Does Texas Have An Estate Tax?

Texas is one of 38 states that do not have an estate or inherent tax, so residents are exempt from state-level estate taxes. Examine federal repercussions, tax exemptions, and strategic estate planning ideas, showcasing the tax-friendly environment and the value of proactive financial plans.
Does Texas Have An Estate Tax
Does Texas Have An Estate Tax?
Discover the tax benefits of estate planning in Texas, which does not levy inheritance or estate taxes. This blog explains federal estate tax exemptions, implications, and practical advice for Texas residents.
In this article

Does Texas Have An Estate Tax? Texas is one of 38 states that do not have an estate or death tax, and the state no longer levies inheritance tax as of 2015. Texas likewise does not have a state gift tax. Thus, citizens must only be concerned with federal gift taxes and exemptions.

Does Texas Have an Estate Tax?

Texas does not have a state-wide estate tax. The Lone Star State stands out for its favorable tax environment, with no state-level tax on personal income. While some states impose estate taxes, Texas residents are only subject to the federal estate tax, which applies to estates exceeding approximately $12 million. Texas’s absence of state estate taxes provides a significant advantage, offering relief to native Texans. Understanding the nuances of estate taxes, especially the federal implications, becomes crucial for individuals navigating their financial planning in the state. Beem assist you in filing your federal and state taxes at the best prices to assure you maximum refund.

What are the Exemptions from the Texas Estate Tax?

Texas does not impose a state estate tax, and residents are solely subject to the federal estate tax. As of 2023, the federal estate tax exemption is $12.92 million per individual, allowing married couples to exempt double that amount collectively. However, it’s crucial to note that this exemption will decrease to $6.6 million in 2026. Texas has no gift tax, aligning with the absence of an estate tax. This absence allows individuals to make gifts of any size without incurring state gift taxes, emphasizing the importance of proactive estate planning, given impending federal changes.

How is the Texas Estate Tax Calculated?

Texas has no state estate tax, but individuals may face federal estate taxes. The federal estate tax only applies to estates exceeding $12.92 million in 2023. The exemption is portable for married couples, potentially shielding up to $25.84 million from taxation. The tax rate is 40% for amounts exceeding the exemption. To calculate the federal estate tax in Texas, subtract the exemption from the estate value, apply the tax rate to the taxable amount, and add the base payment. For instance, an estate of $16.22 million could result in a tax burden of $1,265,800.

How to File a Texas Estate Tax Return?

Texas does not have a state estate tax. However, individuals with estates exceeding the federal exemption may need to file a federal estate tax return. To file a federal estate tax return in Texas, the estate executor typically completes IRS Form 706 and submits it within nine months of the decedent’s death. This form details the estate’s asset deductions and calculates the tax liability. It’s advisable to consult with a tax professional or attorney for accurate guidance and compliance with any changes in tax laws or regulations.

The Texas Estate Tax and Trusts

Navigating the complexities of estate planning in Texas involves a strategic understanding of the state’s tax landscape and the utilization of various trusts. While Texas itself does not impose a state estate tax, individuals may still contend with federal estate taxes. Employing trusts can be instrumental in mitigating tax burdens and ensuring efficient wealth transfer.

Marital Trusts

One effective strategy involves establishing Marital Trusts, which allow spouses to transfer unlimited assets to each other tax-free. By leveraging this trust, married couples in Texas can optimize their estate plans, utilizing the portability of the federal estate tax exemption and potentially shielding up to $25.84 million from taxation.

Irrevocable Life Insurance Trust

ILITs provide a mechanism for managing life insurance policies outside the taxable estate, ensuring that the death benefit is not subject to estate taxes. This trust type can be particularly advantageous for individuals seeking to preserve wealth for beneficiaries while minimizing tax liabilities.

Qualified Personal Residence Trust

QPRTs facilitate the transfer of a primary residence to an irrevocable trust, allowing the grantor to reside in the home for a specified period. This strategy can lead to substantial estate tax savings while enabling the grantor to maintain a residence during their lifetime.

Charitable Trusts

Establishing Charitable Trusts enables individuals to support philanthropic causes while enjoying potential tax benefits. Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) are two common structures that combine charitable giving and asset protection, contributing to a well-rounded estate plan.

