If you talk to Americans abroad these days, those who’ve been out of the U.S. for a decade or more, you might hear a quiet confession slip out sooner or later: “I’ve thought about renouncing.” Not always said proudly, not always said lightly, but said with a strange mix of exhaustion and relief. Renunciation used to sound extreme, almost unthinkable. In 2025, it’s starting to feel… understandable.
There’s no single dramatic policy shift driving this. Instead, it’s a stack of small pressures that, over time, push people toward a decision they once swore they would never make.
1. Filing From Abroad Has Become Exhausting
Most of the frustration boils down to one odd reality: the U.S. taxes based on citizenship, not residency. So even if you haven’t lived in the States for twenty years, the IRS still expects a full tax return every year.
For the 2025 tax year, that means juggling things like:
- the new $130,000 FEIE,
- the Foreign Tax Credit,
- and whatever combination of forms your situation requires, which can be shockingly many for someone with a perfectly normal life abroad.
There was a teacher in Spain earning under €40,000. She needed Form 1040, Form 2555, Schedule 1, FBAR, and FATCA just to prove she owed nothing. She laughed when she finally saw the list, not because it was funny, but because it was absurd.
It's not that filing is impossible. It’s just relentlessly complex for reasons that feel disconnected from the reality of living abroad.
2. FATCA Banking Problems Haven’t Gone Away
Then you have FATCA, that early-2010s law most expats hoped would “settle down” by now. It hasn’t. The Gulf countries, Europe, Asia, and everywhere still treat U.S. citizens like paperwork magnets. They’re required to.
And while FATCA isn’t trying to punish the average person, the side effects are real:
- banks ask for W-9s,
- investment accounts get rejected,
- some institutions close U.S. person accounts entirely.
FATCA was meant to fight tax evasion. It ended up tripping over ordinary lives.
3. The Emotional Strain of Never Feeling “Done”
Even expats who stay fully compliant often carry this strange undercurrent of anxiety, like there’s always one more form, one more rule, one more reporting threshold they haven’t heard of yet.
And the IRS doesn’t make foreign reporting optional:
- FBAR for accounts over $10,000
- FATCA Form 8938 if your assets cross certain thresholds
- Forms like 3520, 5471, or 8865 if you have trusts or foreign companies
It becomes this annual mental burden. You finish your return in April or June, but somehow the tax year never feels over. Renunciation, to some people, isn’t about running away from taxes. It’s about wanting the permission to stop worrying.
4. Exit Tax Rules Are Intimidating, but Staying Feels Worse to Some
People often assume the exit tax is what prevents renunciation. And yes, the numbers for 2025 are significant:
- $2,000,000 net worth threshold
- $206,000 five-year average tax liability test
- $890,000 deemed sale exclusion
But here’s the nuance: a lot of people renouncing don’t owe exit tax. Their net worth sits below the threshold. Their average tax bill is modest. They’re just fed up with the system.
I’ve noticed something surprising: the fear of exit tax is big at first, but the fear of staying becomes bigger.
5. People’s Lives Have Simply Moved On
Another part of the story is softer, less technical. Many long-term expats have families abroad now. They’ve built careers, relationships, and daily rhythms that don’t involve the U.S. at all.
And in that context, U.S. citizenship can start to feel out of sync with who they’ve become, less like a core identity and more like a bundle of administrative obligations they never asked for.
It’s not anti-American. It’s simply life evolving.
6. Compliance Costs Keep Rising
The final nudge? Money.
International tax prep isn’t cheap, especially when foreign pensions, PFICs, companies, or RSUs are in the mix. Paying $1,000 to $3,000 every year just to confirm you owe nothing is… well, many describe it as “paying a subscription fee for a citizenship I don’t use.”
Renunciation becomes less about escaping tax and more about wanting financial sanity.
If You’re Weighing Your Options in 2025, You Don’t Have to Navigate It Alone
Whether you’re simply overwhelmed, genuinely considering renunciation, or just trying to understand where you stand, Expat Tax Online can walk you through the rules step by step, from compliance to exit tax assessments to what life looks like after renouncing. No pressure, no judgment, just clarity from people who work with cases like yours every day.
