Notice 2025-16, 2025-13 I.R.B. 1378

SECTION 1. PURPOSE

This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for specific locations for 2025. These adjustments are based on geographic differences in housing costs relative to housing costs in the United States.

SECTION 2. BACKGROUND

Section 911 allows a qualified individual to elect to exclude from gross income the foreign earned income and to exclude or deduct the housing cost amount of such individual.

The term “housing cost amount” is generally the total of the housing expenses for the taxable year minus a base housing amount. See § 911(c)(1). For this purpose, the base housing amount for the taxable year is limited to an amount that is tied to the maximum foreign earned income exclusion amount of the qualified individual, which is $130,000 for 2025. See § 911(c)(1)(B). Specifically, the base housing amount is 16 percent of the maximum foreign earned income exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period that fall within the taxable year. Assuming that the entire taxable year of a qualified individual is within the applicable period, the base housing amount for 2025 is $20,800 ($130,000 x .16).

Similarly, the housing expense amount is also limited, based on a percentage of the maximum foreign earned income exclusion amount. Specifically, the limit on such housing expenses generally equals 30 percent of the maximum foreign earned income exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period for which the taxpayer is a qualified individual. See § 911(c)(2)(A) and (d)(1). Thus, under this general limitation, a qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $39,000 ($130,000 x .30) for 2025. However, section 911(c)(2)(B) authorizes the Secretary to issue regulations or other guidance to adjust the percentage under section 911(c)(2)(A)(i) (which determines the limit on housing expenses) based on geographic differences in housing costs relative to housing costs in the United States. Pursuant to this authority, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) have published annual notices concerning the limitation on the section 911 housing cost amounts since the 2006 taxable year.

For more background on the foreign housing exclusion, see https://www.irs.gov/individuals/international-taxpayers/foreign-housing-exclusion-or-deduction.

SECTION 3. TABLE OF ADJUSTED HOUSING LIMITATIONS FOR 2025

The following table provides adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $39,000) for 2025. All amounts are in U.S. dollars.

Country

Location

Limitation on Housing Expenses (full year)

Limitation on Housing Expenses (daily/365 days)

