Wealthy American citizens residing in Portugal are being strongly advised to review their financial arrangements now, as a wave of significant US tax changes could be on the horizon.

US President Donald Trump has made clear his intention to raise the top federal income tax rate from 37% to 39.6% for the highest earners. This increase would affect individuals earning over $2.5 million annually and couples with incomes above $5 million.

These proposed changes could have wide-reaching implications for US nationals in Portugal—particularly those with substantial global assets. The impact would also extend to Americans who benefit from Portugal’s favourable tax structures, such as the now-phased out Non-Habitual Residency (NHR) scheme or its recent replacement, the Tax Incentive for Scientific Research and Innovation (IFICI), often dubbed NHR 2.0.

Though the tax hike has yet to be enacted, Trump’s intentions have been clearly stated during his campaign trail. Coupled with another pending change—the halving of the US estate tax exemption in 2026—US passport holders are being warned not to delay action.

Currently, the US estate and gift tax exemption stands at close to $14 million per person, but unless Congress acts, this will drop to approximately $7 million at the start of 2026.

“This is a loud wake-up call for US-connected families living in Portugal,” said Steve Philp, partnership director at Portugal Pathways, an independent advisory organisation supporting affluent international families in tax structuring, relocation, 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.”

One of the core complications for US expats is America’s unique system of taxing its citizens on worldwide income, regardless of where they reside.

“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 RFF & Associados, a leading Lisbon-based tax law firm.

“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 has become an attractive destination for wealthy Americans, drawn by its high quality of life, beneficial tax framework, and its strategic location within Europe. However, the interplay of US and Portuguese tax rules demands careful navigation.

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

“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 US reforms come into force.”

Trump’s proposal has also reignited conversations around a broader reform—potentially ending the US’s citizenship-based taxation model in favour of one based on residency. Such a shift would be a game-changer for Americans abroad, but for now, the existing system stands.

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

Rogério Fernandes Ferreira concluded: “We are entering a phase of tax-tightening globally.

“Cross-border families must be more vigilant than ever."

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Contact Portugal Pathways today for support with tax and financial planning.

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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.

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.

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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.