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Summary for: ASK AN EXPERT: Can expats in Czechia save money under America’s new tax law?For Americans living in Czechia, President Donald Trump’s One Big Beautiful Bill Act introduces new deadlines (and possibly, some relief) to an already complicated financial scenario. The law, officially signed on July 4, 2025, affects most filings beginning in 2026, with some provisions applying to returns filed in 2027.
Currently, U.S. citizens are one of only two nationalities in the world taxed on their income abroad, which means that even if your paycheck comes entirely from Prague or Brno, your government still requires a report. More importantly, depending on how much you make, citizens stand to potentially be taxed twice on the same earned income.
However, several updates under the new law mean you could potentially save thousands of crowns for Americans living and working in Czechia. To illustrate this in practice, we spoke with expert Jan Stránský, a wealth manager at finance and investment group WOOD & Company, who helps foreigners abroad navigate these changes with precision.
Paying Czech taxes? You could owe less to the IRS
If you pay Czech income tax, you can often reduce how much you owe in U.S. taxes through foreign tax credits.
- Past rule: Americans abroad could claim a Foreign Tax Credit for foreign taxes paid, up to 80 percent of the U.S. tax owed on the same income, typically reducing U.S. liability to little or nothing if the local tax rate is comparable.
- New rule: The standard Foreign Tax Credit (FTC) rules for individuals remain the same, though the recent law increased the limit from 80 percent to 90 percent only for certain U.S. corporations under the GILTI regime—not for employees earning a salary abroad.
For expats earning a regular salary anywhere in Czechia, Stránský says this could still mean owing "very little or even nothing to the IRS, depending on the Czech tax already paid.”
Planning ahead when Czechia-based is critical, and professional advice ensures you maximize benefits while staying compliant.”
You can protect more of your salary in Czechia
The updated Foreign Earned Income Exclusion (FEIE) is another important benefit. The FEIE allows Americans abroad to exclude part of their foreign salary from U.S. income taxes, avoiding double taxation.
This rises from USD 120,000 to around USD 130,000 (from roughly CZK 2.49 million to CZK 2.7 million) for the 2025 tax year.
“If you meet the time-abroad requirements, more of your salary stays in your Czech bank account rather than going to the IRS,” explains Stránský. Professional guidance ensures you calculate your exclusion correctly and avoid costly mistakes.
Sending money home? Watch out for a new rule
If you regularly send money to family or friends back in the United States, new rules could affect you.
Starting Jan. 1, 2026, sending money out of the U.S. could cost an extra 1 percent—but only if you use cash, money orders, or similar physical payments,” Stránský explains, but ensures that “regular bank transfers and credit card payments are safe, so most people won’t be affected.”
State taxes also don’t have to cost you as much
Knowing how your deductions interact with federal law is another reason to consult experts. For Americans in Czechia still filing a state return (for example, if you own property or remain a resident of a U.S. state), the cap on state and local tax (SALT) deductions increases from USD 10,000 (CZK 207,800) to USD 40,000 (CZK 831,400).
“This could lower your overall tax bill, particularly if you have high property or state income taxes back home,” says Stránský.
FBAR, not fear: Reporting your foreign accounts
“FBAR” stands for Foreign Bank and Financial Accounts Report. These are four letters worth remembering. If you’re an American in Czechia and your foreign bank or investment accounts exceed USD 10,000 at any point during the year, you must file an FBAR with the IRS annually.
This is vital, because failing to do so can lead to significant fines, even if most of your income is already taxed in Czechia. For the 2025 calendar year, FBARs are due April 15 2026, with a possible extension to Oct. 15, 2026. Even with higher credits and exclusions, the reporting requirement hasn’t changed; professional guidance is invaluable.
What this all means for Americans in Czechia
Higher foreign income exclusions, expanded deductions, and small clarifications in the law all help reduce U.S. tax obligations on Czech-earned income. But applying these correctly (and meeting the right deadlines) requires careful attention.
Thoughtful planning, attention to deadlines, and expert guidance help expats navigate U.S. tax obligations from abroad. WOOD & Company does not provide tax planning or tax filing-related services; however, should you want to reach out to Jan Stránský at WOOD & Company directly for a free consultation related to investing, he can be reached at jan.stransky@wood.cz.
Disclaimer: U.S. tax laws are complex and trading financial instruments carries risks. Always ensure that you understand these risks before trading.
