The Trump administration has agreed to take a financial loss in order to make it easier for Americans to walk away from their US citizenship.
In April, the cost to formally renounce citizenship will plunge from $2,350 to just $450, below the actual cost to the government of processing the requests – but fulfilling a years-long promise to reverse an unpopular fee adopted in 2015.
The number of people seeking a Certificate of Loss of Nationality (CLN) has soared in recent years, with 2024 recording the third highest annual total of 4,820, according to Internal Revenue Service (IRS) figures.
Analysts say political changes in the US are a driving factor in many cases – the start of Donald Trump’s first presidency in 2017 saw an immediate spike. But Americans overseas have also grown increasingly weary of complicated tax rules.
So-called “accidental Americans”, those who acquired citizenship through birth in the US or through parents, but who have lived most or all of their lives abroad, are required to file an IRS tax return annually, prompting many to seek a breakup.
An analysis by the Outbound Investment Group in May reported rising frustration at the outsized cost of a CLN, and a cumbersome application process that often lasts months to more than a year.
It said a global backlog for renunciation appointments exceeded 30,000, and that the government’s efforts to deal with the surge was like a game of Whac-A-Mole, with more applications arriving quicker than others are finalized.
Experts say the figure is also an undercount because the IRS “expatriation list” covers only CLN applicants whose net worth is above $2m.
The slashing of the fee by 80% was announced in a final rule published to the federal register on Friday – and which will take effect on 13 April.
“While there is no legal requirement for individuals to declare their motivation for renouncing US citizenship, anecdotal evidence suggested that difficulties were due at least in part to reporting requirements,” the state department said in announcing the action.
“After significant deliberation, taking into account both the affected public’s concerns regarding the cost of the fee and the not insignificant anecdotal evidence regarding tax-related difficulties many US nationals residing abroad encounter … the department made a policy decision to propose alleviating the cost burden for those individuals who decide to request CLN services by returning to the below-cost fee of $450.”
The government says it will lose money because applicants are required to appear in person before a consular officer, and make repeated statements that they understand the consequences of their actions before being allowed to swear a formal oath of renunciation.
Millions of “accidental Americans” live overseas, including estimates of more than half a million in Europe where many have faced obstacles in banking and other areas of life because of their complicated tax position.
Two British prime ministers were affected, Boris Johnson, who was born in New York in 1964 and was among 5,411 individuals to renounce US citizenship in 2016; and Rishi Sunak, who was a US permanent resident subject to the same tax reporting rules and who came under criticism for not surrendering his green card until 2021.
The International Association of Accidental Americans welcomed the government’s move as a “historic victory after six years of relentless legal action and advocacy”, referring to a succession of lawsuits it filed to press the US state department to act.
Its founder, Fabien Lehagre, said many of those affected may have been unaware of their US nationality until they found themselves unable to open a bank account, obtain a mortgage or invest for retirement in their country of residence.
He said that since 2023, when Joe Biden’s presidential administration announced it would reduce the fee, at least 8,755 individuals had paid $2,350. That generated more than $20.5m in what Lehagre called “unjustified revenue”.
“This fee reduction is a concrete first victory, but our fight to have the right to renounce recognized as a fundamental constitutional right continues,” he said.
The move comes after US passports fell out of the world’s top 10 most powerful for the first time in two decades. In October, the Henley Passport Index, a ranking that measures how many countries a traveler can visit without needing a visa, said a US passport had declined to equal 12th in power alongside Malaysia.
While the Trump administration is making it easier to reduce the number of US citizens abroad, it is also seeking to end the practice of birthright citizenship at home. The US supreme court will rule this year on an executive order issued by Trump at the start of his second presidency in early 2025 seeking to reverse the constitutional right of citizenship to any person born on US soil to non-American parents.
