IRS currency exchange rates: how to use IRS yearly average currency exchange rates for your US tax return

The IRS does not publish a single official exchange rate. Instead, it accepts any posted exchange rate that is used consistently.

For most expats converting a foreign salary or pension to USD on Form 1040, the IRS yearly average currency exchange rates table on irs.gov is the most widely accepted source.

For most expats reporting foreign wages on Form 1040, the IRS yearly average currency exchange rate is the safest and most widely accepted conversion method.

Three facts you need before filing:

• The IRS has no official exchange rate – it accepts any publicly available rate applied consistently
• The yearly average rate published on irs.gov is the standard choice for recurring income such as salary, wages, and pensions
• FBAR and Form 8938 use a different source – the Treasury Reporting Rates of Exchange as of December 31 – not the IRS yearly average

Every dollar of foreign income, every foreign tax paid, and every foreign bank account balance must be translated into USD using an IRS-accepted exchange rate before it appears on your return.

Getting the source wrong for the wrong form is one of the most common – and most preventable – expat filing errors.

What are IRS currency exchange rates and why do they matter?

US citizens and resident aliens must report all worldwide income in US dollars, regardless of where they live or what currency they earn. This makes a reliable conversion method legally necessary for every expat return.

Every dollar of foreign income must be translated into USD using an IRS-accepted exchange rate – and different forms require different rate sources.

IRS Publication 54 directs taxpayers to use the exchange rate prevailing when you receive, pay, or accrue the item.

If there is more than one exchange rate, use the one that most properly reflects your income.

The IRS foreign currency and exchange rates page links to the yearly average table.

The conversion applies to every line of your return that involves IRS foreign currency exchange rates – wages on Form 1040, foreign taxes on Form 1116, account balances on the FBAR, and financial assets on Form 8938.

See our guide to where to report foreign income on Form 1040 for the line-by-line reporting structure.

FREE

Unsure which exchange rate applies to your filing?

Talk to us – your first call is free.

Schedule my free call

The three main IRS-accepted exchange rate sources

Three publicly available rate sources cover the vast majority of expat filing needs. Each has a different update frequency and a different primary use case on the return.

Choosing the wrong rate source for the wrong form – for example, using the yearly average instead of the December 31 Treasury rate for FBAR – is one of the most common expat tax mistakes.

The following three sources are accepted by the IRS:

1. IRS yearly average exchange rates table – published on irs.gov after each calendar year ends, covering about 40 currencies. The rates represent the simple average of daily rates over the year. Primary use: recurring income on Form 1040 such as salary, wages, and pensions. For currencies not listed, the IRS's Foreign currency and currency exchange rates page lists other government and external sources.
2. US Treasury Reporting Rates of Exchange – published quarterly on the Treasury Fiscal Data portal. The December 31 quarter-end rate is required for FBAR and Form 8938 valuations. Covers approximately 170 currencies.
3. Federal Reserve H.10 statistical release – a weekly release containing daily rates for major currencies against the USD. Useful for transaction-date spot rates on one-time events such as property sales and lump-sum distributions. Covers fewer currencies than the Treasury dataset.

The IRS does not require one specific source – but using an officially published government table removes any audit question about rate legitimacy.

IRS foreign exchange rates from any of these three sources are accepted, provided you apply your chosen source consistently within each income category.

IRS yearly average exchange rates explained

The IRS publishes a table of yearly average currency exchange rates on irs.gov each year after the calendar year ends.

For recurring income such as salary, wages, or a monthly pension, the IRS yearly average rate is the most widely used conversion method among expat filers and tax practitioners.

When to use it

• Salary and wages received throughout the year
• Monthly or quarterly pension distributions
• Regular rental income collected over the year

Where to find it

Search irs.gov for "yearly average currency exchange rates." The URL changes each year, but the search phrase always returns the current table.

How the table works

The rates are expressed as foreign currency units per one US dollar. To convert, divide your foreign currency amount by the rate.

For example, if you earned €50,000 and the yearly average EUR rate is 0.886 (2025), you divide: €50,000 / 0.886 = $56,433.

