for-tax-season-with-key-updates-essential-tips?utm_source=openai))
## Actionable Planning Tips for Digital Nomads
- **Time your travel**: If evaluating whether you meet Physical Presence or Bona Fide Residence rules, a few days can shift qualification. Plan return trips carefully.
- **Health plans**: Choose Bronze/catastrophic or direct primary care if using HSAs; retain proof of plan eligibility.
- **Maintain strong records**: Track foreign income, foreign tax payments, housing costs—documents support both FEIE and foreign tax credit claims.
- **Dependents & residents abroad**: Ensure dependents’ SSNs/ITINs are valid and matches Social Security records to qualify for credits.
- **Consider state tax obligations**: Some states ignore foreign exclusions; nomad may still owe state taxes depending on domicile.
## Practical Example
Nomad “Alex” lives in Lisbon, works remote for a U.S. company, earns $140,000 in 2026. His foreign earned income exclusion is $132,900; remaining $7,100 is taxable in U.S. Also, he has a Bronze health plan—now HSA-eligible—and contributes $3,000 to an HSA, lowering taxable income further.
If Alex has children, ensure their SSNs/ITINs are properly valid before filing to claim Child Tax Credits.
## Bottom Line
For digital nomads, 2025–26 brings some long-awaited relief: expanded FEIE, HSA eligibility, and more clarity on new law changes. By planning ahead—with correct documentation, health plan choices, and credit filings—you can optimize your U.S. tax position even while globe-trotting.