823 / Is the exclusion amount of the first spouse to die portable? What is “portability”?
Yes. The 2010 Tax Relief Act introduced a new estate tax concept for 2011 and 2012, the deceased spouse unused exclusion amount (DSUEA). The DSUEA is portable, meaning that a surviving spouse can utilize the unused exclusion amount of the first spouse to die. ATRA made this portability concept permanent for tax years beginning in 2013 and thereafter.
In general, under the provision, an estate’s exclusion amount, referred to as its applicable exclusion amount, is the sum of two components: the basic exclusion amount and the DSUEA. The basic exclusion amount for estates of decedents dying in 2015 was $5.43 million, $5.45 million in 2016, $5.49 million in 2017, and jumped to $11.18 million in 2018, $11.4 million in 2019, $11.58 million in 2020, $11.7 million in 2021, $12.06 million in 2022, $12.92 million in 2023, $13.61 million in 2024 and $13.99 million in 2025 under the 2017 TCJA.1 The amount was increased to $15 million beginning in 2026 under the 2025 OBBB.
The second part of the equation, the DSUEA, is the amount of the first-to-die spouse’s exclusion amount that is not used by that spouse’s estate. Note that a surviving spouse’s DSUEA is equal to the unused exclusion amount of the surviving spouse’s last deceased spouse.
The decedent’s executor must make the election on a timely filed estate tax return and include the computation of the DSUEA. The final regulations provide that an extension of time may be available for filing the estate tax return only if the value of the estate otherwise does not exceed the threshold filing levels ($13.61 million per individual in 2024, $13.99 million in 2025, and $15 million in 2026). In other words, an extension of time may be granted if the taxpayer is only required to file an estate tax return in order to elect portability.2
Planning Point: Note the importance of following the IRS reporting rules precisely. A recent Tax Court case serves as a warning for taxpayers attempting to use portability to claim a first-to-die spouse's remaining estate tax exemption amount. The case, Estate of Billy Rowland, TC Memo 2025-76, dealt with a taxpayer who had passed away in 2018. His estate tried to claim his predeceased wife's remaining exclusion. However, while the spouse filed their required Form 706 on time, it did not contain certain valuation details with respect to her assets. The IRS found that this made the return incomplete, so the second-to-die spouse’s estate was unable to use her remaining exemption. The Tax Court agreed, rejecting the estate's argument that they substantially complied with the rules that they found confusing. Because the estate did not precisely comply with the IRS reporting rules, it lost the ability to claim the DSUE
Further, the portability election will be effective if the executor of an estate completes and files an estate tax return containing a computation of the unused DSUE amount, but it is later found that adjustments are required in order to recompute the correct amount. The IRS provides an example of an estate that has a DSUE amount equal to zero at the deadline for filing, but has claims pending against it that, when subsequently paid, result in an unused exemption. The final regulations clarify that the recomputed DSUE amount will be available to the surviving spouse in such a situation, and the originally filed return will be considered “complete and properly prepared” for purposes of the election.3
Under the final regulations, a surviving spouse who was not a U.S. citizen may use the DSUE amount if he or she subsequently becomes a U.S. citizen and the executor of the estate has filed an estate tax return properly making the portability election. Previously existing rules prevented a non-citizen spouse from taking advantage of portability except where allowed under a U.S. treaty obligation.4
1. Rev. Proc. 2015-53, Rev. Proc. 2016-55, Pub. Law No. 115-97, Rev. Proc. 2018-18, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40.
2. Treas. Reg. § 20.2010-2(a)(1).
3. Treas. Reg. § 20.2010-2.
4. Treas. Reg. §§ 20.2010-3, 25.2505-5.