PRIA, Government Policy, Made Personal

§893 Compensation of Employees of Foreign Governments or International Organizations

Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter N — Tax Based on Income From Sources Within or Without the United States › PART II — NONRESIDENT ALIENS AND FOREIGN CORPORATIONS › Subpart D — Miscellaneous Provisions › § 893

Last updated Sep 22, 2026|Official source

Summary

Wages, fees, or salary paid to an employee of a foreign government or an international organization for official work are not counted as U.S. taxable income if three things are true: the worker is not a U.S. citizen (or is a citizen of the Republic of the Philippines, even if also a U.S. citizen); for foreign-government employees, the work is like the work U.S. government employees do abroad; and the foreign government gives the same tax exemption to U.S. government employees doing similar work there. The Secretary of State must tell the Secretary of the Treasury which countries give that equal exemption and what kinds of services U.S. employees do abroad. The tax break does not apply to anyone who works for a controlled commercial entity (as defined in section 892(a)(2)(B)) or whose main duties are tied to the government’s commercial activities.

Title 26, §893

Internal Revenue Code, Source: USLM XML via OLRC

(a)Rule for exclusion

Wages, fees, or salary of any employee of a foreign government or of an international organization (including a consular or other officer, or a nondiplomatic representative), received as compensation for official services to such government or international organization shall not be included in gross income and shall be exempt from taxation under this subtitle if—

(1)such employee is not a citizen of the United States, or is a citizen of the Republic of the Philippines (whether or not a citizen of the United States); and

(2)in the case of an employee of a foreign government, the services are of a character similar to those performed by employees of the Government of the United States in foreign countries; and

(3)in the case of an employee of a foreign government, the foreign government grants an equivalent exemption to employees of the Government of the United States performing similar services in such foreign country.

(b)Certificate by Secretary of State

The Secretary of State shall certify to the Secretary of the Treasury the names of the foreign countries which grant an equivalent exemption to the employees of the Government of the United States performing services in such foreign countries, and the character of the services performed by employees of the Government of the United States in foreign countries.

(c)Limitation on exclusion

Subsection (a) shall not apply to—

(1)any employee of a controlled commercial entity (as defined in section 892(a)(2)(B)), or

(2)any employee of a foreign government whose services are primarily in connection with a commercial activity (whether within or outside the United States) of the foreign government.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1988—Subsec. (c). Pub. L. 100–647 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.