Estate Tax for Green Card Holders: The $60,000 Trap in 2026

Estate Tax for Green Card Holders can be far more complicated than most immigrants realize. A U.S. citizen dying in 2026 can pass $15,000,000 to their heirs before federal estate tax applies.

A nonresident alien with the exact same U.S. assets gets an exemption of exactly $60,000 a gap of 250 to 1. And here’s what almost nobody tells green card holders and long term visa holders: you can be a full resident for income tax purposes and still fall into the $60,000 bucket for estate tax, because the two taxes use completely different tests to decide who you are. This article walks through exactly how that happens, who it actually hits, and what it means if you’re from a country like India or Nepal that has no treaty to soften the blow.

Quick Answer

Nonresident aliens (for estate tax purposes) get a $13,000 unified credit under IRC §2102(b)(1), which shelters roughly the first $60,000 of U.S. situated assets. Above that, rates run 18%–40%.
U.S. citizens and estate tax domiciliaries get a $15,000,000 exemption in 2026 under IRC §2010(c)(3)(A), as amended by the One Big Beautiful Bill Act (OBBBA), P.L. 119-21.
Whether you’re a “nonresident” for estate tax depends on domicile a subjective, intent based test that’s separate from your income tax residency, and once established, it doesn’t go away just because you move.
The U.S. has estate/gift tax treaties with 15 countries. India and Nepal are not among them.

Estate Tax for Green Card Holders: The $60,000 vs. $15 Million Gap

The U.S. federal estate tax applies very differently depending on whether you’re classified, at death, as a U.S. person or a nonresident alien for transfer tax purposes.

A U.S. citizen or an estate tax domiciliary is taxed on their worldwide estate but gets a large exemption the “basic exclusion amount” under IRC §2010(c). The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) permanently set that amount at $15,000,000 for 2026, up from $13,990,000 in 2025, and removed the scheduled drop back toward roughly $7 million that would otherwise have taken effect under the old TCJA sunset.

A nonresident alien (NRA) is taxed only on U.S. situated assets but the exemption is a $13,000 unified credit under IRC §2102(b)(1), which shelters about the first $60,000 of taxable U.S. estate. This figure has not moved in decades and is not indexed for inflation. OBBBA didn’t touch it.

Classification	2026 Exemption	Taxed On	Statute
U.S. citizen / estate tax domiciliary	$15,000,000	Worldwide estate	IRC §2010(c)(3)(A), OBBBA §70106
Nonresident alien (no treaty)	~$60,000 (via $13,000 credit)	U.S. situated assets only	IRC §2102(b)(1)

Anything above the exemption is taxed on a progressive schedule that reaches 40% quickly the tax on the first $1,000,000 of taxable estate alone is $345,800, and every dollar past that is taxed at the full 40% rate.

Are You Actually a Nonresident? The Domicile Trap

This is the part almost every article on this topic gets wrong, and it cuts in a more specific direction than “green card holders should panic.”

Your income tax residency is decided under IRC §7701(b) either you hold a green card, or you meet the Substantial Presence Test. Pass either test and you’re a U.S. resident taxed on worldwide income, full stop.

Estate and gift tax residency runs on a completely different standard: domicile, defined under Treasury Regulation §20.0-1 as living somewhere even briefly with no definite present intention of ever leaving. It’s a subjective, facts and circumstances test, and it has one feature that catches people off guard in both directions: once domicile is established, it’s presumed to continue until there’s clear evidence it changed. The burden of proving a change falls on whoever is arguing for it usually the estate, sometimes the IRS.

The case law shows exactly how this cuts. In Estate of Khan (T.C. Memo. 1998-22), a Pakistani green card holder spent 14 of his final 18 years back in Pakistan, died there, and by the court’s own account never learned English yet the U.S. Tax Court still found him U.S. domiciled. He’d moved to California decades earlier with an open ended intent to stay, built a farming and real estate business there, and never took clear action to establish that intent had changed.

