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Julie Garber

Estate Taxes by State - Does Texas Have an Estate Tax?

By January 30, 2010

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Does Texas have an estate tax? The answer is no, currently Texas does not collect a state estate tax, although things were different a few years ago before major changes took effect with regard to federal estate tax laws. Prior to January 1, 2005, Texas, like many other states, collected a separate state estate tax, called a "pick up tax," that was actually equal to a portion of the overall federal estate tax bill.

On January 1, 2005, the pick up tax was officially phased out under the provisions of the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA"). Since then 18 states and the District of Columbia chose to enact laws that allow the assessment of a state estate tax (of those 18 states only 15 currently collect a state estate tax), but the Texas legislature did nothing and as a result the state no longer collects a state estate tax.

One thing to keep in mind is that the federal estate tax and the pick up tax (and therefore the Texas estate tax) are scheduled to come back on January 1, 2011, due to the sunset of EGTRRA, but at this point no one really knows what will happen with the federal estate tax in 2010 let alone in 2011 and beyond.

2011 Update: On December 17, 2010, President Obama signed the Taxpayer Relief Act of 2010 (TRA 2010) into law, which overrode the provisions of EGTRRA with regard to estate taxes. As a result of this new law, the pick up tax was not reinstated, and so Texas will not collect a state estate tax for the 2011 and 2012 tax years. Nonetheless, the provisions of TRA 2010 are set to sunset on December 31, 2012, in which case the pick up tax, as well as the Texas estate tax, will return on January 1, 2013. Stay tuned for updates as they become available.

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