Residence-Based Taxation (RBT) in 2026: Real Progress, No Timeline

If you have spent any time in expat circles lately (Facebook groups, Reddit threads, the comment sections of whatever tax blog you have bookmarked), you have likely seen the posts claiming that residence-based taxation is essentially a done deal. Or maybe you saw the posts claiming the counterpoint: that it will never happen. The reality is less dramatic: the bill is still in progress, the timeline is genuinely uncertain, and the current filing rules have not changed. Here is what is actually going on.

A quick rewind

Rep. Darin LaHood (R-IL) introduced the Residence-Based Taxation for Americans Abroad Act (H.R. 10468) as a discussion draft in December 2024. The proposal would allow qualifying Americans living abroad to opt out of the citizenship-based taxation system, meaning they would pay US tax only on US-source income, not on what they earn living and working in Germany. It attracted more serious Congressional attention than anything similar in recent memory.

Then H.R. 10468 expired with the 118th Congress. The One Big Beautiful Bill Act, signed into law last July 4th, was the obvious vehicle, but RBT was left out. So by the time the 119th Congress got to work, the bill had to start over from scratch.

Where things actually stand in June 2026

A revised version is being developed jointly by Congressman LaHood and Sen. Todd Young (R-IN), which is notable: this is the first time the proposal has had serious bicameral support. That is real progress, even if it does not feel like it.

The main holdup is procedural rather than political. Before the bill can be formally reintroduced, the Joint Committee on Taxation has to produce a revenue estimate (what DC calls a "score"). That process involves deep-dive meetings with JCT experts across international, business, retirement, and employee benefits taxation. It is not a rubber stamp. And the JCT is fielding requests from all 435 House members, 100 senators, and two tax-writing committees simultaneously, so RBT is in the queue alongside a lot of other things.

Advocacy groups had expected reintroduction by Q1 of this year. That did not happen. The current position from organizations like American Citizens Abroad is that the work is ongoing and the legislative language is being actively refined, but there is no confirmed date on the table.

Some noise worth noticing

While the main bill waits, Congress has been circling the underlying idea from a few directions.

Rep. Jeff Hurd (R-CO) introduced legislation this year that would exempt Pope Leo XIV, the first American pope, from US taxation on his foreign income. Advocacy groups quickly pointed out the obvious: if Congress is willing to carve out an exemption for one American living abroad, the same logic should apply to the estimated nine million others. It is a useful piece of political framing, even if H.R. 4501 is unlikely to move on its own.

Another proposal with some relevancy concerns a Platinum Card visa that would include an exclusion from US taxation on foreign income for qualifying investors. Again, advocates are making the same argument in the other direction: why does this principle apply to people wealthy enough to invest for a visa, but not to the Americans already living and paying taxes in Germany?

None of this is RBT. But the concept that income earned abroad by Americans actually living abroad should not automatically trigger a US tax bill is getting more traction in the conversation than it did a few years ago.

What the bill would actually do

For anyone still fuzzy on the specifics: under the LaHood/Young proposal, qualifying Americans abroad could elect to be treated as nonresidents for US federal tax purposes. Foreign-source income (what you earn living and working in Germany) would generally fall outside the US system. US-source income would remain taxable: dividends from US stocks, rental income on a US property, distributions from US retirement accounts.

The bill also includes one-time departure tax provision aimed at higher-net-worth individuals, though the proposal includes a five-year compliance track that could sidestep it. And FBAR? Unclear. The main focus is on income taxation; what happens to the foreign account reporting regime is an open question, and anyone planning around this should not assume the compliance overhead fully disappears if it passes.

The bottom line

RBT is a real proposal with genuine momentum behind it, more than any version that came before. It is also not law, and the timeline remains genuinely uncertain. The safest working assumption is that nothing changes until Congress actually acts.

That means continuing to file, continuing to meet FBAR deadlines, and not making financial decisions based on a change that has not happened yet. If anything, the compliance record you build now is likely to matter: current proposals appear to require existing tax compliance as a condition for opting in.

We will keep tracking this and sharing updates here. And if you want to talk through what your current situation looks like, or how a potential shift to RBT might interact with your specific filing picture, reach out. It is a conversation a lot of our clients are having right now, and it usually starts with getting clear on the present before planning for a future that is not certain yet.

This post is intended for general informational purposes and does not constitute tax advice. Please consult a qualified tax professional (like us!) regarding your specific situation.