What Is the One Big Beautiful Bill Act (OBBB)?
One Big Beautiful Bill Act (also popularly known as the “Big Beautiful Bill” or OBBB) was signed into law on July 4, 2025. It contains a large package of tax provisions—some temporary and others permanent—that affect individual income rates, credits, deductions, and reporting requirements. Expats (American citizens abroad) are among those who are affected.
Key Provisions in OBBB Affecting Expats
Following are some of the significant aspects of OBBB that should interest U.S. expats:
| Provision | How It Affects Expats |
| Foreign Earned Income Exclusion (FEIE) | The FEIE limit is raised to around $130,000 for earnings for the year 2025 (reported in 2026). This will enable more of your foreign-earned income to be tax-excluded from U.S. |
| Preservation of Foreign Tax Credit (FTC) | The bill scrapped a surtax scheduled that would have restricted use by certain expats. Expats continue to use FTC in full to avoid double taxation. |
| Remittance Tax | Beginning January 1, 2026, there will be a tax of 1% excise/remittance on certain money transfers out of U.S. accounts (cash, money orders, etc.) to foreign recipients. Money transfers out of debit/credit cards originating in the U.S. or bank wire transfers may be exempt under certain laws. |
| Expanded Child Tax Credit | Child credit raised to $2,500 through tax years 2025-2028. Some requirements for eligibility were tightened, e.g., SSNs required for qualifying kids for refundable component. Mixed-status households may be affected. |
| Extended TCJA Tax Cuts | The 2017 Tax Cuts and Jobs Act (TCJA) tax rates are now permanent rather than set to lapse at end-2025, giving expats more tax planning predictability. |
What Expats Must Do: Filing Tips & Steps
These changes necessitate you to adjust how you file your U.S. tax returns. The following are the steps to file correctly under the new law:
Glide Your Tax Tools or Tax Preparer
Make sure your tax software or tax preparer knows all the OBBB changes—for example, the new FEIE limit, remittance tax, and rules on Child Tax Credit.
Monitor Foreign Income Carefully
Since the FEIE increased, more wages or business income earned overseas may be exempt now. Ensure you have documentation of your foreign earned income, foreign tax imposed, and documentation of residence abroad (or physical presence) in order to qualify.
Remittance Tax Planning
If you hold United States accounts and make remittances abroad through channels that are under the remittance tax in 2026, get ready. Use exempt methods of transfer, or bunch remittances where feasible. Keep records of how money was transferred.
Child Tax Credit Checks
If you have kids, ensure they properly possess U.S. Social Security Numbers, especially in case you want to claim the refundable credit portion of the Child Tax Credit. Learn about how qualification is calculated under OBBB. Mixed status households need to review rules carefully.
Foreign Tax Credit Use
As the FTC is being kept, ensure foreign taxes paid are being recorded. Use foreign income and tax reports to report credits to offset your U.S. tax liability.
Check Deduction Changes
As some deductions (e.g., SALT limits, a few rules on itemizing) have changed, check whether you should take the standard deduction or itemize. Some tip/overtime allowances are new; check whether you qualify.
Compliance & Reporting Requirements
FBAR & FATCA rules continue. No threshold changes have been announced, but fines remain high.
Be transparent about foreign inheritances or gifts—OBBB alters reporting thresholds that could result in additional disclosure.
Common Mistakes Expats Should Avoid
- Overlooking the Remittance Tax: not accounting for all money transfers being exempt
- Believing retroactive changes prior to 2025 income — most apply from 2025 or 2026
- Under-reporting children’s SSNs or missing documents for credits
- Not maintaining foreign residence abroad in close tabs (for qualifying under FEIE)
- Overlooking new deduction/cap rules, which can reduce itemized value
FAQs: One Big Beautiful Bill & Expats
For most expats, the changes like the increased FEIE are for 2025 income (reported in 2026). Remittance tax starts January 1, 2026.
No. Only specific transfer methods (cash, money orders, etc.) are covered. Transfers paid by bank/ACH or U.S. issued debit/credit cards would presumably be excluded under law.
No. Section 899, upon which surtaxes against foreign entities and digital services taxes would be levied, was removed from the final product of legislation. Expats benefit from having FTC intact.
If you have foreign earned income and qualify under physical presence or bona fide residence test, more of your income is exempted. This can reduce your U.S. taxable income significantly.
Yes. The Child Tax Credit was increased, but the rules were tightened up: at least one parent must have a current SSN to be eligible for the amount that is refundable. Mixed-status households ought to research with caution.
Conclusion
The One Big Beautiful Bill Act is among the biggest tax changes for American people in recent history. For expats, most changes are favorable—greater FEIE, retained FTC, bigger child credit—but along with this come new regulations and pitfalls (remittances, paperwork, eligibility tests).
If you’re an expat, it’s time to revisit your tax strategy: know what’s new, keep good records, get a tax pro if you need one, report with the OBBB rules in mind. Surprise on 2026-2027 filings will not be worth it.
