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Does Texas Have an Estate or Inheritance Tax? (2025 Guide)

Here’s a question we get all the time:

“If I die in Texas, will my family have to pay estate taxes or inheritance taxes?”

The short answer? Not in Texas.

But don’t let that lull you into thinking taxes are off the table entirely. There are still a few things every Texan should understand—especially if your estate includes significant property, retirement accounts, or out-of-state assets.

Let’s break down what Texas does and doesn’t tax, and how smart planning can protect your legacy.

No State Estate Tax in Texas

Texas does not have a state estate tax. That means when someone dies in Texas, their estate isn’t taxed by the state—no matter how big or small.

This is great news for families trying to preserve wealth or keep real estate in the family.

But that doesn’t mean your estate is 100% off the hook…

What About Federal Estate Taxes?

While Texas skips the estate tax, the federal government does not.

As of 2025, the federal estate tax exemption is:

• $13.61 million per individual

• $27.22 million per married couple

If your estate is worth more than this when you pass away, the amount above the exemption could be taxed at a rate of up to 40%.

What counts toward your taxable estate?

• Real estate

• Investment accounts

• Retirement funds

• Business interests

• Life insurance (in some cases)

• Personal property like vehicles or art

If you’re nowhere near that threshold, you’re probably safe. But if you’re close—or expect to be—it’s time to start planning.

No Inheritance Tax in Texas, Either

Texas also does not have an inheritance tax.

That means if you’re a beneficiary receiving an inheritance from someone who lived in Texas, you don’t owe state taxes on that gift.

But watch out for these exceptions:

• Out-of-state property may be subject to inheritance tax if located in a state that still has one (like Pennsylvania or Iowa).

• Some income from inherited assets (like IRAs or investment gains) may still be subject to regular income tax.

Real-Life Example: The Vacation Home Surprise

Maria’s father passed away in Houston, leaving her the family home and a vacation cabin in Minnesota.

Texas didn’t tax her inheritance—but Minnesota assessed an inheritance tax on the cabin.

This kind of surprise can catch families off guard, which is why reviewing out-of-state assets and updating your estate plan matters.

How to Minimize Taxes With Good Estate Planning

Even without Texas taxes, there are still ways to reduce the tax bite at the federal level or avoid trouble with out-of-state property.

Here are a few planning tools:

• Revocable Living Trusts: Avoid probate and manage multi-state assets more smoothly.

• Irrevocable Trusts: Remove assets from your taxable estate (if done right).

• Gifting Strategies: Gift assets during your lifetime to reduce estate size.

• Beneficiary Designations: Properly structure retirement accounts and life insurance payouts.

• Business Succession Plans: Reduce tax exposure for family-owned businesses.

Why This Still Matters (Even If You’re Under the Limit)

Many Texans think they don’t need to plan because their estate is modest. But estate planning isn’t just about taxes—it’s about:

• Avoiding probate

• Naming guardians for children

• Preventing family disputes

• Managing real estate across states

• Protecting special needs beneficiaries

Whether you’re passing on a ranch, a retirement account, or a modest home, smart planning means less stress for your loved ones.

How The Lange Firm Can Help

At The Lange Firm, we help Texas families:

• Understand estate and tax laws that apply to them

• Plan around multi-state property issues

• Set up trusts to preserve assets and minimize taxes

• Draft wills, trusts, and healthcare directives

Whether your estate is large or small, we’ll help you protect what matters most—and leave a legacy that lasts.

Final Takeaway

Texas doesn’t tax your estate or your inheritance—but the federal government might.

And if you own property in other states, you may still be affected by their rules.

Contact The Lange Firm today to make sure your estate plan is tax-smart, up-to-date, and ready for whatever 2025 brings.