His estate actually wanted that outcome: U.S. domiciliary status meant the larger $192,800 credit of that era instead of the $13,000 nonresident credit. Compare that to cases like Forni and Estate of Paquette, where people who spent enormous amounts of time physically present in the U.S. were still found non domiciled, because their presence had a specific, bounded purpose medical treatment, a professional license rather than an open intent to stay indefinitely, and they’d kept concrete ties elsewhere: a foreign driver’s license, foreign filed tax returns, a will executed abroad.

The upshot: simply moving back to India or Nepal after years on a green card does not, by itself, flip you to nonresident status. If you built a life in the U.S. with no clearly documented intent to leave, you likely remain domiciled and keep the $15,000,000 exemption even after you’ve physically relocated. The real exposure sits with people who never fully committed in the first place (a green card obtained with a concrete, stated intention of eventually returning home), or who took clear, provable steps to establish a change of domicile before death.

A well settled green card holder with no documented plan to leave has less to actively worry about here than this article’s title might suggest though it’s still worth confirming with a professional rather than assuming. Someone who’s kept one foot out the door has real exposure and should take it seriously.

	Income Tax Residency	Estate & Gift Tax Domicile
Standard	Objective: green card or day count	Subjective: presence + intent to stay indefinitely
Authority	IRC §7701(b)	Treas. Reg. §20.0-1
Once established	Ends when the test is no longer met	Presumed to continue until proven abandoned
Scope if “resident”	Worldwide income taxed	Worldwide estate taxed
Scope if “nonresident”	N/A (nonresident alien return, Form 1040NR)	Only U.S. situs assets taxed, $60,000 exemption

Worked Example: Clear Intent, Clear Consequence

A Nepali citizen comes to the U.S. on an H-1B for a fixed, multi year assignment, with a documented intent stated in visa filings to return to Kathmandu once it ends. Throughout, they keep a home and family in Nepal, file Nepali tax returns every year, and never buy U.S. property beyond a rented apartment. They pass the Substantial Presence Test every year and file as a U.S. income tax resident. Mid assignment, they die. Their estate:

US brokerage account (U.S. corporate stock): $700,000 U.S. situs
US bank savings account: $100,000 excluded under IRC §2105(b)(1)
Home and investments in Kathmandu: $2,000,000 not U.S. situs

Because domicile was never established the presence had a defined end date and concrete, documented ties abroad remained intact throughout the estate is classified as an NRA estate for transfer tax purposes. The taxable U.S. estate is $700,000. Tentative tax under the unified rate schedule: $155,800 + 37% of the amount over $500,000 = $155,800 + $74,000 = $229,800. Less the $13,000 credit (Nepal has no treaty) = $216,800 in federal estate tax roughly 31% of the U.S. assets despite this person having filed Form 1040 as a U.S. tax resident every year they were alive.

What Counts as a U.S. Asset (Situs Rules)

For an NRA estate, only U.S. situated property is taxed. The rules are set out in IRC §2104 and §2105.

Asset	U.S. Situs?	Authority
U.S. real estate	Yes	IRC §2104
Stock in a U.S. corporation even via a foreign broker	Yes	IRC §2104(a); Form 706 NA Instructions
Stock in a foreign corporation	No	IRC §2105
U.S. bank deposits (not tied to a U.S. trade or business)	No	IRC §2105(b)(1)
Brokerage cash accounts (not a bank deposit)	Yes	IRC §2104
Life insurance proceeds on the decedent’s own life	No	IRC §2105(a)
Certain portfolio debt / Treasuries	Generally no, with technical conditions	IRC §2105(b)(3)
Tangible personal property physically in the U.S.	Yes	IRC §2104

The single biggest misconception: moving your U.S. stock portfolio to a broker in Mumbai, Kathmandu, or Zurich does not change its tax situs. What matters is where the issuing company is incorporated, not where the account sits.

The Treaty Countries And Why India and Nepal Get Nothing

Bilateral estate and gift tax treaties can meaningfully change this picture but the U.S. has them with a short, fixed list of countries. Pulled directly from the current Instructions for Form 706NA: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom. That’s 15 countries. Neither India nor Nepal is on it, and neither ever has been.

