In a Federal Register update published on March 13, 2026, the U.S. Department of State announced a reduction in the fee for U.S. citizens who wish to renounce their citizenship and request a Certificate of Loss of Nationality of the United States (CLN). To “alleviate the cost burden” of individuals who renounce their U.S. citizenship, the fee to receive a CLN has been lowered from $2,350 to $450, which returns the fee to its 2010 level. The reduced fee is effective April 13, 2026.
The reduction comes more than two years after the State Department first proposed lowering the fee. Since the fee was raised to $2,350 in 2015, the department has faced sustained criticism, and even litigation, from “accidental Americans” -- those who are U.S. citizens under U.S. law, often unknowingly, and who have little or no meaningful connection to the U.S. -- and other U.S. citizens abroad. As noted in the Federal Register announcement, much of the frustration of U.S. citizens abroad with the U.S. tax system relates to the Foreign Account Tax Reporting Act (FATCA). The enactment of FATCA in 2010 has led to complex reporting requirements for U.S. individuals who hold certain non-U.S. assets, such as bank accounts, mutual funds, pensions, and other investments.
Additional Filing Considerations
While the fee reduction to request a CLN is a victory for those U.S. citizens who are considering renouncing their citizenship, other factors must be evaluated before moving forward. Individuals who renounce their citizenship must file Form 8854, Initial and Annual Expatriation Statement, for the tax year in which they relinquished their citizenship. This form generally must be attached to the individual’s U.S. tax return.
In addition, these individuals may also be subject to a so-called “exit tax.” If an individual who has renounced their citizenship meets one or more of the following tests, they may be subject to U.S. income tax on the unrealized gains from the deemed sale of their worldwide assets:
- The individual’s average annual net income tax liability for the five taxable years prior to expatriation exceeds an inflation adjusted amount ($206,000 for the 2025 tax year and $211,000 for the 2026 tax year).
- The individual’s worldwide net worth was $2 million or more on the date of expatriation.
- The individual fails to certify on Form 8854 that they were in compliance with all federal tax obligations for the five tax years that preceded the date of expatriation.
An expatriate individual who does not meet the income tax liability or net worth thresholds may nevertheless become subject to the exit tax by failing to timely file Form 8854. However, the IRS has developed relief procedures for accidental Americans and other U.S. citizens who have renounced or relinquished, or plan to renounce or relinquish, their citizenship, and who seek to comply with their U.S. tax filing obligations.
For more information on the U.S. tax filing implications of renouncing or relinquishing U.S. citizenship, please reach out to your BDO advisor.