U.S. Tax for Australians Moving to the US: 2026 Guide

U.S. vs Australian taxes run on two calendars, two sets of rules, and two filing systems, and for the first year of a move they overlap. Paying tax twice on the same income is rarely the outcome. The U.S.-Australia tax treaty decides which country taxes what, and the Foreign Tax Credit offsets most of what's left. The complications are timing, superannuation reporting, the FBAR thresholds, and the arrival-year steps, which have to happen in order.

For most Australians, the move starts with a U.S. job, and a work visa needs a sponsoring employer. Migrate Mate's job board lists U.S. employers with a verified history of visa sponsorship, so you can land the role first, then work through the tax below with a cross-border CPA.

US and Australian taxes side by side

Australian rates and the 12% super rate are current for the 2025-26 year, published by the Australian Taxation Office. U.S. rates below are for the 2026 tax year, from the IRS inflation adjustments. If you're filing a 2025 return in 2026, some U.S. figures are slightly lower.

When you become a U.S. tax resident as an Australian

Your U.S. tax obligations depend first on whether you're a U.S. tax resident. For visa holders this is set by a day-count test, and Australians on work visas start counting from arrival.

The substantial presence test, day by day

You're a U.S. resident for tax purposes if you're physically present in the U.S. at least 31 days in the current year and 183 weighted days across the current year and the two years before it. The IRS calls this the substantial presence test.

The weighting counts the current year in full, the prior year at one-third, and the year before that at one-sixth. Days are counted from physical presence, regardless of when your visa activated, and short personal trips and layovers generally count.

For example, if you spent 120 days in the U.S. in 2024, 120 in 2025, and 120 in 2026, you'd count 120 plus 40 plus 20, which is 180 weighted days, just under the 183 threshold.

If you keep stronger ties to Australia despite meeting the test, the closer-connection exception (Form 8840) can sometimes still apply, unless you've applied for a green card.

First-year choice and dual-status returns

If you don't meet the substantial presence test in your arrival year but you'll meet it the next year, the first-year choice election lets you be treated as a US resident for part of the arrival year. It starts your residency on the first day of a 31-day continuous-presence period, as long as you're present at least 75% of the days after that.

Dual-status filers file Form 1040-NR for the pre-arrival part of the year, covering U.S.-source income only, and Form 1040 for the post-arrival part. The standard deduction generally isn't available on a dual-status return, which often produces a worse result.

If you're married to a U.S. citizen or resident, run the numbers on the election to be treated as a full-year U.S. resident, because it restores the standard deduction and lets you file jointly.

When your Australian tax residency ends after the move

Becoming a U.S. tax resident doesn't automatically end your Australian tax residency. The ATO runs its own analysis, and you can be resident in both systems during a transition year until you clearly cease Australian residency.

The ATO's residency tests

The ATO's main test is the resides test, a facts-and-circumstances look at where you live and work. If you fail it, the ATO checks the domicile test and the 183-day test.

Renting out your Australian home doesn't end residency on its own. What matters is your intention to stay abroad, where your family lives, where you work, and where your major assets sit. A three-year U.S. contract, with your family moving with you and your home rented at market rates, usually ends Australian residency from your departure date.

What changes when you cease being an Australian resident

Once you're a foreign resident for Australian tax, you stop paying the Medicare levy and you're no longer taxed on most foreign-source income. Capital gains change too. A CGT event can apply to your assets at departure, and you generally choose between a deemed sale at departure values or continuing to hold them as taxable Australian property, which keeps Australia's taxing rights on the eventual sale. The current rules are set out by the ATO.

HELP and HECS debt keeps accruing and requires worldwide-income reporting once you're overseas. And you'll want to update your Australian bank to foreign-resident status so interest withholding is correct.

What the US-Australia tax treaty does, and what it doesn't

The treaty prevents most double-taxation outcomes. It decides which country taxes each type of income first and caps withholding on cross-border payments. It does not remove your obligation to file in each country.

The U.S.-Australia income tax treaty was signed in 1982, with a protocol added in 2001. Its tie-breaker rules, which look at where you have a permanent home, your center of vital interests, and where you habitually live, can keep you a treaty resident of Australia even when the substantial presence test pulls you into U.S. tax residency.

You still have to file in the U.S., and you claim the treaty position by attaching Form 8833. Most Australians on long-term U.S. work visas won't need a tie-breaker claim, but it's a useful tool for the arrival year.

If your Australian broker pays you U.S. ETF dividends, the broker generally withholds 15% US tax at source under the treaty, as long as you've lodged a W-8BEN establishing your treaty position. Without the form, the default rate climbs to 30%.

How the Foreign Tax Credit (Form 1116) prevents double taxation

The Foreign Tax Credit is what prevents most Australians from being taxed twice on the same income. U.S. residents claim it on Form 1116 for foreign income tax paid on income the U.S. is also taxing.

The credit is capped at the U.S. tax that would otherwise apply to the foreign-source part of your income, so you can't use it to wipe out U.S. tax on U.S.-source income. There's a shortcut. If your foreign tax paid is US$300 or less as a single filer, or US$600 married filing jointly, and it's only on passive income, you can claim the credit directly on Form 1040 without filing Form 1116. As an example, if an Australian rental property has Australian tax withheld, you report the same rental income on your U.S. 1040 and credit the Australian tax on Form 1116, capped at the U.S. tax on that rental.

FEIE vs the Foreign Tax Credit

The Foreign Earned Income Exclusion lets you exclude a slice of foreign earned income, and for the 2026 tax year the limit is $132,900. It only applies while your tax home is outside the U.S. and you meet a foreign residence or 330-days-abroad test. Once you've moved to the US and you're living here, you meet neither, so the exclusion stops applying. It can still cover the part of your arrival year before you left Australia, when you were still living and working there. For most people who move on an E-3, H-1B, or TN, the Foreign Tax Credit is the mechanism that applies, and FEIE covers at most part of the arrival year. Run both before you file.

