US citizens can generally give unlimited amounts to their spouse, free of gift tax, thanks to the unlimited marital deduction. But that rule assumes the spouse is also a US citizen — and if your spouse is not, the unlimited deduction does not apply at all. Instead there is a special, much larger annual exclusion, and for 2026 it rises to $194,000. For mixed-nationality high-net-worth couples — a common pattern for Americans married to UK nationals — understanding this figure, and planning lifetime gifts around it, is central to efficient cross-border wealth transfer.
This guide explains why the ordinary marital deduction does not apply to a non-citizen spouse, what the 2026 exclusion actually is, how it differs from lifetime gifts to anyone else, and the planning techniques couples use to move wealth between spouses efficiently when one is not a US citizen.
Why the unlimited marital deduction does not apply
For gifts and bequests between US citizen spouses, the unlimited marital deduction means no gift or estate tax is due no matter how much passes between them, deferring all transfer tax until the surviving spouse's own death. Congress restricted this for non-citizen spouses out of concern that a surviving non-citizen spouse could simply leave the US with the wealth, escaping US transfer tax entirely. So instead of an unlimited exclusion, gifts to a non-citizen spouse get a much larger, but still capped, special annual exclusion — a middle ground between the ordinary annual exclusion available for gifts to anyone and the unlimited deduction available between citizen spouses.
The 2026 figure: $194,000
For 2026, the special annual exclusion for gifts to a non-citizen spouse is $194,000, up from $190,000 in 2025. This figure is adjusted annually for inflation under the same mechanism as other transfer-tax figures, and the current amount for 2026 comes from the IRS's 2026 inflation adjustments incorporating the One, Big, Beautiful Bill and Revenue Procedure 2025-32. Compare that with the ordinary annual gift exclusion for 2026, which is $19,000 per recipient — the non-citizen-spouse figure is over ten times larger, reflecting Congress's attempt to still give married couples meaningful flexibility even without the unlimited deduction.
How this differs from gifts to a citizen spouse
- US citizen spouse: unlimited gifts, no gift tax ever, regardless of amount (the unlimited marital deduction).
- Non-citizen spouse: $194,000 per year (2026) gift-tax-free; amounts above that use up your lifetime gift and estate tax exemption, or are taxed if the exemption is exhausted.
- Non-spouse recipient (child, friend, anyone else): $19,000 per year (2026) gift-tax-free per recipient — the ordinary annual exclusion.
What happens above $194,000
Gifts to a non-citizen spouse above the annual exclusion do not automatically trigger gift tax due immediately — like other lifetime gifts, they can be applied against your lifetime gift and estate tax exemption (a very large figure, but one shared with your estate at death and, under recent law, itself subject to change over time). Only once your lifetime exemption is exhausted does actual gift tax become payable on the excess. This means a large one-off transfer to a non-citizen spouse is rarely catastrophic, but it does consume exemption that would otherwise shelter your estate later — which is exactly why couples plan gifts to stay within the annual exclusion where practical, rather than relying on the lifetime exemption as a first resort.
Filing requirements
Gifts to a non-citizen spouse that exceed the annual exclusion in a given year generally require the donor spouse to file a gift tax return (Form 709), even if no tax is actually due because the lifetime exemption absorbs the excess. Staying under $194,000 in a calendar year to a non-citizen spouse avoids the filing requirement altogether for that gift. Couples making a larger one-off transfer — funding a home purchase, moving a portfolio, or restructuring jointly held assets — should plan the timing and reporting before the transfer, not after.
Splitting a larger transfer across years
Because the $194,000 figure (2026) applies per calendar year, couples with a larger sum to move between them can often split the transfer across two or more tax years to stay under the exclusion each year and avoid both gift tax exposure and the Form 709 filing requirement. This is a simple, widely used technique, but it needs planning ahead of time — a single large transfer made in December cannot retroactively be split once the calendar year has passed. For mixed-nationality couples anticipating a significant transfer (funding a UK home, equalising investment accounts, or lifetime estate planning), mapping the transfer across tax years in advance is one of the most straightforward ways to use the exclusion efficiently.
Why this matters for US/UK couples specifically
This scenario is common in exactly the client base TaxStone serves: a US citizen married to a UK national (or vice versa, where the American spouse is the recipient of gifts from a UK-domiciled partner, which raises a different, UK-side set of rules). For the US citizen spouse making gifts, the $194,000 figure for 2026 is the number to plan around before assuming the unlimited marital deduction applies — it does not, once nationality differs. This interacts with broader estate planning for mixed-nationality couples, including the separate US estate tax treatment at death, which uses a related but distinct mechanism (the Qualified Domestic Trust, or QDOT) rather than the annual gift exclusion discussed here.
It is also worth remembering that gift tax and residence are largely separate questions from the day-to-day income tax planning most cross-border couples focus on, such as the choice between the Foreign Earned Income Exclusion and the Foreign Tax Credit — the gift tax rules apply based on the donor's citizenship status, essentially independent of where the couple currently lives.
Common mistakes with mixed-nationality gifting
- Assuming the unlimited marital deduction applies because you are married — it does not, once your spouse is not a US citizen.
- Making a large one-off transfer without checking the annual exclusion first, creating an unnecessary Form 709 filing.
- Not spreading a planned large transfer across calendar years when it could easily have stayed under the exclusion each year.
- Confusing the lifetime gift exemption (very large, but finite and shared with your estate) with a genuine gift-tax-free amount.
- Overlooking that jointly titled property and joint accounts can themselves create a taxable gift when one spouse is not a US citizen, even without an explicit transfer.
Joint accounts and property: a hidden trap
Because the unlimited marital deduction is unavailable, even routine actions between a US citizen and their non-citizen spouse can inadvertently create a taxable gift — for example, adding a non-citizen spouse to the title of US real estate, or funding a joint account disproportionately, can be treated as a gift of the value transferred. This catches couples who assume that 'it's just moving money between us' is automatically tax-free, when for a non-citizen spouse it is measured against the $194,000 (2026) exclusion like any other gift. Reviewing how jointly held US assets are structured is worth doing proactively, not after a transfer has already happened.
Plan lifetime gifts, not just the estate
For mixed-nationality HNW couples, the $194,000 annual exclusion (2026) is a genuinely useful planning tool — used well, meaningful sums can move between spouses every year without touching the lifetime exemption or requiring a return. Used carelessly, or ignored on the assumption that 'married means unlimited', it can create unnecessary tax exposure or filing obligations. A US/UK tax specialist can map your lifetime gifting plan against this exclusion, coordinate it with your wider estate strategy, and check how any jointly held assets are currently structured.
