What is the US federal estate tax exemption for 2026?

As of 1 January 2026, the federal estate tax exemption for US citizens and individuals domiciled in the United States is $15 million. Above that threshold, the estate is taxed at rates of up to 40%. Consult a qualified adviser to confirm the current threshold at the time of your planning, as exemption amounts are set by legislation and can change.

My spouse is not a US citizen. How does that affect our estate planning?

Where a surviving spouse is not a US citizen, the unlimited marital deduction under the Internal Revenue Code does not apply in full. The non-citizen surviving spouse faces a $60,000 exemption on US-situated assets inherited, with up to 40% estate tax above that amount. Structures such as a Qualified Domestic Trust (QDOT) exist under US domestic law to address this, but require careful legal structuring. Consult a qualified US estate planning attorney.

Is there a UAE-US estate tax treaty that provides relief?

No. There is currently no estate tax treaty and no income tax treaty between the United States and the UAE. No treaty-based relief mechanisms are available. All planning must rely on US domestic provisions such as exemptions, credits, and trust structures.

I am not a US citizen but I hold a US brokerage account. Am I subject to US estate tax?

Potentially yes. Non-domiciled nonresidents of the United States are subject to US federal estate tax on US-situated assets - which includes US brokerage accounts holding US securities and US real estate. The exemption available to non-domiciled nonresidents is only $60,000, with up to 40% tax above that amount. Consult a cross-border tax adviser if you hold US-situated assets.

Does claiming the Foreign Earned Income Exclusion (FEIE) reduce my estate tax?

No. The FEIE applies to income tax only and has no effect on estate tax liability. These are entirely separate frameworks under the Internal Revenue Code. Consult a cross-border adviser to understand both your income tax and estate tax position as a UAE-based US expat.

Should I register a DIFC Will as a US citizen in the UAE?

A DIFC Will governs the distribution of UAE-situated assets under UAE law and is a separate matter from US estate tax planning. Registering a DIFC Will does not affect or reduce your US estate tax liability. Whether a DIFC Will is appropriate for your circumstances is a question for a UAE-qualified legal adviser. US estate tax planning should be handled separately by a qualified US estate planning attorney.

US Estate Tax for UAE Expats

US citizens living in the UAE benefit from zero personal income tax and no local estate or inheritance tax - but the US federal estate tax follows American citizens worldwide, regardless of where they live or hold assets. For UAE-based expats, understanding the interaction between US estate tax rules and the absence of a UAE-US tax treaty is essential to protecting accumulated wealth. This guide sets out the core rules, the exemptions that apply, and the planning considerations every US expat in the Gulf should be aware of - consult a qualified cross-border adviser before taking any action.

Key takeaways

-The UAE levies no personal income tax, capital gains tax, or inheritance tax on individuals - but US citizens remain fully subject to US federal estate tax on their worldwide assets, regardless of UAE residence.
-As of 1 January 2026, the federal estate tax exemption for US citizens and domiciled individuals is $15 million; above that threshold, the estate is taxed at up to 40%.
-Non-domiciled nonresidents of the US - including many non-US-citizen spouses of American expats - face a sharply reduced exemption of only $60,000 on US-situated assets, with the same 40% rate applying above that threshold.
-There is no estate tax treaty and no totalisation agreement between the United States and the UAE, meaning no treaty-based relief is available to reduce or offset US estate tax exposure for UAE-resident Americans.

How US Estate Tax Works: The Core Rules

The US federal estate tax is imposed under the Internal Revenue Code on the transfer of a decedent's taxable estate. For US citizens and individuals domiciled in the United States, the tax applies to worldwide assets - every bank account, investment portfolio, real estate holding, business interest, and life insurance policy, regardless of where in the world those assets are located or where the individual was living at the time of death.

The estate tax is paid by the estate itself, not by the person inheriting the assets. Gift taxes, by contrast, are paid by the person making the gift, not the recipient. This distinction matters for cross-border planning purposes, particularly when UAE-based expats are structuring transfers to family members across multiple jurisdictions.

The rate structure is progressive, reaching a top marginal rate of 40% on the taxable estate above the applicable exemption threshold. For US citizens and domiciled individuals, the federal estate tax exemption stands at $15 million as of 1 January 2026. Amounts above that exemption are subject to tax at rates up to 40%. Consult a qualified cross-border adviser to understand how the current exemption thresholds interact with your specific asset profile.

