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Salary After Tax · Updated June 2026

Foreign Tax Credit vs FEIE Calculator

The choice that shapes every expat return: exclude the first $132,900 of earnings (FEIE) or credit foreign taxes dollar-for-dollar against US liability (FTC). The decision rule is the local rate: below ~15–18% effective foreign tax, FEIE usually wins; above it, FTC wins and banks carryforwards.

The FTC preserves things the FEIE kills: IRA/Roth contribution eligibility (you need non-excluded earned income), refundable Child Tax Credit access, and a 10-year carryforward of unused credits for future low-tax years.

Salary after tax calculator · 2026

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Where every dollar goes

    2026 rules: federal brackets, $16,100/$32,200 standard deductions, $184,500 SS wage base. Hourly figures assume 40 h/week × 52. Non-US figures are planning estimates incl. employee social charges.

    Key insights

    Key insights

    • Foreign rate < ~15–18% → FEIE; higher → FTC.
    • FTC preserves IRA eligibility and CTC refundability.
    • Unused credits carry forward 10 years.
    • FEIE revocation = 5-year lockout.
    • High-tax-country filers usually owe $0 either way – leftovers differ.

    Decision factors beyond the rate

    Choose FEIE when: zero/low-tax country, no US-side retirement contributions planned, simple salary income. Choose FTC when: high-tax Europe, kids (CTC refundability), IRA funding, or volatile income that benefits from credit banking.

    The trap: revoking FEIE after using it locks you out for 5 tax years without IRS consent. Run both methods in the year you'd switch – the asymmetry punishes casual flip-flopping.

    FAQ

    Frequently asked questions

    Which is better, FEIE or FTC?

    Rate-dependent: nomads and Gulf-state earners → FEIE; Western-Europe employees → FTC (zeroes tax and banks carryforwards). Families wanting the refundable CTC lean FTC even in mid-tax countries.

    Can I use both together?

    Yes – FEIE on the first slice of earned income, FTC on taxes attributable to the excess. Common for >$200k earners in mid/high-tax countries.

    Why does FEIE block IRA contributions?

    IRA eligibility requires taxable compensation; fully excluded income doesn't count. FTC keeps income taxable (then credits the tax), preserving contribution room.

    How do FTC carryforwards work?

    Credits unused this year carry back 1 and forward 10 years within the same income category – a Germany decade can fund a later UAE year's US bill.

    What does revoking FEIE cost?

    Five years of ineligibility without a private letter ruling. Model the switch year carefully; the FTC-only path is usually the stable long-term choice for high-tax residents.

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