Introduction: The Exclusive Citizenship Act and Dual National Families
The Exclusive Citizenship Act is a US Senate bill that would ban dual citizenship and give every dual national one year to choose a single passport. It is not law. However, it has unsettled thousands of dual national US UK families, because the choice it describes carries tax consequences that the bill never mentions.
Most commentary treats the proposal as an immigration story. In contrast, for a wealthy family in Britain it is a tax story. Keeping the American passport means US tax returns for life. Losing it can trigger a deemed sale of everything you own. Furthermore, giving up the British passport would remove your automatic right to live in the country where you work, own a home and raise children.
At TaxYork, we prepare US and UK returns for dual nationals, and clients have asked about this bill since the day it appeared. This guide therefore sets out what the text says, where it stands in October 2026, why it faces constitutional obstacles, and what it would mean for your US tax returns. It also explains what a sensible family should do now, which is less than the headlines suggest.
What the Exclusive Citizenship Act Says
The Exclusive Citizenship Act in Plain Terms
The Exclusive Citizenship Act of 2025 is Senate bill S. 3283, introduced on 1 December 2025 and referred to the Senate Judiciary Committee. The official text of S. 3283 runs to five short sections. Its central rule is one sentence. A person may not be a citizen or national of the United States while simultaneously possessing any foreign citizenship.
The Exclusive Citizenship Act defines foreign citizenship widely. It covers any status recognised by a foreign government that confers nationality or citizenship, or that requires allegiance. Consequently, a full British citizen is caught, and so is someone who holds British citizenship by descent and has never lived in the UK. The definition contains no exception for citizenship acquired at birth.
The One-Year Election
Section 4(c) of the Exclusive Citizenship Act sets the deadline. Within one year of enactment, a US citizen who also holds a foreign citizenship must do one of two things. The first option is to submit a written renunciation of the foreign citizenship to the Secretary of State. The second is to submit a written renunciation of US citizenship to the Secretary of Homeland Security.
A person who does neither is caught by the default rule. The Exclusive Citizenship Act deems that person to have voluntarily relinquished US citizenship for the purposes of section 349(a) of the Immigration and Nationality Act. In other words, silence costs you the American passport, not the foreign one. That default is the most important feature of the bill for families in Britain.
New Foreign Citizenships After Enactment
A separate rule in the Exclusive Citizenship Act deals with the future. Under section 4(b), a US citizen who voluntarily acquires a foreign citizenship after enactment is deemed to have relinquished US citizenship. Therefore, an American in London who naturalised as British after that date would lose US citizenship at once. Current law is the opposite, as our guide to British citizenship and US tax when you naturalise explains.
Administration and the 180-Day Clock
The Exclusive Citizenship Act gives the government 180 days from enactment to prepare. Section 4 takes effect on that date. Within the same period, the Secretary of State must issue regulations on declaration, verification and recordkeeping. Additionally, the Secretary of Homeland Security must publish a notice of the election in the Federal Register.
The text also requires federal systems to record anyone deemed to have relinquished citizenship. Those people are to be treated as aliens for immigration purposes. Notably, the Exclusive Citizenship Act says nothing about how the government would identify dual citizens in the first place. The United States keeps no register of its citizens' other nationalities.
What the Bill Does Not Say
The omissions matter as much as the text. The Exclusive Citizenship Act does not amend the Internal Revenue Code. It contains no relief from the expatriation tax, no transition rule for children and no exception for people who cannot renounce a foreign nationality. It also says nothing about how a foreign country must treat a renunciation sent to Washington. Each of those gaps creates a practical problem that we address below.
Where the Bill Stands in October 2026
No Progress Since Introduction
The Exclusive Citizenship Act has not moved. The Congress.gov record for S. 3283 shows a single action, which is the referral to the Judiciary Committee on the day of introduction. It gained one cosponsor on 18 December 2025. There has been no hearing, no committee vote and no companion bill in the House of Representatives.
Independent forecasts reflect that inactivity. One widely cited legislative tracker gives the Exclusive Citizenship Act a 3% chance of enactment. Moreover, a bill must pass the committee, the full Senate and the House, and then receive the President's signature. This one has not completed the first of those steps in ten months.
The Congressional Calendar
Time is also against the Exclusive Citizenship Act. The 119th Congress ends on 3 January 2027, and every bill that has not passed by then expires. A sponsor could reintroduce the same text in the next Congress. However, it would start again from nothing, with a new number and a new committee referral. Accordingly, nothing in the current bill can bind you this year.
