Under the Internal Revenue Code (§2056) a decedent can deduct from their gross estate the value of any property interest which passes to their surviving spouse. In order to qualify for the deduction, the spouse must have survived the decedent, the interest must have passed directly to the spouse, the interest must be a deductible interest, and the executor must establish the value of the interest. Also, to qualify for the deduction the spouse must be a U.S. citizen, unless the property passes to a qualified domestic trust for the non-citizen spouse.

A deductible interest is any interest included in the gross estate that is not a terminable interest, a deduction allowed under §2053 (relating to deductions for expenses and indebtedness), or any loss deductible under §2054.  

The amount of the deduction is unlimited and applies to lifetime gifts as well.