--- title: "Understanding Estate Taxes in Texas: What Families Need to Know" description: Learn how federal estate taxes may impact Texas families & discover planning strategies to protect your legacy. Contact Steve Powell for trusted tax help. image: https://blog.powelltaxlaw.com/hubfs/Real%20estate%20sale%2c%20home%20savings%2c%20loans%20market%20concept.%20Housing%20industry%20mortgage%20plan%20and%20residential%20tax%20saving%20strategy.%20Piggy%20bank%20isolated%20outside%20home%20on%20background.%20Focus%20on%20piggybank.%20Homeowner-1.jpeg --- (888) 913-9745 Need Assistance With Your Tax Issues Quickly? 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But that doesn’t mean estate taxes are off your radar. The federal estate tax can still apply, especially if your estate exceeds certain thresholds, and knowing how it works can help you plan ahead, protect your heirs, and avoid unpleasant surprises. This guide is designed to help Texas families get a clear picture of how the federal estate tax works, who it affects, and what strategies can help reduce the potential tax burden. ## What Is the Federal Estate Tax? The federal estate tax is a tax levied on the transfer of a person’s assets after they pass away. It applies only to estates valued above a certain amount, which is known as the federal estate tax exemption. As of 2024, the exemption is $13.61 million per person. For married couples, this can be doubled to $27.22 million if proper estate planning steps are taken. This means that unless your estate is worth more than that amount, your heirs generally won’t owe federal estate taxes. However, it’s important to remember two things: - These exemptions are temporary and set to drop significantly in 2026, potentially to around $6 million per person. - Even if you’re below the threshold today, a growing estate could push you into taxable territory in the future. You can check the most up-to-date federal exemption limits on the [IRS website](https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax). ## Does Texas Have an Estate or Inheritance Tax? No, Texas is one of several states that does not have a state-level estate or inheritance tax. That’s a major benefit for residents, especially when compared to states like Oregon or Massachusetts, where even smaller estates can be taxed at the state level. But while Texas won’t tax your estate, the federal government still might, which is why proactive estate planning is crucial, even here. ## Common Assets Included in an Estate When calculating the size of an estate for tax purposes, it’s not just cash or property that counts. The IRS looks at everything you own or control at the time of your death, which may include: - Real estate (primary residence, vacation homes, rental property) - Investment accounts and savings - Retirement accounts (like IRAs and 401(k)s) - Life insurance payouts (if you owned the policy) - Business interests - Collectibles or high-value personal property It’s easy to see how the value can add up quickly, especially if you own a business, have valuable real estate holdings, or carry large life insurance policies. ## Planning Ahead: Why It Matters Estate taxes can take a big bite out of your legacy if you don’t plan for them. Without proper planning, your heirs could face a hefty tax bill or be forced to sell assets like family land or a small business to cover the cost. Estate planning can help avoid this. Strategies might include: - **Using the marital deduction** to transfer assets tax-free to a spouse - **Gifting during your lifetime** to reduce the size of your taxable estate - **Creating irrevocable trusts** to move assets out of your estate - **Purchasing life insurance** inside a trust to help pay any future estate taxes The best plan for you depends on your unique situation, and that’s where professional guidance is essential. ## Why Families Should Act Now Even if your estate doesn’t currently meet the federal threshold, changes are coming. The current exemption levels were put in place under the Tax Cuts and Jobs Act and are set to expire at the end of 2025. Unless Congress takes action, the exemption will be cut in half. That could mean a much larger percentage of families - especially those with land, retirement savings, and life insurance - could face estate taxes in the coming years. By taking action now, you can lock in today’s generous limits and build a more tax-efficient estate plan for the future. ## The Role of a Tax Attorney in Estate Planning While estate planning often involves an attorney or financial planner, a tax attorney plays a unique and valuable role. They’re trained not only in the legal aspects of estate planning but also in the intricate workings of the tax code. A tax attorney can help: - Evaluate whether your estate might be subject to federal taxes - Design tax-efficient gifting strategies - Structure trusts and other tools to reduce tax exposure - Ensure compliance with IRS rules and documentation requirements Texas families looking to preserve their wealth and protect their heirs can benefit greatly from consulting with a tax professional early in the planning process. For a deeper dive into how estate taxes work and how they might affect you, this article from [NerdWallet](https://www.nerdwallet.com/article/taxes/estate-tax) breaks down some common questions and scenarios. ## **Get Personalized Estate Tax Guidance** Even though Texas doesn’t impose its own estate tax, the federal rules can still impact your family’s financial future. The good news? With the right plan in place, you can reduce or even eliminate that burden. If you’d like help understanding your estate’s potential tax exposure, or building a smart plan to minimize it, [**contact Steve Powell today**](https://powelltaxlaw.com/contact/) He has the experience to guide you through every step. --- [Estate Tax](https://blog.powelltaxlaw.com/tag/estate-tax) ## RELATED ARTICLES ### [Estate Taxes: What Texans Need to Know](https://blog.powelltaxlaw.com/estate-taxes-what-texans-need-to-know) Posted by **Powell Tax Law** on 21 Feb, 2024 [![Real estate sale, home savings, loans market concept. 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