Can I use both the FEIE and the FTC?

Yes, but never on the same dollar of income. A common combination is excluding the first $130,000 (2025) with the FEIE and claiming the Foreign Tax Credit on income above it. The IRS prohibits crediting foreign tax paid on income you excluded.

What is the FEIE stacking rule?

Excluded income still sets your tax bracket. Under the Foreign Earned Income Tax Worksheet, tax on your remaining income is computed at the rates that would apply if the excluded amount were still on top — so income above the FEIE is taxed starting in the bracket where your full income sits, not from 10%.

Why does the FEIE block the child tax credit refund?

IRS Schedule 8812 instructions bar the additional (refundable) child tax credit for anyone who files Form 2555. Families abroad who qualify for the refundable credit — up to $1,700 per child for 2025 — often come out ahead electing the Foreign Tax Credit instead, even when both paths show $0 tax.

What happens if I switch from FEIE to FTC?

Claiming the FTC on income you could have excluded counts as revoking your FEIE election. Once revoked, you cannot use the FEIE again for five tax years without IRS consent via a private letter ruling — so the switch is a one-way door to plan deliberately.

FEIE vs Foreign Tax Credit Calculator: Which Saves You More in 2025–2026?

By Expat Cove Editorial Team Updated June 10, 2026 IRS figures: Rev. Proc. 2024-40 & 2025-32, verified June 2026

Short answer: low-tax country → the Foreign Earned Income Exclusion (Form 2555) usually wins; high-tax country → the Foreign Tax Credit (Form 1116) usually wins, because it reaches $0 US tax and banks the excess foreign tax as a 10-year carryover while keeping the refundable child credit. This calculator runs both elections on your real numbers with official IRS brackets — the 2025 FEIE cap of $130,000 or the 2026 cap of $132,900, the post-OBBBA standard deduction, and the stacking rule most quick estimates skip.

Your numbers

Tax year
Filing status
Foreign earned income (USD/yr)
Foreign income tax paid (USD/yr)

Scope: federal income tax only, earned income only, standard deduction, under 65, one earner. It ignores self-employment tax, the foreign housing exclusion, state tax and NIIT — see the caveats below. Estimates, not advice.

On this page

How the two elections work
The stacking rule
Three worked examples
The IRS figures used
Two traps before you choose
FAQ

How do the FEIE and the Foreign Tax Credit work?

They attack the same problem from opposite ends. The Foreign Earned Income Exclusion removes up to $130,000 (2025) / $132,900 (2026) of foreign earned income from US tax entirely — you claim it on Form 2555 after passing the Physical Presence Test (330 full days abroad in 12 months) or the Bona Fide Residence Test. The Foreign Tax Credit instead gives a dollar-for-dollar credit on Form 1116 for income tax you actually paid abroad. You may combine them — never on the same income.

FEIE: works even where you pay zero local tax (Panama, Costa Rica, Croatia, the Gulf). Requires the days test; excluded income can't feed IRA contributions or the refundable child credit.
FTC: works only where you actually pay foreign income tax. Excess credits carry back 1 year and forward 10 — a real asset if you might move home or to a low-tax country later.

What is the stacking rule (and why do quick estimates get it wrong)?

Excluded income still sets your bracket. Under the Foreign Earned Income Tax Worksheet in the Form 1040 instructions, tax on income above the FEIE is computed as the tax on your full taxable income minus the tax on the excluded amount — so the un-excluded slice is taxed at your top-of-stack rates, not from 10% upward. On $180,000 with the 2025 exclusion, the remaining ~$50,000 is taxed mostly in the 24% bracket, not the 10–12% brackets. This calculator applies the worksheet; many quick blog estimators don't, and understate the FEIE-path tax by thousands.

Three worked examples (2025 rules, single filer)

Same engine as the calculator, computed on the official 2025 brackets. The pattern to notice: at $100k the winner is decided by the host country's tax rate, and above the FEIE cap the stacking rule erodes the exclusion's edge.