 

 

IRS yearly average exchange rates for 2026 – tax year 2025

Always download the IRS yearly average exchange rate table directly from irs.gov for the tax year you are filing – never rely on a third-party reproduction that may be outdated.

The IRS publishes the official yearly average exchange rates for tax year 2025 on irs.gov.

The table below shows the format and selected major currencies.

Because per-currency tax year 2025 figures are finalized after calendar year-end, always verify directly from the IRS yearly average exchange rates page before filing.

Verify all tax year 2025 rates directly from irs.gov before filing – the table below shows the format only.

 

The IRS average exchange rate for 2025 follows the same format as prior years: foreign currency units per one USD. Divide your foreign income by the rate to convert to dollars.

The IRS updates the yearly average table annually – check irs.gov directly before filing to confirm the figures for your tax year.

Historical IRS foreign exchange rates

The table below provides yearly average currency exchange rates for previous years. These rates are essential for amended returns, prior-year filings, and catch-up submissions through the IRS Streamlined Procedure.

For prior-year filings and amended returns, use the IRS yearly average rate for the specific tax year being filed – not the current year's rate.

How to convert

• From foreign currency to US dollars: divide the foreign currency amount by the applicable yearly average rate
• From US dollars to foreign currency: multiply the US dollar amount by the applicable rate

 

The table above includes IRS foreign exchange rates for 2024 through 2020, sourced from the TFX historical FX rates page, which mirrors the IRS yearly average table.

For tax years not shown, search irs.gov for "yearly average currency exchange rates" and select the archived table for the relevant year.

Behind on filings? We handle prior-year conversions.

Learn more

Based on a common TFX client scenario

A US expat in Germany earning €72,000 in annual salary converts using the tax year 2025 yearly average EUR rate.

If the rate is 0.886 units per USD: €72,000 / 0.886 = $81,264. This USD figure goes on Form 1040.

If the expat also claims the Foreign Earned Income Exclusion, the conversion happens first – the exclusion of up to $130,000 (2025) then applies to the already-converted USD amount.

 

 

Which exchange rate to use for each IRS form

Different forms require different rate sources. The table below maps the correct rate to each filing obligation.

The December 31 Treasury rate applies to FBAR and Form 8938; the yearly average applies to Form 1040 wages and Form 2555; the date-paid rate applies to Form 1116.

 

Form 1040 income conversion looks at what you earned over the year. FBAR looks at the peak account value translated at one fixed year-end rate.

Mixing these up can trigger an incorrect reported balance or an inaccurate foreign tax credit calculation.

FBAR exchange rates: Treasury Reporting Rates vs. IRS yearly average

FBAR requires the Treasury Reporting Rates of Exchange as of December 31 of the tax year – not the IRS yearly average. This is a separate source with a different purpose.

FBAR exchange rates use a single year-end snapshot to value foreign accounts. The IRS yearly average spreads the conversion across the full calendar year. These are not interchangeable.

Where to find the Treasury rate

The Treasury Fiscal Data portal publishes quarterly rates covering approximately 170 currencies.

What "maximum account value" means for FBAR

Report the highest balance in the account at any point during the year, converted to USD using the December 31 Treasury rate – not the rate on the date the peak balance occurred.

Consequence of using the wrong rate

Reporting account balances at the IRS yearly average instead of the December 31 Treasury rate can understate or overstate reported values. This may trigger penalties for inaccurate FBAR reporting.

FinCEN Form 114 requires conversion using the Treasury rate for the last day of the calendar year. If no Treasury rate is available for a specific currency, use another verifiable exchange rate and document the source.

 

 

See our guide to determining the maximum account value for FBAR for the full two-step conversion method.

Multiple foreign accounts and income sources? We handle every conversion.

Learn more

Foreign tax credit exchange rates: converting taxes paid abroad

Cash-basis taxpayers claiming the foreign tax credit on Form 1116 must convert foreign taxes paid using the exchange rate on the date the tax was actually paid or withheld – not the yearly average.

