Renouncing US citizenship for $450: the expensive part comes later

The US Department of State has changed its schedule of fees for consular services. The fee for processing a request for a Certificate of Loss of Nationality drops from $2,350 to $450.

The rule takes effect on 13 April 2026. It was published as a final rule in the Federal Register, the official journal of the US government, on 13 March 2026.

For context: $2,350 was by far the highest fee of its kind anywhere in the world. It was raised to that amount from $450 in 2014 and has been criticized ever since for effectively putting a price on a constitutionally protected right.

Now it is going back to its old level.

Because the fee was never the problem. It was just the visible part of a process whose real costs lie elsewhere.

If you give up American citizenship, your taxes have to be in order. In concrete terms: you must certify that you have met your US tax obligations for the last five years. If you can't, you are treated as a so-called covered expatriate, and then a rule kicks in that packs a real punch.

It treats all of your assets as if they had been sold the day before you expatriated. The notional gain is taxed above an exemption amount. For someone with a paid-off home, a grown investment portfolio and a business stake, that can mean a six-figure bill.

So the $450 is the price of the appointment. Not the price of the process.

The group is larger and quieter than you might think. In Europe it is made up mainly of three kinds of people.

Accidental Americans. Born in the United States, moved away as a child, never lived there. Citizens under the Fourteenth Amendment, with every tax consequence that brings. Many find out through their bank, because financial institutions check place of birth under the American reporting system.

Returnees. People who lived in America for years and naturalized there, then moved back and are now discovering that the tax obligation came with them.

Children of Americans. If you were born abroad and have at least one American parent with enough time spent in the US, you may have acquired citizenship without ever being registered.

In a great many cases, renunciation is not the best solution but the last resort. The first question is whether the tax burden is really as heavy as it feels.

The truth is a relief for most people affected: if you live in Europe, pay tax there and earn a normal income, you often end up paying nothing in the United States. Tax treaties and the foreign tax credit take care of that. What remains is paperwork, not a tax bill.

It gets unpleasant in certain situations: holdings in foreign corporations, funds that US law treats as passive foreign investment companies, certain kinds of pension savings, and selling your own home at a large gain.

So if you're weighing it up, first have someone calculate what keeping your citizenship actually costs. For many, the answer is: surprisingly little.

Then the path follows an order you must not reverse.

First, get your taxes in order. If you've missed returns, you catch up on them, usually through the simplified procedure for non-willful failures. It is only open to you as long as the IRS hasn't contacted you first. The process is explained in Streamlined Filing.

Next, check whether the exit tax applies. It depends on asset thresholds, on your average tax liability over recent years and on whether the five years can be certified.

Only then come the consular appointment, the oath and the certificate. And the following year, one final return that closes the process.

If you reverse this order and go to the consulate first, you lose planning options you had before.

The US Treasury publishes a quarterly list of people who have given up their citizenship. The list is public, and it is a remarkable document.

For decades the numbers were in the low hundreds per year. Since the introduction of the American reporting system for foreign accounts and the visibility that came with it, they have shot up and now regularly run into the thousands, well beyond that in peak years.

The reason is rarely the tax burden. It is hassle and access. People give up their passport because European banks will no longer open investment accounts for them, because pension products are not available to them, because their accountant charges four figures every year for a return that ends up at zero.

That is the quiet tragedy of this issue: it mostly hits people with ordinary incomes, for whom the American passport no longer has any practical value and only creates friction.

Simply stop filing. Citizenship does not end by doing nothing. It ends through a formal act before a consular officer. If you just stop, you have a growing gap and no solution.

Let your passport expire. An expired passport does not end your citizenship. It only ends your ability to travel on it, and it creates an extra problem at the US border, because American citizens must enter on an American passport.

Pass the problem on to your children. If you have passed citizenship on to your children without knowing it, sort it out while they are young. Special rules apply to minors, and an eighteen-year-old's finances are simpler than a fifty-year-old's.

The rule of thumb: this issue doesn't get smaller over time. It gets more expensive, because assets grow and gaps add up.

Between keeping and giving up there is a third way, and for some people it is the right one: keep your citizenship and reduce the friction.

In practice that means choosing investments US law doesn't penalize. So no European investment funds that are treated as passive foreign investment companies, but individual securities or American funds instead. And no structures with foreign corporations unless they're truly necessary.

If you set up your assets so they look unremarkable from an American point of view, you get a tax return that takes effort but costs little. If you don't, you have a debate every year.

For an accidental American with a portfolio and a house, that is often the more sensible choice than renunciation with everything it involves.

For those who take this path, here is how it works in practice, because it differs from anything you know from government offices at home.

The process takes place at an American embassy or consulate. It cannot be done in writing, online or in the United States. You need an appointment in person, and at many consulates you need two.

At the appointment you declare under oath that you are giving up your citizenship voluntarily and with full knowledge of the consequences. The officer is required to explain the consequences to you and to make sure you have understood them.

The file then goes to Washington and comes back as a certificate. That can take months. The renunciation takes effect retroactively from the day of the oath.

And the following year comes one last tax return that splits the year of expatriation into two parts. If you forget this step, you haven't completed the process.

Finally, the side that gets lost in this debate. An American passport is one of the strongest positions a person can hold.

It lets you enter, live and work at any time in the country with the largest domestic market in the world. It can't be taken away because you've been gone too long. It extends to your children. And it opens a job market that other people play the lottery for years to get into.

If you give it up, you give all that up for good. There is no way back except immigrating again from scratch, and former citizens may be worse off in that process than any other applicant.

So here is the most important point of this article: you don't make this decision because of a fee, either way. You make it once you've run the numbers on both sides, and then you make it once.

The official reasoning behind changes like this is always the same: the fee should cover the actual cost. And 2,350 dollars for an administrative step that takes a consulate a few hours of work was hard to justify.

What you shouldn't read into it is any real easing of the rules. The tax rules stay exactly as they are. What gets cheaper is the door. Not the road that leads to it.

If you want to know what your situation will actually cost, with and without the passport, talk to Mount Bonnell Advisors in Austin, Texas. A good place to start is Becoming a US citizen and Tax services for individuals.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.