Estate and Legacy Planning in Texas

Does Texas Have an Estate Tax? 2026 Rules Explained

Texas has no estate, inheritance or gift tax, and a 2025 amendment bans one. What still applies in 2026: the $15 million federal exemption, gifts and step-up.

No. Texas has no estate tax, no inheritance tax and no gift tax. The old Texas inheritance tax has not been collected for deaths on or after January 1, 2005, the Legislature repealed it in 2015, and in November 2025 Texas voters amended the state constitution to prohibit the Legislature from imposing one in the future.

That does not mean every estate passes tax free. The federal estate tax still applies to very large estates, and your heirs can still owe federal income tax on some inherited accounts. Here is how the rules fit together in 2026.

Is there a Texas inheritance tax?

Not anymore. Texas once had an inheritance tax under Chapter 211 of the Tax Code, but it was designed to equal the credit allowed for state death taxes on the federal estate tax return. When Congress phased out that federal credit, the Texas tax stopped producing revenue. According to the Texas Comptroller, the tax was not collected for dates of death on or after January 1, 2005.

The Legislature then repealed Chapter 211 entirely through Senate Bill 752, effective September 1, 2015. The bill analysis explained that repeal would eliminate the possibility of the tax being revived in the future.

Texas also has no state gift tax and no state income tax, so heirs do not owe Texas tax when they receive or later withdraw inherited money.

No Texas Estate Tax

What did the 2025 amendment change?

On November 4, 2025, Texas voters approved Proposition 8 (House Joint Resolution 2) by 2,140,379 votes to 823,406. It added Section 26 to Article 8 of the Texas Constitution.

The amendment prohibits the Legislature from imposing death taxes on a decedent's property or on the transfer of an estate, inheritance, legacy, succession or gift. In practical terms, nothing changed for Texas families the day after the election, because there was already no such tax. What changed is that a future Legislature cannot create one by passing an ordinary law. It would take another constitutional amendment approved by voters.

Does the federal estate tax apply to Texans?

Yes, but only to large estates. For people who die in 2026, the IRS lists a basic exclusion amount of $15,000,000 per person, up from $13,990,000 for 2025. The increase came from the federal tax law signed on July 4, 2025 (Public Law 119-21), which set the $15 million figure for 2026 and adjusts it for inflation in later years.

A few federal rules matter most for married Texas couples:

Unlimited marital deduction. Assets left to a surviving spouse who is a U.S. citizen generally pass free of federal estate tax.
Portability. When the first spouse dies, the executor can elect to pass any unused exclusion to the surviving spouse by filing a federal estate tax return (Form 706). With full portability, a couple can shelter up to $30 million in 2026. The IRS allows a late portability election up to five years after death for estates that were not otherwise required to file.
Top rate. Amounts above the exclusion are taxed at rates up to 40 percent.

The vast majority of Texas households will never owe federal estate tax. For those near the threshold, the planning still matters.

What about gifts during life?

Texas does not tax gifts. Federally, you can give up to $19,000 per recipient in 2026 without using any of your lifetime exclusion or filing a gift tax return. A married couple can give $38,000 per recipient by splitting gifts, which does require filing Form 709. Gifts to a spouse who is not a U.S. citizen have a separate 2026 annual limit of $194,000.

Larger gifts reduce the same $15 million lifetime exclusion used at death. Because the exclusion is shared, the main questions are usually about income tax and control, not estate tax.

Why Texas community property helps at death

Texas is a community property state, and that brings a federal income tax benefit many couples overlook. When one spouse dies, IRS Publication 551 says the total fair market value of community property, including the surviving spouse's half, generally becomes the new tax basis for the whole asset. This is often called a double step-up.

Here is a simple, hypothetical example with round numbers:

A Georgetown couple bought a brokerage portfolio for $1,000,000. It is community property and is worth $2,000,000 when the first spouse dies.
Under the community property rule, the surviving spouse's basis in the whole portfolio becomes $2,000,000.
If the survivor sells soon after, there is little or no capital gain to report. In a separate property state, only the deceased spouse's half would generally get a new basis.

Their total estate of about $4 million, including the home and IRAs, is well under the federal exclusion, so no federal estate tax would be due either. How assets are titled and documented still matters, so coordinate with your estate attorney and CPA.

What taxes can Texas heirs still face?

Even with no state estate or inheritance tax, a few taxes can still apply:

Federal income tax on inherited retirement accounts. Withdrawals from an inherited traditional IRA or 401(k) are taxable income to the beneficiary. Most beneficiaries other than a spouse must empty the account within 10 years, according to IRS Publication 590-B.
Federal estate tax on estates above the exclusion, as described above.
Other states' taxes. If the decedent lived in another state, or owned real estate in a state with its own estate or inheritance tax, that state's rules can apply even if the heirs live in Texas.
Property taxes on inherited Texas real estate continue, and over-65 exemptions and tax ceilings belong to the owner who qualified. Apart from a qualifying surviving spouse, heirs do not automatically keep them.

Frequently asked questions

Does Texas have an inheritance tax in 2026?

No. Texas repealed its inheritance tax effective September 1, 2015, and the 2025 constitutional amendment bars the Legislature from creating a new one.

Do I have to pay taxes on an inheritance in Texas?

Generally not at the state level. Cash and property you inherit are not taxable income. You may owe federal income tax when you withdraw from an inherited traditional IRA or 401(k), or when you sell inherited property for more than its stepped-up basis.

What is the federal estate tax exemption for 2026?

$15,000,000 per person for people who die in 2026, according to the IRS. A married couple using portability can shelter up to $30 million.

Does Texas have a gift tax?

No. Federal gift rules still apply, with a 2026 annual exclusion of $19,000 per recipient.

Do I still need an estate plan if there is no Texas estate tax?

Yes. A will or trust, beneficiary designations and powers of attorney decide who receives your assets, how quickly, and who can act for you if you cannot. Texas probate and family situations, not taxes, are usually the bigger issues.

Talk it through with us

Texas makes the tax side of passing on wealth simpler than most states, but how you title assets, name beneficiaries and draw down retirement accounts still shapes what your family keeps. If you want to see how your estate plan and retirement income plan fit together, book a Financial Clarity Session with our team. We coordinate with your estate attorney and CPA. Vital Wealth & Retirement has helped Central Texas families plan for retirement since 2005.