US Exit Tax Calculator
Estimate your covered-expatriate status and the Section 877A mark-to-market tax before you renounce US citizenship or surrender a long-term Green Card.
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2025: net-worth test $2,000,000 · income-tax test $206,000 · gain exclusion $890,000
Your estimate — 2025
Based on your inputs you would be treated as a covered expatriate (net-worth test). The first $890,000 of your net gain is excluded, leaving $1,110,000 taxable and an estimated exit tax of $222,000. Deferred compensation, IRAs/401(k)s and non-grantor trust interests are taxed under separate rules not shown here.
Estimate only — confirm with Jungle Tax before acting. This calculator applies simplified current-year Section 877A figures and does not model deferred compensation, tax-deferred accounts, non-grantor trusts, the Section 2801 succession tax, the payment-deferral election, state tax or UK-side consequences. Expatriation is irreversible.
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Understanding the US exit tax
The US is one of the only countries on earth that taxes its citizens and permanent residents on their worldwide income no matter where they live. For internationally mobile, high-net-worth individuals, that reach can become a burden they eventually decide to end — by renouncing US citizenship or, for long-term Green Card holders, by surrendering their permanent-resident status. But the door out is not free. Under Internal Revenue Code Section 877A, leaving the US tax net can trigger a one-time expatriation tax, universally known as the exit tax. Getting the numbers right before you act is essential, because the decision to expatriate cannot be undone.
What the exit tax actually is
The exit tax is a mark-to-market tax. On the day before your expatriation date, the IRS pretends you sold every asset you own anywhere in the world at its fair market value. It then calculates the net unrealised gain across that entire deemed sale — the difference between what your worldwide portfolio is worth and what you paid for it. From that net gain you subtract an annual exclusion amount ($890,000 for 2025), and the excess is taxed, generally at long-term capital gains rates. There is no cash-out event and no willing buyer; the tax is imposed on paper gains you may never have realised, which is precisely why the calculation surprises so many people.
Who has to worry about it: covered expatriates
Crucially, the exit tax does not apply to everyone who leaves. It applies only to covered expatriates. You become a covered expatriate if you expatriate and meet any one of three tests. The net-worth test catches you if your worldwide net worth is $2 million or more. The tax-liability test catches you if your average annual net US income tax over the five years before you expatriate exceeds an inflation-indexed threshold ($206,000 for 2025). And the certification test catches you if you cannot certify on Form 8854 that you have complied with all US federal tax obligations for the previous five years — meaning even a modest-net-worth individual with unfiled returns can be swept in. Because these are bright-line tests, the planning window is before expatriation, not after.
The high-net-worth cross-border angle
For Jungle Tax clients the exit tax is rarely a hypothetical. Many are US citizens who have built lives, businesses and investment portfolios in the UK; others are UK-based executives and entrepreneurs who took a US Green Card years ago and have now held it long enough to be treated as long-term residents (lawful permanent residents in at least 8 of the last 15 tax years). When such individuals decide to sever US ties, the $2 million net-worth threshold is almost always crossed — a family home, a private-company shareholding and a pension can reach it on their own. The mark-to-market base is worldwide, so UK real estate, private equity, crypto, art and closely held business interests all feed the calculation. The result is that the exit tax for a HNW cross-border individual is frequently an order of magnitude larger than a simple US-only view would suggest.
How the exit tax is calculated
The headline mechanics are straightforward, even if the underlying valuations are not. First, establish covered-expatriate status. If you are covered, total the fair market value and cost basis of your worldwide assets to arrive at a net unrealised gain. Subtract the year's exclusion amount. Apply the relevant capital gains rate — 0%, 15% or 20% for most long-term gains, with a small number of ordinary-income items taxed at higher rates. The product is your mark-to-market exit tax. This tool models exactly that headline path so you can see the shape of the liability, but note that three important categories sit outside the mark-to-market computation and follow their own rules:
| Asset category | How it is taxed on expatriation |
|---|---|
| General worldwide assets | Deemed sold; net gain above the exclusion taxed at capital gains rates. |
| Eligible deferred compensation | Not marked to market; 30% withholding on future distributions instead. |
| Ineligible deferred comp / IRAs / 401(k)s | Treated as fully distributed the day before expatriation; taxed at ordinary rates. |
| Non-grantor trust interests | 30% withholding on future distributions attributable to the interest. |
Year-by-year thresholds
Two of the three key figures are indexed for inflation each year; the $2 million net-worth threshold is fixed by statute and has not moved. Because your expatriation year determines which figures apply, timing can matter — expatriating one side of a year-end can shift the exclusion and income thresholds you are measured against.