Using the wrong exchange rate for foreign taxes on Form 1116 can either overstate or understate your foreign tax credit, directly affecting your US tax liability.

Cash-basis filers

IRS Publication 514 states: use the exchange rate on the date you paid the foreign tax.

For taxes withheld from regular wages, the technically correct rate is the rate on each withholding date. Many practitioners use the yearly average when the difference is immaterial – but for large payments on a specific date, the date-paid rate is the defensible position.

Accrual-basis filers

Publication 514 provides that in most cases, you must use the average exchange rate for the foreign tax year to which the taxes relate. An election is available to use the date-paid rate instead.

See our Form 1116 foreign tax credit guide for the full credit calculation mechanics.

Spot rate vs. yearly average: when each applies

The IRS accepts both spot rates and yearly averages, but each applies to a different type of income. Mixing methods within the same income type for the same tax year is not permitted.

Use the yearly average rate for recurring income:

• Salary and wages received throughout the year
• Monthly or quarterly pension distributions
• Regular rental income collected over the year

Use the spot rate on the transaction date for one-time events:

• Sale of foreign property
• Lump-sum pension or retirement plan distributions
• Foreign tax payments on a specific date
• Large one-time transfers or settlements

 

 

Mixing methods within the same income type is not permitted, but using different methods for different income types on the same return is acceptable.

See our guide to FEIE vs. Foreign Tax Credit for how the rate choice interacts with your exclusion or credit strategy.

Foreign pension exchange rates: converting retirement income from abroad

Foreign pension income must be converted to USD the same way wages are. The yearly average rate is generally appropriate for regular monthly or annual distributions. Lump-sum withdrawals should use the spot rate on the distribution date.

Based on a common TFX client scenario, a US expat receiving a monthly UK pension converts each year of distributions using the IRS yearly average GBP rate for that tax year.

Before converting pension income, determine whether it is taxable in the US. Many US tax treaties contain pension-specific articles that can reduce or eliminate US tax on certain foreign pension exchange rates and income.

The treaty analysis comes first – the currency conversion applies only to the taxable portion.

Foreign pensions may also trigger FBAR and Form 8938 reporting if account balances exceed the respective thresholds.

See our TFX pensions webinar Q&A for pension-specific filing rules.

Foreign spouse income: exchange rate rules when filing jointly

When a US citizen elects to include a nonresident alien spouse's income on a joint return under IRC Section 6013, subsection g, all of that spouse's foreign income must also be converted to USD using the same IRS-accepted rate methodology.

If you elect to file jointly with a foreign spouse, every dollar of their foreign income – converted at the IRS yearly average rate or a consistent spot rate – becomes part of your combined US taxable income.

The Section 6013 election, once made, continues automatically for all future years until it is terminated or suspended. It can be revoked – but once ended, it can never be made again by either spouse.

This makes it a once-in-a-lifetime choice. The initial decision – and the tax impact of adding the spouse's converted income – is worth careful analysis.

See our guide on whether to include a foreign spouse's income for the full filing-status comparison.

Digital assets and cryptocurrency: IRS exchange rate rules

The IRS treats cryptocurrency as property under Notice 2014-21, not as foreign currency. Crypto does not generate foreign currency gain or loss under IRC Section 988.

Cryptocurrency transactions are measured at US dollar fair market value on the date of each transaction – not converted using the IRS yearly average or Treasury rate.

If you sell crypto on a foreign exchange and receive foreign fiat currency in return, the fiat portion does need conversion to USD. The two steps are separate:

1. The crypto gain or loss is determined by comparing the USD fair market value at the time of sale against your USD cost basis
2. If you received foreign fiat currency from the sale, convert that fiat amount to USD using the spot rate on the transaction date

FBAR and FATCA implications

Under FinCEN Notice 2020-2, accounts holding only virtual currency are not currently reportable on the FBAR.

If the account also holds fiat currency, the entire account is reportable once the $10,000 aggregate threshold is met.

See our digital asset reporting guide for the current filing rules.

Common mistakes when using IRS exchange rates

The following five errors account for the most common currency conversion problems on expat returns.