The UAE's Tax Position: What Local Law Does and Does Not Cover

The UAE levies no personal income tax, no capital gains tax, and no estate or inheritance tax on individuals. The only broad-based consumption tax in the UAE is a 5% VAT on goods and services. For US expats, this means that assets held and income earned in the UAE are not subject to any local wealth or succession tax at the emirate or federal level.

Despite this favourable local environment, UAE residence does not extinguish or reduce a US citizen's US estate tax liability. The US taxes its citizens on a citizenship basis, not a residence basis. A US citizen who has lived in Dubai for twenty years, holds assets entirely in the UAE, and has no US-source income is still subject to US federal estate tax on their worldwide estate at death.

This point is frequently misunderstood. Because the UAE imposes no inheritance tax, some expats assume the estate tax question is settled. It is not. The UAE's domestic tax position and the US federal estate tax are entirely separate legal frameworks operating independently. Consult a cross-border adviser to map your actual exposure across both systems.

No UAE-US Tax Treaty: What That Means for Your Estate

There is currently no income tax treaty between the United States and the United Arab Emirates. There is also no totalisation agreement between the two countries. The absence of a bilateral estate tax treaty means that none of the relief mechanisms available under, for example, the US-UK estate tax treaty - such as unified credit sharing or marital deduction provisions for non-citizen spouses - are available to UAE-resident US citizens.

For expats with a non-US-citizen spouse, this is a particularly significant gap. Under US domestic law (Internal Revenue Code Section 2056), the unlimited marital deduction for transfers to a surviving spouse does not apply in full where the surviving spouse is not a US citizen. This rule applies regardless of UAE residence. Specific planning structures, such as a Qualified Domestic Trust (QDOT), exist under US law to address this issue - but these require careful structuring with a qualified US estate planning attorney.

The lack of a totalisation agreement means that US expats who are self-employed or working outside the scope of a UAE employer may face additional Social Security obligations under US law, though this falls outside the estate tax framework directly. Consult a cross-border adviser for guidance on how the absence of these treaty protections affects your overall position.

Non-US Citizens in the UAE: The $60,000 Exemption Rule

The estate tax rules are considerably less generous for individuals who are non-domiciled nonresidents of the United States - a category that includes the non-US-citizen spouses and family members of many UAE-based American expats, as well as non-American expats who hold US-situated assets such as US brokerage accounts, US real estate, or shares in US companies.

For a non-domiciled nonresident, the US federal estate tax applies only to US-situated assets - not to worldwide assets. However, the exemption available is only $60,000, compared to the $15 million exemption available to US citizens and domiciled individuals. The same top rate of up to 40% applies above that $60,000 threshold.

A UAE-based expat of British, Indian, Egyptian, or any other non-American nationality who holds a US brokerage account worth $500,000, for example, could face a significant US estate tax liability on that account at death - despite never having lived in the United States. This is a widely overlooked exposure. Consult a qualified cross-border adviser if you hold US-situated assets and are not a US citizen.

FEIE and Income Tax vs Estate Tax: Two Separate Frameworks

A common point of confusion for UAE-based US expats is the relationship between the Foreign Earned Income Exclusion (FEIE) - which applies to income tax - and the federal estate tax. These are entirely separate frameworks. Claiming the FEIE on Form 2555 reduces a US expat's income tax liability on foreign-earned income; it has no effect whatsoever on estate tax exposure.

For tax year 2025 (returns filed in 2026), the FEIE limit is $130,000. For tax year 2026 (returns filed in 2027), it increases to $132,900. US citizens who meet either the Physical Presence Test (330 days outside the US in a 12-month period) or the Bona Fide Residence Test qualify to claim the exclusion. These tests determine income tax treatment only.

Separately, the Foreign Tax Credit (FTC) is available as an alternative to the FEIE for reducing income tax liability where foreign taxes have been paid. Because the UAE levies no income tax, the FTC is generally of limited direct use in the UAE context for income tax purposes - and again, neither mechanism touches estate tax liability. Consult a cross-border adviser to understand how your income tax position and your estate tax position interact.

Estate Planning Considerations for UAE-Based US Expats

Because the UAE imposes no local inheritance or estate tax, the primary estate planning challenge for US citizens in the Gulf is managing US federal estate tax exposure on a potentially large, globally distributed asset base. Several US domestic planning tools are available - but their application requires careful structuring by a qualified US estate planning attorney and, where cross-border assets are involved, a cross-border tax adviser.

