US Citizens in Paraguay: Do You Still Owe US Tax? (2026)
US citizens and green-card holders owe US tax on worldwide income even in Paraguay. What FEIE, FBAR, and renunciation really mean for expats in 2026.
16 min readParaguay for US Citizens: Residency, Cost and the Tax Truth
Almost every page selling Paraguay to Americans leads with 0% tax. That page is not this one. The United States taxes its citizens wherever they live, so the honest pitch is different, and for a lot of people it is still a good one.
Start with the part most providers bury. The United States is one of two countries on earth that taxes on the basis of citizenship rather than residence. Moving to Asunción does not end your filing obligation, does not end your tax liability, and does not make your investment income disappear. Any page that tells an American they will pay 0% by getting a Paraguayan cédula is either careless or selling something.
What Paraguay does offer is worth listing plainly. A second residency you control, obtained in months rather than years, with no investment minimum and no language test. A cost base that is a fraction of a US city. A path to a second passport after roughly five years. And, for the small number who go all the way, the only route that genuinely ends US taxation, which is renunciation, with its own exit tax and its own consequences.
The Foreign Earned Income Exclusion helps at the margin: $132,900 of earned income in 2026. It does nothing for dividends, capital gains or rental income, and it does not touch self-employment tax. FBAR and FATCA reporting follow you regardless. None of that makes Paraguay a bad decision. It makes it a decision about cost of living, optionality and freedom of movement rather than about tax.
Key guides for US citizens & green-card holders
The tax reality first, then the residency, the cost base and the exit route.
Moving From the US to Paraguay: The Honest 2026 Guide
Moving from the US to Paraguay won't end your US federal tax. Here's what really changes for Americans, what doesn't, and how to plan the move.
12 min read
Foreign Earned Income Exclusion (FEIE): Form 2555 Guide
The Foreign Earned Income Exclusion (FEIE) lets US expats in Paraguay exclude $132,900 of earned income on Form 2555 in 2026, but never passive income.
14 min read
FBAR and FATCA for US Expats in Paraguay: 2026 Guide
FBAR and FATCA are the two US foreign-account reports every American in Paraguay must file. What triggers each, and the penalties for missing them.
14 min read
Green-Card Holders: US Tax on Worldwide Income Abroad
Green-card holders stay US tax residents on worldwide income even living in Paraguay. Why leaving the US does not end it, and how surrender timing works.
14 min read
Renouncing US Citizenship: The Exit Tax Reality (2026)
Renouncing US citizenship is the only route to a true 0% life abroad. The $2,350 fee, the Section 877A exit tax, and why a second passport comes first.
12 min read
Paraguay Residency & Cédula: Step-by-Step Guide (2026)
Paraguay residency and the cédula, step by step: documents, apostille, Migraciones, the 2026 rules, and the path to permanent residency and citizenship.
15 min read
Cost of Living in Paraguay 2026: Real Asunción Numbers
What is the real cost of living in Paraguay in 2026? Here are honest monthly USD budgets for Asunción, from a single person to a family of four.
16 min readRecommended package
Standard package $2,100
For most Americans the Standard package is the right size: residency, cédula, sworn translations and on-the-ground support. The RUC inscription in the Premium package matters mainly if you want a Paraguayan tax-residency certificate, and plenty of US persons with no Paraguayan income never need one. We would rather tell you that than sell you the larger package.
Frequently asked questions
Does Paraguay residency reduce my US taxes?
By itself, no. The United States taxes citizens and green-card holders on worldwide income regardless of where they live. Paraguay's territorial system means Paraguay does not tax your foreign income, which avoids double taxation, but your US return does not go away.
How much does the FEIE actually exclude in 2026?
$132,900 of foreign earned income per qualifying person, up from $130,000 in 2025. It applies to earned income only, so dividends, interest, capital gains and rental income stay fully taxable, and it does not reduce self-employment tax.
Do I still have to file FBAR and FATCA from Paraguay?
Yes. A Paraguayan bank account counts as a foreign financial account, so the usual FBAR threshold and FATCA reporting apply exactly as they would anywhere else. Residency changes where you live, not what you report.
Is Paraguay worth it for an American at all?
Often yes, but for different reasons than the marketing suggests: a low cost base, a second residency you actually control, and a realistic path to a second passport. Treat the tax outcome as neutral rather than as the reason, unless you are seriously weighing renunciation.
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