There is no legal ceiling on how much a non-U.S. citizen can inherit from a U.S. estate. A foreign beneficiary can receive millions of dollars in cash, property, or investments. What actually shrinks the inheritance is tax, and the answer to how much a non-U.S. citizen can inherit before tax takes over depends almost entirely on one thing: whether the person who died, or the person inheriting, counts as a U.S. resident for federal tax purposes. The gap between the two categories is enormous — a $15 million exemption on one side, a $60,000 exemption on the other.
Resident Alien or Nonresident Alien: The Split That Controls Everything
Federal estate tax law divides non-citizens into two groups. A resident alien lives in the United States and is domiciled here, meaning the U.S. is their permanent home even though they haven’t naturalized. A nonresident alien lives abroad, or is present in the U.S. only temporarily without intending to stay.
The IRS doesn’t decide this from a visa alone. It looks at where the person’s permanent home is, where family lives, where belongings are kept, and where social and economic ties are strongest. That determination controls the exemption, and the exemption controls how much of the inheritance survives to reach the beneficiary.
When a Resident Alien Inherits
A resident alien inheriting from a U.S. estate is treated much like a U.S. citizen would be. Federal estate tax is paid by the estate before assets are distributed, so the burden falls on the estate rather than on the beneficiary directly.
For 2026, the federal estate tax exemption is $15,000,000 per person under the One, Big, Beautiful Bill Act signed into law on July 4, 2025.1Internal Revenue Service. What’s New – Estate and Gift Tax An estate worth $15 million or less passes without federal estate tax. Amounts above that are taxed at graduated rates that begin at 18% and climb to 40% on the portion more than $1 million over the exemption.2Office of the Law Revision Counsel. 26 U.S. Code 2001 – Imposition and Rate of Tax Beginning in 2027, that $15 million figure adjusts annually for inflation.
When the Deceased Was a Nonresident Alien
Here the numbers turn harsh. If the person who died was a nonresident alien, federal estate tax applies only to property “situated in the United States,” but the exemption is only $60,000.3Internal Revenue Service. Estate Tax for Nonresidents Not Citizens of the United States The figure isn’t indexed for inflation and hasn’t moved in decades. Everything above $60,000 in U.S.-situs assets is taxed at the same graduated rates that apply to citizens, up to 40%.4Office of the Law Revision Counsel. 26 U.S. Code 2101 – Tax Imposed
A nonresident alien who dies owning a $1 million U.S. condominium and $500,000 in U.S. stock has $1.5 million in U.S.-situs assets. After the $60,000 exemption, roughly $1.44 million is exposed to estate tax, with the bill running into the hundreds of thousands of dollars before the beneficiaries see anything.
What Counts as U.S.-Situs Property
The rules for what the IRS treats as “situated in the United States” are specific and sometimes counterintuitive:
- Real estate located in the United States, including vacation homes and investment property.
- Stock of U.S. corporations, regardless of where the certificates are physically held.5Office of the Law Revision Counsel. 26 U.S. Code 2104 – Property Within the United States
- Debt obligations of U.S. persons, including bonds and notes from U.S. individuals, corporations, or government entities.
- Tangible personal property, such as art, jewelry, or vehicles located in the U.S. at the time of death.
What Is Excluded
Some assets with a U.S. connection are deliberately kept out of the nonresident alien’s U.S. taxable estate:
- Bank deposits in U.S. accounts are generally not treated as U.S.-situs property, which makes them one of the safer ways for a nonresident to hold U.S. dollar assets.
- Life insurance proceeds on the decedent’s life are not U.S.-situs property.
- Stock of foreign corporations stays outside the U.S. estate even if the company does most of its business in the United States.6eCFR. 26 CFR Part 20 – Estates of Nonresidents Not Citizens
The distinction matters for planning. A nonresident who holds U.S. equities through a foreign holding company rather than directly can potentially keep those shares out of the U.S. estate, though that route carries its own complications.
The Non-Citizen Spouse Problem
This is the most expensive surprise in the area. A U.S. citizen who leaves everything to a U.S. citizen spouse pays no federal estate tax at all, thanks to the unlimited marital deduction. If the surviving spouse is not a U.S. citizen, that deduction is disallowed entirely.7Office of the Law Revision Counsel. 26 U.S. Code 2056 – Bequests, Etc., to Surviving Spouse
A U.S. citizen with a $20 million estate who leaves it all to a non-citizen spouse triggers estate tax on the $5 million above the $15 million exemption, producing a tax bill in the neighborhood of $2 million. The same transfer to a citizen spouse would have owed nothing.
