Green Card Exit Tax: Long-Term Residents

Green card holders face the US exit tax only if they are long-term residents, meaning they held the card in at least 8 of the last 15 tax years. Give up the card before year 8 and the exit tax generally does not apply, no matter your net worth. Cross that line, and the same covered-expatriate tests that apply to citizens apply to you.
The exit tax is usually discussed in terms of citizenship, but it reaches green-card holders through a separate door. The key is one number: 8.
The 8-of-15-years rule
You become a long-term resident once you have been a lawful permanent resident for 8 of the prior 15 tax years. Any part of a year in which you held the card counts as a full year, so someone who got a green card in late one year and gives it up early in year 8 can already be over the line. Until you reach long-term resident status, abandoning the card is not an expatriation event for exit-tax purposes.
Under 8 years = exit tax does not apply
At or past 8 years = covered tests apply
How Form I-407 triggers expatriation
For a long-term resident, formally abandoning the green card by filing Form I-407, or having the status revoked, is the expatriation event. From that date the mark-to-market rules of IRC §877A apply exactly as they would for a citizen who renounces, and you file Form 8854 with a final dual-status return.
The treaty-election trap
There is a subtle trap for green-card holders who spend time in a treaty country. If you claim to be a nonresident of the US under a treaty tie-breaker, that claim can both count toward the 8-year long-term-resident clock and, in some cases, be treated as an expatriation event itself. Review any treaty position with an advisor before filing, because an innocent-looking election can start the exit-tax machinery.
Reducing the exposure
The most reliable strategy is timing: decide whether to keep the card well before year 8. After that, the same tools as citizens apply, including managing net worth below the $2,000,000 threshold and using the residency-date basis step-up for assets you owned before becoming a US person. See how to legally reduce the exit tax and estimate your position in the calculator.
Sources: IRC §877(e) and IRS expatriation guidance. See sources.