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ComorosFEIE calculator for Americans working in the Gulf
A US citizen or green card holder working abroad, for example in the Gulf, can exclude up to $132,900 of foreign earned income from federal income tax in 2026 if they spend 330 full days outside the US in any 12 months or are a bona fide resident of a foreign country. Example: a $150,000 salary in Dubai with $40,000 of housing costs brings federal income tax down to $0 from $24,734.
Your income abroad
Who qualifies for the exclusion
- You must have earned income from work done abroad, your tax home (your main place of work) must be in a foreign country, and you must pass one of the two tests.
- Physical presence test: you are in a foreign country or countries for at least 330 full days in any 12 consecutive months, for any reason.
- Bona fide residence test: a US citizen (or a resident from a country with a US tax treaty) is a bona fide resident of a foreign country for an uninterrupted period that includes a full tax year.
- Your tax home is not abroad while your usual home stays in the US, except in declared combat zones.
- The 2026 exclusion limit is $132,900. You can add a housing exclusion for housing costs above $21,264, within a general cap of $39,870.
- The exclusion does not remove self-employment tax, and you claim it on Form 2555.
Why it matters for a Gulf job
None of the Gulf states taxes salaries, so there is no foreign income tax to credit against your US tax. The foreign earned income exclusion is therefore the main way to reduce US tax on a salary in the UAE, Saudi Arabia, Qatar, Kuwait, Oman or Bahrain. Income above the exclusion is taxed at the rates it would have reached with the excluded income included (the stacking rule), so the remaining tax can be higher than you expect.
| Salary abroad | Federal tax without FEIE | With FEIE | With FEIE and $40,000 housing |
|---|---|---|---|
| $100,000 | $13,170 | $0 | $0 |
| $150,000 | $24,734 | $240 | $0 |
| $200,000 | $36,734 | $12,240 | $7,775 |
| $250,000 | $51,304 | $26,810 | $22,345 |
Single filer, 2026 federal rates and standard deduction, eligible for the full year, no other income. The housing exclusion uses the general cap of $39,870; some high-cost cities have a higher cap. Some states, such as California, do not recognise the exclusion if you remain resident there.
US vs each Gulf state: take-home pay
What you keep of the same gross salary at home and in each Gulf state, before any US tax on foreign income.
Gulf salary calculators
Frequently asked questions
How much is the foreign earned income exclusion in 2026?
$132,900 per person in 2026, and $130,000 in 2025. If both spouses work abroad, each has their own exclusion.
Do the 330 days have to fall in a calendar year?
No. Any 12 consecutive months you choose will do, and the days must be full days outside the US. Days spent travelling over international waters do not count.
Does the FEIE exempt me from US Social Security tax?
No. It covers income tax only. If your employer is American, Social Security and Medicare are still due; a foreign employer usually does not withhold them.
Do I still have to file a US return if all my income is excluded?
Yes. The exclusion is not automatic: you claim it on Form 2555 with your return, and you may also need to report your bank accounts abroad.
Why does the FEIE matter so much in the Gulf?
The Gulf states do not tax salaries, so there is no foreign tax to credit against US tax. The exclusion is the main way to cut US tax on a salary in the UAE, Saudi Arabia or Qatar. On $200,000, federal tax of about $12,240 remains on the part above the exclusion, worked out at the higher bands.
Sources
IRS figures for tax year 2026, last checked on 9 October 2026.
- IRS IR-2025-103: tax year 2026 inflation adjustments Official source · checked 9 October 2026
- IRS Rev. Proc. 2025-32 (2026 adjusted items) Official source · checked 9 October 2026
- IRS: Foreign earned income exclusion Official source · checked 9 October 2026
- IRS: Physical presence test Official source · checked 9 October 2026
- IRS: Bona fide residence test Official source · checked 9 October 2026
- IRS: Foreign housing exclusion or deduction Official source · checked 9 October 2026
- KPMG GMS Flash Alert 2026-090 (2026 housing base and cap) Secondary source used to cross-check · checked 9 October 2026
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