The United States made it cheaper to renounce your citizenship, in case that's something you want to do
After years of pressure, the State Department announced an 80 percent decrease in the cost of formally renouncing your U.S. citizenship because affordability does matter
Renouncing your United States citizenship isn’t a common thing for people to do. According to data, between 5,000 and 6,000 people renounce their citizenship, and the State Department wants to make it easier. In a recent rule change, the cost of renouncing your U.S. citizenship is now $450. The announcement comes at a time when the federal government has been trying to get rid of birthright citizenship and threatening to strip people of their citizenship.
Renouncing your U.S. citizenship has never been cheaper
The State Department just dropped the cost of renouncing your U.S. citizenship from $2,350 to $450. That is an 80 percent drop in the financial cost of walking away from your citizenship. It is now back down to the original price it cost in 2010 when the U.S. started to charge citizens to renounce their citizenship. The price increased to $2,350 in 2015 when requests surged due to the changing tax responsibility for U.S. citizens living abroad.
“Many reported spending hundreds or thousands of dollars a year on tax professionals, even when they might have no U.S. tax liabilities,” an official for the State Department said, according to The New York Times. “Some stated that despite being required to comply with U.S. tax laws, they received and/or benefited from few of the services for which their taxes were collected.”
The drop in price is due to unrelenting legal pressure from the Association of Accidental Americans, which is based in France. The organization represents people living abroad who are U.S. citizens simply due to being born in the U.S. The organization filed several lawsuits questioning the constitutionality of the fee. There is a current lawsuit pending that argues that there should be no fee to renounce your citizenship.
“The Association of Accidental Americans welcomes this decision, which acknowledges the necessity of making this fundamental right accessible to all,” Fabien Lehagre, the president of the Association of Accidental Americans, said in a statement. “This victory is the direct result of six years of relentless legal action and advocacy.”
There are implications for anyone who renounces their U.S. citizenship
Renouncing your U.S. citizenship comes with implications. Once someone renounces their citizenship, they lose all rights that are given to citizens. First, people who give up their citizenship lose the right to enter, work, and live in the U.S. In the eyes of the government, once you renounce your citizenship, you are seen as a foreign national. It is seen as a permanent, irrevocable process, so don’t take it lightly.
For high-income individuals, the financial liabilities to renounce their citizenship keep growing. Currently, people who make $2 million+ net worth or $190k+ average annual income tax for 2024/2025 have to pay capital gains taxes on all property they own abroad. This is called an “exit tax.”
People are also required to file a specific tax form as their final tax return for the year they renounce. Renouncing your citizenship doesn’t wipe away tax liability debt. After all, the U.S. government wants to make sure it gets its money.
It is also important not to renounce, if you want, before having citizenship in another country. There is a risk of becoming stateless, which leaves you limited in how you can travel or receive government protection.
Renouncing your citizenship is not an easy process and requires the person to confirm multiple times that they understand the implications. The new fees are effective on April 13.