The federal estate tax marital deduction allows a married person to transfer an unlimited amount of property to a surviving spouse without incurring any estate tax. Congress created this deduction under IRC § 2056 to prevent the same wealth from being taxed twice when it passes between spouses. A parallel deduction under IRC § 2523 applies to lifetime gifts between spouses. Together, these provisions give married couples the ability to defer all wealth transfer taxes until the surviving spouse dies.
The marital deduction is not a tax exemption. It is a deferral mechanism. Property that qualifies for the deduction passes to the surviving spouse free of tax at the first death, but that property will be included in the surviving spouse’s estate and taxed at the second death. This distinction shapes every estate planning decision about how much property to pass to the surviving spouse, in what form, and through what trust structures.
Why the Marital Deduction Matters for Married Couples
The marital deduction eliminates double taxation risk. Without it, a couple with a $20 million estate could face a 40% estate tax at the first death and another 40% tax on the remaining assets at the second death, consuming more than half the estate in taxes.
Consider a simplified example. A married couple owns $20 million in combined assets. If the first spouse dies and leaves everything to the surviving spouse, the marital deduction eliminates all estate tax at that death. The full $20 million remains available to the surviving spouse. At the surviving spouse’s death, the estate tax applies, but only once, and the surviving spouse’s own $15 million applicable exclusion amount shelters the first $15 million from tax.
Without the marital deduction, the estate would face tax at both deaths. The difference in total tax liability can be millions of dollars. That is why virtually every estate plan for a married couple considers the marital deduction as a starting point.
How Property Qualifies for the Marital Deduction
Property qualifies for the marital deduction if it passes from the decedent to the surviving spouse and is included in the decedent’s gross estate. The transfer can take several forms: an outright bequest in a will, a transfer through a qualifying trust, jointly held property that passes by right of survivorship, life insurance proceeds payable to the surviving spouse, or retirement account benefits designated to the spouse.
The critical constraint is the “terminable interest rule” under IRC § 2056(b)(1). Congress did not want taxpayers to claim a marital deduction for property that the surviving spouse receives temporarily, only for it to pass to someone else later. If the surviving spouse’s interest in the property will terminate at some point, and a third party will then receive the property, the transfer generally does not qualify.
Several statutory exceptions override this rule. The most important are the QTIP trust under IRC § 2056(b)(7), the power of appointment trust under IRC § 2056(b)(5), and the estate trust (which avoids the rule entirely because nothing passes to a third party).
For a detailed explanation of what disqualifies a transfer, including the three conditions that must all be present for an interest to fail, see our discussion of the terminable interest rule in marital deduction planning.
The Marital Deduction Is Not Always “All or Nothing”
Many people assume the marital deduction means leaving everything to the surviving spouse. Experienced estate planners take a more nuanced approach. The question is not whether to claim the deduction, but how much to claim.
Each individual has an applicable exclusion amount ($15 million in 2026) that shelters assets from estate tax through the unified credit. If the first spouse leaves everything to the surviving spouse, the first spouse’s exclusion goes unused. Although Congress created “portability” under IRC § 2010(c)(4) to let a surviving spouse use a deceased spouse’s unused exclusion, portability has significant limitations: it does not apply to the generation-skipping transfer (GST) tax exemption, it requires a timely filed estate tax return, the unused amount is not indexed for inflation, and it can be lost if the surviving spouse remarries.
For these reasons, most estate plans create a two-trust structure at the first death. One trust (the “nonmarital” or “credit shelter” trust) holds an amount equal to the first spouse’s applicable exclusion amount and shelters it from tax at both deaths. The second trust (the “marital” trust) holds the balance and qualifies for the marital deduction, deferring tax until the surviving spouse’s death.
The amount that produces exactly zero estate tax at the first death is called the “optimum marital deduction.” Calculating the right amount to claim, and choosing the right trust structures to hold it, are two of the most important decisions in estate planning for married couples.
For a deeper look at how planners determine the right amount of marital deduction to claim, see our guide to the optimum marital deduction.
