Effective 2011, U.S. citizens or Resident Aliens who live abroad can exclude up to $92,900 for the year beginning in 2011 of foreign-earned income and exclude or deduct certain foreign housing costs. This is an increase of $1,400 from the prior year $91,500).

The exclusion is limited to the smaller of $92,900 or the excess of the foreign earned income for the tax year over the foreign housing exclusion. This is computed separately for each spouse in the case of married taxpayers. Thus, if both spouses work abroad and each meets either the bona fide residence test and/or the physical presence test, then each can elect the foreign earned income exclusion. In effect, it is thus possible for a married couple to exclude up to $185,800 in 2011

Furthermore, the qualifying taxpayer in addition to the foreign earned income exclusion, "can also choose to exclude or deduct from gross income a certain amount of foreign housing costs." The housing amount is subject to limitations and generally limited to 30% of the maximum foreign earned income exclusion. For the tax year 2011, the housing cost limitation is $27,870 (30% × 92,900).

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