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Motor Vehicle Tax Guide
Inherited Motor Vehicles
As of Sept. 1, 2025, motor vehicles transferred from a decedent’s estate to a distributee as defined in Estates Code Section 22.010, Distributee, or transferred from a decedent’s estate under a rights of survivorship agreement described in Transportation Code Section 501.031, Rights of Survivorship Agreement, are not subject to motor vehicle tax. See Tax Code Section 152.094, Motor Vehicle Transferred From Decedent.
A distributee is a person who is entitled to a part of the estate of a decedent under a lawful will or the statutes of descent and distribution.
The date used to determine exemption eligibility is the date the motor vehicle was transferred (i.e., distributed) from a decedent’s estate to a distributee or under a rights of survivorship agreement on or after Sept. 1.
Liens on Inherited Vehicles
If a motor vehicle has a lien at the time of the owner’s (i.e., decedent’s) death, no motor vehicle tax is due upon transfer of title to a distributee or under a rights of survivorship agreement.
Subsequent Transfers from a Distributee to a Third Party
When a distributee receives a motor vehicle through a transfer described above, and then transfers it a to a third-party, motor vehicle tax may be due. The tax consequences differ depending on how the transfer takes place, to whom it is transferred and the titling. Here are some examples:
Scenario 1
If the motor vehicle is transferred to the distributee and it is titled in the distributee’s name , no motor vehicle tax is due on the transfer to the distributee from the decedent’s estate. If the distributee then subsequently transfers the motor vehicle to an eligible gift recipient for no consideration, the subsequent transfer is subject to the $10 gift tax.
Scenario 2
If the motor vehicle is transferred to the distributee and it is titled in the distributee’s name, no motor vehicle tax is due on the transfer to the distributee from the decedent’s estate. If the distributee then subsequently transfers the motor vehicle to a person who does not qualify for gift tax, the subsequent transfer is subject to motor vehicle tax; standard presumptive value (SPV) procedures may apply.
Scenario 3
If the motor vehicle is transferred to the distributee but instead of being titled in the distributee’s name, the distributee has it titled directly in the name of a third party (e.g., a person other than the distributee or under a rights of survivorship agreement), motor vehicle tax is due (unless an exemption applies). SPV procedures may apply.
Exemptions that may apply include:
- Ag/Timber
- Motor Vehicle Transported Out of State
- Orthopedically Handicapped