Saving tax in the USA: legal strategies for expats

In Europe, the saying goes: "Pay off your debts and you'll sleep better." In the USA, it's: "Keep the mortgage and you'll pay less tax."
Mortgage interest is deductible up to a limit set by law. That's why many Americans deliberately don't pay off their homes, invest the capital elsewhere instead and deduct the interest year after year.

In the USA, financing a business vehicle, especially an SUV or pickup over 6,000 pounds, can be a tax feast. Section 179 often lets you write off the entire purchase price in the first year. Bonus: the financing costs are deductible too.
The result: you drive a huge truck and the IRS practically chips in.

If you're self-employed, you can deduct your health insurance premiums in full, for yourself and your family. Employees use pre-tax payroll deductions to pay premiums before tax. Combined with employer contributions, that can quickly save several thousand dollars a year.

Married couples with taxable income below roughly $96,700 (tax year 2025) pay 0% tax on long-term capital gains. With smart planning, you can realize high five-figure gains tax-free every year.

Thanks to the primary residence exclusion, married couples can make up to $500,000 in profit tax-free when they sell the home they live in ($250,000 for singles), provided you've lived there for at least two of the last five years.

If you sell a rental property and buy a comparable ("like-kind") property soon after, you can defer the entire gain. You can repeat this as often as you like, and many US investors go decades without paying capital gains tax on their real estate profits.

The changes introduced by the Big Beautiful Bill give expats new room to maneuver:

• Tax-free tips in certain industries

• Interest-free or heavily discounted vehicle financing as an employer benefit

• Higher capital gains allowances for married couples

• Better deductibility of education costs for a career change or retraining

In the USA, residential property is depreciated over 27.5 years and commercial property over 39 years, even when its real value is rising. Bonus depreciation allows certain improvements or fixtures to be written off immediately, which can cut your tax massively, especially in the early years.

Anything that is "ordinary and necessary" for running a rental property can be deducted: mortgage interest, property tax, repairs, insurance, travel costs and even office supplies for managing it.

Business owners and investors can shift losses flexibly into other years (carryback, carryforward) to recover tax already paid or reduce future profits.

Hire your own children in your own business, pay them a salary (often tax-free for the child) and deduct it as a business expense: completely legal in the USA, as long as the work is real. Social media posts and scanning files count.

Texas, Florida, Nevada & co. charge no state income tax. That saves you several thousand dollars a year right away and makes your tax return simpler.

A 401(k) plan is the American version of a workplace pension. Contributions (up to $23,500 in 2025, plus catch-up contributions from age 50) are tax-deductible, and the money grows tax-free until you withdraw it in retirement. Many employers even add a matching contribution: free money from the boss.

With a Roth IRA, you pay tax on your contribution today, but all future earnings and withdrawals in retirement are tax-free. Ideal for expats who expect to stay in the USA and not face higher tax rates later.

An HSA combines healthcare savings with a tax advantage that seems almost too good to be true:

1. Contributions are tax-deductible

2. Earnings grow tax-free

3. Withdrawals for medical expenses are tax-free
   On top of that, unused money stays in the account and can serve as an extra tax-advantaged pension in later life.

Donations to recognized US nonprofits are deductible, often up to 60% of taxable income. Donations in kind (furniture, clothing, even cars) count too. Many expats underestimate how much they can save this way while doing good at the same time.

The US tax system is a huge toolbox. If you only take the standard deductions, you're leaving cash on the table. From tax-free real estate gains and hefty write-offs on trucks to triple tax-free HSAs: the system rewards those who know their cards and play them strategically.

Or, as Americans say: It’s not how much you make, it’s how much you keep.

These tax hacks are powerful, but they only work at their best when they fit your personal situation and are implemented correctly. US tax law is notorious for its complexity, and small mistakes can quickly become expensive.

Mount Bonnell Advisors in Austin, Texas, has been advising entrepreneurs, investors and private individuals on their move into the USA for many years. We combine solid knowledge of US tax law with a deep understanding of the particular challenges European expats face.

We help you:

• File your first US tax return correctly and tax-efficiently

• Structure your real estate investments tax-efficiently (including depreciation and 1031 exchanges)

• Choose the right retirement and savings plans (401(k), Roth IRA, HSA)

• Put the benefits of the Big Beautiful Bill to real use

• Choose the right US state of residence for the best tax outcome

If you're ready to make the move to the USA, do it right from day one. You'll find more articles under News.

Book a consultation with us now, so your start in the USA is not just exciting but a success on the tax side too.

Consultation & implementation

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