Using the IRS yearly average for FBAR instead of the December 31 Treasury rate is the single most frequent conversion error we see at TFX.

1. Using the current-year rate for a prior-year amended return. Each tax year requires the IRS yearly average rate for that specific year. Filing an amended 2022 return in 2026 still requires the 2022 rates.
2. Using the IRS yearly average for FBAR instead of the December 31 Treasury rate. The FBAR has its own rate source – the Treasury Reporting Rates of Exchange. The IRS yearly average is for income conversion on Form 1040, not for account balance reporting on FinCEN Form 114.
3. Mixing spot rates and yearly averages within the same income category. If you choose the yearly average for your salary, you must use it for all salary income that tax year.
4. Using a commercial bank rate instead of an IRS-accepted published rate. The rate your credit card company applied to a transaction is not the same as a publicly posted government rate.
5. Forgetting to convert foreign tax payments for Form 1116 at the payment-date rate. Cash-basis filers should use the rate on the date the tax was paid or withheld – not the yearly average.

 

 

Using the IRS or Treasury published tables removes any audit question about rate legitimacy.

See our guide to Form 1040 Schedule B for the foreign account disclosure rules that apply alongside these conversion requirements.

IRS exchange rates for FATCA reporting – Form 8938

Taxpayers filing Form 8938 must report the maximum value of specified foreign financial assets during the year, converted to USD.

The Form 8938 instructions direct filers to use the Treasury Reporting Rates of Exchange as of the last day of the tax year – even if the asset was sold before year-end.

Form 8938 FATCA reporting thresholds are measured in USD, making the choice of exchange rate directly determine whether you are required to file at all.

Filing thresholds for tax year 2025:

• Single, living in the US: $50,000 year-end / $75,000 at any point
• Married filing jointly, living in the US: $100,000 year-end / $150,000 at any point
• Single, living abroad: $200,000 year-end / $300,000 at any point
• Married filing jointly, living abroad: $400,000 year-end / $600,000 at any point

If no Treasury rate is available for a specific currency, use another publicly available exchange rate and disclose the rate and source on Form 8938.

IRS exchange rates and the Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion allows qualifying expats to exclude up to $130,000 (2025) of foreign earned income from US taxation.

The exclusion reduces taxable income – but the conversion step cannot be skipped.

Even income excluded under the FEIE must first be converted to USD using a consistently applied, publicly available rate before the exclusion is applied on Form 2555.

The FEIE does not change which exchange rate you use. It changes how much of the converted amount is taxable.

If you earned €72,000 and the USD equivalent is $81,264, you exclude the full $81,264 because it falls below the $130,000 (2025) cap.

Had you earned €140,000 and the USD equivalent were $158,014, you would exclude $130,000 (2025) and pay US tax on the remaining $28,014.

See our guide to Form 2555 and the Foreign Earned Income Exclusion for the full eligibility rules and filing steps.

Multiple forms, multiple rates? Our CPAs handle every conversion.

Learn more

Where to find IRS exchange rates: official sources checklist

The following four official sources cover every exchange rate an expat filer is likely to need. Bookmark these directly – third-party reproductions risk being outdated.

• IRS yearly average exchange rates table – irs.gov, search "yearly average currency exchange rates." Updated annually after year-end. Use for recurring income on Form 1040 and Form 2555.
• US Treasury Fiscal Data portal – fiscaldata.treasury.gov. Quarterly rates from 2001 onward, downloadable as CSV. Use for FBAR and Form 8938 year-end valuations. Both US IRS exchange rates and Treasury rates are government-published, but each applies to different forms.
• Federal Reserve H.10 statistical release – federalreserve.gov/releases/h10. Weekly release containing daily rates for major currencies. Use for transaction-date spot rates on one-time events.
• FinCEN BSA E-Filing portal – bsaefiling.fincen.gov. For FBAR filing and rate confirmation.

 

 

FREE

Not sure which rate applies to your specific situation?

Our CPAs walk you through the exact rates and forms you need.

Schedule my free call