Renounce U.S. Citizenship: State Fee, Exit Tax, and Total Cost

Starting April 13, 2026, the government fee to renounce U.S. citizenship drops from $2,350 to $450. That $450 is only the administrative charge, though, and for anyone with meaningful assets it is usually the smallest number in the whole calculation. The full cost to renounce U.S. citizenship can also include an exit tax on unrealized gains, a dual-status income tax return for the year you leave, several thousand dollars in professional fees, and a lasting 40% tax hit on any future gifts or inheritances you give to family members still in the United States.

The State Department Fee

Since 2014, the State Department has charged $2,350 to process a request for a Certificate of Loss of Nationality. A final rule published in the Federal Register on March 13, 2026 reduces that fee to $450, effective April 13, 2026.¹ Which fee you pay depends on when your renunciation appointment occurs at the embassy or consulate, not when you first contact them.

The fee is non-refundable regardless of the outcome. If the State Department ultimately denies your Certificate of Loss of Nationality, the money is gone. It is collected at the start of the formal interview, typically by credit card, U.S. dollars, or local currency equivalent. Each person renouncing pays separately, so a married couple going through the process together pays twice.

When the Exit Tax Applies

The exit tax does not hit everyone who renounces. It applies only to “covered expatriates,” and you become one by meeting any single test from a list of three.²

Net worth test: Your net worth is $2 million or more on the day before your expatriation date.
Income tax test: Your average annual net income tax liability for the five tax years before expatriation exceeds a threshold that adjusts for inflation. For 2025, that figure is $206,000. The 2026 figure was not yet published at the time of writing but typically increases slightly each year.³
Certification test: You fail to certify under penalty of perjury that you have met all federal tax obligations for the five preceding tax years.

The third test is the one that catches people off guard. Even if your net worth and income are well below the thresholds, falling behind on tax filings or failing to submit the required certification makes you a covered expatriate by default.

How the Exit Tax Is Calculated

Covered expatriates face a mark-to-market tax under IRC 877A. The law treats you as having sold every asset you own worldwide for fair market value on the day before your expatriation date.⁴ You then owe capital gains tax on any unrealized gain above an exclusion amount.

The exclusion started at $600,000 in 2008 and adjusts for inflation annually. For 2025, it is $890,000.³ The 2026 figure had not been released at the time of writing. In practice, if your total unrealized gain across all assets sits below that exclusion, you owe nothing on the deemed sale even as a covered expatriate. If your gain exceeds it, only the excess is taxable.

Certain assets get special treatment. Deferred compensation from a U.S. employer, like a pension or 401(k), is not part of the mark-to-market calculation. Instead, any future payments from those accounts are subject to a flat 30% withholding tax at the source.⁴ Interests in certain trusts follow their own rules rather than the general deemed-sale regime.

Tax Filings for the Year You Renounce

You must file Form 8854, the Initial and Annual Expatriation Statement, with the IRS for the year you renounce. It reports your net worth, lists your worldwide assets and liabilities, and includes the certification that you have met all federal tax obligations for the five preceding years.⁵ Skipping this form or filing it late does more than trigger penalties. It automatically makes you a covered expatriate under the certification test, potentially exposing you to the exit tax even if you otherwise would have been exempt.

You will also need to file a dual-status income tax return for the year of renunciation. For the portion of the year you were a citizen, you owe tax on worldwide income. For the portion after renunciation, you owe tax only on income from U.S. sources, and any income not connected with a U.S. trade or business is taxed at a flat 30% rate.⁶ You cannot take the standard deduction on a dual-status return and generally cannot file jointly, though an exception exists if your spouse is a U.S. citizen or resident and you both elect to be treated as residents for the full year.

The Long-Term Cost to U.S. Family Members

A cost almost nobody sees coming: if you are a covered expatriate, your U.S. family members will owe a special tax whenever they receive gifts or inheritances from you. Under IRC 2801, any U.S. citizen or resident who receives a covered gift or bequest from a covered expatriate pays a tax equal to the highest estate tax rate in effect at the time of receipt, currently 40%.⁷ The recipient pays it, not you, and it applies to lifetime gifts as well as bequests after your death.

There are exceptions. Transfers within the annual gift tax exclusion amount are exempt, as are transfers to a spouse who would otherwise qualify for the marital deduction and transfers already reported on a timely filed U.S. gift or estate tax return.⁷ Recipients report and pay the tax on Form 708.⁸

Even years or decades after you renounce, your decision can create a significant tax bill for your children, grandchildren, or other U.S.-based family members every time you give them money or leave them an inheritance. For many families, this is the single largest long-term financial consequence of covered expatriate status.

Professional Fees and Total Cost

The $450 State Department fee is the only fixed government charge. For anyone with meaningful assets, though, the real expense is professional advice. The exit tax calculation, dual-status return, and Form 8854 involve complex international tax rules where mistakes are expensive and sometimes irreversible. Tax attorneys and CPAs who specialize in expatriation work typically charge several thousand dollars for the full engagement, and fees climb quickly for anyone with trusts, deferred compensation, or assets in multiple countries.

Adding it all up, someone with a straightforward financial situation and no exit tax exposure might spend under $1,000 total. A covered expatriate with significant unrealized gains, retirement accounts, and U.S.-based heirs could face a combined cost well into six figures once the exit tax, professional fees, and long-term Section 2801 consequences are factored in.

What Renunciation Does Not Cost You

Renouncing citizenship does not automatically erase Social Security benefits you have already earned. If you paid into the system long enough to qualify, you can still receive payments. The catch is where you live. The Social Security Administration generally cannot send payments to noncitizens after their sixth consecutive calendar month outside the United States.⁹

Whether that restriction applies depends on the citizenship you hold after renouncing. Citizens of countries with which the United States has a totalization agreement or other payment arrangement can continue receiving benefits regardless of how long they live abroad. That list includes most of Western Europe, Canada, Japan, South Korea, Australia, and several dozen other countries.¹⁰ If your new citizenship is from a country not on that list, benefits could stop after six months abroad unless you return to the U.S. and stay for at least one full calendar month to restart them.

The gap between a $1,000 exit and a six-figure one is why qualified tax advice before starting the process matters far more than the fee itself. Run the covered expatriate tests first, price the exit tax on your actual balance sheet, and think through what Section 2801 will mean for the people you plan to give money to for the rest of your life. Those numbers, not the $450, are the real cost.

1
Federal Register. Schedule of Fees for Consular Services-Fee for Administrative Processing of Request for Certificate of Loss of Nationality of the United States
2
Office of the Law Revision Counsel. 26 USC 877 – Expatriation to Avoid Tax
3
Internal Revenue Service. Expatriation Tax
4
Office of the Law Revision Counsel. 26 USC 877A – Tax Responsibilities of Expatriation
5
Internal Revenue Service. Instructions for Form 8854 – Initial and Annual Expatriation Statement
6
Internal Revenue Service. Taxation of Dual-Status Individuals
7
Office of the Law Revision Counsel. 26 USC 2801 – Imposition of Tax
8
Internal Revenue Service. About Form 708, United States Return of Tax for Gifts and Bequests From Covered Expatriates
9
Social Security Administration. Social Security Payments Outside the United States
10
Social Security Administration. Country List 1 – International Programs