US Tax Law and Opportunities for Expats in Czechia
For many Americans living in Czechia, the new U.S. tax reform brings major updates. The One Big Beautiful Bill Act, signed in 2025, reshapes how foreign income is taxed. The U.S. still taxes citizens on worldwide income, but key changes now help expats save thousands of crowns and reduce double taxation.
Foreign Tax Credits and Czech Income
If you already pay Czech income tax, you can reduce your U.S. liability through the Foreign Tax Credit (FTC). While higher limits apply only to corporations, employees still benefit when Czech tax rates match U.S. ones—often resulting in little or no U.S. tax due.
Foreign Earned Income Exclusion (FEIE)
The Foreign Earned Income Exclusion now rises from USD 120,000 to USD 130,000. Expats in Prague and Brno who meet residency requirements can exclude more of their salary from U.S. taxation, keeping more funds in their Czech bank accounts.
Transfers, Deductions, and Compliance
Starting in 2026, cash transfers to the U.S. will face a 1% fee, though bank transfers remain unaffected. The State and Local Tax (SALT) deduction cap also increases to USD 40,000, reducing overall tax pressure for those with U.S. property or state ties.
Don’t forget the FBAR (Foreign Bank Account Report): any account over USD 10,000 must be reported to the IRS, even if already taxed abroad. Missing it can lead to serious penalties.
Working with an expert in international tax consulting in Prague helps ensure compliance, maximize savings, and build smarter tax strategies for expats across borders.
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