For many digital nomads, the start of a new year feels less like a reset and more like a continuation. Clients stay the same, platforms keep paying, and work continues from wherever you happen to be living at the moment. Taxes, however, do not quite work that way.
Each year brings updated income thresholds, revised deduction limits, and subtle changes in how the IRS applies existing rules. 2026 is a year where small adjustments can make a meaningful difference. Below, we’ll focus on what to check or plan for as you move into 2026.
If you’d like a refresher on the basics of US taxes for digital nomads, refer to our blog on tax planning for digital nomads.
Reconfirm Key Federal Thresholds For 2026
One of the easiest mistakes digital nomads make is relying on last year’s thresholds. The Foreign Earned Income Exclusion (FEIE), the standard deduction, and tax brackets are adjusted annually for inflation, and those changes can impact your estimated taxes and final liability.
For 2026, the Foreign Earned Income Exclusion limit has increased to $132,900, up from $130,000 for tax year 2025, reflecting inflation. What matters most is confirming whether your income still fits comfortably within the exclusion or whether a portion is now taxable. This is especially relevant for creators and freelancers whose income has grown steadily.
The same applies to tax brackets and deductions. Even modest increases in income can push you into a different bracket if you are not paying attention, which can lead to underpayment if your estimates are based on outdated assumptions.
Reevaluating FEIE Versus The Foreign Tax Credit In 2026
Many digital nomads default to the FEIE because it feels straightforward. If you live abroad and qualify, you exclude income and move on. In 2026, that default approach deserves a second look.
Foreign tax rates in many countries have increased, and for nomads living in higher tax jurisdictions, the Foreign Tax Credit can sometimes produce a better outcome than the exclusion. This is especially true once income rises above the exclusion limit or when you have a mix of earned income and other income streams.
The decision is not just about which option reduces taxes the most this year. It also affects future years, carry-forward credits, and how your income appears on your return. Taking time early in 2026 to compare both options using current income and tax rates can prevent surprises later.
Self-Employment Tax Still Catches Nomads Off Guard
For self-employed digital nomads, self-employment tax remains one of the most misunderstood parts of the system. Even if you qualify for the FEIE, it does not eliminate Social Security and Medicare taxes.
This continues to be a major source of unexpected tax bills. If you earn more than a small threshold in net self-employment income, you are responsible for these taxes unless a totalization agreement applies. Totalization agreements exist with certain countries and can help avoid paying into two systems, but they are not automatic, and they require proper documentation.
If you are self-employed and living abroad, it is worth confirming whether a totalization agreement applies to your situation and whether you are meeting the requirements correctly. Getting this wrong can be costly.
Estimated Taxes Matter More With Fluctuating Income
Estimated taxes are not new, but they become more important as income becomes less predictable. Many digital nomads experience uneven earnings due to platform changes, client cycles, or launches that do not follow a quarterly rhythm.
In 2026, the IRS continues to enforce pay-as-you-go rules, and penalties are tied to how evenly tax is paid throughout the year. Catch-up payments can help reduce penalties, but they do not always eliminate them entirely.
The best approach is to review estimated taxes early in the year, especially if your income has changed materially. Updating estimates after a strong quarter or a slow one helps keep payments closer to reality and reduces stress when filing.
State Residency Still Deserves Attention
Leaving the United States does not automatically end state tax obligations. Many states continue to apply residency rules based on ties rather than physical presence alone.
States such as California and New York remain aggressive about enforcing residency standards. Driver’s licenses, voter registration, mailing addresses, and long-term intent all play a role. Digital nomads who assume they are no longer residents simply because they are abroad often discover otherwise when a state notice arrives.
Reviewing your state ties periodically and understanding whether you are still considered a resident can prevent unexpected state tax filings and penalties.
Foreign Account Reporting Is Back In Focus
Foreign account reporting has always been required, but enforcement has become more consistent. This is an area where many digital nomads run into trouble simply due to oversight.
Foreign bank accounts, local savings accounts, and even some payment apps can trigger reporting requirements if balances cross certain thresholds. The key detail many people miss is that the threshold is based on the highest balance at any point during the year, not the ending balance.
Preparing a list of accounts and tracking peak balances as the year progresses makes reporting far easier and reduces the risk of missing a filing.
Tax Season Doesn’t Have To Be Stressful
Digital nomad taxes are rarely simple, but they do not have to be overwhelming. Keeping income and expenses organized, tracking travel days, and documenting foreign taxes paid all make filing easier.
If you want support with bookkeeping, estimated taxes, foreign reporting, or reviewing how your setup fits your lifestyle, book a discovery call.
BizBud works with digital nomads and content creators (annual income exceeding $80,000) around the world. Having advisors who understand cross-border work can help you stay compliant, reduce stress, and focus on the work that keeps you moving.
Starting the year informed and organized is one of the best ways to make 2026 a smoother one.
