Do I Have to File an Estate Tax Return When My Spouse Dies in Texas?

Margaret Chen had done everything right. After her husband Bob died unexpectedly in May 2022, she met with an attorney, settled the estate, and followed every piece of advice she received. Their estate was worth about $3 million — comfortable by any measure, but far below the federal estate tax threshold. Her attorney gave her straightforward, legally accurate guidance: no estate tax return was required, no Form 706 to file. Why spend money on paperwork the government didn't require?

Then, in late 2024, Margaret's father passed away and left her a $14 million inheritance. Overnight, the Frisco grandmother's estate had grown to $17 million — two million dollars over the $15 million federal estate tax exclusion for 2026. At a 40 percent estate tax rate on the excess, her children and grandchildren were looking at an $800,000 bill the moment she died.

But here was the part that stunned her: Bob had his own $15 million federal exclusion that he never used. That unused amount — called the Deceased Spouse's Unused Exclusion, or DSUE — could have been "ported" to Margaret, doubling her protection to $30 million. The problem? Electing portability requires filing a federal estate tax return, even when no tax is owed. And nobody had told her that.

The window, it turned out, was still open. Under Revenue Procedure 2022-32, a surviving spouse has five years from the date of the deceased spouse's death to file a late portability election. Bob died in May 2022. Margaret had until May 2027. One estate tax return, filed years after the fact, could protect $800,000 for the next generation.

The question most Texas families never think to ask — do I need to file an estate tax return when my spouse dies? — turns out to have a non-obvious and consequential answer.

Texas Has No State Estate Tax — But the Federal Tax Is Real

The first thing to understand is that Texas does not impose a state estate tax. The state eliminated its estate tax effective September 1, 2015, and no replacement has been enacted. There is no state-level filing to worry about when a Texan dies.

The federal estate tax is a different matter entirely. Under 26 U.S.C. § 2001(a), a tax is imposed on the transfer of the taxable estate of every U.S. citizen or resident. For 2026, the basic exclusion amount is $15,000,000 per person, established by statute under the One Big Beautiful Budget Act (OBBBA § 70106, amending 26 U.S.C. § 2010(c)(3)). Estates below that threshold owe no federal estate tax.

Most Texas families — even successful ones — will never owe federal estate tax. But "not owing tax" and "not needing to file a return" are not the same thing. That distinction is where the $800,000 mistakes happen.

What Is Portability, and Why Does It Require a Return?

When one spouse dies, their unused federal estate tax exclusion doesn't automatically transfer to the surviving spouse. It must be elected. That election is made on a federal estate tax return — Form 706 — and it is only available if the deceased spouse's executor files a timely return or qualifies for late-election relief.

This concept is called portability, codified at 26 U.S.C. § 2010(c)(4). The amount a surviving spouse can add to their own exclusion is the Deceased Spouse's Unused Exclusion, or DSUE. Under 26 U.S.C. § 2010(c)(5)(A), the portability election is only available if the deceased spouse's executor timely files a complete and properly prepared estate tax return — or qualifies for the administrative late-election procedure under Revenue Procedure 2022-32.

In plain terms: if you don't file a return when your spouse dies, you permanently lose the ability to use their unused exclusion — unless you catch it within the late-election window.

For most married couples this isn't urgent. Their combined estate is well below even one person's $15 million exclusion. But life changes. Inheritances materialize. Business interests appreciate. Real estate doubles. The surviving spouse who was clearly below the threshold at 65 may be above it at 80. And if they missed the portability window fifteen years earlier, that protection is permanently gone.

The Five-Year Late-Filing Window

The good news for families who missed the original deadline: Congress recognized that many surviving spouses didn't file because they genuinely didn't know they needed to. Revenue Procedure 2022-32 provides an administrative shortcut — a surviving spouse's estate can file a late portability election on Form 706 at any point within five years of the deceased spouse's date of death.

That five-year window is not a permanent grace period. Once it closes, it is closed.

Here is what this means practically for Texas families:

• Spouse died in 2021? The window closes in 2026.
• Spouse died in 2022? The window closes in 2027.
• Spouse died in 2023? The window closes in 2028.
• Spouse died in 2024? The window closes in 2029.
• Spouse died in 2025? The window closes in 2030.

Anyone widowed since 2021 may still have time to capture their spouse's unused exclusion — and protect potentially millions of dollars for the next generation.

The window used to be much shorter. Revenue Procedure 2017-34 allowed only 24 months. Revenue Procedure 2022-32 extended it to five years, a change that quietly created one of the most significant planning opportunities in estate tax law. The families most likely to benefit are exactly the ones least likely to have heard about it: those who were correctly told at the time of death that no return was required, and who have never revisited the question since.

Does Texas's Community Property Law Change This?

Texas is one of nine community property states, which means that most property acquired during a marriage belongs equally to both spouses. This has significant tax advantages — particularly around the step-up in basis that occurs at death.

Under 26 U.S.C. § 1014(b)(6), when a spouse dies in a community property state, both halves of the community property receive a stepped-up basis to fair market value — not just the deceased spouse's half. For a couple who bought a McKinney home for $200,000 that's now worth $800,000, this could eliminate the entire capital gain on a future sale. That's a six-figure benefit unavailable to spouses in common-law states.

But the basis step-up only addresses income tax on appreciated assets. It does not replace the portability election for federal estate tax. A Texas widow who correctly gets the step-up on her home, rental properties, and investment accounts still needs to think about portability if her estate could ever grow above $15 million.

The two benefits operate on different tax systems and must be managed separately. An estate planner who handles one is not automatically handling the other.