| Expatriation year | Net-worth test | Avg. income-tax test | Gain exclusion |
|---|---|---|---|
| 2023 | $2,000,000 | $190,000 | $821,000 |
| 2024 | $2,000,000 | $201,000 | $866,000 |
| 2025 | $2,000,000 | $206,000 | $890,000 |
Planning levers before you expatriate
Because covered-expatriate status turns on bright lines, thoughtful planning in the years before expatriation can materially change the outcome. Lifetime gifting can bring net worth below $2 million, though it must respect US gift-tax rules and, for covered expatriates, the later Section 2801 succession tax on US recipients. Managing the five-year average tax liability, harvesting gains and losses, and valuing illiquid assets defensibly all feed the number. Above all, ensuring five clean years of US tax compliance — filed returns, FBARs and information returns — is what lets you certify truthfully on Form 8854 and avoid the certification test entirely. Long-term Green Card holders sometimes plan to abandon the card before crossing the 8-of-15-year line, side-stepping the regime altogether.
What the calculator does and does not do
The estimate above tells you whether, on your inputs, you are a covered expatriate and what the headline mark-to-market tax might be. It is a decision-support starting point, not a filing figure. It deliberately omits deferred compensation withholding, deemed distributions from tax-deferred accounts, non-grantor trust treatment, the Section 2801 tax on gifts and bequests to US persons, the option to defer payment of the tax until assets are actually sold, state-level taxes, and the UK capital gains, remittance and domicile consequences that run in parallel for our cross-border clients. Coordinating both tax systems is where the real value lies — and where a mistake is most expensive. Treat every figure here as a current-year estimate and confirm it with Jungle Tax before you act.
Frequently Asked Questions
The US exit tax and expatriation — what high-net-worth individuals ask most.
The US exit tax — formally the mark-to-market tax under Internal Revenue Code Section 877A — is a one-time tax triggered when a "covered expatriate" renounces US citizenship or a long-term Green Card holder abandons their permanent-resident status. On the day before expatriation the IRS treats you as if you sold all of your worldwide assets at fair market value. The net unrealised gain above an annual exclusion amount ($890,000 for 2025) is then taxed, generally at long-term capital gains rates.
You are a covered expatriate if you renounce US citizenship (or, for long-term Green Card holders, give up your status) and meet ANY one of three tests: (1) the net-worth test — your worldwide net worth is $2 million or more; (2) the tax-liability test — your average annual net US income tax for the five years before expatriation exceeds the indexed threshold ($206,000 for 2025); or (3) the certification test — you fail to certify on Form 8854 that you have complied with all US federal tax obligations for the prior five years. Failing the certification test makes you a covered expatriate even if your net worth and income are modest.
For expatriations in 2025 the mark-to-market gain exclusion is $890,000. This means the first $890,000 of your net unrealised worldwide gain is not taxed; only the excess is subject to the exit tax. The exclusion is indexed for inflation each year — it was $866,000 in 2024 and $821,000 in 2023.
The net-worth test threshold is $2 million. Unlike the exclusion and the income-tax figure, this $2 million amount is fixed in the statute and is not indexed for inflation, so it has stayed the same for years. If your worldwide net worth (assets minus liabilities, at fair market value) is $2 million or more on your expatriation date, you meet the net-worth test and are a covered expatriate.
The tax-liability test looks at your average annual net US income tax liability over the five tax years ending before the year you expatriate. For 2025 expatriations the threshold is $206,000 (it was $201,000 for 2024 and $190,000 for 2023). If your five-year average exceeds this figure you are a covered expatriate — this is your actual tax liability, not your income.
The deemed sale is generally taxed at the long-term capital gains rates that would apply if you had actually sold the assets — 0%, 15% or 20% depending on the character of the gain and your income level. Most high-net-worth expatriates fall in the 20% bracket. Ordinary-income assets (for example certain accrued compensation) can be taxed at higher ordinary rates, and specialised rules apply to deferred compensation, tax-deferred accounts and interests in non-grantor trusts, which are taxed differently and are not part of the mark-to-market calculation.
