MARITAL DEDUCTION
Back to GlossaryDefinition
A deduction for estate and gift tax purposes for the amount of property that passes to a spouse from the other spouse
Summary
The Marital Deduction is a tax benefit that allows married couples to transfer unlimited amounts of property to each other during their lifetime (gift tax) or at death (estate tax) without paying federal taxes. This deduction recognizes marriage as an economic partnership and prevents the government from taxing wealth transfers between spouses. However, both spouses must be U.S. citizens, and special rules apply when one spouse is not a U.S. citizen.
Usage Context
Essential for understanding estate planning strategies, calculating estate and gift tax liabilities, and structuring transfers between married couples to minimize tax consequences.
Common Confusions
- Thinking the marital deduction eliminates taxes permanently rather than just deferring them until the surviving spouse's death
- Assuming the deduction applies when transferring to non-citizen spouses without special arrangements
- Confusing the unlimited marital deduction with the annual gift tax exclusion limits
- Not understanding that the deduction may just postpone taxes to the second spouse's estate
