Texas Bankruptcy Exemptions: 2026 Rules & Dollar Limits

If you file for bankruptcy in Texas, you can probably keep more than you think. The Texas bankruptcy exemptions are among the most generous in the country, and unlike most states, Texas lets you pick between the state list and the federal list instead of forcing you into one. That single choice can decide whether you walk out of Chapter 7 with your house, your IRA, and your work truck, or whether a trustee liquidates something that should have been off-limits.

The catch: most people guess wrong about which list to pick, and a lot of law firm blogs haven’t updated their numbers since the April 1, 2025 federal adjustments. Below is the current state of the rules, with the specific Texas Property Code citations and the dollar figures in effect for cases filed through March 31, 2028.

The Two-List Choice Most Texans Don’t Know They Have

Under 11 U.S.C. § 522(b), Congress let each state decide whether to opt out of the federal exemption scheme. About thirty states did. Texas didn’t. A Texas debtor can elect either the federal exemptions in § 522(d) or the Texas exemptions scattered across Property Code Chapters 41 and 42. What you can’t do is mix and match. You pick one column and take everything in it.

The U.S. Bankruptcy Court for the Western District of Texas spells this out in its exemption guidance, and it trips up filers who heard from a neighbor that “Texas has unlimited homestead” and assumed the choice was obvious. It often is. It’s also occasionally wrong.

To use the Texas list, you have to have lived here for at least 730 days before filing. If you moved here inside that window, the federal domicile rule sends you back to the exemption list of whichever state you lived in longest during the 180 days before that 730-day window. Texas isn’t automatic just because the petition gets filed in Dallas.

The Texas Homestead Exemption: Acres, Not Dollars

Most states cap the homestead exemption at a dollar amount. Florida caps you by acreage too but still protects value without a dollar ceiling. Texas is the purest version of the acreage model. Texas Property Code § 41.002 defines the homestead in terms of land area, not equity. If the property fits within the statutory footprint, the equity inside it is protected without a dollar limit under Texas law.

The footprint:

Urban homestead: up to 10 contiguous acres inside a municipality or its extraterritorial jurisdiction. One family, one home.
Rural homestead, family: up to 200 acres in one or more parcels.
Rural homestead, single adult: up to 100 acres.

Classification turns on where the property sits the day you designate it. A rural parcel that gets annexed into a city later doesn’t instantly lose homestead status, but new designations follow the city limits and extraterritorial jurisdiction lines. The full text of Chapter 41 is worth reading if you’re near either edge.

Here’s where it gets complicated. Federal bankruptcy law overrides the state acreage-only rule in one specific scenario. Under 11 U.S.C. § 522(p), if you acquired your current homestead within 1,215 days (roughly 40 months) before filing, you can only exempt up to $214,000 of that equity regardless of what state law says. That dollar cap runs from April 1, 2025 through March 31, 2028 per the Judicial Conference’s triennial adjustment. The cap does not apply to equity rolled over from a previous Texas home; if you sold one Texas homestead and bought another inside the 1,215-day window, that portion stays fully protected.

I’ve seen two cases this year where a recent transplant assumed the Texas rule controlled their brand-new Austin home. It didn’t. The § 522(p) cap applied, and the equity above $214,000 went to the trustee.

Personal Property Under Chapter 42: The $50,000/$100,000 Ceiling

Texas doesn’t just protect your land. Property Code § 42.001 creates a per-household cap on personal property exemptions: $100,000 in aggregate fair market value for a family, $50,000 for a single adult. The limit is calculated net of liens, so a financed car counts at your equity, not sticker price.

Everything you want to protect under the personal property rule has to fit inside that ceiling AND appear on the list in § 42.002. The categories, slightly paraphrased:

Home furnishings, including family heirlooms
Provisions for consumption (food, essentially)
Farming or ranching vehicles and implements
Tools, equipment, books, and apparatus used in a trade or profession, including boats and motor vehicles
Wearing apparel
Jewelry, capped at 25% of the aggregate limit ($25,000 family / $12,500 single)
Two firearms
Athletic and sporting equipment, including bicycles
One motor vehicle per licensed family member, or per adult who needs one driven for them
Two horses, mules, or donkeys with tack; 12 head of cattle; 60 other livestock; 120 fowl; and household pets

The livestock language is not a drafting joke. It’s a holdover from the 19th-century homestead tradition, and rural filers still use it. If you’re in Hays County running a hobby goat operation, those animals go on the exemption schedule.

