Married couples can generally give each other unlimited amounts of money or property without triggering federal gift tax, thanks to what’s called the unlimited marital deduction. That rule doesn’t apply, though, when one spouse isn’t a U.S. citizen. Instead, the IRS caps how much a citizen or resident spouse can give a noncitizen spouse tax-free each year, and the agency has just set that number for 2026.
Why the unlimited marital deduction skips noncitizen spouses
The unlimited marital deduction exists so money can move freely between spouses without the IRS treating every transfer as a taxable gift, on the theory that the wealth stays inside the U.S. tax system and will eventually be taxed when the second spouse dies or gives it away. Congress carved out an exception for noncitizen spouses because that assumption doesn’t hold the same way: a noncitizen spouse could leave the country, give up U.S. residency, or otherwise move assets beyond the reach of U.S. gift and estate tax. This is a narrower rule than most people expect, since it turns on citizenship alone — a spouse with a green card who has lived in the U.S. for years is still treated as a noncitizen spouse for this purpose. Rather than deny these couples any tax-free giving, the law substitutes a large but limited annual exclusion in place of the unlimited deduction.
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The $194,000 ceiling for 2026, and how fast it’s climbed
For calendar year 2026, a citizen or resident spouse can give a noncitizen spouse up to $194,000 without filing a gift tax return or using any lifetime exemption, according to the IRS’s frequently asked questions on gift taxes for noncitizen spouses. That’s up from $190,000 in 2025, and the number has climbed quickly in recent years: $164,000 in 2022, $175,000 in 2023, and $185,000 in 2024. It’s also far larger than the standard annual exclusion of $19,000 that applies to gifts to anyone else, including a citizen spouse’s gifts to children or other relatives, reflecting an attempt to keep the noncitizen-spouse exclusion meaningfully useful even though it isn’t unlimited.
What happens to a gift above $194,000
Gifts to a citizen spouse beyond any annual exclusion simply pass tax-free under the unlimited marital deduction, with nothing to track. Gifts to a noncitizen spouse don’t get that backstop. Once combined gifts to a noncitizen spouse in a calendar year exceed $194,000, the excess is a taxable gift, and the giver must file a gift tax return using the instructions for Form 709-NA if the donor is a nonresident noncitizen, or the standard Form 709 for citizen and resident donors. For example, a citizen spouse who transfers a $250,000 investment account to a noncitizen spouse in a single year would have $56,000 of that transfer treated as a taxable gift, since only the first $194,000 falls under the exclusion. Unlike gifts to most other people, where the giver can apply part of their lifetime estate and gift tax exemption to absorb an amount above the annual exclusion, the IRS is explicit that no lifetime gift tax credit is available to offset tax on the amount above the noncitizen-spouse exclusion.
Gift-splitting doesn’t work when one spouse isn’t a citizen
Married couples normally can “split” gifts to a third person, treating a gift as though half came from each spouse and doubling the amount that can pass tax-free to that recipient. The IRS is direct that this option is only available if both spouses are U.S. citizens or residents; if one spouse is a nonresident noncitizen, each spouse instead has to file a separate gift tax return for their own portion of any gift. That restriction, combined with the lack of a lifetime credit for gifts to a noncitizen spouse, means households with one noncitizen spouse have fewer tools available than other married couples to move larger sums without a filing obligation or tax exposure.
Who this actually affects
The rule surfaces most often for mixed-nationality couples: a U.S. citizen married to a spouse who holds a green card or a nonimmigrant visa, or a couple where one spouse never pursued citizenship after years of U.S. residency. It also comes up in cross-border retirement and estate planning, when a citizen spouse wants to transfer a home, investment account, or business interest to a noncitizen spouse ahead of retirement or a move abroad. Because the $194,000 figure applies per calendar year, a couple with enough time can move meaningful sums across several years without exceeding the exclusion in any single year, even though a single large transfer, like the equity in a house, could easily exceed it at once. The exclusion is one of more than 60 dollar amounts the IRS reset for 2026 in its annual inflation-adjustment announcement, and its published gift-tax guidance for noncitizen spouses remains the controlling record for what counts as a taxable transfer in any given year.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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