At the 2025 US Expats Financial Conference, Marylouise Serrato, Executive Director at American Citizens Abroad, shared valuable insights about ACA’s advocacy strategies for the Residence Based Taxation for Americans Abroad Act. As legislative attention in Washington shifts to tax reform, ACA is working to ensure the voices of Americans overseas are heard — and that real, workable solutions like residence-based taxation (RBT) are considered.
Why Residence-Based Taxation?
The United States is one of only two countries in the world that continues to tax its citizens based on citizenship rather than residence. This system creates a host of challenges for US expats, including the risk of double taxation, burdensome compliance requirements, restricted access to banking and investment services, and, in some cases, a decision to renounce citizenship altogether.
ACA argues that the solution lies in switching to residence-based taxation. Under this system, foreign earned income would be exempt from US taxation, aligning America with the vast majority of developed nations and simplifying life for ordinary Americans living abroad.
The LaHood Bill: A Potential Turning Point
The Residence-Based Taxation for Americans Abroad Act, introduced by Representative Darin LaHood, seeks to make this change a reality. Often referred to as the “LaHood Bill,” the legislation would exclude foreign earned income from US taxation and use a set of eligibility criteria to determine who qualifies.
Key features of the bill include:
- Exemption of foreign earned income from US tax.
- Residency requirement: must have lived abroad for at least 3 of the past 5 years, or continuously since age 25.
- Optional participation through a signed attestation.
- Exclusion of digital nomads and high-net-worth individuals above $13.6 million in assets, who would face a departure tax.
- Elimination of GILTI and FATCA reporting for qualifying individuals.
- End to FBAR filing obligations under current draft language.
ACA’s Role in Shaping RBT Policy
ACA’s efforts to influence US tax policy stretch back decades, but the organization’s decision to relocate its headquarters to Washington DC in 2012 marked a pivotal moment. By operating at the heart of US political decision-making, ACA has cultivated bipartisan relationships and become a trusted voice on tax and compliance matters affecting Americans abroad.
While ACA did not draft the LaHood bill, the organization’s detailed tax policy modeling, developed in 2016 and updated since, has significantly informed the proposed legislation. ACA’s modeling provided a legislative roadmap, helping drafters understand how the current tax code could be adapted to support residence-based taxation.
A Rare Legislative Window of Opportunity
The expiration of the Tax Cuts and Jobs Act (TCJA) provisions has triggered a broader tax reform debate in Congress. ACA sees this as an ideal time to advance residence-based taxation. The LaHood bill has been carefully designed to align with the requirements of reconciliation procedures, increasing its chances of inclusion in larger legislative packages.
In response to President Trump’s campaign promise to end double taxation, ACA launched a “100-day commitment” to promote RBT. This has included publishing comparisons of current tax code and proposed changes, releasing technical documentation on the LaHood bill, and briefing key offices on Capitol Hill.
Research That Shifts the Narrative
A longstanding barrier to progress has been a lack of reliable data. ACA, through its Global Foundation, partnered with District Economics Group to address this. Their research has already influenced policymakers, revealing that the expat population is smaller, more compliant, and less wealthy than often assumed.
Their estimate of around 4 million Americans abroad — significantly lower than the widely quoted but unsupported figure of 9 million — has been well received. It paints a more realistic picture and supports ACA’s position that residence-based taxation is a necessary and manageable reform.
What Expats Can Do to Help
ACA’s multi-pronged strategy in 2025 includes supporting refinements to the LaHood bill, securing favorable revenue estimates, and expanding bipartisan support. The organization is also leading public engagement efforts through the RBT Coalition, media outreach, and educational events.
US expats can contribute by:
- Becoming members of ACA.
- Donating to advocacy and research initiatives.
- Participating in campaigns to contact lawmakers.
- Sharing their stories to highlight the real-world impact of current tax policy.
Unresolved Issues and Open Questions
Not everything is settled. The current draft of the LaHood bill does not cover green card holders, and US-sourced income such as pensions and investments would remain taxable. Whether refundable credits like the Child Tax Credit will be preserved is still being discussed.
There are also questions about how the bill will interact with existing tax treaties. For now, the proposal appears to remove the “savings clause” that allows the US to override treaty provisions, but more clarity will be needed.
The Global Context and the Road Ahead
Interestingly, as the US considers moving away from citizenship-based taxation, countries like France and the UK are reportedly exploring the opposite. These efforts seem targeted at high-net-worth individuals, but ACA stresses that the US should focus on creating fair and functional policy for the millions of ordinary Americans living abroad.
ACA believes this is a pivotal moment. The groundwork has been laid, the policy modeling is robust, and awareness in Congress is at an all-time high. With tax reform imminent, residence-based taxation has a real shot at becoming law — and ACA is determined not to let the opportunity pass.
From Advocacy to Action
While nothing is guaranteed, ACA’s advocacy work has brought residence-based taxation closer to reality than ever before. For Americans abroad, the promise of a simpler, fairer tax system is no longer a distant dream. With continued pressure and support, 2025 could mark the beginning of a new era for US expats.