Texas does not have a state inheritance tax
Texas is one of twelve states with no inheritance tax at all. You will not owe Texas state tax on money or property you inherit, regardless of the amount or your relationship to the person who died. This applies whether you inherit from a will, through intestate succession (when someone dies without a will), or as a beneficiary of a life insurance policy or retirement account.
The federal government does have an estate tax, but it only affects estates larger than a certain threshold — $13.61 million for deaths in 2024, though this amount changes yearly and is set to drop in 2026. Most Texas residents will never encounter it. Your state of residence does not change this federal rule.
Key Takeaways
- Texas has no state inheritance tax, so you owe nothing to Texas on inherited money or property.
- The federal estate tax applies only to estates above $13.61 million (for 2024), and this threshold changes each year.
- Inherited retirement accounts and life insurance proceeds are not subject to Texas state tax, though federal rules may explore to very large estates.
- If you inherit property in Texas from someone who lived elsewhere, you still owe no Texas inheritance tax.
- The executor or administrator of an estate may need to file a federal estate tax return if the estate exceeds the federal threshold, but this is separate from any state tax.
How the federal estate tax works, and when it matters
The federal estate tax is a tax on the total value of everything a person owned when they died — real estate, bank accounts, investments, vehicles, and personal property. The executor of the estate (the person named to handle the estate) must file a federal estate tax return if the estate's value exceeds the threshold. For 2024, that threshold is $13.61 million for a single person and $27.22 million for a married couple.
If the estate is below the threshold, no federal estate tax return is required, and the heirs owe nothing. If it is above the threshold, the executor files Form 706 with the IRS and pays tax on the amount over the limit. The tax rate is 40 percent on the excess.
This threshold is temporary. Congress set it to drop back to roughly $7 million per person (adjusted for inflation) on January 1, 2026, unless new legislation extends the current amount. If you are inheriting a large estate, the executor should track this important date.
What happens to inherited retirement accounts and life insurance
Money from a life insurance policy paid to a named beneficiary is not subject to Texas state tax or federal income tax. However, if the life insurance proceeds are large enough that the total estate exceeds the federal threshold, they count toward that threshold and may trigger federal estate tax.
Inherited retirement accounts — such as traditional IRAs, 401(k)s, or Roth IRAs — are not subject to Texas state tax. You will owe federal income tax on withdrawals from traditional accounts (because the original owner got a tax deduction when the money went in), but not on withdrawals from Roth accounts. The timing and amount of required withdrawals depend on your relationship to the original owner and the account type; the financial institution holding the account will provide guidance on this.
Inherited property and real estate in Texas
If you inherit real estate or other property in Texas, you owe no Texas inheritance tax on it. You will eventually owe property tax on real estate (assessed annually by the county), but that is a different tax and applies to all property owners, not just heirs.
When you inherit property, the county assessor may reassess its value for property tax purposes. In some cases, the assessed value may change. You can contact your county assessor's office if you want to understand how the reassessment works or if you believe the new value is incorrect.
If the person who died lived in another state
Some states have inheritance taxes. If the person who died lived in one of those states, their estate may owe tax to that state — but you, as the heir, still owe nothing to Texas. The estate itself (handled by the executor) may owe tax in the state where the person lived or owned property.
If you inherited property located in another state, you may owe property tax or other taxes in that state, but again, not to Texas. The rules vary by state and by the type of property, so the executor or a tax professional familiar with that state can advise on what is owed there.
What the executor needs to do
The executor is responsible for handling the estate's finances, paying debts, and distributing what remains to the heirs. If the estate is large enough to trigger federal estate tax, the executor must file Form 706 with the IRS within nine months of the death (though an extension can be requested).
The executor may also need to file a final income tax return for the deceased person (Form 1040) if the person had income in the year they died. This is a federal return, not a Texas state return, because Texas has no state income tax. The executor should keep records of all estate transactions and be prepared to answer questions from heirs about how the estate was settled.
When to talk to a tax professional or attorney
If the estate is below the federal threshold and the person who died had no significant debts, the executor can often settle the estate without professional help. If the estate is large, includes property in multiple states, or the family situation is complicated, an attorney or tax professional can help the executor understand what paperwork is required and what important date explore.
You, as an heir, do not need to hire anyone to receive your inheritance — the executor handles the legal and tax work. If you have questions about what you inherited or how it affects your own taxes, a tax professional can answer those questions, but there is no Texas state tax consequence to inheriting in Texas.
Frequently Asked Questions
Do I owe Texas tax on money I inherited?
No. Texas has no inheritance tax, so you owe nothing to Texas on inherited money, property, or other assets. The only tax that might explore is the federal estate tax, and only if the total estate exceeds $13.61 million (for 2024).
What if I inherited a house in Texas?
You owe no Texas inheritance tax on the house. You will owe annual property tax to the county (like any property owner), but that is separate from inheritance tax. The county may reassess the property's value when you inherit it.
Do I have to report my inheritance on my tax return?
No. Inherited money and property are not reported as income on your federal or Texas tax return. If the inherited asset generates income later (such as rent from a rental property or interest from a bank account), that income is taxable, but the inheritance itself is not.
What if the person who died lived in a state with an inheritance tax?
You still owe nothing to Texas. The estate may owe tax to the state where the person lived, but that is the executor's responsibility, not yours. If you inherited property in that state, you may owe tax there, depending on that state's rules.
Will the federal estate tax affect my inheritance?
Only if the total estate exceeds $13.61 million (for 2024). If it does, the executor pays federal estate tax from the estate before distributing the remainder to heirs. Most Texas estates are well below this threshold.