If Donald Trump returns to office, he might make it easier for U.S. expats to manage their taxes, thanks to his promise to end double taxation on Americans living abroad. This tax burden has long been a point of contention, with many U.S. expats complaining about being taxed on their worldwide income, regardless of where they reside or pay taxes. In fact, according to a 2024 survey, around 75% of U.S. expats thinking about renouncing their citizenship cite the tax system as a major factor.
Trump has spoken about tackling this issue, with a campaign pledge to eliminate double taxation, which he claims has been an ongoing concern for expats. He has repeatedly said that he would “take very good care” of expats, but his specific plans for how to implement this change remain unclear. Given his past record on other campaign promises, it’s hard to say whether he would follow through.
Currently, the U.S. follows a citizenship-based taxation system, meaning Americans are taxed on their income no matter where they earn it. This is in contrast to most other countries, which follow a residence-based tax system. Economist Tyler Cowen has criticized the U.S. system as “excessively complicated,” and many believe it discourages Americans from working or starting businesses abroad.
Some argue that shifting to a residence-based tax system would be more logical and beneficial. For example, Cowen suggests that U.S. expats could still pay U.S. taxes on passive income from U.S. sources but would not owe taxes on their foreign-earned income. This could make it easier for Americans to work abroad and contribute to U.S. exports, a goal Trump has expressed.
However, there’s skepticism about whether Trump would reform the system in a way that benefits most Americans. Given his past policies favoring the wealthy, there’s concern that his expat tax reform might disproportionately benefit rich Americans, rather than providing relief to everyday expats. If he does follow through, it’s unclear whether the benefits would extend beyond the wealthiest Americans.