📢 Expat Tax Watch: What’s Changing, What’s Coming, and What You Can Do

There is no shortage of tax chatter lately, and it is coming from both political talking points and real regulatory changes already in motion. I have many expat clients reaching out to me with various sentiments—from concerns about uncertainty over what President Trump and Congress will do to the IRS, to hopeful excitement that income tax could be abolished entirely. For U.S. expats, globally mobile families, and international business owners, staying ahead of this evolving landscape is essential. Whether it is high-level discussions about replacing income tax with tariffs, new IRS reporting rules for foreign-owned U.S. companies, or major tax provisions set to expire in the coming years, these developments could shape your financial picture for years to come. Below, I am breaking down four key topics to keep on your radar right now.

📦 Can Tariffs Replace Income Taxes? Not Likely, But the Conversation Is Gaining Attention

Some political leaders, including President Trump, have proposed replacing federal income taxes with tariffs on imported goods. While the idea may sound simple on the surface, the math just does not add up. Current tariffs generate about $77 billion annually, while personal income tax revenue exceeds $2 trillion. To fully replace income tax with tariffs, the U.S. would need to impose rates well above 130 percent on all imports. That level of taxation would drive up prices, increase inflation, and disrupt global trade relationships in significant ways.

Even reverting to historical tariff models from the early 1900s would not begin to fund today’s federal budget. While such proposals may not be realistic, they indicate a broader shift toward protectionist trade policies that could eventually affect cross-border transactions, import-dependent industries, and international business strategy.

🌍 Expats and International Taxpayers Are Still a Focal Point for Policymakers and the IRS

Even while living abroad, U.S. citizens and resident aliens must continue to report their worldwide income to the IRS. Several lawmakers are pushing for reform, including:

• Proposals to increase the Foreign Earned Income Exclusion (FEIE), which currently allows qualifying taxpayers to exclude up to $126,500 of foreign earned income in 2024. Rep. Don Beyer (D-VA) has previously voiced support for increasing the FEIE to keep pace with inflation and better reflect cost of living abroad.
• Discussions about permanently exempting certain expats from U.S. taxation altogether, though these conversations are still early stage.
• Efforts to simplify the filing and reporting process for international forms like Form 5471, Form 8938, and FBAR (FinCEN Form 114).

At the same time, enforcement continues to ramp up. The IRS has placed greater scrutiny on foreign asset reporting and cross-border financial activity. Taxpayers with foreign pensions, investments, or ownership in non-U.S. entities should take care to ensure accurate and timely reporting. Missed forms can result in significant penalties, regardless of whether any tax is actually owed.

🏢 BOI Reporting Requirements for Foreign-Owned U.S. Companies

Under the Corporate Transparency Act (CTA), new Beneficial Ownership Information (BOI) reporting requirements have gone into effect. Any individual or entity with substantial control or ownership in a U.S. company must disclose identifying information to the Financial Crimes Enforcement Network (FinCEN).

This includes foreign nationals who own or control U.S. entities like single-member LLCs or holding companies. Even if the business has no U.S. income or employees, a BOI report is still required. This reporting obligation is separate from the IRS and is intended to help combat money laundering, tax evasion, and other financial crimes.

Deadlines vary depending on when the company was formed:

• Companies formed on or after January 1, 2024 must file their BOI report within 90 days.
• Existing companies formed before 2024 have until January 1, 2025 to file.

The penalties for noncompliance can be steep, so foreign investors and U.S.-based advisors alike should ensure that BOI filings are submitted correctly and on time.

🧾 TCJA Provisions Set to Expire and What That Means for International Tax Planning

The Tax Cuts and Jobs Act (TCJA), passed in 2017, made several significant changes to individual tax law. Many of those changes are set to expire after 2025 unless Congress acts to extend them. Here are a few of the most impactful provisions for expats and international taxpayers:

• Individual tax brackets: The TCJA lowered five of the seven marginal tax rates. The top rate dropped from 39.6 percent to 37 percent. If not extended, these rates will revert to pre-2018 levels.
• Standard deduction: The increased standard deduction ($13,850 for single filers in 2023) may revert to lower amounts, and the personal exemption could be reinstated.
• SALT deduction limits: The deduction for state and local taxes (SALT) is currently capped at $10,000 for joint filers. This cap may expire or be modified. Some lawmakers support increasing the cap or removing it entirely.
• Child Tax Credit: The credit was expanded to $2,000 per qualifying child under TCJA, with a portion refundable. Without action, the credit could shrink, and the income phase-out thresholds may lower.
• Estate and gift tax exemption: The unified federal exemption has risen to over $13 million per individual. Without extension, it could drop back to pre-TCJA levels, around $5 million.

International taxpayers may also see indirect effects from changes to Qualified Business Income deductions, mortgage interest deductions, and limitations on miscellaneous itemized deductions. These provisions can impact not only your personal tax liability, but also the optimal structure for international business or investment holdings.

Final Thoughts: Staying Ahead of Change

Tax policy often changes slowly… until it doesn’t. The feasibility of replacing income tax with tariffs may be low, but the surrounding political rhetoric shows just how much is at stake. Meanwhile, real compliance shifts like BOI reporting and TCJA expirations are already reshaping how international taxpayers approach planning.

At Matriarch, we help expats and globally-minded clients understand what is real, what is proposed, and how to proactively position themselves for whatever comes next. If you’re unsure how these changes could affect your situation, now is the time to ask. Being informed is your best financial advantage.