US: IRS identifies jurisdictions qualifying for 2025 foreign earned income exclusion relief

The US Internal Revenue Service has waived foreign earned income exclusion requirements for taxpayers forced to leave seven countries due to war, civil unrest, or adverse conditions during 2025. Affected individuals in Haiti, Ukraine, the Democratic Republic of the Congo, South Sudan, Iraq, Lebanon, and Mali may still qualify for tax benefits if they can demonstrate they would have met residency requirements under normal circumstances.

The US Internal Revenue Service (IRS) has issued Revenue Procedure 2026-16, scheduled for formal publication in Internal Revenue Bulletin 2026-13 on 23 March 2026 on the IRB website. The guidance addresses the foreign earned income exclusion for individuals who were unable to meet the eligibility requirements because adverse conditions in a foreign country prevented them from satisfying those requirements.

Taxpayers meeting specific requirements may qualify for the foreign earned income exclusion, foreign housing exclusion, and/or foreign housing deduction. To claim these benefits, individuals must have foreign earned income and maintain a tax home in a foreign country.

Eligibility extends to three categories of taxpayers: US citizens who are bona fide residents of a foreign country for an uninterrupted period including an entire tax year; US resident aliens who are citizens or nationals of countries with US income tax treaties in effect and maintain bona fide foreign residency for an uninterrupted period including an entire tax year; or US citizens or resident aliens physically present in a foreign country for at least 330 full days during any 12 consecutive months.

Rev. Proc. 2026-16

This revenue procedure provides information to any individual who failed to meet the eligibility requirements of section 911(d)(1) of the Internal Revenue Code (Code) for 2025 because of adverse conditions in a foreign country.

Section 911 allows a “qualified individual,” as defined in section 911(d)(1), to elect to exclude from gross income the foreign earned income and to exclude or deduct the housing cost amount of such individual.

Section 911(d)(1) of the Code defines the term “qualified individual” as an individual whose tax home is in a foreign country and who is (A) a citizen of the United States and establishes to the satisfaction of the Secretary of the Treasury that the individual has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year, or (B) a citizen or resident of the United States who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days.

In addition, section 911(d)(4) of the Code provides that an individual will be treated as a qualified individual with respect to a period in which the individual was a bona fide resident of, or was present in, a foreign country if the individual left the country during a period for which the Secretary of the Treasury, after consultation with the Secretary of State or their delegate, determines that individuals were required to leave because of war, civil unrest, or similar adverse conditions that precluded the normal conduct of business. An individual must establish that but for those conditions the individual could reasonably have been expected to meet the eligibility requirements.

The Internal Revenue Service previously has listed countries for which the eligibility requirements of section 911(d)(1) of the Code are waived under section 911(d)(4) because of adverse conditions in those countries. See Rev. Proc. 2025-17, 2025-13 I.R.B. 1382.

For 2025, the Secretary of the Treasury, in consultation with the Secretary of State, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following countries beginning on the specified date:

For example, for purposes of section 911 of the Code, an individual who left Haiti on or after January 1, 2025, will be treated as a qualified individual with respect to the period during which that individual was a bona fide resident of, or was present in, Haiti if the individual establishes a reasonable expectation that he or she would have met the requirements of section 911(d) but for those conditions.