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, investments, or real estate without hitting any statutory cap. What actually shrinks the inheritance is tax, and the tax answer depends almost entirely on one thing: whether the person who died (and in some cases the person inheriting) counts as a U.S. resident for estate tax purposes. The gap between the best case and the worst case is enormous. A resident alien gets the same $15 million federal exemption as a U.S. citizen. A nonresident alien gets $60,000.
Residency, Not Citizenship, Drives the Tax Bill
U.S. tax law sorts non-citizens into two categories, and the consequences diverge sharply. A resident alien lives in the United States and is domiciled here, meaning the U.S. is their permanent home even without citizenship. A nonresident alien lives abroad or is in the U.S. only temporarily. The IRS doesn’t decide this on visa type alone. It looks at where the permanent home is, where the family lives, where belongings are kept, and where social and economic ties are strongest.
That one classification controls almost every number that follows.
If the Deceased Was a U.S. Citizen or Resident Alien
When the person who died was a U.S. citizen or a resident alien, their worldwide estate is subject to federal estate tax, but the exemption is generous. 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 Estates below that threshold owe no federal estate tax, and the inheritance passes to beneficiaries intact. Amounts above the exemption are taxed at graduated rates starting at 18% and reaching 40%.2Office of the Law Revision Counsel. 26 U.S. Code 2001 – Imposition and Rate of Tax The exemption will be adjusted for inflation starting in 2027.
The estate pays this tax before anything is distributed, so the burden sits on the estate rather than directly on you. Your citizenship status as the beneficiary doesn’t change the estate’s exemption. A non-citizen inheriting from a $10 million U.S. estate receives the same post-tax amount a citizen would.
If the Deceased Was a Nonresident Alien
This is where the math turns harsh. When the person who died was a nonresident alien, federal estate tax reaches only property “situated in the United States,” but the exemption shrinks to $60,000.3Internal Revenue Service. Estate Tax for Nonresidents Not Citizens of the United States That $60,000 figure is not indexed for inflation and has not moved in decades. Every dollar of U.S.-situs property above it 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
Consider a nonresident alien who dies owning a $1 million U.S. condo and $500,000 in U.S. stock. That’s $1.5 million in U.S.-situs assets. After the $60,000 exemption, roughly $1.44 million is subject to estate tax, producing a bill in the several hundred thousand dollar range before anything reaches beneficiaries.
What Counts as U.S.-Situs Property
The situs rules are specific and sometimes counterintuitive. Property treated as U.S.-situs includes real estate located within U.S. borders; stock in companies incorporated in the United States, regardless of where the certificates sit; debt obligations of U.S. individuals, corporations, or government entities; and tangible personal property such as art, jewelry, or vehicles physically in the U.S. at death.5Office of the Law Revision Counsel. 26 U.S. Code 2104 – Property Within the United States
Several categories get favorable treatment and are excluded even when they look American. Money in U.S. bank accounts generally is not U.S.-situs property for a nonresident alien, which makes bank deposits one of the safer ways to hold U.S. dollar assets. Life insurance proceeds on the decedent’s life are not U.S.-situs. Stock in a foreign corporation is not U.S.-situs even if the company does most of its business in the United States.6eCFR. 26 CFR Part 20 – Estates of Nonresidents Not Citizens
The Non-Citizen Spouse Problem
The single most expensive surprise in this area involves surviving spouses. When a U.S. citizen leaves everything to a U.S. citizen spouse, the estate pays zero tax regardless of size, thanks to the unlimited marital deduction. But if the surviving spouse is not a U.S. citizen, that marital 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 everything to a non-citizen spouse exposes the $5 million above the exemption to tax, producing a bill of roughly $2 million. The same bequest to a citizen spouse would owe nothing.
The QDOT Workaround
Congress built a workaround called a 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 The trust must have at least one trustee who is a U.S. citizen or domestic corporation, that trustee must have authority to withhold estate tax from any distribution of principal, and the trust must satisfy additional Treasury requirements designed to ensure the tax can eventually be collected.
The surviving spouse can receive income from the QDOT without triggering estate tax, but any distribution of principal is taxed as if it had been included in the original estate.9eCFR. 26 CFR 20.2056A-5 – Imposition of Section 2056A Estate Tax Whatever remains when the surviving spouse dies is also taxed. The QDOT delays the tax; it does not erase it. The property must be transferred into the trust before the estate tax return is due, and the executor must elect QDOT treatment on that return. A non-citizen spouse who inherits outright, with no QDOT in place, loses the marital deduction entirely.
