Wealthy Americans in Portugal Warned to Prepare for Looming U.S. Tax Changes

Affluent U.S. citizens residing in Portugal are being urged to seek early advice and take action as major tax changes proposed by President Donald Trump could significantly impact their financial standing.

Trump has been vocal about his intention to raise the top federal income tax rate from 37% to 39.6% for the highest earners. The proposed increase would affect individuals earning more than $2.5 million annually and married couples with incomes exceeding $5 million.

While the policy has not yet been enacted into law, it poses particular concern for U.S. citizens living abroad in Portugal—especially those with global assets or those who have benefited from Portugal’s Non-Habitual Residency (NHR) tax regime or its successor, the Tax Incentive for Scientific Research and Innovation (IFICI), also known as NHR 2.0.

This potential rate hike coincides with another critical development: the U.S. estate and gift tax exemption, currently close to $14 million per individual, is set to be halved to approximately $7 million by 2026 unless Congress intervenes.

“This is a loud wake-up call for US-connected families living in Portugal,” said Steve Philp, partnership director at Portugal Pathways, an independent platform that supports affluent international families with relocation, tax planning, and investment in Portugal.

“We’re seeing increased demand from wealthy US clients who now realise they cannot postpone planning, especially if they want to avoid being caught between changing US tax rules and Portugal’s evolving fiscal landscape under the double taxation agreement between the two countries.”

Unlike many nations, the United States taxes its citizens on their global income, regardless of where they reside. This means Americans living in Portugal may still face higher U.S. tax bills without appropriate planning.

“Any increase in US federal tax rates will hit Americans in Portugal unless they are proactively managing their exposure through dual-compliant structures,” said Rogério Fernandes Ferreira, managing partner at Lisbon-based tax law firm RFF & Associados.

“It’s not only about income tax - it’s about ensuring estate planning vehicles are recognised in both jurisdictions, especially as the US exemption is scheduled to be halved in 2026.”

Portugal continues to attract wealthy U.S. citizens for its appealing lifestyle, beneficial tax conditions, and strategic access to Europe. But with overlapping fiscal systems, strategic planning is critical.

“Being a tax resident in Portugal doesn’t free you from Uncle Sam,” added Philp.

“What we do is help individuals structure their affairs so they are tax-efficient, compliant, and future-proofed—whether that’s through the careful use of trusts, foundations, or shifting income sources before these U.S. reforms come into force.”

Trump’s push for increased taxes on the wealthy has reignited debates around the U.S. system of citizenship-based taxation. Many expats advocate for a shift to a residence-based model, which would align the U.S. with most other countries. However, for now, the existing system remains unchanged.

“There are several options open to US citizens living in Portugal,” said Paul Stannard, founder and chairman of Portugal Pathways and the Portugal Investment Owners Club.

“It’s key to review estate plans to ensure alignment with both Portuguese and US tax law with our cross-border advisors for both US and Portuguese tax considerations.

“In addition, you can utilise gifting strategies now while exemptions are high.

“We have also seen a new trend: some Americans are giving up their US passport altogether and unfettering themselves from worldwide tax as a US passport holder. This option has always been there, but rarely happened, and we have had over a dozen requests for advice on actioning this in recent weeks alone.”

Concluding, Fernandes Ferreira noted, “We are entering a phase of tax-tightening globally. Cross-border families must be more vigilant than ever. The intersection of Portuguese residency and US tax can be navigated - but only with experienced, multi-jurisdictional advice and through Portugal Pathways, we can help clients get clarity and peace of mind.”

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About Portugal Pathways

Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.

About Portugal Investment Owners Club

The Portugal Investment Owners Club, or P Club for short, is a unique investor membership community designed for discerning individuals, families, and organisations committed to exploring and capitalising on life in Portugal and enjoying money-can't-buy experiences and exclusive events.

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Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice. Golden Visa investments need to be held for 6 to 7 years to allow for permanent citizenship/passport in the EU.

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