Even within those 15, the benefit isn’t uniform. Nine of them Australia, Canada, Finland, France, Germany, Greece, Italy, Japan, and Switzerland carry a specific provision under IRC §2102(b)(3)(A) that lets a decedent’s estate claim a prorated share of the full U.S. citizen exemption, based on what fraction of their worldwide estate sits in the U.S. The United Kingdom runs on a different, arguably stronger mechanism: U.S. tax is capped at whatever it would have been had the decedent died domiciled in the U.S. Canada separately gets a small estate exemption for worldwide estates under $1.2 million. The other treaty countries have their own specific provisions that don’t map cleanly onto either of these.

Worked Example: Identical Assets, Different Passport

Two people one from India, one from the UK each hold $2,000,000 in U.S. real estate and brokerage assets, out of a $10,000,000 worldwide estate. Same numbers, same portfolio. Neither is U.S. domiciled.

Tentative U.S. tax on $2,000,000: $345,800 + 40% of the amount over $1,000,000 = $345,800 + $400,000 = $745,800.

Indian national (no treaty): credit is capped at $13,000. Net tax = $732,800.
UK national (treaty): the 2026 citizen equivalent credit on $15,000,000 works out to $5,945,800. Prorated to the 20% of the estate sitting in the U.S., that’s $1,189,160 more than enough to fully offset the $745,800 tentative tax. Net tax = $0.

Same assets. Same country of death. A $732,800 difference, purely because of where each person happened to hold citizenship.

The Non Citizen Spouse Trap

The unlimited marital deduction the rule that lets a surviving U.S. citizen spouse inherit any amount tax free does not apply if the surviving spouse is not a U.S. citizen, under IRC §2056(d). This is true even if the deceased spouse was a U.S. citizen and the surviving spouse is a longtime green card holder.

The workaround is a Qualified Domestic Trust (QDOT) under IRC §2056A: assets pass into the trust instead of directly to the spouse, deferring not eliminating the estate tax until trust principal is distributed or the surviving spouse dies. A QDOT requires at least one U.S. trustee, and larger QDOTs face additional bonding or security requirements.

Lifetime gifts to a non citizen spouse also don’t qualify for the unlimited marital deduction, but they get a much larger annual exclusion than the general $19,000 limit: $194,000 for 2026 (up from $190,000 in 2025), confirmed directly by the IRS. Gifts up to that amount in a calendar year trigger no gift tax and no filing requirement.

Filing Form 706NA

If a nonresident alien’s U.S. situated assets, combined with certain lifetime gifts, exceed the $60,000 filing threshold, the executor must file Form 706NA within 9 months of the date of death. An automatic 6 month extension is available on Form 4768, but it extends the filing deadline only not the payment deadline; interest accrues on unpaid tax from the original due date regardless.

The Transfer Certificate Problem

This is the part that catches families off guard even when no tax is owed. Under the federal estate tax lien (IRC §6324), U.S. banks, brokers, and transfer agents are personally on the hook for unpaid estate tax if they release a deceased nonresident’s assets too early. In practice, that means they won’t release anything stocks, real estate proceeds, cash until the executor produces an IRS Transfer Certificate (Form 5173).

Getting one splits into two tracks, and using the wrong one delays everything:

Part A (U.S. assets over $60,000, Form 706NA required): fax the filed Form 706 NA and supporting schedules to 855-201-8011 (within the U.S.) or 304 707 9970 (outside the U.S.).
Part B (U.S. assets at or under $60,000, no Form 706 NA required): fax the decedent’s will, any foreign death or inheritance tax return, the death certificate, and a notarized affidavit covering the decedent’s birth details, citizenship history, a full itemized list of U.S. assets with account numbers, and residency at death to the same two fax numbers. Do not file Form 706NA if Part B applies the IRS says explicitly that doing so unnecessarily delays the certificate.

Processing time for Part B is 12 to 18 months from when the IRS has everything it asked for. Part A generally runs faster but is still commonly a 6 to 9 month wait. Families who don’t know this process exists routinely spend a year or more with a frozen brokerage account they assumed would transfer immediately.