The QDOT Workaround
Congress created a mechanism called the Qualified Domestic Trust, or QDOT. If assets pass into a QDOT instead of directly to the non-citizen spouse, the estate can claim the marital deduction and defer the estate tax.8Office of the Law Revision Counsel. 26 U.S. Code 2056A – Qualified Domestic Trust To qualify, the trust must meet several conditions:
- At least one trustee must be a U.S. citizen or a domestic corporation.
- The U.S. trustee must have authority to withhold estate tax from any distribution of principal.
- The trust must satisfy additional Treasury requirements aimed at making sure the tax is eventually collectible.
The surviving spouse can draw income from the QDOT without triggering estate tax. Any distribution of principal is taxed as if it had been in the original estate, and whatever remains at the surviving spouse’s death is taxed then.9eCFR. 26 CFR 20.2056A-5 – Imposition of Section 2056A Estate Tax The QDOT delays the tax rather than eliminating it, while keeping funds accessible to the surviving spouse.
Timing matters. Property has to be transferred into the QDOT before the estate tax return is due, and the executor has to elect QDOT treatment on that return. A non-citizen spouse who simply inherits outright loses the marital deduction. Planning has to happen before anyone dies.
Treaties That Rewrite the Exemption
The United States has estate and gift tax treaties with 15 countries: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom.10Internal Revenue Service. Estate and Gift Tax Treaties (International) If the deceased was a resident of one of those countries, the treaty can change the outcome substantially.
The most valuable benefit is often a prorated share of the full U.S. estate tax exemption. Instead of $60,000, a treaty-covered nonresident alien may claim a credit calculated by multiplying the $15 million citizen exemption by the ratio of U.S.-situs assets to worldwide assets. If 30% of the worldwide estate is U.S. property, the effective exemption is roughly $4.5 million rather than $60,000.
Treaties can also change what is treated as U.S.-situs property or reduce withholding on income from inherited assets. Provisions vary from one treaty to the next, so checking the relevant one before filing is worth doing early.
Selling Inherited U.S. Real Estate: FIRPTA
A non-citizen who inherits U.S. real estate and later sells it should expect an immediate cash hit at closing. Under the Foreign Investment in Real Property Tax Act, the buyer withholds 15% of the total sale price and remits it to the IRS.11Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests The withholding is on the price, not the profit, so the amount held back often exceeds the actual tax owed.
Two narrow exceptions apply. If the buyer intends to use the property as a personal residence and pays $300,000 or less, no FIRPTA withholding applies. If the price is $1,000,000 or less and the buyer plans to use it as a residence, the rate drops to 10%.12Internal Revenue Service. FIRPTA Withholding Investment property or higher-priced homes get the full 15%.
The withholding isn’t the final tax. After filing a U.S. return that reports the sale, you can claim a refund for any withholding above your actual liability. The refund takes months. It’s also possible to apply to the IRS for a withholding certificate before closing to reduce the amount, but that takes advance planning.
State Estate and Inheritance Taxes
Federal tax isn’t the only layer. Roughly a dozen states and the District of Columbia impose their own estate taxes, and about half a dozen states impose inheritance taxes. Several of the state thresholds are far below the federal exemption. Oregon starts at $1 million, Massachusetts at $2 million, Illinois at $4 million. A few state inheritance taxes have no minimum threshold at all for certain classes of beneficiary.
If the deceased owned real estate or tangible property in one of these states, the state tax applies to that property regardless of where the beneficiary lives. A non-citizen inheriting a $3 million home in Massachusetts can owe state estate tax even though the estate is well under the federal exemption. State rates are generally lower than federal ones but can still reach 16% or more.
Filing and Getting Paid
If the deceased was a nonresident alien with U.S.-situs assets above $60,000, the executor files Form 706-NA within nine months of the date of death.13Internal Revenue Service. Instructions for Form 706-NA An automatic six-month extension is available on Form 4768. The return reports U.S.-situs assets at date-of-death value, calculates the estate tax, and documents any treaty benefits being claimed.
As a non-citizen beneficiary, you’ll need a taxpayer identification number before distributions can be processed and any related income reported. If you’re not eligible for a Social Security Number, apply for an Individual Taxpayer Identification Number by submitting Form W-7 with original or certified copies of identity documents.14Internal Revenue Service. Individual Taxpayer Identification Number (ITIN) The W-7 can be submitted with the return that requires the ITIN.
Estates with significant U.S. real estate or cross-border complexity almost always need both a probate attorney and a tax professional experienced with international estates. The exemption alone doesn’t decide what you keep. Situs classification, treaty coverage, spousal status, state taxes, and FIRPTA all pull in different directions, and each one is easier to manage before a death than after.