IRS Publishes Notice on Adjusted Housing Cost Limitations for Foreign Locations for 2026

The IRS published a notice providing adjusted limitations on housing expenses for qualified individuals living abroad who claim foreign earned income exclusions under I.R.C. §911. The notice establishes location-specific housing expense limitations for 2026 that replace the general limitation of $39,870, based on geographic differences in housing costs relative to the United States. The adjustments apply to numerous international locations, with amounts ranging from $40,000 to $116,900 depending on the city. Taxpayers may also apply these 2026 adjusted limitations to their 2025 taxable year if the amounts are higher than those provided in the previous year’s notice. [IRS Notice 2026-25, ...