The One Deduction With No Dollar Limit
Most tax deductions come with a cap, but the federal marital deduction doesn't. Under U.S. law, you can leave an unlimited amount of assets to a surviving spouse who is a U.S. citizen and it passes completely free of federal estate tax β whether that's $500,000 or $50 million. This is fundamentally different from deduction structures based on legal shares of an estate; here, the dollar amount simply doesn't matter as long as the recipient is a qualifying spouse. Only the portion of your estate that goes to someone other than your spouse β children, other relatives, or anyone else β gets measured against the standard federal estate tax exemption (about $13.99 million per person in 2025) before the roughly 40% top rate applies to what's left. One catch: this only fully applies to U.S. citizen spouses. Non-citizen spouses generally need assets to pass through a Qualified Domestic Trust (QDOT) instead to get similar deferral treatment. And remember, deferring tax isn't eliminating it β assets that pass to your spouse become part of their own taxable estate down the road.
How It's Calculated
| Step | Item | Formula |
|---|---|---|
| 1 | Marital Deduction | 100% of amount left to U.S. citizen spouse (no limit) |
| 2 | Amount to Other Heirs | Total Estate β Amount to Spouse |
| 3 | Taxable After Exemption | Other Heirs Amount β $13.99M Federal Exemption |
| 4 | Estimated Tax | Taxable Amount Γ ~40% (top federal rate) |
Frequently Asked Questions
Correct β any amount left to a U.S. citizen spouse passes completely free of federal estate tax, with no dollar cap.
No, non-citizen spouses generally need assets to pass through a Qualified Domestic Trust (QDOT) instead.
It defers tax at the first death, but assets become part of your spouse's own taxable estate later.
β» Uses the approximate 2025 federal exemption and a simplified flat 40% top rate. Actual estate tax uses a graduated schedule and may involve portability elections and state-level taxes.