Can I renounce my U.S. citizenship to avoid taxes?

Yes, but renouncing your U.S. citizenship is not a quick or simple way to fix tax problems.

What renunciation can do

Renunciation can end your future obligation to file U.S. tax returns and pay U.S. tax on your worldwide income. However, before you take that step, there are several important tax rules to understand.

You need to be tax compliant first

To renounce “cleanly,” you generally need to certify that you have been fully tax compliant with the IRS for the five years before renunciation.

If you have not been filing, you may need to catch up first, often through the Streamlined Procedures.

The exit tax may apply

Some people may face the U.S. “exit tax.” This usually applies to high-net-worth individuals, including those with a net worth of more than $2 million or an average annual U.S. income tax liability above a certain threshold.

In simple terms, the IRS may treat your assets as if you sold them the day before you renounced, which can create a tax bill on unrealized gains.

You may still pay U.S. tax on U.S.-source income

Renouncing does not mean you will never deal with the U.S. tax system again. If you continue to receive U.S.-source income, such as rental income from U.S. property, dividends from U.S. investments, or certain pensions, that income may still be taxable in the United States.

The renunciation fee is lower, but advice is still important

The U.S. State Department has reduced the renunciation fee to $450, effective April 2026, which makes the administrative cost lower than before. However, the tax consequences can still be significant, so it is important to get professional advice before making a final decision.