The 2026 Estate Tax Law Changed Everything for Americans. For Foreign Investors, It Changed Nothing.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The personal-finance headlines were unanimous: starting January 1, 2026, the US federal estate tax exemption rises to $15 million per person — $30 million for a married couple — made permanent and indexed for inflation. For most American families, the estate tax just became something that happens to other people.
Here is what no headline mentioned: none of it applies to you. If you are a non-US citizen who doesn’t live in the United States, your exemption on US-situated assets remains exactly what it has been for decades: $60,000. Not $15 million. Sixty thousand dollars.
What changed, and what didn’t
| US citizen or resident (2026) | Nonresident foreign investor | |
|---|---|---|
| Estate tax exemption | $15,000,000 | $60,000 |
| Tax on $440,000 of US stocks | $0 | $122,400 |
| Top marginal rate | 40% | 40% |
| Relief under the US–China income tax treaty | — | None |
Read that middle row again. A US citizen who dies holding $440,000 of American stocks owes nothing. A foreign investor who dies holding the same $440,000 leaves their heirs a bill for roughly $122,400 — 28 cents of every dollar, gone, before lawyer’s fees.
| The math on $440,000 | |
|---|---|
| Graduated tax on the full amount (18%–34% brackets) | $135,400 |
| Minus the nonresident unified credit | −$13,000 |
| The bill — 28 cents per dollar | $122,400 |
That $13,000 credit happens to be exactly the tax on $60,000 — which is where the famous “$60,000 exemption” comes from. Mechanically it is a credit, not an exemption, and the version above is the only one the IRS accepts.
The new law did not touch a single line of the rules that govern nonresidents. The $60,000 threshold, the brackets, the credit — all unchanged.
What counts as a “US asset”
The tax follows the asset, not your account. These are US-situs assets for estate purposes:
- US company stocks — Apple, Coca-Cola, the S&P 500 ETFs registered in the US (VOO, SCHD, JEPI). It does not matter that your broker is in Singapore, Hong Kong, London or Shanghai. If the stock is American, it’s a US asset.
- US real estate
- Cash at US brokers — the USD balance sitting in your brokerage account
And these are generally not:
- US bank deposits (ordinary savings/checking accounts, specifically exempted)
- US Treasury bonds and most portfolio debt
- Ireland-domiciled UCITS ETFs — funds that hold American stocks but are themselves Irish companies (this is the single most important line in this article)
- Life insurance proceeds
How the IRS actually collects
No one will warn you about this. There is no popup when you open a brokerage account, no annual reminder, no footnote in your statement. For most families, the first time the $60,000 rule comes up is the day they try to move the money — and by then, it’s too late to plan around it.
This is not an honor system. When a nonresident dies, US brokers — Interactive Brokers, Schwab, Fidelity — routinely freeze the account. The heirs cannot sell or transfer anything until they file Form 706-NA (the nonresident estate tax return, due nine months after death), pay the tax, and obtain proof the IRS is satisfied.
For a family abroad, this means hiring a US attorney or cross-border accountant, translating death certificates, and waiting months — all to unlock their own inheritance. Families with modest holdings are often hit hardest in practice, because the fixed costs of compliance don’t scale down.
Friendly in life, ruthless in death
The strangest part of this system is the asymmetry. While you are alive, the US is remarkably kind to foreign investors:
- No capital gains tax when you sell US stocks — provided you were present in the US for fewer than 183 days that year, and US real estate isn’t involved
- Dividend withholding of just 10% for residents of mainland China under the income tax treaty — 15% for most of Europe. Some investors pay less on US dividends than Americans do. The rate is not automatic — it rides on a form that expires.
Then, at death, the tone changes completely. Most income tax treaties — including the US–China treaty — do not cover estate tax. There is no 10% rate, no relief, no negotiation. The treaty that cut your dividends for decades does nothing for your heirs. The treaty rate table is a lifetime benefit only.
The exceptions worth knowing. The US has separate estate tax treaties with 14 countries — including the UK, France, Germany, Japan, the Netherlands and Australia — and Canada gets estate tax relief written directly into its income tax treaty. Residents of those countries may qualify for a far larger exemption than $60,000. Residents of mainland China, Hong Kong, Singapore, Taiwan, and most of Asia and Latin America do not.
What experienced investors do about it
None of the following is advice — cross-border planning done wrong can trigger taxes at home or anti-avoidance rules, so treat this as a map of the options, then talk to a cross-border tax professional who knows both countries’ systems.
- Hold US stocks through Ireland-domiciled UCITS ETFs. An Irish fund holding the S&P 500 is not a US asset, so it falls outside the estate tax entirely — and its internal withholding on US dividends is still only 15%. This is why those tickers exist.
- Favor non-situs assets near the threshold. Treasuries and bank deposits are exempt from the estate tax.
- Lifetime gifts of US stock. Nonresidents generally owe no US gift tax on gifts of stocks (only real and tangible property is covered), so some families transfer gradually while alive.
- Foreign holding companies or trusts (“blocker” structures) — effective, but expensive and easy to get wrong. Professional territory.
- Mind the spouse trap. The unlimited marital deduction does not apply when the surviving spouse is not a US citizen — the assets are taxed unless they pass through a Qualified Domestic Trust (QDOT). “I’ll just leave it to my wife” is not a plan. The lifetime side of that trap has its own page: gifts to a non-citizen spouse cap at $194,000 a year in 2026, and gifts of US stock are usually gift-tax-free.
- Life insurance sized to cover the potential bill, so heirs aren’t forced to sell assets to pay it.
First, know your number
Most foreign investors have never totaled their US-situs exposure. It takes two minutes: add up your US stocks, US-registered ETFs, and cash at US brokers, and see what the graduated brackets would take above $60,000.
Check your estate tax exposure →
The 2026 law was a reminder, if you needed one: when Washington debates estate tax, it is debating somebody else’s exemption. Yours is still $60,000, and nobody is coming to raise it.
DivAtlas is an educational reference, not tax, legal or investment advice. Estate tax outcomes depend on domicile, treaties and asset structure — verify against the treaty text and a qualified cross-border adviser before acting.
Do nonresidents pay US estate tax?
Yes. Nonresidents holding US-situs assets above a $60,000 threshold face US estate tax at graduated rates of 18–40%.
Does the US–China tax treaty cover estate tax?
No. Income tax treaties do not cover estate tax. The 10% dividend rate is a lifetime benefit only.
Figures and thresholds on this page last checked: August 31, 2026.