Vehicles, Tools, and the Quiet Generosity of § 42.002

Texas treats motor vehicles more favorably than almost every other state. Under § 42.002(a)(9), you get one exempt vehicle for every licensed adult in the household plus any non-driver who relies on someone else to transport them. A family of five with three licensed drivers can exempt three cars. Compare that to the federal list, which gives you a single vehicle exemption of $5,025 under § 522(d)(2) and nothing past that.

Unsure whether Texas or federal exemptions protect more of what you own? A bankruptcy attorney can run the numbers on your specific property before you file. The wrong choice can cost you a house, a retirement account, or a second vehicle. Getting a free case review takes a few minutes and costs nothing.

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Tools of the trade are similarly broad. A framing contractor’s truck, a plumber’s van, a stylist’s chair, a photographer’s camera bodies, all of that qualifies under § 42.002(a)(4) as long as it’s used in the trade or profession. There’s no separate cap beyond the overall $50K/$100K ceiling, which is why the Texas list is so friendly to self-employed filers.

Retirement Accounts: Untouchable, With One Asterisk

If you have money in a qualified retirement plan, it’s almost certainly safe. Texas Property Code § 42.0021 exempts the entire value of 401(k)s, 403(b)s, pensions, traditional and Roth IRAs, SEP and SIMPLE IRAs, inherited IRAs, Keogh plans, health savings accounts, Coverdell ESAs, 529 plans, and qualified ABLE accounts, as long as the account retains its federal tax-exempt or tax-deferred status.

Note that Texas does protect inherited IRAs, which matters because the U.S. Supreme Court in Clark v. Rameker (2014) held that inherited IRAs are not “retirement funds” under the federal exemption. A Texas filer who elects the Texas list can still protect an inherited IRA the federal list would expose.

The asterisk: recent contributions made to an IRA specifically to shield cash from creditors can be challenged as a fraudulent transfer under Texas Business & Commerce Code § 24.005. A trustee who sees $40,000 in new IRA contributions three months before filing will ask questions. The exemption covers what’s legitimately yours for retirement. It doesn’t launder an eve-of-bankruptcy deposit.

Wages, Bank Accounts, and the Garnishment Rule

Texas is one of a small number of states where a judgment creditor generally cannot garnish your wages for consumer debt. Article XVI, § 28 of the Texas Constitution exempts current wages for personal services from garnishment except for child support, spousal maintenance, taxes, and federally guaranteed student loans. In bankruptcy, unpaid but earned wages at the time of filing are exempt under § 42.001(b)(1).

The trap is what happens after wages hit your bank account. Once deposited, funds lose their wage character unless you can trace them. If you have $8,000 sitting in checking from last month’s paychecks, a trustee can argue it’s no longer exempt wages, it’s cash. Cash isn’t on the § 42.002 list. Cash is why timing matters, and why bankruptcy lawyers often tell clients to spend down or apply cash reserves to exempt categories before filing.

When Federal Exemptions Actually Beat Texas: The Wildcard Problem

Here’s the scenario where picking Texas is a mistake. You don’t own a home. You don’t have a big retirement balance. Your main assets are a modest car, a savings account, a tax refund you’re expecting, and a small inheritance stuck in probate. Texas protects almost none of that beyond the vehicle itself. There’s no wildcard exemption in the Texas Property Code.

Federal law has one. 11 U.S.C. § 522(d)(5) gives a wildcard of $1,675, plus up to $15,800 of any unused federal homestead exemption, which you can apply to anything. For a non-homeowner, that’s up to $17,475 you can drop onto cash, a tax refund, a brokerage account, or any other asset Texas would leave exposed. The $17,475 figure is the combined cap in effect for cases filed between April 1, 2025 and March 31, 2028.

The test most bankruptcy attorneys use: if you have meaningful home equity, take Texas. If you’re a renter with liquid savings, look hard at the federal list. A free exemption calculator gives you a rough read, but the wrong answer here costs real money.

Residency Rules, the Means Test, and the 730-Day Clock

Two timing rules matter more than most filers realize.

First, the 730-day rule under § 522(b)(3)(A) governs which state’s exemptions you can use. Live in Texas for the full two years before filing, and the Texas list is available. Shorter than that, federal law looks back to where you lived for the majority of the 180 days before that two-year window. A filer who moved from California to Plano in the last year is probably stuck with California’s $700,000 homestead cap and California’s dollar-based personal property exemptions, not the Texas list.

Second, the Chapter 7 means test uses Texas’s state median income to decide whether you qualify for a discharge of unsecured debt or whether the court pushes you into a Chapter 13 repayment plan. As of November 1, 2025, the U.S. Trustee Program set the Texas medians at $65,123 for a one-person household, $84,491 for two, $96,728 for three, and $114,938 for four, with $11,100 added for each additional member. Gross income below your household’s figure means you skip the rest of the means test. Above it, you run the Chapter 7 deductions calculation in Official Form 122A-2, and the result determines whether you file Chapter 7 or Chapter 13.