Trust Structures That Qualify for the Marital Deduction
An outright bequest to the surviving spouse is the simplest way to qualify for the deduction, but trusts offer asset protection, management continuity, and control over the ultimate disposition of the property. Four trust structures qualify:
- QTIP trust. The qualified terminable interest property trust under IRC § 2056(b)(7) is the most widely used marital trust in modern estate planning. The surviving spouse receives all trust income at least annually for life, and the decedent controls where the property goes after the surviving spouse’s death. The personal representative elects QTIP treatment on the estate tax return, creating valuable postmortem flexibility, including partial elections. Families concerned about protecting assets for children from a prior marriage or retaining control over the ultimate beneficiaries typically choose a QTIP.
- Power of appointment trust. The trust under IRC § 2056(b)(5) requires the surviving spouse to receive all income annually and hold a general power of appointment over the trust property. This gives the surviving spouse more control than a QTIP, including the ability to redirect property during life or at death. It suits situations where maximum flexibility matters more than the first spouse’s retained control.
- Estate trust. This trust does not require annual income distributions. Instead, the trust remainder passes to the surviving spouse’s estate at death. This structure suits non-income-producing assets like undeveloped land or closely held business interests. It gives the surviving spouse effective control over the property at death.
- Charitable remainder trust. The trust under IRC § 2056(b)(8) qualifies when the surviving spouse is the only noncharitable beneficiary. It is used in specialized split-interest planning and is far less common than the other three forms.
For a comprehensive explanation of the most common form, consult our guide to QTIP trusts and how they protect both spouses’ interests.
The Credit Shelter Trust: Preserving the Other Spouse’s Exemption
The marital deduction works alongside the credit shelter trust (also called the nonmarital trust, bypass trust, or family trust). This trust holds the portion of the estate that the first spouse’s applicable exclusion amount shelters from tax. In 2026, that amount is $15 million, protected by a unified credit of $5,945,800.
The credit shelter trust is structured so its assets are not included in the surviving spouse’s estate at the second death. The surviving spouse can benefit from the trust through distributions for health, education, maintenance, and support. The trust assets then pass to the next generation without additional estate tax.
The credit shelter trust serves purposes beyond tax planning. It provides asset protection for beneficiaries, professional management continuity, spendthrift protection against creditors, and a vehicle for multi-generational wealth transfer when combined with GST exemption planning. Even in estates below the applicable exclusion amount, a credit shelter trust may be appropriate for non-tax reasons.
For a detailed guide, see our explanation of how a credit shelter trust preserves estate tax exemptions for your family.
Current Law: The 2026 Landscape After the One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently set the applicable exclusion amount at $15 million per individual ($30 million for married couples). This eliminated the sunset provision in the 2017 Tax Cuts and Jobs Act, which would have reverted the exclusion to approximately $7 million after December 31, 2025. Inflation adjustments begin in 2027 using 2025 as the base year.
The key federal estate and gift tax figures for 2026 are:
- Applicable exclusion amount: $15,000,000 per person
- Unified credit (tax equivalent of the exclusion): $5,945,800
- GST exemption: $15,000,000 (equal to the applicable exclusion)
- Top estate and gift tax rate: 40%
- Annual gift tax exclusion: $19,000 per donee
- Noncitizen spouse annual gift exclusion: $194,000
Because the OBBBA made the elevated exclusion permanent, the “use it or lose it” urgency that characterized pre-2026 planning no longer applies. Married couples can rely on the current exclusion amounts for long-term planning. However, future Congresses could reduce the exclusion. The anti-clawback regulation (Treas. Reg. § 20.2010-1(c)) protects gifts made when the exclusion was higher from being recaptured if the exclusion is later reduced.
What to Consider Next
The marital deduction is the starting point for estate planning, not the endpoint. The decisions that follow determine whether a plan achieves its tax and non-tax objectives: which trust structure to use, how much property to pass through each trust, and how to fund the trusts after death.
Married couples with combined estates approaching or exceeding the applicable exclusion amount should work with an estate planning attorney to design a plan that coordinates the marital deduction with the credit shelter trust, the GST exemption, and the family’s specific goals. Even couples with smaller estates benefit from understanding how the marital deduction interacts with portability, basis step-up at death, and state estate taxes.