The Dutch expat ruling reduces the tax you can credit in America.
There is a US–Netherlands income tax treaty and a totalization agreement. The expat ruling exempts part of your salary from Dutch tax — 30% for 2025 and 2026, and a flat 27% from 2027. Less Dutch tax paid means less to credit on Form 1116, so the ruling shifts tax rather than removing it.
Tax snapshot — Netherlands
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Sources: IRS Publication 54; IRS Publication 514; US–Netherlands income tax treaty and totalization agreement; Dutch expat ruling rules, including the flat 27% from 1 January 2027 and the abolition of partial non-resident status from 1 January 2025; box 3 rules on the deemed return; Rev. Proc. 2025-32; 31 CFR 1010.350. Checked 22 September 2026.
What that means on your return
The ruling is 30% for 2025 and 2026 and becomes a flat 27% from 1 January 2027. An earlier stepped reduction was announced and then reversed before it ran its course, so anything describing a 30/20/10 taper is describing a plan that was abandoned. The credit available on your US return still changes as the percentage does, while your salary stays the same.
Box 3 taxes a deemed return on your net assets rather than income you actually received. It is generally not creditable against US income tax, and the Dutch litigation over how the deemed return is computed does not change the US answer.
The totalization agreement covers Dutch social insurance, so a self-employed American contributing there generally escapes the 15.3% US self-employment charge with a certificate of coverage.
Partial non-resident taxpayer status, which let ruling holders keep foreign income and assets outside Dutch tax, was abolished from 1 January 2025, with transitional relief for those who already held it. It changed which income Dutch tax reaches, and therefore how much foreign tax there is to credit.
Because the ruling's percentage and scope have moved repeatedly, the Dutch tax paid on an unchanged salary changes from year to year and so does the credit. This is one of the few postings where last year's conclusion is an unreliable guide to this year's.
If you are in the Netherlands as a…
Questions I get about the Netherlands
Does the 30% ruling save me US tax?
No — it usually moves tax rather than removing it. Exempting salary from Dutch tax reduces the foreign tax credit available, so the US may collect what the Netherlands does not.
Is box 3 tax creditable on my US return?
Generally no. It is charged on a deemed return on net assets rather than on income received, which puts it outside the income taxes Form 1116 recognises.
What is happening to the ruling's percentage?
It is 30% for 2025 and 2026 and becomes a flat 27% from 1 January 2027. An earlier stepped reduction was reversed before it ran its course, so descriptions built on a 30/20/10 taper are out of date.
I had partial non-resident status. Does that still exist?
It was abolished from 1 January 2025, with transitional relief for people who already held it. For an American it changed which income Dutch tax reaches, and therefore how much foreign tax there is to credit.
I already pay high tax in the Netherlands. Do I still file a US return?
Yes, every year. Citizenship-based taxation does not care what you pay locally. The foreign tax credit usually removes the US liability, but the filing obligation stands, and FBAR and FATCA reporting stand with it.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Dutch bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from the Netherlands this year?
Fifteen minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 14 years in practice, 11 of them as an Enrolled Agent.