In 2025, the laws surrounding gifts to a non-U.S. citizen spouse are updated to address tax exclusions and the potential estate tax implications. Spouses who are both U.S. citizens can transfer an unlimited amount of assets to one another without incurring any gift tax. This allows for the deferral of taxes until the death of the surviving spouse. However, when one spouse is a non-U.S. citizen, there are restrictions on how much can be transferred tax-free.
Unlimited Gifts Between U.S. Citizen Spouses
For U.S. citizen spouses, the unlimited marital deduction remains in place, meaning you can transfer assets freely between you and your spouse during your lifetime or upon death without worrying about paying gift tax. This effectively postpones the tax until the surviving spouse’s death.
Restrictions for Non-U.S. Citizen Spouses
When gifting assets to a non-U.S. citizen spouse, there is a limit on how much can be excluded from the gift tax. In 2025, the exclusion for gifts to a non-citizen spouse is capped at $190,000. This means that if you give your non-U.S. citizen spouse more than $190,000 in 2025, the portion exceeding the exclusion limit will be subject to gift tax.
For example, if you give your non-U.S. citizen spouse $200,000, only $190,000 of that gift will be excluded from taxable donations. The remaining $10,000 will be subject to the applicable gift tax rate.
Why the Limitation Exists
The reason for this limitation lies in the potential tax advantages when a non-U.S. citizen spouse inherits assets. If the non-citizen spouse were to pass away, the transferred wealth may not be subject to U.S. estate taxes, unlike transfers between U.S. citizen spouses, which would be taxed upon the death of the surviving spouse. This creates a concern that allowing unlimited gifts to a non-citizen spouse could lead to tax avoidance in the future.
What You Need to Know for 2025
- The first $190,000 in gifts to a non-U.S. citizen spouse is exempt from gift tax in 2025.
- Any amount over $190,000 will be subject to the applicable gift tax rates.
- This exclusion is separate from the general annual gift tax exclusion limit.
Consulting with a tax or estate planning professional can help ensure you’re making informed decisions about gifting to a non-U.S. citizen spouse in light of these new laws.
Ask an Estate Plan Attorney Today
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