Angola

Luanda

84,000

230.14

Argentina

Buenos Aires

56,500

154.79

Aruba

Oranjestad

46,200

126.58

Aruba

Other

46,200

126.58

Australia

Sydney

62,300

170.68

Australia

Wollongong

43,700

119.73

Bahamas, The

Nassau

49,700

136.16

Bahrain

Bahrain

48,300

132.33

Bermuda

Bermuda

90,000

246.58

Brazil

Sao Paulo

56,600

155.07

Canada

Calgary

43,400

118.90

Canada

Montreal

50,100

137.26

Canada

Ottawa

46,800

128.22

Canada

Toronto

57,400

157.26

Canada

Vancouver

56,600

155.07

Canada

Victoria

39,200

107.40

Cayman Islands

Grand Cayman

48,000

131.51

China

Beijing

66,600

182.47

China

Hong Kong

114,300

313.15

China

Shanghai

57,001

156.17

Colombia

Bogota

58,700

160.82

Colombia

All cities other than Bogota

49,400

135.34

Democratic Republic of the Congo

Kinshasa

42,000

115.07

Denmark

Copenhagen

43,704

119.74

Dominican Republic

Santo Domingo

45,500

124.66

Estonia

Tallinn

46,600

127.67

France

Garches

65,700

180.00

France

Paris

65,700

180.00

France

Sevres

65,700

180.00

France

Suresnes

65,700

180.00

France

Versailles

65,700

180.00

Germany

Berlin

39,300

107.67

Germany

Boeblingen

41,200

112.88

Germany

Bonn

42,000

115.07

Germany

Cologne

56,200

153.97

Germany

Gelnhausen

40,600

111.23

Germany

Hanau

40,600

111.23

Germany

Ingolstadt

46,000

126.03

Germany

Kaiserslautern, Landkreis

39,500

108.22

Germany

Ludwigsburg

41,200

112.88

Germany

Mainz

44,000

120.55

Germany

Munich

46,000

126.03

Germany

Nellingen

41,200

112.88

Germany

Pirmasens

39,500

108.22

Germany

Sembach

39,500

108.22

Germany

Stuttgart

41,200

112.88

Germany

Wahn

42,000

115.07

Germany

Wiesbaden

44,000

120.55

Germany

Zweibrucken

39,500

108.22

Guatemala

Guatemala City

42,000

115.07

Guinea

Conakry

51,300

140.55

Holy See, The

Holy See, The

43,700

119.73

India

Mumbai

67,920

186.08

India

New Delhi

56,124

153.76

Israel

Beer Sheva

55,300

151.51

Israel

Jerusalem

49,000

134.25

Israel

Tel Aviv

50,800

139.18

Israel

West Bank

49,000

134.25

Italy

Genoa

41,800

114.52

Italy

La Spezia

40,400

110.68

Italy

Milan

65,300

178.90

Italy

Naples

44,900

123.01

Italy

Rome

43,700

119.73

Jamaica

Kingston

41,200

112.88

Japan

Gifu

74,300

203.56

Japan

Komaki

74,300

203.56

Japan

Nagoya

74,300

203.56

Japan

Okinawa Prefecture

41,600

113.97

Japan

Osaka-Kobe

90,664

248.39

Japan

Tokyo

67,700

185.48

Kazakhstan

Almaty

48,000

131.51

Korea

Camp Colbern

54,200

148.49

Korea

Camp Mercer

54,200

148.49

Korea

K-16

44,500

121.92

Korea

Kimpo Airfield

44,500

121.92

Korea

Seoul

44,500

121.92

Korea

Suwon

44,500

121.92

Kuwait

Kuwait City

64,400

176.44

Kuwait

All cities other than Kuwait City

57,700

158.08

Luxembourg

Luxembourg

51,700

141.64

Malaysia

Kuala Lumpur

46,200

126.58

Malta

Malta

55,100

150.96

Mexico

Mexico City

47,900

131.23

Mexico

All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Mexico City, Monterrey, Nogales, Nuevo Laredo, Tijuana, and Veracruz

39,400

107.95

Mozambique

Maputo

39,500

108.22

Netherlands

Amsterdam

52,900

144.93

Netherlands

Hague, The

52,100

142.74

Netherlands

Schiphol

52,900

144.93

Netherlands Antilles

Curacao

45,800

125.48

Oman

Muscat

41,300

113.15

Panama

Panama City

39,500

108.22

Peru

Lima

39,100

107.12

Poland

Warsaw

55,000

150.68

Portugal

Alverca

40,000

109.59

Portugal

Lisbon

40,000

109.59

Qatar

Doha

45,888

125.72

Romania

Bucharest

41,200

112.88

Russia

Moscow

108,000

295.89

Russia

Saint Petersburg

60,000

164.38

Saudi Arabia

Riyadh

40,000

109.59

Singapore

Singapore

82,900

227.12

Slovenia

Ljubljana

45,900

125.75

South Africa

Pretoria

39,300

107.67

Spain

Barcelona

40,600

111.23

Spain

Madrid

53,300

146.03

Switzerland

Bern

72,100

197.53

Switzerland

Geneva

102,600

281.10

Switzerland

Zurich

39,219

107.45

Taiwan

Taipei

46,188

126.54

Tanzania

Dar Es Salaam

44,000

120.55

Thailand

Bangkok

59,000

161.64

Trinidad and Tobago

Port of Spain

54,500

149.32

Ukraine

Kyiv

72,000

197.26

United Arab Emirates

Abu Dhabi

49,687

136.13

United Arab Emirates

Dubai

57,174

156.64

United Kingdom

Basingstoke

41,099

112.60

United Kingdom

Bath

41,000

112.33

United Kingdom

Bracknell

62,100

170.14

United Kingdom

Caversham

73,800

202.19

United Kingdom

Cheltenham

47,300

129.59

United Kingdom

Croughton

43,100

118.08

United Kingdom

Farnborough

54,700

149.86

United Kingdom

Gibraltar

44,616

122.24

United Kingdom

Harrogate

42,300

115.89

United Kingdom

High Wycombe

62,100

170.14

United Kingdom

Lakenheath

43,300

118.63

United Kingdom

London

67,000

183.56

United Kingdom

Loudwater

54,300

148.77

United Kingdom

Menwith Hill

42,300

115.89

United Kingdom

Mildenhall

43,300

118.63

United Kingdom

Reading

62,100

170.14

United Kingdom

Southampton

44,200

121.10

United Kingdom

Surrey

48,402

132.61

Venezuela

Caracas

57,000

156.16

Vietnam

Hanoi

46,800

128.22

Vietnam

Ho Chi Minh City

42,000

115.07

SECTION 4. OPTION TO APPLY 2025 ADJUSTED HOUSING LIMITATIONS TO 2024 TAXABLE YEAR

For some locations, the limitation on housing expenses provided in Section 3 of this notice may be higher than the limitation on housing expenses provided in the “Table of Adjusted Limitations for 2024” in Notice 2024-31, 2024-15 I.R.B. 869. A qualified individual incurring housing expenses in such a location during 2024 may apply the adjusted limitation on housing expenses provided in Section 3 of this notice for 2025 (prorated over 366 days rather than 365) in lieu of the amounts provided in the “Table of Adjusted Limitations for 2024” in Notice 2024-31 (and as set forth in the Instructions to Form 2555, Foreign Earned Income, for 2024).

The Treasury Department and the IRS anticipate that future annual notices providing adjustments to housing expense limitations will make a similar option available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations for 2026 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2025 taxable year.

SECTION 5. EFFECT ON OTHER DOCUMENTS

This notice supersedes Notice 2024-31, 2024-15 I.R.B. 869.

SECTION 6. EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2025.

However, as provided in Section 4, taxpayers may apply the 2025 adjusted housing limitations contained in Section 3 of this notice to the taxable year beginning in 2024.

SECTION 7. DRAFTING INFORMATION

The principal author of this notice is Kate Y. Hwa of the Office of Associate Chief Counsel (International). For further information regarding this notice, contact Ms. Hwa at (202) 317-5001 (not a toll-free call).