Why Dual Nationals Should Still Pay Attention
A low chance of passage is not a reason to ignore the subject. The Exclusive Citizenship Act has shown many dual nationals how little they know about their own US tax position. Specifically, it has exposed families who have never filed, parents who have not registered their children, and investors who do not know their own exit tax exposure. Those gaps exist today, whatever Congress does.
Why the Exclusive Citizenship Act Faces Constitutional Obstacles
Afroyim v. Rusk
The Fourteenth Amendment makes everyone born or naturalised in the United States a citizen. In Afroyim v. Rusk, decided in 1967, the Supreme Court held that Congress has no power to take citizenship away without the citizen's consent. A citizen keeps that status unless he or she voluntarily gives it up. The Exclusive Citizenship Act relies on a statutory deeming rule, which is difficult to reconcile with that holding.
Vance v. Terrazas
The second case concerns intent. In Vance v. Terrazas, decided in 1980, the Court held that the government must prove a specific intention to relinquish citizenship. Performing an act listed in the statute is not enough by itself. Therefore, failing to post a form within twelve months is unlikely to count as an intentional surrender of nationality.
Current State Department Practice
Existing practice follows those cases. Under the State Department's regulation on loss of nationality, officials presume that an American who naturalises abroad intends to keep US citizenship. Similarly, the UK accepts multiple nationality, as its guidance on dual citizenship confirms. Neither country currently asks a dual national US UK citizen to choose.
What a Court Challenge Would Mean for Tax
Litigation would create its own uncertainty. A court could suspend the law for years, uphold it in part or strike it down. Meanwhile, families would not know whether they were US taxpayers. Consequently, even an Act that eventually failed in court could force expensive protective filings. That risk is the reason to understand the tax rules now.
The US Tax Consequences of Each Choice
Choice One: Keep the US Passport
Under the Exclusive Citizenship Act, renouncing the foreign citizenship changes nothing for US tax. You remain a citizen, so you continue to file Form 1040 on worldwide income every year. The IRS explains that duty in its guidance for US citizens and resident aliens abroad. FBAR and Form 8938 reporting also continue, together with the reporting for UK companies and funds.
The cost of this choice sits on the British side. You would give up citizenship of the country where you live. In addition, the US reporting burden that many dual nationals find heavy would become permanent. Accurate US tax return preparation for expats would therefore remain an annual task.
Choice Two: Give Up US Citizenship
Losing US citizenship ends worldwide US taxation, but it opens the expatriation rules in section 877A of the Internal Revenue Code. Those rules ask whether you are a covered expatriate. If you are, the law treats you as selling all your assets at market value on the day before you expatriate. The gain is taxable in that final year.
Three tests decide covered status, and meeting any one is enough. The first is a net worth of $2 million or more. The second is an average annual US income tax liability above a threshold over the previous five years, which is $206,000 for 2025 and $211,000 for 2026. The third is a failure to certify five years of full US tax compliance. The IRS sets these out on its expatriation tax page.
The Deemed Sale and the Exclusion
A covered expatriate does not pay tax on the whole deemed gain. An exclusion applies, which is $890,000 for 2025 and $910,000 for 2026. Gains above that figure are taxed at normal capital gains rates, usually 20% plus the 3.8% net investment income tax. Our guide to the US exit tax for dual filers covers the calculation in depth.
For a business owner the numbers grow quickly. Founder shares, a London home with a large gain and an investment portfolio all enter the deemed sale. Importantly, the UK does not treat that deemed sale as a disposal. As a result, there is no UK tax in the same year to offset the US charge. When you later sell for real, the UK taxes the full gain, and the earlier US tax may not be creditable against it.
UK Pensions Under the Expatriation Rules
Pensions follow a separate and harsher rule, which the Exclusive Citizenship Act leaves untouched. A UK workplace pension or SIPP is normally ineligible deferred compensation for a covered expatriate, because the payer is not a US person. The law then treats the present value of your accrued benefit as paid to you on the day before expatriation. That amount is ordinary income, taxed at rates up to 37%.
This rule surprises almost every client who meets it. A senior banker or partner with a seven-figure UK pension can face a US charge on money that remains locked away for years. Furthermore, the UK will tax the same pension again when it is actually paid. The interaction with the US-UK double taxation convention needs careful analysis in each case.
Choice Three: Do Nothing
The default under the Exclusive Citizenship Act is deemed relinquishment. For tax purposes, that outcome would be the worst of the three, because it is the least certain. Section 877A treats a citizen as relinquishing citizenship only on specific events. They are a formal renunciation before a consular officer, a signed statement of voluntary relinquishment, the issue of a certificate of loss of nationality, or a court order cancelling naturalisation.