Tips for Reducing your Estate Tax Bill in Texas

Crafting a sound estate plan in Texas involves strategic maneuvers to minimize tax liabilities and maximize wealth transfer. While Texas doesn’t impose a state estate tax, individuals should be attuned to federal estate tax implications. Implementing these tips can be instrumental in reducing the estate tax bill.

Marital Transfers

Leveraging the unlimited marital deduction allows spouses to transfer assets to each other without incurring federal estate taxes. Structuring bequests and inheritances through marital trusts ensures seamless wealth transfer, optimizing the use of the federal estate tax exemption.

Lifetime Gifts to Children and Grandchildren

Making lifetime gifts to heirs can be a proactive strategy. The annual gift exclusion allows individuals to gift up to a certain amount per recipient without triggering taxes. By distributing assets during one’s lifetime, individuals can reduce the taxable estate, potentially minimizing estate tax burdens.

Gifting to Minors

Establishing trusts or custodial accounts for minors can be a tax-efficient way to transfer assets. By doing so, the donor maintains control over the assets until a specified age, facilitating wealth transfer while potentially lowering the overall estate tax exposure.

Private Annuity

Utilizing a private annuity involves transferring assets to a family member in exchange for a fixed income stream. This strategy can reduce the taxable estate while providing income to the grantor, offering a dual benefit of tax efficiency and financial security.


Texas distinguishes itself with a lack of state estate tax, granting residents a tax-friendly environment. The absence of both state-level estate and income taxes provides significant advantages. While federal estate taxes apply, understanding exemptions and utilizing trusts. Implementing strategic planning can help Texans minimize tax burdens. Proactive steps, such as leveraging marital transfers, making lifetime gifts, and exploring trust options, are vital for optimizing wealth transfer and reducing estate tax bills. As tax laws may evolve, seeking professional guidance ensures individuals stay informed and employ effective strategies tailored to their unique financial circumstances. With the Beem app, you can file your taxes in all 50 states across the United States, regardless of your filing status.


Am I required to file a Texas tax return?

It depends on your income level, as Texas does not have a state income tax but may have other filing requirements.

How much is estate tax in Texas?

Texas does not have a state estate tax.

Does Texas tax trust income?

No, Texas does not tax trust income.

What is the estate tax exemption for 2023 in Texas?

Texas does not have a state estate tax, but for federal purposes, the estate tax exemption 2023 is $12.92 million.

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

Team Beem

Team Beem

Team Beem brings you the latest in the world of personal finance to you. From tips and tricks on how to manage money to how to get cash for emergencies, Beem is your destination for all the information you need to be smart about your money.

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts

What Happens If a Deceased Person Owes Taxes?
What Happens If a Deceased Person Owes Taxes?
Following a person's death, any outstanding taxes often become the responsibility of their estate. Let's understand what happens if a deceased person owes taxes to the government!
IRS Form 2441
IRS Form 2441 – What It Is, Who Can File, & How to Fill It?
A taxpayer uses Form 2441 to claim tax credit during filing if they have paid an entity or person for taking care of their children or qualifying dependent in a given year. Here's everything you need to must know about IRS form 2441 ahead of the tax-filing season.
23 Uber driver tax deductions and Lyft driver tax deductions
46000 After Tax
46000 After Tax – If i made $46000 how much tax refund
This guide will illuminate the path, providing a simple and insightful overview of what $46,000 after taxes means for you. From practical tips to exploring financial possibilities, let's embark on a journey to maximize the value of your hard-earned income. Let's explore the world of $46,000 after tax!
41000 After Tax
41000 After Tax – If i made $41000 how much tax refund
Have you ever considered how taxes affect your $41,000 annual income? This guide delves deep into the nuances, shedding light on federal and state taxes, net pay calculations, and more, ensuring a clearer understanding of your financial landscape. Let us learn more!
43000 After Tax
43000 After Tax – If i made $43000 how much tax refund
How much of your $43,000 yearly salary will you keep after taxes? Investigate the details of federal and state tax rates, deductions, and deductions. What's left after deductions may tremendously influence your financial decisions, so let's dive in to learn more!

Get up to $1,000 for emergencies

Send money to anyone in the US

Ger personalized financial insights

Monitor and grow credit score

Get up to 20% on everyday spends

Save up to 40% on car insurance

Get up to $1,000 for loss of income

Insure up to $1 Million

Coming Soon

File federal and state taxes at low cost

Quick estimate of your tax returns

Get up to $1,000 for emergencies

Send money to anyone in the US

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: