🧠 Calquify Intelligence
TCJA doubled exemption potentially halving in 2026 — US expats need urgent estate plan review
The Tax Cuts and Jobs Act 2017 doubled the federal estate and gift tax exemption from approximately $5.5m to $11.18m per person (inflation-adjusted to $13.61m in 2026). Under current law, this doubled exemption is set to revert (sunset) to approximately $6.8m-$7m after December 31, 2025, unless Congress acts to extend it. Republicans have sought permanent extension; the outcome as of January 2026 is uncertain. US expats with estates between $7m and $13.61m who relied on the higher exemption for planning must urgently review their estate plans. Gifts made using the higher exemption before the sunset date are generally protected (no clawback) under IRS regulations.
Source: IRC § 2001(c); TCJA § 11061; IRS Rev. Proc. 2019-11 (no clawback)
Non-US citizen spouses are a critical US estate tax trap — the unlimited marital deduction does NOT apply
The US unlimited marital deduction allows unlimited assets to pass between US citizen spouses with zero estate tax. However, this deduction is categorically denied for non-US citizen spouses — regardless of how long they have been married or how long they have lived in the US. For a US citizen married to a Dutch, German, or French spouse, transfers to the spouse at death are subject to US estate tax above the $13.61m exemption. The solution: a Qualified Domestic Trust (QDOT) defers US estate tax until the non-US spouse dies or takes distributions. QDOT is complex and requires a qualified US trustee. Many US-EU couples are unaware of this until they seek estate planning advice.
Source: IRC § 2056(d) — non-US citizen spouse marital deduction denied; § 2056A — QDOT
Expatriation from US citizenship eliminates future estate tax but triggers exit tax — only viable for very large estates
US citizens who relinquish citizenship (covered expatriates — net worth >$2m or average tax >$206k for past 5 years) pay exit tax: a deemed disposal of all worldwide assets at fair market value on the day before expatriation, with gains taxed as ordinary income. For very large estates (>$30m), the lifetime estate tax savings can exceed the exit tax cost — making expatriation economically rational. For estates below $20m, the math rarely works. The process requires careful planning, Form 8854 filing, and 5-year post-expatriation compliance period. Many US expats find the emotional and bureaucratic cost of renunciation outweighs the tax benefit.
Source: IRC §§ 877, 877A, 2801 — expatriation tax regime
US Expat Estate Tax Risk Level by European Country (1=Low, 5=High)
National authorities 2026
📋 Reference Data
US Expat Estate Tax Exposure 2026 — Data 2026
National authorities + STEP
| Scenario | US Estate Tax? | EU Inheritance Tax? | Double Taxation Risk? | Planning Notes |
|---|---|---|---|---|
| US citizen (married US citizen) in Netherlands | Yes — worldwide estate | Dutch erfbelasting on NL assets | Moderate — FTC available | Use FTC; maximize both exemptions |
| US citizen (married non-US spouse) in Germany | Yes — unlimited marital deduction DENIED for non-US spouse | German ErbSt on DE assets | HIGH — no US marital deduction | QDOT trust essential for non-US spouse |
| US citizen in UK — estate to UK children | Yes — worldwide estate at 40% | UK IHT at 40% on UK assets | HIGH — both countries tax same assets | Check US-UK estate tax treaty |
| US green card holder (domicile US) in France | Yes — worldwide estate | French succession tax on FR assets | Moderate — FTC available | Domicile question critical — if France-domiciled, French rules govern |
| US citizen renounces citizenship (covered expatriate) | Exit tax on deemed disposal — then no estate tax | EU inheritance tax on EU assets | Lower post-expatriation — but exit tax cost | Expatriation only viable for very large estates |
| Non-US person inheriting US assets | No US estate tax on inheritor | EU inheritance tax in home country | Low — generally not double taxed | US situs assets taxed on US side only at non-resident rate ($60k exemption) |
ⓘ US citizens are taxed on worldwide assets regardless of where they live — the US is one of only two countries (with Eritrea) that taxes citizens on worldwide income/estate regardless of residence. Green card holders are treated as US domiciliaries for estate tax if they intend to remain permanently in the US (domicile test). The TCJA doubled exemption ($13.61m in 2026) is potentially reverting to ~$7m after 2025 unless Congress extends it.
