Trump proposes key tax break for US citizens living abroad, pledges to end double taxation

Donald Trump is proposing a significant tax break for US citizens living overseas, aiming to relieve the unique burden faced by approximately 9 million Americans abroad. This tax relief for expatriates is the latest addition to his broader 2024 tax plan, which includes eliminating income taxes on tips, overtime pay, and Social Security benefits, according to AP News and The Independent.

In a video released by Republicans Overseas CEO Solomon Yue, Trump pledged to end the double taxation on US citizens living abroad. “Once and for all, I'm going to end double taxation on our overseas citizens,” Trump stated, as reported by NewsMax. He added, “You've been wanting this for years, and nobody has listened to you. And you deserve it. And I'm going to do it. ... I'm going to get this done for you.”

Americans living or traveling outside the US are required to file income tax returns, estate tax returns, and gift tax returns, and pay estimated tax in the same way as those residing within the country, according to the Internal Revenue Service (IRS). While many other countries employ a residence-based tax system, the US uses a citizen-based taxation system, leading to potential double taxation for Americans abroad, as ABC News notes.

Although the US has bilateral agreements and tax treaties with several nations to ease the burden of double taxation, many Americans abroad still face higher tax payments due to overlapping tax systems. Some expatriates benefit from tax credits and exclusions, but many still endure complex and costly tax filings, particularly "accidental Americans" with limited ties to the US, according to The Independent.

Trump's proposal could simplify tax obligations for US citizens abroad, addressing the complexities they currently face, though his campaign has not yet provided specifics on how this would be implemented. His overseas tax proposal remains vague, and there are few details regarding his other no-tax proposals outside of his announcement, India Today reported.

The proposal would require congressional approval, and Trump has acknowledged that he will need to work with Congress to amend the Tax Code. Supporters of Trump's plan believe it would reduce unnecessary paperwork and simplify tax obligations for the approximately 9 million Americans living overseas, as per Straight Arrow News.

Ending double taxation has bipartisan support among Americans abroad, with both Democratic and Republican groups backing plans to eliminate it. Democrats Abroad supports transitioning to a residence-based tax system, according to its platform, which states, “Democrats Abroad supports reforms to create a system of residency-based taxation that would remedy the vast majority of tax problems faced by US citizens abroad, prevent the use of offshore residence for tax avoidance, and be more administrable for the Treasury," as reported by Newsweek.

Critics of Trump's proposal argue that it could encourage tax avoidance by wealthier individuals relocating to low-tax countries, potentially favoring the wealthier expatriates. Critics also contend that his 2017 tax overhaul disproportionately benefited corporations and high-income individuals, according to The Independent.

Trump is pitching the idea of a tax break for US citizens living abroad as part of his effort to garner votes from millions of potential beneficiaries. He urged overseas citizens to register and vote, promising tax relief. “You have to make sure that you are registered and you are going to vote, because I'm going to take very good care of you,” he emphasized, as covered by AP News.

As of 2022, approximately 4.4 million US citizens lived abroad, with around 2.8 million of them eligible to vote, according to the Federal Voting Assistance Program. Trump hopes to secure support from the millions of potential voters living outside the US with his promise to eliminate double taxation, simplifying tax obligations for over 4 million US expatriates, as reported by The Wall Street Journal.

Trump's engagement with US citizens abroad has not been without controversy, particularly following his claims linking overseas voters to unfounded accusations of election fraud in 2024. In a recent Truth Social post, Trump accused Democrats of planning to manipulate overseas votes, stating, “Actually, they are getting ready to CHEAT!” These allegations have not been substantiated, according to NewsMax.

The cost of Trump's proposed tax changes, including the elimination of taxes on tips and overtime pay, could significantly increase the national deficit, with estimates ranging from $10 trillion to $15.15 trillion over a decade. The Wall Street Journal first reported Trump's plans to end the double taxation of overseas Americans, estimating the cost at $7.5 trillion over 10 years, according to a nonpartisan budget group.

A series in cuts

Trump's tax break proposal is the latest in a series of tax cuts aimed at specific constituencies, including his separate idea to eliminate taxes on tips, overtime pay, and Social Security benefits. His previous tax plans have targeted middle- and working-class citizens. He is proposing to exempt tip income, overtime pay, and Social Security benefits from income taxes, positioning these initiatives as benefits for working Americans, as noted by AP News.

Solomon Yue praised Trump for his commitment to ending double taxation for overseas citizens, commending his willingness to act on an issue that has long burdened expatriates. “Republicans Overseas has been fighting for the rights of Americans abroad since its inception ten years ago,” Yue said in a statement. “We have spoken to many politicians over the years, and while they sympathized with the burden of double taxation, very few have been willing to act,” as reported by ABC News.

In an October press release, Republicans Overseas announced that Trump supported ending double taxation, stating, “Overseas Americans should pay income tax in the countries where they live, work, and earn," according to NewsMax.

Although many Americans living abroad already deduct taxes paid to other governments from their US tax bill, the filing process remains complex, particularly for those with limited ties to the US, as noted by The Independent.

Trump has pledged to “end double taxation for US citizens living overseas,” reaffirming in his campaign video that he “will take very good care of” expatriate citizens. “You've been wanting this for years, and nobody has listened to you. And you deserve it. And I'm going to do it,” Trump said, according to AP News.