Neither rule is about exemptions directly, but both shape the strategic question of when to file. If you’re near the 730-day mark, waiting can unlock the Texas list. If you’re near the means-test threshold, timing a filing to a quarter when overtime has dried up can be the difference between Chapter 7 and Chapter 13.

Texas Bankruptcy Exemptions vs. Federal: Side-by-Side Math

For a typical Houston family with a home worth $380,000 (mortgaged to $290,000), two financed vehicles with $12,000 combined equity, $45,000 in household goods, $180,000 in a 401(k), and $3,000 in checking:

Texas list: Homestead protects the $90,000 in home equity (acreage, not dollars). Section 42.002 covers both vehicles and the household goods. Section 42.0021 protects the entire 401(k). The $3,000 in checking is unprotected unless traceable to current wages.
Federal list: Homestead under § 522(d)(1) caps at $31,575, leaving roughly $58,000 of home equity exposed. Vehicles capped at $5,025 per car, so one of the two has equity on the table. Household goods capped at $16,850 total. The 401(k) is still fully exempt under § 522(b)(3)(C). Wildcard covers most of the checking.

Texas wins that matchup by a wide margin because of the home equity alone. Change the facts to a renter with $15,000 in a brokerage account and the math flips.

What Courts and Trustees Actually Care About

The Texas bankruptcy bench has a well-earned reputation for protecting legitimate homestead claims aggressively. In re Bradley, 501 F.3d 421 (5th Cir. 2007), is still the touchstone for homestead disputes: the party challenging a homestead designation bears a heavy burden, and doubtful cases resolve in the homeowner’s favor. Trustees know this. They rarely pursue a homestead objection on thin facts.

Where trustees do push is on three specific issues. Recent transfers of cash into exempt assets. Undisclosed assets the debtor forgot to list. And claimed homesteads on properties where the debtor’s actual residence is elsewhere. Each of those is a source of § 727 discharge objections. Each is also avoidable with accurate schedules and a lawyer who asks the right questions six months before filing, not the week of.

Do I have to use Texas exemptions if I live in Texas?

No. Texas is one of the states that gives debtors a choice between the Texas list and the federal list in 11 U.S.C. § 522(d). You have to pick one or the other, not combine them. For most Texas homeowners the Texas list protects more property, but for renters with liquid savings the federal wildcard can be a better deal. You must have lived in Texas for 730 days before filing to use the Texas list.

Is there a dollar cap on the Texas homestead?

Not under Texas law. Texas Property Code § 41.002 uses acreage limits, not equity caps, which is why the state has a reputation for unlimited homestead protection. Federal bankruptcy law imposes one exception: if you bought the home within 1,215 days before filing, your homestead exemption is capped at $214,000 under 11 U.S.C. § 522(p) for cases filed between April 1, 2025 and March 31, 2028. Equity rolled over from a prior Texas homestead is not counted toward that cap.

Can a bankruptcy trustee take my 401(k) or IRA in Texas?

In nearly all cases, no. Texas Property Code § 42.0021 exempts qualified retirement accounts in full, including 401(k)s, pensions, traditional and Roth IRAs, SEP and SIMPLE IRAs, inherited IRAs, and HSAs. The federal list also protects ERISA-qualified plans in full under 11 U.S.C. § 522(b)(3)(C), though it caps IRAs at about $1.5 million in aggregate. Recent contributions made in contemplation of bankruptcy can be clawed back as fraudulent transfers under Texas Business & Commerce Code § 24.005.

Does Texas have a wildcard exemption?

No, Texas does not have a wildcard exemption. That’s the main reason a debtor with significant non-homestead liquid assets may prefer the federal list, which provides a wildcard of $1,675 plus up to $15,800 of unused federal homestead under 11 U.S.C. § 522(d)(5). The wildcard can be applied to any type of property, including cash, tax refunds, and brokerage accounts that Texas law otherwise leaves exposed.

What happens if I just moved to Texas?

Under 11 U.S.C. § 522(b)(3)(A), you must have been domiciled in Texas for the 730 days before filing to use Texas exemptions. If you don’t meet that requirement, you use whichever state you lived in longest during the 180 days before that two-year window. That means a recent transplant might be stuck with the exemption list of their former state, which is often less generous than Texas. Waiting to file can unlock the Texas list.

This article is for informational purposes only and does not constitute legal advice. Exemption rules are fact-specific, and the dollar amounts update every three years. Talk to a Texas-licensed bankruptcy attorney about your specific situation before filing.