FEIE vs FTC on three scenarios — tax year 2025, single, standard deduction $15,750, FEIE cap $130,000. Computed June 2026; rounded to the dollar.
Scenario	US tax with FEIE	US tax with FTC	Winner
$100,000 in Croatia (0% local tax on nomad-permit income)	$0	$13,449 (no foreign tax to credit)	FEIE saves $13,449
$100,000 in Spain (Beckham 24% ⇒ $24,000 foreign tax)	$0 (credits wasted)	$0 + $10,551 carryover banked	FTC — same bill, plus carryover & child-credit eligibility
$180,000 in Croatia (0% local tax)	$8,220 (stacking rule on the $50k above the cap)	$32,267	FEIE saves $24,047

Two elections can both show $0 owed and still not be equal: the FTC route in Spain banks a $10,551 ten-year carryover and keeps the refundable child credit; the FEIE route burns both.

Which IRS figures does the calculator use?

The official 2025 and 2026 numbers, post-OBBBA. All four inputs below are from the IRS revenue procedures and newsroom releases linked in the sources; the 2025 standard deduction reflects the One Big Beautiful Bill Act increase signed July 4, 2025.

Key IRS figures in this calculator. Sources: Rev. Proc. 2024-40 (TY2025), Rev. Proc. 2025-32 (TY2026), OBBBA provisions page.
Item	Tax year 2025	Tax year 2026
FEIE maximum (Form 2555)	$130,000	$132,900
Standard deduction — single	$15,750	$16,100
Standard deduction — married joint	$31,500	$32,200
Bracket rates	10% · 12% · 22% · 24% · 32% · 35% · 37% (thresholds per year in the script — view source)

What are the two traps to check before choosing?

The child credit and the five-year lockout. Both are easy to miss when the two paths show the same $0:

Refundable child tax credit: the Schedule 8812 instructions bar the additional child tax credit (up to $1,700 per child refundable for 2025) for anyone filing Form 2555. A two-kid family in Spain can be ~$3,400/year better off on the FTC path at identical tax.
Revocation lockout: dropping the FEIE counts as revoking the election; Publication 54 bars re-electing it for five tax years without IRS consent. If your next stop might be a zero-tax country, don't revoke casually.

Also outside this tool: 15.3% self-employment tax (the FEIE never removes it — see the Tax Burden Index for which countries' totalization agreements can), the foreign housing exclusion (16%–30% of the FEIE, can improve the Form 2555 path for high rents), and state taxes if you kept ties to a sticky state.

Decided your election? Now pick software that can actually file it

Form 2555 and Form 1116 support varies wildly — and most mainstream DIY products can't file your FBAR at all. We verified who supports what, line by line.

See the expat tax software comparison →

Free tool, no signup, computations run in your browser — nothing is sent to us. Estimates for orientation only, not tax advice; verify with the IRS or a professional. Want this on your site? Embed version here (attribution required).

Frequently asked questions

Should I use the FEIE or the Foreign Tax Credit?

Low-tax or no-tax country → FEIE. Country that taxes you at or above US rates → FTC, which zeroes the bill, banks carryovers and preserves the refundable child credit. Run both above — the answer flips with income and rate.

Can I split — FEIE on part of my income, FTC on the rest?

Yes: a classic structure excludes up to the FEIE cap and credits foreign tax attributable to income above it. You just can't credit foreign tax on the dollars you excluded.

Does the calculator handle the housing exclusion?

No — it's deliberately conservative. The foreign housing exclusion (base 16% of the FEIE, general cap 30%) can only improve the Form 2555 path, so if FEIE already wins for you, housing widens the gap.

What about self-employment tax?

Neither election touches it. Freelancers owe 15.3% SE tax on top unless a totalization agreement assigns them to the host system — see which countries have one in our Tax Burden Index.

Why do my software numbers differ slightly?

Software applies your exact deductions, credits, housing amounts and rounding tables. This tool uses the standard deduction and the statutory brackets — close enough to choose an election, not to file.

Expat Cove Editorial Team

The engine uses the official bracket thresholds from Rev. Proc. 2024-40 and 2025-32, the post-OBBBA standard deduction and the Foreign Earned Income Tax Worksheet stacking method, all verified against irs.gov in June 2026. View source to audit the math — it's all in the page.