Yes, potentially. The exit tax applies to "long-term residents" — Green Card holders who held lawful permanent-resident status in at least 8 of the last 15 tax years — when they abandon the Green Card or are treated as giving it up under a tax treaty. Once you cross the 8-year mark, ceasing US residency can trigger the same covered-expatriate tests and mark-to-market tax that apply to citizens who renounce.
Because the tests are bright lines, planning is about managing them before you expatriate. Common strategies include lifetime gifting to bring net worth below $2 million (subject to gift-tax rules), timing the expatriation around income to manage the five-year average tax, harvesting gains and losses, and — critically — ensuring five clean years of tax compliance so you can truthfully certify on Form 8854. Long-term Green Card holders sometimes plan to abandon status before hitting the 8-of-15-year threshold. Every strategy has trade-offs and must be modelled carefully with a cross-border adviser.
Form 8854, the Initial and Annual Expatriation Statement, is the form you file with the IRS to formally notify it of your expatriation and to certify five years of tax compliance. It is how you establish whether you are a covered expatriate and report the mark-to-market computation. Failing to file Form 8854 automatically makes you a covered expatriate under the certification test — and can trigger a separate penalty — regardless of your net worth or income.
No. For citizens, formally renouncing before a US consular officer (or otherwise relinquishing citizenship) is the trigger. For long-term Green Card holders, abandoning the card by filing Form I-407, having it revoked, or being treated as a non-resident under a tax treaty tie-breaker can all trigger long-term-resident expatriation. In every case the covered-expatriate tests and, if applicable, the mark-to-market tax are assessed as of the expatriation date.
They are treated separately. "Eligible deferred compensation" (such as certain pensions where the payer agrees to withhold) is generally subject to a 30% withholding tax on future distributions rather than the mark-to-market tax. "Ineligible deferred compensation" and specified tax-deferred accounts (such as IRAs and 401(k)s) are instead treated as fully distributed the day before expatriation and taxed at ordinary rates. These items are outside the simplified mark-to-market estimate this calculator produces.
Worldwide. The deemed sale under Section 877A captures the fair market value of your entire global portfolio — US and non-US real estate, brokerage accounts, private company shares, cryptocurrency, art and other collectibles — not just US-situs assets. This global reach is why the calculation is often far larger for internationally mobile, high-net-worth individuals than they expect.
Net worth is the fair market value of all your assets minus your liabilities, determined as if everything were sold on the expatriation date. It includes assets that would not normally be on a tax return — beneficial interests in trusts, closely held business interests, life-insurance cash values, pensions and personal property. Because illiquid and private holdings require valuations, high-net-worth expatriates typically commission formal appraisals to support the Form 8854 figures.
Yes. Many of our clients are US citizens or Green Card holders living in the UK, or dual US/UK taxpayers considering giving up US status to simplify their affairs. The US-UK income tax treaty does not eliminate the exit tax, but coordinated planning matters: the timing of a UK disposal, UK capital gains tax on the same assets, remittance-basis history, and UK domicile/deemed-domicile position all interact with the US mark-to-market event. Getting both sides modelled together avoids paying tax twice on the same gain.
The mark-to-market tax is reported on your final-year (dual-status) US income tax return for the year of expatriation, alongside Form 8854, and is generally due with that return. You may make an irrevocable election to defer payment of the mark-to-market tax on a property-by-property basis until the property is actually sold, but interest accrues, you must post adequate security (such as a bond), and you must waive treaty rights that would prevent collection. This deferral election is a specialist decision.
Generally your worldwide US tax obligations end once you are a non-resident alien, but not entirely. You remain subject to US tax on US-source income (for example US real estate or certain US dividends). Covered expatriates also face a separate inheritance-style "succession tax" under Section 2801: US-citizen or resident recipients of gifts or bequests from a covered expatriate can owe tax at the highest gift/estate rate. Expatriation ends most obligations but creates new, lasting ones that need planning.
No. This tool gives a simplified, current-year estimate of covered-expatriate status and the headline mark-to-market tax. It does not model deferred compensation, tax-deferred accounts, non-grantor trust interests, the Section 2801 succession tax, state tax, the deferral election, or UK-side consequences. Expatriation is one of the most consequential and irreversible steps in cross-border tax. Confirm every figure with Jungle Tax before acting.
Thinking about expatriating?
Our US/UK dual-qualified specialists model the exit tax, the covered-expatriate tests and the UK-side consequences together — so you understand the full cost of leaving the US tax net before you take an irreversible step.
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