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United States  ·  June 2026  ·  Weekly

The IRS didn’t take a break either.

◆ A note before we start

Three months ago, this newsletter went quiet.

Not because the tax landscape stopped moving - it didn’t. Because the team and I were heads-down, taking your feedback seriously and reworking Settel from the ground up. Better features. Clearer data. A platform that actually delivers tax and global wealth clarity on the go.

We are closing in on the relaunch. A new Settel. More on that very soon.

In the meantime - the newsletter is back. The world kept changing while we were building. Here is what matters right now.

Story 1 of 3

The FEIE threshold went up - and your 2026 tax calculation needs a fresh run

▶ What changed

The IRS has confirmed the Foreign Earned Income Exclusion rises to USD 132,900 for 2026 - a rule that lets Americans working abroad exclude a chunk of their foreign salary from US tax. Standard deduction and bracket thresholds have also increased. These are live for the 2026 tax year, meaning payroll decisions and salary structures being set right now should reflect the new numbers.

▶ What this actually means

You took a job abroad. Your salary is paid in dirhams, pounds or rupees. The US still wants a cut - because you hold an American passport. The Foreign Earned Income Exclusion is the rule that lets you tell the IRS: this income was earned abroad, leave it alone. The threshold just went up, which means more of your foreign salary is protected this year. If you are in a zero-tax country like the UAE, this may mean your US bill drops to zero. If you are in a higher-tax country, the calculation is more layered - but the higher threshold still works in your favour.

◆ Anita’s take  TAX SAVING

This could directly reduce what you owe the IRS this year. But the FEIE versus Foreign Tax Credit calculation - the credit that stops you paying tax on the same income in two countries - needs revisiting before you file. If you have not run those numbers since 2024, your tax bill may be higher than it needs to be. The threshold moved. The arithmetic moved with it.

Story 2 of 3

IRS interest rate benchmarks shifted - relevant if you have loans or estate structures

▶ What changed

The IRS released Applicable Federal Rates for May 2026, setting short-term AFR at around 3.82%, mid-term at 4.08%, long-term at 4.83%, and the Section 7520 rate at 5.00%. These are the minimum interest rates the IRS requires on loans between related parties - including loans between a US person and an overseas entity or family member. At 5%, the Section 7520 rate is now materially higher than it was during the low-rate era.

▶ What this actually means

You lent money to a family member or a family business - or a trust was set up on your behalf using an agreed interest rate. The IRS has minimum rates it requires on those arrangements. If the rate in your loan is lower than the IRS minimum, the difference gets treated as a gift - which has tax consequences. Those minimum rates just went up to 5%. If your arrangement was set up two or three years ago when rates were lower, it may now be out of line with what the IRS expects. That is worth checking.

◆ Anita’s take  RETIREMENT PLANNING

For US expats with estate structures or related-party loans set up during the low-rate environment, this is worth reviewing. The retirement and estate planning benefit of certain vehicles - GRATs, CLATs, intra-family loans - is directly tied to the 7520 rate. At 5%, the calculus on some of those structures has changed. Not broken. Changed. Worth a fresh look before the rate moves again.

Story 3 of 3

Section 892 guidance shifts how sovereign-linked income flows to expat managers

▶ What changed

The IRS and Treasury issued updated guidance on Section 892 - the rule that exempts foreign governments and sovereign wealth funds from US tax on passive US investments. The guidance clarifies applicability dates for proposed regulations affecting how these vehicles structure US holdings. For expats, the relevance is indirect: many globally mobile professionals in finance are employed by or co-invest alongside sovereign platforms where 892 exemptions shape how income is structured.

▶ What this actually means

You work in finance. Part of your pay is tied to a fund's performance - a share of the profits when deals close, or co-investment rights alongside the fund. Some of the investors in that fund are government-backed or sovereign entities. The IRS just updated guidance on how those government investors are treated on US returns. If the fund restructures in response, where your income is treated as coming from - the US or abroad - could shift without any change to your own arrangements. That shift changes what exclusions and credits apply to your tax bill.

◆ Anita’s take  INVESTMENT RETURNS

This is a narrow story but a sharp one for a specific profile - finance professionals in London or the Gulf co-investing alongside sovereign platforms. If your compensation is structured through vehicles that include 892-exempt investors, and those vehicles restructure in response to this guidance, your US-source income allocation could shift. That changes your FEIE and FTC position without any change to your own arrangements.

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