A deemed loss under the Exclusive Citizenship Act matches none of those events until the State Department issues a certificate. Moreover, section 7701(a)(50) provides that a person remains a citizen for tax purposes until one of them occurs. On a plain reading, someone who ignored the deadline could lose the passport and still owe worldwide US tax returns. The bill does not resolve that conflict.
Form 8854 and the Five-Year Certification
Every person who expatriates must file Form 8854. The form reports your assets and certifies, under penalty of perjury, that you met all US tax obligations for the five preceding years. A person who cannot certify is a covered expatriate regardless of wealth. In addition, failing to file the form can attract a $10,000 penalty.
This is where missed US tax returns become dangerous under the Exclusive Citizenship Act. A dual national with modest assets and no filing history would fail the certification test. That person would therefore face the deemed sale and the pension charge without any wealth threshold applying. Consequently, an unfiled return is a larger risk under the Exclusive Citizenship Act than a large balance sheet.
The Dual Citizen at Birth Exception
Who Qualifies
One group affected by the Exclusive Citizenship Act receives protection under current tax law. A person who became a citizen of the United States and of another country at birth can escape the net worth and tax liability tests. Two conditions apply. You must still be a citizen of the other country and taxed there as a resident on the expatriation date. You must also have been US resident for no more than ten of the last fifteen tax years.
Many British families fit this description. A child born in London to an American parent and a British parent is usually a citizen of both countries from birth. Likewise, a person born in the United States to a British-born parent may hold both nationalities from birth. Under the Exclusive Citizenship Act, those individuals could give up US citizenship without the wealth tests.
Who Does Not Qualify
The exception is narrower than it sounds. An American who moved to London and naturalised as British did not acquire British citizenship at birth. That person therefore faces the full net worth and tax liability tests. Similarly, a dual citizen from birth who spent more than ten of the last fifteen years living in the United States falls outside the rule.
The compliance test also survives. A dual citizen from birth must still certify five years of US tax compliance on Form 8854. An accidental American who has never filed cannot give that certification. In that case, the IRS relief procedures for certain former citizens may help, although they apply only below a net worth of $2 million.
Children Under Eighteen
A second exception covers the young. A person who relinquishes citizenship before reaching eighteen and a half, and who has been US resident for no more than ten years, also avoids the wealth tests. However, the Exclusive Citizenship Act does not explain how a child would make the one-year election. A parent generally cannot renounce US citizenship on behalf of a minor. A dual national child could therefore be deemed to have lost citizenship without ever making a decision.
The British Side of the Election
How Renouncing British Citizenship Really Works
The Exclusive Citizenship Act asks you to send a written renunciation of foreign citizenship to the US Secretary of State. British law does not recognise that step. You can give up British citizenship only by a declaration registered by the Home Secretary under section 12 of the British Nationality Act 1981. The process uses Form RN, as the official guidance on renouncing British nationality explains.
This mismatch produces an awkward result. A letter to Washington would satisfy the election in section 4(c). Nevertheless, you would remain a British citizen under UK law. The general ban in section 4(a) applies to anyone possessing foreign citizenship, so the Exclusive Citizenship Act appears to contradict itself. A complete renunciation would require a separate Home Office application.
Your Right to Live in the UK
Choosing the US passport under the Exclusive Citizenship Act has an immediate practical cost. British citizens have the right of abode. A former citizen does not, and the official guidance warns that your right to live in the UK will be affected. An American who renounced would therefore need indefinite leave to remain or a visa to stay in Britain. Our guide to indefinite leave to remain for Americans describes that status.
Resumption is possible but limited. Under section 13 of the 1981 Act, a person who renounced in order to keep or acquire another citizenship can register to resume British citizenship once as of right. Any further application is at the Home Secretary's discretion. However, resuming British citizenship after enactment would count as acquiring a foreign citizenship and would end US citizenship under section 4(b).
UK Tax Does Not Depend on Your Passport
Your nationality barely affects UK tax, so the Exclusive Citizenship Act matters far less to HMRC. The UK taxes residents on worldwide income under the statutory residence test, which HMRC explains in its RDR3 guidance. A British citizen and an American with indefinite leave pay the same income tax and capital gains tax. Therefore, the election would change your US tax position sharply and your UK tax position hardly at all.
That asymmetry shapes the decision. Keeping the US passport preserves two full tax systems. Giving it up leaves you with one, after a possible exit charge. Meanwhile, the UK bill stays broadly the same on either path. For most dual national US UK families, the question is the price of leaving the US system and whether that price is worth paying.
