marital deduction

Primary tabs

Marital deduction refers to exceptions to gift and estate taxes for transfers made to spouses. Almost all property qualifies for this deduction and there is no limit. The deduction does not avoid taxes completely, but rather, the spouse receiving the property must pay the eventual estate taxes. Typically, the marital deduction becomes important for wealthy spouses who must strategically use both spouse’s applicable exclusion amounts to avoid estate taxes. 

There are limits on the marital deduction for tax purposes. Most property interests qualify, but terminable property typically will not. Unless qualifying for an exception like for QTIP trusts or for some charitable remainder trusts, terminable interests transferred will not qualify for the marital deduction. The transfers must be made to a legally recognized spouse and for estate marital deductions, the benefiting spouse must survive the granting spouse. Also, transfers made to spouses who are not U.S. citizens will not qualify unless under a qualified domestic trust

[Last updated in March of 2022 by the Wex Definitions Team]