The cost to renounce US citizenship starts at a $450 State Department fee, but for anyone with meaningful assets or income the exit tax dwarfs everything else. A covered expatriate can owe federal tax on unrealized gains above a $910,000 exclusion, face a $10,000 penalty for a botched filing, and leave US family members exposed to a 40% tax on future gifts and inheritances. Attorney and tax advisor fees typically run several thousand dollars on top.
The $450 State Department Fee
As of April 13, 2026, the administrative fee for processing a Certificate of Loss of Nationality is $450, down from $2,350.1Federal Register. Schedule of Fees for Consular Services – Fee for Administrative Processing of Request for Certificate of Loss of Nationality of the United States The higher fee had been in place since 2015; the $450 figure is a return to the pre-2015 level rather than a new discount.
The fee is flat and non-refundable. Anyone who paid $2,350 before the reduction does not get the difference back, and the State Department declined to make the lower fee retroactive or to create a hardship waiver.1Federal Register. Schedule of Fees for Consular Services – Fee for Administrative Processing of Request for Certificate of Loss of Nationality of the United States Everyone pays the same $450 regardless of income.
The Exit Tax on Covered Expatriates
Federal law imposes an expatriation tax on “covered expatriates.” Whether you owe it depends on three tests, and meeting any one of them is enough.
Who Counts as a Covered Expatriate
- Your net worth is $2 million or more on the date you expatriate.
- Your average annual net income tax over the five tax years before expatriation exceeds $211,000 for 2026.2Internal Revenue Service. Revenue Procedure 2025-32
- You fail to certify on Form 8854 that you have met all federal tax obligations for the five years before expatriation.3Internal Revenue Service. Expatriation Tax
That third prong matters even for people with modest finances. Forgetting the certification, or having unfiled returns, drops you into covered expatriate status by default.
How Much the Exit Tax Costs
For covered expatriates, all property is treated as sold at fair market value the day before expatriation.4Office of the Law Revision Counsel. 26 USC 877A – Tax Responsibilities of Expatriation Nothing actually changes hands, but the IRS taxes the unrealized gain as if it had. For 2026, the first $910,000 of net gain is excluded.2Internal Revenue Service. Revenue Procedure 2025-32 Gains above that are taxed at the capital gains rates that would apply on an actual sale.
The dollars add up quickly. On $2 million of combined unrealized gains, the first $910,000 is excluded and $1,090,000 remains taxable. At a 20% long-term capital gains rate, that produces roughly $218,000 in federal tax, before the 3.8% net investment income tax that may also apply. Actual liability depends on your income bracket and the character of each asset.
Some assets are handled separately. Deferred compensation such as pensions and unvested stock options, tax-deferred accounts, and interests in nongrantor trusts sit outside the mark-to-market calculation. Future distributions from these sources to a covered expatriate are subject to 30% withholding when paid.4Office of the Law Revision Counsel. 26 USC 877A – Tax Responsibilities of Expatriation Deferred compensation items that aren’t eligible for withholding are treated as distributed at present value the day before expatriation, triggering immediate tax.
The $10,000 Form 8854 Penalty
Everyone who renounces citizenship or ends long-term residency must file Form 8854 for the year of expatriation.3Internal Revenue Service. Expatriation Tax The form notifies the IRS of the status change and certifies five-year tax compliance. It is also what keeps you out of covered expatriate status under the compliance prong.
Failing to file, filing late, or filing with incomplete or incorrect information carries a $10,000 penalty.5Office of the Law Revision Counsel. 26 USC 6039G – Information on Individuals Losing United States Citizenship Reasonable cause can waive the penalty, but the IRS is not required to accept the explanation. The bigger risk is collateral: missing the certification pushes you into covered expatriate status and can trigger the exit tax even when your income and net worth are nowhere near the thresholds.
The Tax Your US Heirs Will Owe
Covered expatriate status creates a cost that outlives the renunciation itself, and the person who pays is not the expatriate. When a covered expatriate gives money or leaves property to a US citizen or resident, the recipient owes a special tax on amounts above the annual gift exclusion, which is $19,000 for 2026.6Office of the Law Revision Counsel. 26 USC 2801 – Imposition of Tax7Internal Revenue Service. Gifts and Inheritances The rate matches the highest federal estate tax rate, currently 40%. Any foreign gift or estate tax paid on the same transfer reduces what’s owed.
Renouncing as a covered expatriate therefore builds a permanent 40% surcharge into every future gift and bequest to US family members.
Ongoing Costs After You Renounce
Social Security Payments Abroad
Renouncing does not erase Social Security benefits you have earned, but it can interrupt payment. The Social Security Administration generally cannot pay retirement, survivors, or disability benefits to noncitizens after six consecutive calendar months outside the United States.8Social Security Administration. Social Security Payments Outside the United States Once benefits stop, you must return and remain lawfully present in the US for a full calendar month before they restart.
Totalization agreements provide an exception. Citizens of countries that have such an agreement with the US may keep receiving benefits while living in that country.9Social Security Administration. International Agreements The list of agreement countries is limited, so this is worth confirming for your specific destination before renouncing.
Withholding on US-Source Income
As a nonresident alien, US-source income that isn’t connected to a US business is subject to a flat 30% withholding tax with no deductions.10Internal Revenue Service. Taxation of Nonresident Aliens Dividends from US companies, pension distributions, rental income, and similar payments all fall under this rule. A tax treaty with your new country of residence may cut the rate; without one, the full 30% applies. Anyone keeping significant US investments after renouncing should expect this cost every year.
Attorney, Tax Advisor, and Travel Costs
Most people hire at least one professional. Immigration attorneys who handle expatriation cases typically charge between $5,000 and $25,000. A simple case with modest assets sits at the lower end; complex portfolios, deferred compensation, trust interests, and overseas holdings push toward the top of that range or beyond.
Tax advisors specializing in expatriation bill separately. If you are close to any of the covered expatriate thresholds, planning before you renounce is worth the fee. A mistake on Form 8854 doesn’t just cost $10,000 in penalties; it can flip your status and trigger the full exit tax.
Renunciation happens only at a US embassy or consulate abroad, and the process involves more than one appointment, so travel is part of the budget. If you don’t live near a post, plan on at least two trips and possibly more if paperwork issues surface. Birth certificates, marriage records, and certified translations add a few hundred dollars for most people.