Foreign Housing Exclusion Calculator: Your 2025 Formula and Examples

IRS data shows that 2 out of 3 American expats owe $0 in US taxes after properly using available exclusions and credits. If you’re paying rent in Paris, utilities in Tokyo, or property insurance in Singapore, the Foreign Housing Exclusion calculator can show you exactly how much you can save.

For the 2025 tax year (filed in 2026), the Foreign Housing Exclusion lets you exclude up to $39,000 in housing costs (and much more in high-cost cities) on top of the $130,000 Foreign Earned Income Exclusion. But, here’s where expats often get stuck: calculating the exact amount requires knowing three key numbers, applying the correct formula, and verifying your city’s specific limit.

The calculation itself is straightforward once you grasp the formula: Total Housing Expenses – Base Housing Amount = Your Exclusion (up to the cap for your location). The challenge is knowing which expenses count, what the base amount is for the 2025 tax year (filed in 2026), and whether your city qualifies for a higher limit.

Already know you qualify? Great. If you need background on what the Foreign Housing Exclusion is and who qualifies, start there first, then come back to calculate your numbers.

What Three Numbers Do I Need Before I Calculate?

Before you can use the foreign housing exclusion calculator formula, gather these three figures for your 2025 tax year (filed in 2026):

1. Your Total Qualified Housing Expenses

Add up everything you paid out-of-pocket for housing in 2025 while living abroad. This includes rent, utilities (not phone), property insurance, residential parking, and furniture rental. It doesn’t include mortgage payments, furniture purchases, or domestic help.

Example: $2,800 rent + $200 utilities + $50 parking = $3,050 per month, or $36,600 annually.

2. The Base Housing Amount for 2025

This is 16% of the Foreign Earned Income Exclusion limit. For the 2025 tax year (filed in 2026), that’s $20,800 ($130,000 × 0.16). You must subtract this from your total expenses because the IRS considers this the baseline cost of housing anywhere.

If you qualified for only part of 2025, prorate this amount: ($20,800 ÷ 365) × your qualifying days.

3. Your Location’s Maximum Limit

The standard cap is $39,000 for the 2025 tax year (30% of the $130,000 FEIE). However, if you live in a high-cost city listed in IRS Notice 2025-16, your cap could be significantly higher. Check the Form 2555 instructions for the current list.

What’s the Foreign Housing Exclusion Calculator Formula?

Here’s the exact formula for calculating your 2025 Foreign Housing Exclusion (filed in 2026):

• Step 1: Total Qualified Housing Expenses for the year
• Step 2: Subtract the Base Housing Amount ($20,800 for full-year 2025)
• Step 3: Compare to your location’s cap and use the lower amount

Your Exclusion = Lesser of:

• (Total Expenses – Base Amount), OR
• Your location’s maximum limit

Let’s see this in action with three different scenarios.

How Do I Calculate for a Standard Location?

Marcus lives in Berlin and earned $95,000 in 2025. He qualifies for FEIE under the Physical Presence Test.

His housing costs:

• Rent: $2,400/month = $28,800
• Utilities: $180/month = $2,160
• Renter’s insurance: $40/month = $480
• Total: $31,440

The calculation:

• Total housing expenses: $31,440
• Minus base amount: -$20,800
• Preliminary exclusion: $10,640

Berlin isn’t on the IRS high-cost list, so Marcus uses the standard $39,000 cap. Since $10,640 is below $39,000, he can exclude the full $10,640.

Tax impact:

• Foreign earned income: $95,000
• Foreign Housing Exclusion: -$10,640
• Remaining income: $84,360
• Foreign Earned Income Exclusion: -$84,360
• Taxable foreign income: $0

Marcus owes $0 in US federal tax on his foreign earnings.

How Do I Calculate for a High-Cost City?

Jennifer works in Hong Kong and earned $150,000 in 2025. She qualified for FEIE all year under the Bona Fide Residence Test.

Her housing costs:

• Rent: $4,500/month = $54,000
• Utilities: $250/month = $3,000
• Parking: $200/month = $2,400
• Total: $59,400

The calculation:

• Total housing expenses: $59,400
• Minus base amount: -$20,800
• Preliminary exclusion: $38,600

Hong Kong’s 2025 limit is $114,300, so Jennifer can exclude the full $38,600.

Tax impact:

• Foreign earned income: $150,000
• Foreign Housing Exclusion: -$38,600
• Remaining income: $111,400
• Foreign Earned Income Exclusion: -$111,400 (full $130,000 available, but only $111,400 remaining)
• Taxable foreign income: $0

Even with income above the FEIE limit, Jennifer owes $0 thanks to the housing exclusion.

How Do I Calculate for a Mid-Year Move?

David moved to Singapore on May 1, 2025. He worked there for 245 days in 2025 and qualified under the Physical Presence Test by April 30, 2026. He earned $120,000 in Singapore.

His Singapore housing costs (8 months):

• Rent: $3,200/month × 8 = $25,600
• Utilities: $150/month × 8 = $1,200
• Total: $26,800

The prorated calculation:

• Qualifying days in 2025: 245
• Prorated base amount: ($20,800 ÷ 365) × 245 = $13,973
• Total housing expenses: $26,800
• Minus prorated base: -$13,973
• Preliminary exclusion: $12,827

Singapore’s limit for 2025 is approximately $82,900, and David’s prorated portion is: ($82,900 ÷ 365) × 245 = $55,705. His $12,827 is well below this, so he can exclude the full amount.

Tax impact:

• Foreign earned income: $120,000
• Prorated FEIE: ($130,000 ÷ 365) × 245 = $87,260
• Foreign Housing Exclusion: -$12,827
• Remaining income after housing: $107,173
• Foreign Earned Income Exclusion: -$87,260 (his prorated limit)
• Taxable foreign income: $19,913

David will owe some US tax on the remaining $19,913, but the housing exclusion still saved him approximately $2,825 in federal taxes. He could also use the Foreign Tax Credit on the remaining income to reduce his tax bill further.