Annual gifting strategies under US gift tax rules, irrevocable life insurance trusts (ILITs), and - for non-citizen spouses - Qualified Domestic Trusts (QDOTs) are among the mechanisms that US domestic law provides. The suitability of any particular structure depends entirely on the individual's asset profile, family circumstances, and residency intentions. This guide does not recommend any specific structure - consult a qualified adviser.

UAE-based expats should also consider the interaction between US estate tax planning and UAE succession rules. While the UAE does not impose an inheritance tax, local succession laws may affect the distribution of assets held in the UAE, particularly for assets outside a recognised structure such as a DIFC Will. The DIFC Wills Service Centre provides a regime specifically designed for non-Muslim expats to register wills governing UAE-situated assets. Consult both a US estate planning attorney and a UAE-qualified legal adviser to coordinate planning across both systems.

Filing and Reporting: Key US Obligations for UAE Expats

US citizens in the UAE are required to file US federal tax returns annually, regardless of where income is earned and regardless of UAE residence status. This obligation flows from the citizenship-based taxation system applied by the IRS. Separately, the estate tax return (IRS Form 706) is filed by the executor of the estate after death, not by the individual during their lifetime - but pre-death planning directly affects the size of the taxable estate.

US expats with foreign financial accounts exceeding $10,000 in aggregate at any point during the year are required to file a FinCEN Form 114 (FBAR) annually. Separately, FATCA (the Foreign Account Tax Compliance Act) imposes reporting obligations on specified foreign financial assets above certain thresholds, reported on IRS Form 8938. While these are income-tax-era compliance requirements rather than estate tax filings, failure to maintain compliance during life can complicate the estate settlement process.

The IRS does not have a tax treaty with the UAE to coordinate filing obligations or provide relief from double reporting. All filings must be made under US domestic rules. Consult a qualified cross-border tax adviser to ensure your annual compliance position is current before addressing estate planning steps.

Frequently asked questions

Does living in the UAE remove my US estate tax liability?: No. The US taxes its citizens on a citizenship basis, not a residence basis. A US citizen living in Dubai remains subject to US federal estate tax on their worldwide assets at death, regardless of how long they have been UAE resident. UAE residence has no effect on this obligation.
What is the US federal estate tax exemption for 2026?: As of 1 January 2026, the federal estate tax exemption for US citizens and individuals domiciled in the United States is $15 million. Above that threshold, the estate is taxed at rates of up to 40%. Consult a qualified adviser to confirm the current threshold at the time of your planning, as exemption amounts are set by legislation and can change.
My spouse is not a US citizen. How does that affect our estate planning?: Where a surviving spouse is not a US citizen, the unlimited marital deduction under the Internal Revenue Code does not apply in full. The non-citizen surviving spouse faces a $60,000 exemption on US-situated assets inherited, with up to 40% estate tax above that amount. Structures such as a Qualified Domestic Trust (QDOT) exist under US domestic law to address this, but require careful legal structuring. Consult a qualified US estate planning attorney.
Is there a UAE-US estate tax treaty that provides relief?: No. There is currently no estate tax treaty and no income tax treaty between the United States and the UAE. No treaty-based relief mechanisms are available. All planning must rely on US domestic provisions such as exemptions, credits, and trust structures.
I am not a US citizen but I hold a US brokerage account. Am I subject to US estate tax?: Potentially yes. Non-domiciled nonresidents of the United States are subject to US federal estate tax on US-situated assets - which includes US brokerage accounts holding US securities and US real estate. The exemption available to non-domiciled nonresidents is only $60,000, with up to 40% tax above that amount. Consult a cross-border tax adviser if you hold US-situated assets.
Does claiming the Foreign Earned Income Exclusion (FEIE) reduce my estate tax?: No. The FEIE applies to income tax only and has no effect on estate tax liability. These are entirely separate frameworks under the Internal Revenue Code. Consult a cross-border adviser to understand both your income tax and estate tax position as a UAE-based US expat.
Should I register a DIFC Will as a US citizen in the UAE?: A DIFC Will governs the distribution of UAE-situated assets under UAE law and is a separate matter from US estate tax planning. Registering a DIFC Will does not affect or reduce your US estate tax liability. Whether a DIFC Will is appropriate for your circumstances is a question for a UAE-qualified legal adviser. US estate tax planning should be handled separately by a qualified US estate planning attorney.