When Filing Really Isn't Necessary

To be direct: most Texas families genuinely do not need to file a federal estate tax return when a spouse dies, and the portability election will never matter to them. A Form 706 is technically required only when the gross estate exceeds the applicable exclusion amount — and at $15 million per person, the vast majority of estates have no filing requirement and no realistic prospect of exceeding the threshold.

The question to ask is not only "Do we owe tax today?" It's "Could the surviving spouse's estate ever exceed $15 million — from inheritance, business growth, real estate appreciation, or any other source — and if so, would we want the deceased spouse's unused exclusion available?"

For a retired teacher in Plano with a $400,000 house and a modest IRA, the answer is almost certainly no. For a Southlake family with a closely held business, substantial rental properties, a brokerage account, and parents who are themselves well-off, the calculation deserves a conversation. The cost of that conversation is trivial compared to the cost of getting the answer wrong.

What Filing a Late Portability Election Actually Involves

Filing a late portability election under Revenue Procedure 2022-32 means preparing and submitting a complete Form 706 for the deceased spouse — even though no estate tax is owed. The return must accurately report every asset the deceased spouse owned at the date of death, apply the applicable exclusion amount, calculate the unused exclusion (the DSUE), and formally elect portability.

Key requirements under Rev. Proc. 2022-32 for the late election to be valid:

• The deceased spouse must have been a U.S. citizen or resident at the time of death
• The surviving spouse must be alive at the time the election is made
• The deceased spouse's estate must not have been required to file a return because the gross estate exceeded the applicable exclusion — in other words, the whole premise is that no return was required at death
• The return must be filed within five years of the date of death
• The return must be complete and include all required information

Form 706 is among the most complex documents in the federal tax code. It covers the valuation of every asset the deceased spouse owned at death — real property, business interests, retirement accounts, life insurance, financial accounts, and anything else — along with the computation of taxable gifts made during life, the applicable exclusion calculation, and the formal DSUE election. Errors in the return can result in the election being denied or the DSUE amount being calculated incorrectly, potentially at significant cost.

This is not a task for a general-purpose tax preparer who files 1040s annually. It requires an attorney or CPA with specific estate tax experience — and ideally, the kind of deep federal tax background that comes from an advanced tax degree.

The Widow's Overlooked Advantage

There is a quiet logic to why the portability election gets missed so consistently. When a spouse dies, the estate planner and the attorney are both looking at the present: the estate as it exists right now, the tax as it stands today, the filings that are legally required at this moment. A $3 million estate in 2022 generates no estate tax and no mandatory filing. The advice given — no return needed — was correct for that snapshot.

What the snapshot misses is the forward view. The surviving spouse is typically younger. They will likely receive assets over time through inheritance, business distributions, or investment growth. They may sell a business, collect a life insurance policy, or receive a settlement. The estate that looks modest at age 65 can look very different at age 80.

Portability planning asks the question the snapshot can't answer: What might this estate look like in twenty years, and would we want the option to double the exclusion available at that time?

For families who want that option, the window is measured not from the surviving spouse's eventual death, but from the day the first spouse died. That is the deadline that matters — and for widows and widowers since 2021, it is still running.

Margaret's Outcome — and the Conversation That Changed It

Margaret filed her late portability election in early 2025. The return documented that Bob's entire $15 million federal exclusion was unused at the time of his death. Combined with her own $15 million exclusion under current law, her estate now has $30 million in federal protection — well above the $17 million she has today and enough to cover substantial future appreciation.

The $800,000 that had been drifting quietly toward the IRS stayed in the family.

What made the difference was a single additional question that her new estate planning attorney asked: "Did your husband's estate ever file a return?" When the answer was no, the attorney asked a second question: "When did he die?" And then: "Have you considered whether his unused exclusion might still be portable?"

Three questions. One estate tax return. Eight hundred thousand dollars.

What to Do If You're in This Situation

If your spouse has died — whether recently or within the past several years — and no federal estate tax return was ever filed, the question is whether a late portability election makes sense for your specific situation. The answer depends on the current size of your estate, what it might reasonably grow to become, and how many years remain in the five-year window.

The analysis takes one conversation. For some families, the answer will be that the election is unnecessary because the estate will never approach the federal threshold. For others, it will be the most consequential estate planning decision available to them right now — and the window for making it is finite and measurable.

Tax-smart estate planning is a core focus of WG Law's practice, led by Carla Alston. Carla holds an LL.M. in Taxation from New York University School of Law — one of the most respected advanced tax degrees in the country — and has been practicing estate and tax law for 39 years. Her own experience as the widow of a spouse who held complex assets — including cryptocurrency — gives her a particular understanding of the planning questions that arise in the years after a spouse's death, when surviving spouses are often focused on other things and the technical tax questions are easy to defer.

Taylor Willingham, WG Law's founding attorney, has guided more than 10,000 Texas families through estate planning matters, including the often-overlooked planning steps that should follow a spouse's death.

If you are a Texas resident who lost a spouse since 2021 and no estate tax return was filed, the question of whether the portability window is still open for you is worth asking before it is not.

Request a consultation with WG Law's estate planning team, or call us at 214-250-4407. We serve families in McKinney, Southlake, Frisco, Plano, Allen, and throughout the DFW area from our offices in McKinney (7701 Eldorado Pkwy, Suite 200) and Southlake (1560 E Southlake Blvd, Suite 100, Office 116).

This article provides general legal and tax information about federal estate tax portability and is not legal or tax advice. Estate tax law is complex and fact-specific. Consult a qualified estate planning attorney and tax advisor for guidance specific to your circumstances. Tax laws are subject to change.