Hi Gianna,
Thanks for the note.
Because you owe taxes to Uncle Sam no matter what, you would be eligible for the Foreign Earned Income Exclusion, to the degree that you have earned income for a job of some sort.
You are correct in that the exclusionary amount is $120,000 for tax year 2023. But for tax year 2024, that jumps up to $126,500.
Now, as for having an Italian passport and opportunities for tax-reduction programs, I believe you would still be eligible for something like Portugal’s Non-Habitual Residence (NHR) tax regime (assuming it, or a version of it remains in place). That program is not aimed at any specific nationality, so you would be eligible.
I know lots of Brits (pre-Brexit) and lots of French retirees have been using that program to sharply reduce their tax burden. So it seems logical that an Italian-American with dual nationality would be able to benefit from it as well.
I would tell you to double-check this answer with a tax pro who’s knowledgeable about expat tax issues.