Your housing exclusion limit, city by city

1How does the housing exclusion work?

The housing exclusion comes on top of the foreign earned income exclusion. Three amounts decide how much of your housing costs it covers:

• The base amount. The first $21,264 of a full year's housing costs never counts. It's 16% of the $132,900 income exclusion for 2026.
• The limit. Costs count only up to a cap: $39,870 in most places, which is 30% of the income exclusion, and more in the locations the IRS lists as expensive.
• What you actually pay. Only reasonable costs you paid for the year count.

So for a full year, the most you can exclude is your limit minus $21,264: $18,606 in most places, and $95,636 in Geneva, the top of the list. Here's what $60,000 a year of housing costs is worth in three places:

2What counts as housing costs?

Reasonable costs for your home abroad count, including for your spouse and dependents if they live with you. Only costs for the part of the year you qualify count.

• Counts: rent, utilities other than phone, property and contents insurance, nonrefundable fees to get a lease, rented furniture, residential parking and repairs. So does the fair rental value of housing your employer provides, if it isn't already excluded.
• Doesn't count: mortgage principal, deductible interest and taxes, buying or improving a home, buying furniture, domestic help, pay TV, and anything lavish or extravagant.

3Who can claim it?

You need to qualify for the foreign earned income exclusion: a tax home abroad, and either the bona fide residence test or the 330-day physical presence test. Our 330-day counter checks the second one. Then:

• Employees exclude it, against what their employer pays them. Salary counts, not just a housing allowance.
• The self-employed deduct it instead. The deduction can't be more than your foreign earned income left after the exclusions, and anything over that carries forward one year only.
• Both in one year? Part is excluded and part deducted, in proportion to each kind of income.

It all goes on Form 2555, with the income exclusion. Together, the two exclusions can't be more than your foreign earned income.

4Where are the limits highest?

The 2026 list has 109 entries in 57 countries. These are the highest:

Plenty of big cities aren't on the list, and the standard limit applies there. The U.K. works differently: places it doesn't name get $44,200, except 29 that use the standard limit, including Belfast, Birmingham, Edinburgh and Liverpool. The IRS publishes a new list each spring.

5What if you qualify for part of the year?

Both amounts are counted by day. For part of 2026, your base amount is $58.26 for each qualifying day, and your limit is your location's daily figure, which the tool shows, times the same days. If you moved between two places during the year, each gets its own limit for the days you lived there, and you add them up.

Filing for 2025? Where a 2026 limit is higher than the 2025 one, the IRS lets you use the 2026 figure on your 2025 return.

Common questions

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