I have a green card and I'm moving back to Europe — does the US exit tax apply to me?
Short answer: The US exit tax applies if you are a 'long-term resident' (holding a green card in 8 of the last 15 years) and meet one of three 'covered expatriate' tests: a net worth over $2M, a high average tax liability, or a failure to certify 5 years of tax compliance. If covered, your global assets are 'deemed sold' for tax purposes.
Written and reviewed by Anthony Walsh, Selanis. Last reviewed 2026-10-06.
Why it works this way
The exit tax (Section 877A) was designed to prevent people from leaving the US just to avoid tax on large gains. For Europeans, the $2 million net worth test is the most common trigger. This includes the value of your US and European real estate, 401(k)s, IRAs, and any unvested equity. It is a 'snapshot' of your global wealth.
The '8-year rule' is strict. Even one day of holding a green card in a calendar year counts as a full year. If you got your card in late 2018 and are leaving in early 2025, you have hit the 8-year mark. Planning often involves abandoning the green card *before* the 8th year begins to avoid the 'long-term resident' label entirely.
If you are a 'covered expatriate,' the consequences are severe: you are taxed on the unrealized gain of all your assets (above an exclusion amount, which is inflation-indexed: $866,000 in 2024 and $890,000 in 2025), your IRAs are treated as fully distributed, and any future gifts or bequests you make to US citizens could be taxed at 40%.
The expensive mistake: Assuming the $2M threshold is per couple
The $2 million net worth test is applied *individually*. If a couple has $3.5 million in joint assets, neither may be a covered expatriate. However, if one spouse holds $2.1 million and the other $1.4 million, the first spouse is 'covered.' Titling assets correctly before expatriating can be the difference between paying the tax or not.
What to do
- Count your green card years precisely — Review your records to see if you have hit the 8-of-15 year threshold. If you are in year 7, consider moving your departure date up.
- Conduct a 'Mock' Exit Tax calculation — List all global assets at fair market value to see if you exceed the $2M threshold or the average tax liability test.
- Certify five years of tax compliance — Ensure all your past returns, FBARs, and form disclosures (like 3520 or 8938) are correct, as failing this test makes you 'covered' regardless of wealth.
| Test | Threshold | Notes |
|---|---|---|
| Net Worth Test | $2,000,000+ | Global assets, including pensions and property |
| Tax Liability Test | $206,000+ | 5-year average net income tax liability |
| Compliance Test | N/A | Must certify 5 years of full tax compliance |
| Exclusion Amount | $890,000 | Amount of gain excluded from tax if 'covered' |