The high net-worth individual surge
High-net-worth individuals (HNWIs) are voting with their feet—2025 UBS Global Wealth Report shows a 15% uptick in millionaire migrations to low-tax havens, with Panama and Lisbon leading for Americans ditching NYC's 3.876% state tax bite. In 2026, geo-arbitrage isn't just for nomads; it's a HNWI blueprint, slashing living costs 50-70% while banking $20k+ yearly in savings (or reinvested FIRE—Financial Independence, Retire Early—funds). NYC's $5,500+/month grind vs. Panama's $2,000? That's $42k/year unlocked. But taxes? The real game-changer. Let's arbitrage it right.
Practical guide
Tax basics
Not financial advice; consult a licensed pro (e.g., via Greenback Expat Tax) for your situation.
U.S. citizens pay global taxes (worldwide income), but geo-arbitrage shines via the Foreign Earned Income Exclusion (FEIE: up to $126,500 tax-free in 2026 if abroad 330+ days/year) and Foreign Tax Credits (offset foreign levies). No "tax haven escape" for Uncle Sam, but smart moves minimize double-dips. Here's the 101 for our trio—based on 2025 IRS/foreign gov rules, projected stable.
Foreign Earned Income Exclusion (FEIE) & Form 2555: Exclude foreign-earned income (wages/remote pay) up to $126,500—file annually (free, auto-qualifies if physical presence test met). Pro: Covers most nomad salaries. Con: Doesn't apply to investments. Hack: Track days with apps like this Google Sheet (explained below)—aim for 11 months abroad.
Foreign Tax Credit (Form 1116): Deduct taxes paid abroad (e.g., Panama's 0% on foreign income) against U.S. liability—dollar-for-dollar relief. Pro: Stacks with FEIE for max savings. Con: Paperwork (receipts needed). Hack: Panama's territorial tax (only local income taxed) + FEIE = near-zero on remote work.
State Taxes & FBAR (Report of Foreign Bank and Financial Accounts): Ditch NYC's 8.82% top rate by proving non-residency (183+ days out). Report foreign accounts >$10k (FBAR, free but due June 30). Pro: States like CA/TX can't touch you abroad. Con: Audit risk if sloppy—use software like Taxes for Expats ($500/year).
Country | U.S. Tax Impact | Local Tax on Foreign Income | Pro Hack |
|---|---|---|---|
NYC Baseline | 37% fed + 8.82% state | N/A | Full bite—$100k salary = $35k+ tax. |
Panama | FEIE eligible; 0% local | 0% territorial | Pair with Panama bank for seamless. |
Lisbon | FEIE eligible; 20% NHR (first 10 years) | 20% flat (non-habitual resident) | EU perks + credit offsets U.S. fed. |
Empathy note: The IRS shadow looms—this is normal. Start with a Greenback Expat Tax consult to sleep easy.
Subscriber spotlight
Jordan's Panama FIRE Pivot
Jordan H., 50, tech FIRE (Financial Independence, Retire Early) seeker from NYC's Upper East Side, hit his $1.2M nest egg and eyed escape from $5,500/month co-op fees and 8.82% state taxes. Panama City (mid-tier Casco Viejo) became the pivot: $1,700 1-bed with canal views, $1,200/month total living, and canal-side walks swapping Wall Street stress for $3 ceviche lunches.
FIRE math was brutal in NYC—$100k withdrawals taxed to oblivion. Panama's territorial system + FEIE freed $25k/year; I traded spreadsheets for sailing. Shock? The humidity—fixed with AC. By month 4, I'd joined a HNWI expat circle via Panama Equity Fund, turning savings into local real estate flips.
Jordan's blueprint: FEIE file Day 1 (with help from TurboTax), Panama’s Friendly Nations visa ($5k deposit, 1 month), and a "U.S. tether" (quarterly NYC visits). Mid-tier magic: Casco's $1,800 total (vs. NYC $5,500) funds his $40k/year drawdown indefinitely..
Deep dive
What is FEIE
FEIE stands for Foreign Earned Income Exclusion, a U.S. tax provision under IRC Section 911 that lets eligible American expats exclude up to $126,500 (2026 limit, adjusted for inflation) of foreign-earned income from federal taxes. It's a game-changer for remote workers or self-employed abroad, potentially saving $20k+ yearly vs. U.S. residents. (State taxes may still apply—check yours.)
Quick Eligibility & How It Works
Qualify Via: Physical Presence Test (330+ days abroad in 12 months) or Bona Fide Residence Test (full tax year living/working overseas).
Applies To: Wages, salaries, self-employment (not passive income like dividends).
File: Form 2555 with your 1040 (free via IRS; TurboTax handles ~$89).
Document Everything: Keep passports, tickets, leases—IRS requests these in 80% of audits.
Pros | Cons |
|---|---|
Up to $126k tax-free (e.g., $30k fed savings on $100k salary) | Doesn't cover investments; audit risk if sloppy records. |
Stacks with Foreign Tax Credit for double relief | 330-day rule means no long U.S. trips. |
It’s low risk if you file accurately.
Real Triggers: High earners ($400k+), unreported foreign accounts, or inconsistent days abroad (e.g., 200 claimed vs. passport stamps showing 150).
Expat audit rate: <0.5%, mostly correspondence (mail audits), not deep dives.
Premium resource (free!)
FEIE progress tracker
Use this Google Sheet to see how you can hit FEIE within 12 months! It tracks YTD for overview, rolling windows for multiple qualifying periods (IRS allows overlaps), and actionable tips.
Foreign Earned Income Exclusion (FEIE) eligibility under the Physical Presence Test doesn't require the 330 full days to fall within a single calendar year—it can span across years (e.g., Oct 2026 to Sep 2027), as long as it's in any consecutive 12-month period. The IRS explicitly allows this flexibility: You qualify if you're abroad for at least 330 days during any 12-month window you choose (not tied to tax year), making it nomad-friendly for mid-year moves.
Pro Tip: Track multiple windows (e.g., one for 2026 tax year, another rolling)—file Form 2555 for each qualifying period.
Secure your abroad setup
Stay Connected, Stay Safe: NordVPN for Expats on the Move
Staying connected abroad means dodging hackers, geo-blocks, and spotty WiFi—NordVPN's got your back ($4/month basic plan, 6,000+ servers in 60 countries). Expat pros swear by it for seamless U.S. streaming in Panama cafes or banking logins from Lisbon balconies, all with military-grade encryption to protect your remote gigs from prying eyes.
[Secure Now] (affiliate link—no extra cost to you).
Mask & Unblock: Hide your IP to access Netflix U.S. or company VPNs without hassle.
Expat-Proof Speed: 5,000Mbps+ on WireGuard—lag-free Zoom from anywhere.
No-Log Privacy: Audited zero-logs policy keeps your data yours, even on public hotspots.
Feel secure emailing clients from beach WiFi!
Your turn
Which arbitrage calls?
Reply with "Panama taxes" or "Lisbon life"—it will fuel future newsletters. Follow @abroadblueprint on TikTok for "FIRE Day in Casco" clips. Subscribe for the series: abroad blueprints to unlock your freedom. [Subscribe Now].