If you give up your green card or US citizenship, you must pay an ‘exit tax’ to do so.
Read the source of this article for really great in-depth info on the subject: https://www.greenbacktaxservices.com/knowledge-center/exit-taxes-us
[The exit tax involves] taxing the unrealized gains on [the person giving up their US personhood’s] worldwide assets as if they were sold for fair market value the day before they left.
Essentially, the IRS acts as if you sold all your property (houses, stocks, businesses) the day before you renounce citizenship, even if you didn’t actually sell anything. You are then taxed on the profit that those assets have built up over time.
[..] The U.S. State Department has reduced the renunciation fee to $450, effective April 13, 2026.
Per the article above, if you have less than $2 M in net assets (after subtracting debts), have remained 100% compliant on your US tax filing, AND have averaged less then ~$200,000 in actual annual tax payments (NOT income!) to the US for the past 5 years, you are NOT a ‘Covered Expatriate’, and do not have to pay any exit tax.
For most people working in a country with a US tax treaty who have continued to file in the US, they therefore would only get hit with the US exit tax if their net worth is over $2,000,000 when they renounce their citizenship/green card.
For Green Card holders, “[y]ou are only subject to these tests if you are considered a Long-Term Resident. This means you held your Green Card for at least part of 8 out of the last 15 tax years. If you leave in year seven, you can often avoid the exit tax entirely, regardless of your wealth.”
Exit Tax Exclusion amount
Even if you DO qualify for the Exit Tax, the IRS lets you exclude gains of $910,000 (for 2026), so you still might not pay anything, depending on your unrealized gains when you renounce.
Specified Tax-Deferred Accounts (IRAs and HSAs)
“If you are a “covered expatriate,” certain accounts are treated as if they were fully cashed out the day before you left. This is called deemed distribution.
- Which accounts are affected?
- Traditional IRAs, Roth IRAs, Health Savings Accounts (HSAs), and 529 College Savings Plans.
- The Tax Hit: You must report the entire balance of these accounts as ordinary income on your final U.S. tax return.
- The Downside: You cannot apply the $910,000 exclusion to these accounts. They are taxed from the very first dollar.
- The Silver Lining: The IRS generally waives the 10% early withdrawal penalty for these deemed distributions, even if you are under age 59½.”
