Trump Administration to Slash US Citizenship Renunciation Fee by 80%
The Trump administration has announced a significant reduction in the fee for Americans seeking to renounce their citizenship, cutting it by 80% from $2,350 to $450. This change, detailed in a final rule published to the federal register, will take effect on April 12, 2025. The move is designed to make it easier for individuals to walk away from their US citizenship, even though it will result in a financial loss for the government, as the new fee falls below the actual cost of processing requests.
Rising Demand and Political Factors Drive Fee Reduction
In recent years, the number of people applying for a Certificate of Loss of Nationality (CLN) has surged, with 2024 recording the third-highest annual total of 4,820, according to Internal Revenue Service (IRS) figures. Analysts point to political changes in the US as a key driver, noting an immediate spike at the start of Donald Trump's first presidency in 2017. Additionally, Americans living overseas have grown increasingly frustrated with complex tax rules, prompting many to seek renunciation.
So-called "accidental Americans"—individuals who acquired citizenship through birth in the US or through parents but have lived most or all of their lives abroad—are required to file annual IRS tax returns. This requirement has led to a growing desire to sever ties. An analysis by the Outbound Investment Group in May 2024 highlighted rising frustration over the high cost and cumbersome application process for CLNs, which often takes months to over a year to complete.
Backlog and Underreporting Issues
The global backlog for renunciation appointments has exceeded 30,000, with the government struggling to manage the surge in applications. Experts describe the situation as akin to a game of Whack-a-Mole, as new applications arrive faster than existing ones are finalized. Moreover, the official figures are likely an undercount, as the IRS "expatriation list" only includes CLN applicants with a net worth above $2 million, leaving many others unrecorded.
In announcing the fee reduction, the State Department acknowledged that while there is no legal requirement for individuals to declare their motivation for renouncing citizenship, anecdotal evidence suggests that difficulties are partly due to tax reporting requirements. After significant deliberation, the department decided to alleviate the cost burden for those seeking CLN services by returning to the below-cost fee of $450.
Impact on Accidental Americans and Global Context
Millions of "accidental Americans" reside overseas, with estimates of over half a million in Europe alone. Many face obstacles in banking and other areas of life due to their complicated tax status. Notable examples include former British Prime Minister Boris Johnson, who renounced his US citizenship in 2016, and current Prime Minister Rishi Sunak, who faced criticism for not surrendering his US green card until 2021.
This fee reduction comes as US passports have fallen out of the world's top 10 most powerful for the first time in two decades, according to the Henley Passport Index. Meanwhile, the Trump administration is also seeking to end the practice of birthright citizenship at home, with the US Supreme Court set to rule on an executive order issued in early 2025 that aims to reverse the constitutional right of citizenship for children born on US soil to non-American parents.