Case Study: The Harrington Family in London
Daniel Harrington was born in Chicago and moved to London in 2008. He naturalised as British in 2019. He owns founder shares with an unrealised gain of $2.4 million, a UK pension worth £900,000 and a net worth of about $6.2 million. His daughter Ella was born in London in 2012 to Daniel and his British wife, so she has held both nationalities since birth.
Suppose the Exclusive Citizenship Act became law. Daniel's first option is to renounce British citizenship. His US tax returns continue unchanged and he pays no exit charge. However, he loses the right of abode in the country where his family and business are based. He would need to obtain immigration permission to remain.
His second option is to give up US citizenship. Daniel is a covered expatriate, because his net worth exceeds $2 million and he was not a dual citizen at birth. The deemed sale of his shares produces a gain of $2.4 million. After the $910,000 exclusion, $1.49 million is taxable at 23.8%, which is about $354,600. The UK charges nothing that year, so no credit is available.
His pension adds a second charge. At $1.33 to the pound, the fund is worth about $1,197,000, and the law treats it as paid out. At ordinary rates that could add more than $400,000 of US tax. Daniel's total exposure therefore exceeds $750,000 to keep his British passport.
Ella's position is different. She became a citizen of both countries at birth, lives in the UK and has never been US resident. She therefore escapes the net worth and tax liability tests. Her parents' task is to keep her US filings correct, so that the five-year certification remains available. In this illustration, the same law costs the father three-quarters of a million dollars and the daughter nothing.
What Dual National US UK Families Should Do Now
Do Not Renounce in a Panic
Nothing in the Exclusive Citizenship Act requires action today. Renouncing either citizenship today is permanent or close to it, and the proposal may never pass. The renunciation fee is now $450, as we explain in our article on the reduced US renunciation fee. Nevertheless, a lower fee is not a reason to make a lifelong decision on the strength of a stalled bill.
Bring Your US Filings Up to Date
Compliance is the one step that helps under every outcome. Five clean years of returns protect the Form 8854 certification. They also remove penalty exposure if you stay in the system. If you have missed US tax returns or a missed FBAR, you should correct them now. Our IRS Streamlined Filing service covers eligible non-wilful cases, and our FBAR and FATCA team handles account reporting. FinCEN sets out the FBAR filing requirement for accounts above $10,000.
Know Your Numbers
You cannot weigh a choice without figures. You should know your net worth in dollars, the US tax basis of each major asset and your average US tax liability over five years. Additionally, you should value your UK pensions and identify which are foreign plans. With those figures, a family can see within an hour whether an exit would cost nothing or seven figures.
Register Children and Keep Their Records
Parents should confirm each child's status. A child born in Britain to an American parent may already be a US citizen, with or without a US passport. Such a child needs a Social Security number before filing, as our guide to obtaining a Social Security number from Britain explains. Keeping a child's filings correct preserves the birth exception for later.
How TaxYork Can Help
TaxYork prepares US and UK tax returns for dual national families, business owners and investors in Britain. We file Form 1040 with the foreign tax credit, FBAR, Form 8938 and the forms for UK companies and funds. Furthermore, we bring earlier years into compliance where returns or reports were missed.
We also model the expatriation position before any decision. That work covers the covered expatriate tests, the deemed sale, the pension charge and Form 8854. Where the treaty affects the outcome, our tax treaty optimisation service coordinates the US and UK positions. You then have the figures in hand, whatever Congress decides.
Conclusion
The Exclusive Citizenship Act would force every dual citizen to choose one nationality within a year, with loss of US citizenship as the default. It remains a stalled Senate bill with one cosponsor, serious constitutional obstacles and a Congress that ends in January 2027. Therefore, no dual national in Britain needs to give up a passport today.
The tax lessons are real, however. Keeping US citizenship means lifelong US tax returns. Losing it can mean a deemed sale and a pension charge for wealthy families, while children who held both nationalities from birth are largely protected. Ultimately, the families who will handle any future law best are those whose filings are complete and whose numbers are known.
Contact Us
If the Exclusive Citizenship Act has prompted questions about your own position, speak to our US-UK tax team. You can book a consultation online, email hello@taxyork.com or call 020 3488 8606. We will review your filing history, your children's status and your expatriation exposure.
Disclaimer
This article provides general information only and does not constitute tax, legal, immigration or financial guidance for your circumstances. The Exclusive Citizenship Act is a proposal and may change or lapse. Tax rules, thresholds and exchange rates change, and their application depends on your own facts. The case study is illustrative. You should obtain professional help from a qualified US-UK tax specialist before acting. TaxYork accepts no liability for actions taken in reliance on this article.