US Expat Estate Tax Exposure 2026 — Context
STEP + national law
| US-EU Treaty | Countries Covered | Key Provision | Estate Tax Reduced? |
|---|---|---|---|
| US-Netherlands | Netherlands | Situs-based; some relief on real estate | Partial — complex |
| US-Germany | Germany | Older treaty — limited modern relief | Limited |
| US-France | France | Credit mechanism — French tax credited against US | Yes — FTC available |
| US-UK | United Kingdom | Most comprehensive — FTC + specific provisions | Yes — significant relief |
| US-Italy | None | No treaty — both countries tax independently | High risk of double tax |
| US-Spain | None | No treaty — both countries tax | High risk |
| US-Switzerland | None — income treaty only | No estate tax treaty | High risk |
| US-Australia | None | No treaty | High risk |
ⓘ Only a handful of countries have US estate tax treaties. France and UK have the most comprehensive. Italy, Spain, Switzerland have no estate tax treaty with the US — US citizens with significant assets in these countries face potential double taxation on the same estate. A foreign tax credit (FTC) provides some relief but doesn't eliminate double taxation in treaty-less countries.
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🔬 Methodology & Sources
Estate & Legacy Data
Data from official legislative sources, STEP, and IRS publications.
Formula
Jurisdiction-specific.
CitationEU Succession Regulation 650/2012; IRC §§ 2001-2058; STEP Handbook 2025.
❓ Frequently Asked Questions
US citizens are subject to US federal estate tax on their worldwide assets regardless of where they live. Living in Germany or France does not eliminate US estate tax. The 2026 exemption is $13.61m per person ($27.22m for couples using portability). Above this, 40% US estate tax applies. Additionally, European inheritance tax applies to European assets under local rules. The interaction of two countries' estate taxes is managed through foreign tax credits and bilateral treaties (where they exist — US-UK and US-France treaties are most comprehensive). Italy, Spain, and Switzerland have no US estate tax treaty — creating double taxation risk.
The unlimited marital deduction — which allows unlimited assets to pass between US citizen spouses estate-tax-free — is denied for non-US citizen spouses. A US citizen married to a Dutch, German, or French national cannot use the unlimited marital deduction. Assets passing to the non-US spouse at death are subject to US estate tax above the $13.61m exemption. The main solution is a Qualified Domestic Trust (QDOT): assets in a QDOT pass to the surviving non-US spouse, deferring US estate tax until the non-US spouse takes principal distributions or dies. QDOT is complex — requires a qualified US trustee and compliance with strict IRS requirements.
The federal estate and gift tax exemption is $13.61m per person in 2026 (inflation-adjusted). A married couple using portability has $27.22m combined. Estates below these amounts pay no federal estate tax. The exemption is scheduled to revert to approximately $6.8m-$7m after December 31, 2025 (TCJA sunset) unless extended by Congress. US expats with estates between $7m and $13.61m should urgently review their plans — and consider maximising gifts before the potential sunset date.
A covered expatriate is a US citizen or long-term green card holder (8+ years) who relinquishes their status and meets any of three tests: (1) average net income tax over past 5 years exceeds $206,000 (2026 threshold, inflation-adjusted); (2) net worth on expatriation date is $2m or more; (3) fails to certify 5-year tax compliance. Covered expatriates pay exit tax — a deemed disposal of all worldwide assets at fair market value, with net gains above $866,000 (2026) taxed as ordinary income. They also face a 40% tax on future gifts to US persons.
Lifetime gifts are covered by the same federal exemption as the estate tax — it's a unified credit. Gifts above the $18,000/person annual exclusion consume the lifetime exemption. Gifts above the lifetime exemption ($13.61m in 2026) are taxed at 40% gift tax — the same rate as estate tax. There is no simple way to give everything away and avoid tax — the US system is specifically designed to prevent this. However, annual exclusion gifts ($18,000 per recipient per year), direct payments of tuition or medical expenses (unlimited if paid directly to institution), and 529 education account contributions have specific exemptions that are genuinely tax-efficient.
Sources & References
Data sourced from official institutional publications. Results are for informational purposes only. Last reviewed Jan 2026.
Data Disclaimer
Estate and succession law is complex. Always consult qualified legal and tax advisers. This is informational only.
Estate and succession law is complex. Always consult qualified legal and tax advisers. This is informational only.