Don’t Forget State Level Estate Tax

Everything above is federal. About a dozen states run their own estate or inheritance tax, with exemption thresholds well below the federal one and their own residency rules that don’t automatically track the federal domicile analysis. Massachusetts taxes estates starting at $2,000,000 an exemption that isn’t indexed for inflation and hasn’t moved. New York’s 2026 exemption sits near $7,350,000 still well short of the federal $15,000,000. Owning U.S. property or living in a state with its own estate or inheritance tax means checking that state’s rules separately; federal nonresident status doesn’t automatically exempt you at the state level. That’s a big enough topic for its own article flagged here so it isn’t mistaken for being covered.

What Most Articles Get Wrong

Treating “green card = full exemption” as automatic, or “moved back home” as automatically ending it. Both get the domicile test backwards. It turns on documented intent, not on immigration status or current address and once established, domicile persists until there’s clear evidence it was abandoned. Estate of Khan is the case to know: the Tax Court found a green card holder U.S. domiciled even though he’d spent his final 14 of 18 years, and died, in Pakistan.
Calling $60,000 a straight deduction. It’s a $13,000 credit against tentative tax, which matters if the decedent made taxable gifts after 1976 those gifts erode the same $60,000 threshold.
“Foreign broker means foreign asset.” U.S. corporate stock stays U.S. situs no matter which country’s brokerage account holds it.
Citing a stale citizen exemption. A lot of pre 2025 content still quotes ~$13.6 million or warns of a drop to ~$7 million in 2026 both wrong after OBBBA locked in $15 million.
Skipping the Transfer Certificate entirely. Even a fully tax exempt estate under $60,000 still needs one before a US institution will release anything.

Frequently Asked Questions

Does having a green card mean I get the $15 million estate tax exemption?

Not automatically, but it’s meaningful evidence in your favor. A green card establishes residency for income tax and is treated as strong evidence of intent for the separate estate tax domicile test. Whether you actually get the $15 million exemption or the $60,000 one comes down to documented intent, not the card itself.

If I move back to India or Nepal after years on a green card, do I automatically stop being a U.S. domiciliary?

No. Once U.S. domicile is established, it’s presumed to continue until there’s clear evidence it was abandoned the burden of proof is on whoever argues it changed. Courts have upheld U.S. domicile for estate tax purposes even for people who spent their final years, and died, abroad.

Can I be a U.S. resident for income tax but a nonresident for estate tax at the same time?

Yes. The IRS’s own Form 706 NA instructions state this directly. Income tax residency and estate tax domicile are decided under different legal standards and can produce different answers for the same person.

Does the U.S. have an estate tax treaty with India or Nepal?

No. Neither country has ever had a U.S. estate or gift tax treaty. Nationals of both get the standard $60,000 exemption with no treaty based enhancement, unlike nationals of the 15 treaty countries.

Is U.S. stock held through an Indian or Nepali broker still subject to U.S. estate tax?

Yes. Situs depends on where the company is incorporated, not where the brokerage account is held. Stock in a U.S. corporation is U.S. situs regardless of the broker’s location.

Are my bank deposits and life insurance included?

Generally no. U.S. bank deposits not tied to a U.S. trade or business, and life insurance proceeds on the decedent’s own life, are both excluded from U.S. situs property for a nonresident alien’s estate.

What happens if my spouse isn’t a U.S. citizen?

The unlimited marital deduction doesn’t apply. Assets can pass through a Qualified Domestic Trust to defer tax, and lifetime gifts up to $194,000 per year (2026) avoid gift tax entirely.

What is Form 706 NA and when is it due?

It’s the estate tax return for nonresident alien descendants, due if U.S. situated assets exceed $60,000. It’s due 9 months after death, with an optional 6 month extension on Form 4768 for filing only, not payment.

Why won’t my broker just release the account to the heirs?

Because the broker is personally liable for unpaid estate tax under the federal tax lien if they release assets too early. They’ll require an IRS Transfer Certificate (Form 5173) first, which can take anywhere from several months to over a year to obtain.