The IRS has provided the foreign housing expense exclusion/deduction amounts for tax year 2025. Generally, a qualified individual whose entire tax year is within the applicable period is limited to maximum housing expenses of $39,000 for 2025. Similarly, the computation of the base housing amount is also tied to the maximum foreign earned income exclusion. In fact, the base housing amount is 16-percent of the maximum exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period that fall within the tax year. The notice also provides a table containing information on adjusted limitations on housing expenses, in lieu of the otherwise applicable limitation of $39,000 for 2025.
Notice 2024-31, I.R.B. 2024-15, 869, is superseded.