What If My Expenses Don’t Exceed the Base Amount?

You won’t be able to claim any Foreign Housing Exclusion. The IRS only allows you to exclude costs that exceed what you’d reasonably spend in the US. However, you can still use the full $130,000 FEIE on your earned income.

This happens more often than you’d think, especially for expats in lower-cost countries or those with employer-provided housing.

Example: Ana lives in Mexico City, where her apartment costs $1,200/month plus $100 in utilities, totaling $15,600 annually.

Since $15,600 is less than the $20,800 base amount, Ana can’t claim any Foreign Housing Exclusion. She can still use the full $130,000 FEIE on her earned income, but she will not receive any additional housing benefit.

How Do High-Cost City Limits Affect My Calculation?

Your location makes a significant difference in how much you can exclude. Here’s how the same housing expenses play out in different cities:

Scenario: $55,000 in annual housing expenses

• Total expenses: $55,000
• Minus base amount: -$20,800
• Preliminary exclusion: $34,200

In a standard location (no special limit): Maximum exclusion: $34,200 (below the $39,000 standard cap)

In London ($67,000 limit): Maximum exclusion: $34,200 (below London’s cap)

In Geneva ($102,600 limit): Maximum exclusion: $34,200 (well below Geneva’s cap)

Now let’s say those same expenses were $65,000:

In a standard location:

• Preliminary calculation: $65,000 – $20,800 = $44,200
• Capped at standard limit: $39,000
• You can only exclude $39,000

In London:

• Preliminary calculation: $65,000 – $20,800 = $44,200
• London limit: $67,000
• You can exclude the full $44,200

The London expat receives an additional $5,200 in exclusions compared to someone in a standard location, resulting in approximately $1,144 in federal tax savings.

What About Self-Employed Expats?

If you’re self-employed, you use the Foreign Housing Deduction instead of the exclusion. The calculation is identical, but the tax treatment differs slightly.

The deduction appears on Form 2555 Part IX instead of Part VI. It reduces your adjusted gross income rather than being excluded from gross income entirely. The end result on your tax liability is similar.

What Are the 2025 Limits for Quick Reference?

Keep these figures handy when calculating your Foreign Housing Exclusion for the 2025 tax year (filed in 2026):

• Base Housing Amount: $20,800 (or $56.99 per day)
• Standard Maximum Cap: $39,000 (or $106.85 per day)
• FEIE Limit: $130,000 (or $356.16 per day)

High-Cost City Examples (2025 tax year):

• Hong Kong: $114,300
• Geneva: $102,600
• Singapore: $82,900
• Tokyo: $67,700
• London: $67,000
• Paris: $60,300
• Zurich: $100,100
• Mexico City: $47,900
• Dubai: $44,200

Always verify your specific city in the current year’s IRS Form 2555 instructions, as limits are updated annually.

What Calculator Mistakes Should I Avoid?

Mistake 1: Forgetting to subtract the base amount

Simply excluding your entire rent payment won’t work. You must subtract $20,800 first. If you paid $35,000 in housing, your exclusion is only $14,200 ($35,000 – $20,800).

Mistake 2: Including non-qualified expenses

Your $150/month phone bill, $80/month internet, and $2,000 couch purchase don’t count. Stick to rent, utilities (including gas, electric, and water), insurance, and other specifically allowed expenses from the qualified expenses list.

Mistake 3: Using last year’s numbers

The base amount and FEIE limit increase in most years. For the 2024 tax year (filed in 2025), the amounts were $20,240 and $126,500. For the 2025 tax year (filed in 2026), the thresholds are $20,800 and $130,000. Always use the current year’s figures.

Mistake 4: Not prorating for partial years

Moved abroad in July? You can’t use the full $20,800 base amount or $130,000 FEIE. Every number must be prorated based on your qualifying days.

Mistake 5: Exceeding your location’s cap

If you’re not in a high-cost city and your calculation shows $45,000, you can only exclude $39,000. Always compare your calculation to your location’s maximum limit.

Do I Need to Calculate Foreign Housing Exclusion Every Year?

Yes, the Foreign Housing Exclusion must be calculated separately for each tax year. For example, your 2025 tax year calculation (filed in 2026) will use 2025 figures, while your 2026 tax year (filed in 2027) will use updated amounts. This is because:

• Your housing expenses likely change
• The base amount adjusts for inflation
• FEIE limits increase annually
• High-cost city limits are updated
• Your qualifying days may vary

You’ll recalculate each year on your Form 2555 when filing your annual tax return. Keep receipts and documentation for all housing expenses in case the IRS requests verification.

What If I Haven’t Been Claiming This Exclusion?

Haven’t been calculating or claiming the Foreign Housing Exclusion on past returns? You might be owed refunds.

Using the IRS Streamlined Filing Compliance Procedures, you can file amended returns for prior years to claim housing exclusions you missed. Many expats in high-cost cities discover they paid thousands more in US taxes than necessary.

The key is coming forward voluntarily. The IRS is more forgiving when you proactively address unfiled or incorrect returns rather than waiting for them to contact you.

Get Your Housing Exclusion Calculated Correctly

One wrong number in the foreign housing exclusion calculator formula and you could miss thousands in legitimate tax savings. Claim an expense that doesn’t qualify, and you could face penalties.

If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.

This article provides general information about calculating the Foreign Housing Exclusion and should not be considered specific tax advice. Tax calculations can be complex, especially with partial-year qualifications and multiple locations. We recommend consulting with a qualified expat tax professional to ensure your housing exclusion is calculated correctly for your specific situation.