Digital Nomad
Digital Nomads & the Foreign Earned Income Exclusion: What’s New in 2026
The One, Big, Beautiful Bill introduces a waiver for certain time requirements for expats in countries like Ukraine & Mali—opening new possibilities for digital nomads facing instability.
By NomadicTax Research Team • 5-8 min read • May 7, 2026
## Understanding the Foreign Earned Income Exclusion
U.S. citizens living and working abroad may exclude up to $132,900 of foreign earned income from U.S. taxation for tax year 2026, under IRS rules. But to qualify, you usually need to satisfy either the **bona fide residence test** or the **physical presence test**, each with strict time-based requirements. ([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))
## Recent Change: Waiver Under OBBB Act
The **One, Big, Beautiful Bill Act** (Public Law 119-21) includes a provision granting a **waiver of the minimum time requirements** under Section 911(d)(4) for individuals forced to leave a foreign country due to **war**, **civil unrest**, or similar adverse conditions. Effective for tax year 2025, this applies to countries such as Haiti, Ukraine, the Democratic Republic of the Congo, South Sudan, Iraq, Lebanon, and Mali. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
## Actionable Insights for Digital Nomads
- If you're in one of the listed countries and had to depart due to unrest or conflict, you may be exempt from having to reside there for the full term required.
- Apply for the exclusion when you file your 2025 tax return—but retain excellent records showing the date and reason for your departure.
- If you're planning to relocate, keep meticulous logs of dates, addresses, and contacts, especially for travel, housing, and emergency documentation.
## Hypothetical Example
Maria, a U.S. citizen, worked in Ukraine until March 2025 when she was forced to leave due to conflict. Under the waiver, she may still meet the requirements for the Foreign Earned Income Exclusion, even though she didn’t complete 12 continuous months of residence abroad. If she earned $130,000 abroad in 2025, and meets all other criteria, she could exclude that entire amount on her U.S return.
## Bottom Line
Digital nomads living in or displaced from certain affected countries have new flexibility thanks to the OBBB Act. Use this waiver smartly—and document everything. Legal and eligible exclusion can mean big savings and reduced tax risk. This is for tax year 2025 filings, effective immediately for those impacted. Schedule your record keeping and consultation accordingly.