Double Taxation Relief Calculator

Compare credit method vs exemption method for double taxation relief. Calculate foreign tax credits, exemption with progression, and find the optimal relief strategy.

Inputs

Foreign Source Income ($)

Domestic Income ($)

Foreign Tax Paid ($)

Home Country Tax Rate (%)

Foreign Tax Rate (%)

Treaty Credit Limit (%)

Exemption with Progression (1=Yes)

Local/State Surtax (%)

Tab to move between fields

Results

Tax Without Relief (Double Tax)

$117,500.00

≈ 8 used cars

Effective Rate (No Relief) (%)47%

Foreign Tax Credit Allowed$30,000.00

Excess Credit (Carryover)$0.00

Total Tax (Credit Method)$87,500.00

Effective Rate (Credit) (%)35%

Total Tax (Exemption Method)$82,500.00

Effective Rate (Exemption) (%)33%

Better Method (0=Credit, 1=Exempt)1

Maximum Relief Amount ($)$35,000.00

Best Effective Rate (%)33%

How to Use This Calculator

Enter Foreign Source Income ($), Domestic Income ($), and Foreign Tax Paid ($).
Set Home Country Tax Rate (%), Foreign Tax Rate (%), and Treaty Credit Limit (%).
Adjust Exemption with Progression (1=Yes), Local/State Surtax (%) as needed.
Review the Tax Without Relief (Double Tax) ($) result.
Use Effective Rate (No Relief) (%) (%) and Foreign Tax Credit Allowed ($) to inform your decision.

How the result changes with Home Country Tax Rate (%)

Home Country Tax Rate (%)	Tax Without Relief (Double Tax)
6	$45,000.00
21	$82,500.00
39	$127,500.00
54	$165,000.00

What each input means

Foreign Source Income ($): Income earned in or sourced from the foreign country.
Domestic Income ($): Income earned in your home country.
Foreign Tax Paid ($): Total income tax paid in the foreign jurisdiction.
Home Country Tax Rate (%): Marginal or average tax rate in your home country.
Foreign Tax Rate (%): Tax rate in the foreign country (for reference).
Treaty Credit Limit (%): Maximum percentage of foreign tax eligible for credit under the treaty.
Exemption with Progression (1=Yes): 1 = Exempted income still affects the tax rate on remaining income.
Local/State Surtax (%): Additional local or state surtax on income.

What each result means

Tax Without Relief (Double Tax): Total tax if no double taxation relief is applied.
Effective Rate (No Relief) (%): Effective tax rate with full double taxation.
Foreign Tax Credit Allowed: Amount of foreign tax credited under the credit method.
Excess Credit (Carryover): Foreign tax not creditable in current year.
Total Tax (Credit Method): Combined home + foreign tax using the credit method.
Effective Rate (Credit) (%): Effective tax rate using the credit method.
Total Tax (Exemption Method): Combined home + foreign tax using the exemption method.
Effective Rate (Exemption) (%): Effective tax rate using the exemption method.
Better Method (0=Credit, 1=Exempt): Which relief method produces lower total tax.
Maximum Relief Amount ($): Maximum tax savings from the better relief method.
Best Effective Rate (%): Lowest achievable effective tax rate.

How this is calculated

Worked example, using the default values

Identify Input Parameters
4 parameters
Foreign Source Income ($) = 100000, Domestic Income ($) = 150000, Foreign Tax Paid ($) = 30000, Home Country Tax Rate (%) = 35 = 8 input(s) provided
Calculate Tax Without Relief
Tax Without Relief = foreignTaxPaid + homeTaxOnWorldwide
117500 = $117,500
Calculate Effective Rate (No Relief)
Effective Rate (No Relief) = totalWorldwideIncome > 0
47 = 47%
Calculate Foreign Tax Credit Allowed
Foreign Tax Credit Allowed = min(foreignTaxPaid, creditLimit)
30000 = $30,000

Engine last updated July 28, 2026.

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