Treaty Relief for 15 Countries
The United States maintains estate and gift tax treaties with 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 lived in one of these countries, the treaty can change the outcome substantially.
The most valuable benefit is often a prorated share of the full U.S. exemption. Instead of being capped at $60,000, a nonresident alien covered by a treaty may receive a credit calculated by multiplying the full $15 million exemption by the ratio of U.S.-situs assets to worldwide assets. If 30% of the worldwide estate consisted of U.S. property, the effective exemption could land near $4.5 million rather than $60,000. Treaties can also redefine what counts as U.S.-situs or reduce withholding on income from inherited assets. The specifics vary by country.
Stepped-Up Basis on What You Inherit
One rule works in your favor regardless of citizenship. You generally receive a “stepped-up” cost basis equal to the property’s fair market value at the date of death.11Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent
If you inherit stock the deceased bought for $50,000 but worth $300,000 at death, your basis is $300,000. Sell for $310,000 and you owe capital gains tax only on the $10,000 gain since death, not on the $260,000 that accumulated during the deceased person’s lifetime. On inherited real estate and long-held investments, this can save tens or hundreds of thousands.
Selling Inherited U.S. Real Estate: FIRPTA
If you’re a non-citizen who inherits U.S. real estate and later sells it, expect an immediate cash hit at closing. Under the Foreign Investment in Real Property Tax Act, the buyer must withhold 15% of the total sale price and send it to the IRS.12Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests That’s 15% of the sale price, not the profit, which usually means far more is withheld than the actual tax owed.
Two narrow exceptions reduce the withholding. If the buyer plans to use the property as a personal residence and the price is $300,000 or less, no FIRPTA withholding applies. If the buyer plans to use it as a residence and the price is $1,000,000 or less, the rate drops to 10%.13Internal Revenue Service. FIRPTA Withholding For investment property or higher-value homes, the full 15% applies.
The withholding is not the final tax. After filing a U.S. return reporting the sale, you can claim a refund for any amount withheld above your actual liability. The refund takes months. You can also apply to the IRS before closing for a withholding certificate that reduces the amount, if you plan ahead.
State Estate and Inheritance Taxes
Federal rules aren’t the whole picture. Roughly a dozen states and the District of Columbia impose their own estate taxes, and about half a dozen states impose inheritance taxes. Several state thresholds sit well below the federal $15 million. Oregon starts at $1 million, Massachusetts at $2 million, and Illinois at $4 million. Some inheritance taxes have no minimum threshold for certain beneficiaries.
If the deceased owned real estate or tangible property in one of these states, the state tax applies to that property no matter 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 below the federal exemption. State rates are generally lower than federal rates but can still reach 16% or more.
Income Tax on What the Assets Produce
The inheritance itself is not income. You don’t owe federal income tax simply because you received property from someone who died. Once you own the assets, however, any income they generate is taxable.
A nonresident alien who collects rent from inherited U.S. real estate, dividends from U.S. stocks, or interest from certain U.S. investments owes tax on that income. The default withholding rate is 30% of the gross amount with no deductions allowed.14Office of the Law Revision Counsel. 26 U.S. Code 871 – Tax on Nonresident Alien Individuals If the income is effectively connected to a U.S. trade or business, it’s taxed at graduated rates with deductions available. Treaties often lower the 30% default rate, commonly cutting dividend withholding to 15% and sometimes eliminating withholding on certain interest. The payer reports what was withheld on Form 1042-S.15Internal Revenue Service. Instructions for Form 1042-S
Filing and ITINs
If the deceased was a nonresident alien with U.S.-situs assets above $60,000, the executor must file Form 706-NA within nine months of the date of death, with an automatic six-month extension available on Form 4768.16Internal Revenue Service. Instructions for Form 706-NA The return reports all U.S.-situs assets at date-of-death value, calculates the tax, and documents any treaty-based claims.
As a non-citizen beneficiary, you need a taxpayer identification number to receive distributions and report income. If you’re not eligible for a Social Security Number, apply for an Individual Taxpayer Identification Number using Form W-7 with original or certified copies of your identity documents.17Internal Revenue Service. Individual Taxpayer Identification Number (ITIN) The W-7 can be submitted with the return that requires it. Cross-border estates with meaningful U.S. real estate or treaty questions almost always warrant both a probate attorney and a tax professional who works in this area.