How the U.S. taxes your Australian property, shares, and rental income

Once you're a U.S. tax resident, the US taxes your worldwide income, which brings U.S. reporting on the assets you still hold in Australia. Reviewing this before you move is easier than untangling it afterward.

Australian rental income goes on your U.S. return on Schedule E, and the Australian tax you pay credits against the U.S. tax through Form 1116. Australian bank interest is reportable too, alongside the FBAR side covered below.

Australian shares, ETFs, and managed funds need the most attention. Most Australian ETFs and managed funds are passive foreign investment companies (PFICs) under U.S. rules, which carry some of the heaviest reporting in the tax code: annual Form 8621 filing, and a default treatment that can tax gains at the top rate plus an interest charge. Each fund can mean a separate Form 8621.

U.S. and Australian filing deadlines, and which return to lodge first

The two tax years don't line up, and that mismatch causes most cross-border filing problems.

U.S. individual returns are due 15 April. If you're abroad on the due date you get an automatic two-month extension to 15 June, and you can push it to 15 October by filing Form 4868. The extension is to file, not to pay. If you owe U.S. tax, interest runs from 15 April regardless.

In Australia, self-lodgment is due 31 October. Lodging through a registered tax agent extends the date well into the following year, often to around mid-May, though the exact date depends on your circumstances and prior compliance. Verify yours with your agent, especially in your departure year.

What you have to report: FBAR and FATCA

These are report-only filings, no extra tax, but the penalties for skipping them are steep, and the thresholds are low enough that most Australians with super and a bank account cross at least one. U.S. IRAs and 401(k)s don't count toward them.

How the U.S. taxes your Australian superannuation

Australian super has no settled U.S. tax treatment, and it's the main reason to have a cross-border CPA in your first year.

The treaty doesn't clearly classify Australian super as a qualified foreign pension, so U.S. treatment varies between practitioners. Three positions are common.

One treats the fund as a foreign grantor trust, which brings annual reporting on Forms 3520 and 3520-A and can tax growth each year.

Another treats it as an employees' trust, where employer contributions are taxable as wages but the growth is deferred.

The third, and rarest, takes a treaty-protected pension position. Self-managed super funds are almost always treated as grantor trusts and trigger the most reporting, and the investments inside any super fund can raise the same PFIC issues covered above.

FICA, Social Security, and the Totalization Agreement

On an E-3, H-1B, or TN with a U.S. employer, you pay US FICA from your first paycheck. The Totalization Agreement changes this only in narrow cases.

FICA is Social Security at 6.2%, on wages up to an annual cap of about $184,500 for 2026, plus Medicare at 1.45% with no cap, for a 7.65% employee share. Your employer matches it, so total FICA on your wages is 15.3% split between you. High earners also pay an extra 0.9% Medicare surtax on wages above the single-filer threshold, on top of the regular 1.45%.

The main exception is a short-term assignment under an ATO-issued certificate of coverage, which keeps you on the Australian Super Guarantee and exempts you from U.S. FICA. It's only available for short-term assignments and is used by intra-company transferees on temporary secondments, not by E-3 or H-1B holders hired directly by a US employer.

The U.S.-Australia Totalization Agreement, in force since 2002, lets you combine work credits across both systems, so a shorter U.S. career can still count toward U.S. Social Security. Each country pays its own benefit separately.

Your US take-home pay: federal tax, state tax, and FICA

Your U.S. take-home is federal income tax, from 10% to 37% by bracket, plus state tax, which is zero in Texas, Florida, and Washington and runs up to about 13% in California, plus FICA at 7.65%, all applied to wages after the standard deduction.

For the 2026 tax year the standard deduction is $16,100 for single filers and $32,200 for married filing jointly, the 10% bracket covers the first $12,400 of taxable income for a single filer, and the 37% top rate starts above $640,600.

As an example, an E-3 holder earning $150,000 in Texas, with no state income tax, takes home roughly $108,000 to $115,000 after federal tax and FICA, based on 2026 brackets and the $16,100 standard deduction. The effective federal rate sits well below the 24% marginal bracket because the standard deduction and lower brackets do real work.

Payroll and super questions to ask HR before day one

On payroll and tax, get it in writing that you'll be on U.S. payroll only, that FICA withholding starts from your first paycheck, that your W-2 arrives before the 15 April deadline, and that direct deposit is set up before your first pay run.

If you need to open a U.S. bank account from Australia, start early. Ask whether the employer reimburses cross-border CPA support and has a preferred provider for Australian hires.

On super and benefits, ask what the 401(k) match terms are and how vesting works, since a 401(k) match is the closest U.S. equivalent to the Super Guarantee.

Employer 401(k) matches at US companies commonly run 3% to 6% of salary. Australia's Superannuation Guarantee is 12% as of 2025-26. A 6% match on a $150,000 salary is about $9,000 a year, roughly half of what 12% super would have added on equivalent Australian wages. If you're moving from a strong Australian employer to a weaker U.S. match, factor that into your base salary negotiation.

Land the offer first, then map the tax

These obligations attach to your U.S. days, not to your offer letter. The substantial presence test, the FBAR threshold, the Foreign Tax Credit, and the dual-status arrival year all start once you're in the U.S. counting days. For a work-based move, the sponsoring role is what gets you there, so it's the practical first step.

If you're going the E-3 route, the filing is the next step once you have the offer, and Migrate Mate can handle it for you. A dedicated E-3 expert prepares the LCA, DS-160, and document review and books your consulate slot, for a flat $499, filed within one business day of receiving your documents.

Frequently asked questions