A provision of federal tax law permitting unlimited transfers of property between spouses during life or at death without incurring federal estate or gift tax, regardless of amount. The deduction applies only to transfers to citizen spouses; transfers to non-citizen spouses have limitations and may require qualified domestic trusts.
The unlimited marital deduction means you can give or leave any amount of money or property to your spouse without paying federal estate or gift tax. Married couples don't pay these taxes on transfers between each other, no matter how much.
⏱ When you'll encounter this term
- Estate planning for married couples
- Large gifts between spouses
- Estate tax planning and calculations
- Spousal inheritance situations
"Dad left his entire $10 million estate to Mum. Thanks to the unlimited marital deduction, the estate paid zero federal estate tax—transfers to a surviving spouse are fully tax-free. But when Mum eventually dies, her estate may face taxes."
⚖️ Compare: Marital Deduction vs Unified Credit
Unlimited amount. Only to spouse. Delays tax, doesn't eliminate. Both spouses must be citizens.
Limited amount (millions). To anyone. Uses up exemption. No citizenship requirement.
💡 Did you know?
The unlimited marital deduction can create a "wasted exemption" problem. If the first spouse leaves everything to the surviving spouse, they don't use their unified credit. Advanced planning with trusts can preserve both spouses' exemptions, potentially saving millions in estate taxes.