In July 2025, Congress passed the biggest US tax overhaul since 2017 — the One Big Beautiful Bill Act. For Americans abroad, the months before it passed were genuinely nervous: an early version contained a provision that would have raised US taxes specifically on citizens living in countries like Canada, the UK, France, and Australia.

Here’s what actually became law, what got cut, and what it means if you’re a US citizen living outside the US.

The bullet that was dodged: Section 899

Early drafts included a provision nicknamed the “revenge tax” — Section 899 — aimed at Americans living in countries with digital services taxes. Canada was on that list. It would have effectively limited the use of foreign tax credits for people in those countries, raising their US bills through no action of their own.

After international pushback and a deal with G7 countries, Section 899 was removed before the bill was signed. If you live in Canada or another affected country, this is the single most important non-event of 2025: the foreign tax credit system you rely on came through intact.

What’s now permanent

The individual tax rates and expanded standard deduction from the 2017 tax law — which had been scheduled to expire — are now permanent. For expats, this mostly means planning certainty: the framework you’ve been filing under isn’t going to snap back to pre-2017 rules.

The Foreign Earned Income Exclusion also continues its normal inflation climb — to $130,000 for the 2025 tax year and $132,900 for 2026. The qualification tests didn’t change. Neither did the foreign tax credit.

In short: the core toolkit Americans abroad use to avoid double taxation survived untouched.

What’s new — and mostly doesn’t reach you

The headline goodies — deductions for tip income, overtime pay, and an extra deduction for seniors — are largely US-centric. They’re generally tied to US payroll reporting, so expats working for foreign employers are unlikely to qualify. If you read excited coverage about tax-free tips and wondered whether it applies to your job abroad: probably not.

The Child Tax Credit did improve in a way that matters for families abroad: it rose to $2,500 per child (through 2028), and only one parent now needs a Social Security number — a meaningful fix for mixed-status families. The child still needs a valid SSN.

The one new tax that did arrive: the remittance tax

Starting January 1, 2026, a 1% federal tax applies to money transferred out of the US using cash, money orders, or cashier’s checks. Transfers through bank accounts and debit/credit cards are excluded.

Two things worth knowing: the tax isn’t creditable (you can’t offset it elsewhere on your return), and it’s easily avoided for most people — move money through a bank, not a money order. The people it actually catches are those moving funds outside the banking system.

What didn’t change — and this is the part that matters

Every disclosure obligation you had before, you still have:

  • The FBAR threshold is unchanged.
  • The foreign-asset reporting thresholds on your tax return are unchanged.
  • The penalty structure is unchanged — which is to say, still severe.

The law also did not move the US toward residence-based taxation. A separate bill proposing that has been in the works since late 2024, but it has never been voted on by either chamber. The advocacy groups pushing hardest for it say the same thing we will: don’t delay filing or change your compliance approach based on proposed legislation. You file under the rules that exist, not the rules you’re hoping for.

The honest summary

For Americans abroad, this law was less punitive than feared and mildly helpful in places: the worst provision died before passage, the exclusions grew, the credit toolkit survived, and one narrow new tax arrived that most people will never pay.

But nothing about your filing life got simpler. The obligations, the forms, and the penalties all carried forward exactly as they were. The bill changed how much some people owe. It changed nothing about what everyone has to file.