Digital Nomad
What Digital Nomads Should Know About US Tax With the One, Big, Beautiful Bill
For remote workers living outside the US or traveling continuously, recent US legislative changes under the OBBB may alter your foreign earned income exclusion, deductions, and reporting obligations.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Digital Nomads & US Tax: Key Changes from OBBB
OBBB (One, Big, Beautiful Bill) has updated several tax provisions relevant to nomads and expats. Here’s what you need to know:
### Foreign Earned Income Exclusion (FEIE)
- For **tax year 2026**, the exclusion amount increases to **$132,900**, up from $130,000 in 2025. This helps nomads exclude more qualifying foreign earned income from US taxation. ([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))
- Qualifying criteria still include the **Bona Fide Residence Test** or **Physical Presence Test**, and “foreign earned” as defined under IRC §911. Ensure you maintain sufficient presence abroad or residency.
### Standard Deduction & Tax Brackets Inflation Adjustments
- Standard deductions and tax brackets increase with inflation for TY 2026: single filers’ standard deduction becomes **$16,100**, married filing jointly **$32,200**, heads of household **$24,150**. ([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))
- Marginal rates remain the same (10% through 37%) but apply to higher income thresholds. This can reduce tax liability for nomads with uneven income streams due to fluctuations or currency effects. ([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))
### New Reporting & Deduction for Car Loan Interest, Tips, Overtime
- Even nomads who return to the US or maintain a home base may qualify for deductions on **qualified car loan interest**, **tips**, or **qualified overtime compensation** if the rules are met (loan after Dec 31, 2024, occupation list for tips, etc.). ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors?utm_source=openai))
## Example Scenarios for Nomads
- **Scenario 1**: Alex lives abroad 330 days/year, works remotely for US company. Earns $140,000 foreign salary in 2026. He qualifies for FEIE up to $132,900 → reports only $7,100 subject to US tax, plus standard deduction.
- **Scenario 2**: Maria splits time 8 months abroad, 4 months in US in 2025, earns tips on short US stays. Only for US base years she may have qualified tips deduction, if occupation is listed, she has payor statements. Use the transition relief during 2025 to avoid penalties.
## Compliance & Planning Tips
- Keep meticulous documentation: proof of residence abroad, records of qualified tips/overtime/car loan interest, etc.
- Know withholding obligations: nomads with overseas income may need to adjust estimated tax payments and Form W-4 isn’t directly useful — coordinate with employer if overseas compensation includes tips/overtime interest deductions.
- Track changes for 2026: updates to FEIE, standard deductions, inflation adjustments — these affect tax due when filing in 2027.
## Action Steps for Digital Nomads Right Now
- Review whether you’re eligible for new deductions (tips, overtime, etc.) and collect necessary documents.
- Calculate expected foreign earned income for 2026 and see whether FEIE covers it.
- Consult a tax professional to ensure treaty implications (if in a country with US tax treaties), foreign tax credits, and reporting (FBAR, Form 8938, etc.) remain handled correctly.
- Use updated tax rate/provisions when estimating 2026 liability, incorporate inflation adjustments.
These rules can mean meaningful savings for nomads — but only if you anticipate changes and stay on top of both reporting and withholding.