Washington Estate Tax Update - Washington Increases the Exemption and Almost Doubles the Rate.
On Wednesday, May 21st, 2025, Washington State Governor Bob Ferguson signed into legislation the Engrossed Substitute Senate Bill 5813. This Bill, now law, amended RCW 82.87.040, 83.100.040, and 83.100.04 and reenacted and amended RCW 83.100.020 by increasing the Washington Estate Tax Exemption and Rates, Washington Capital Gains, and adding Qualified Non-Familial Heir for QFOBI.
The law goes into effect July 1, 2025, and made the following changes to Washington State Exemption and Tax rates for individual estates:
- The exemption will increase from $2,193,000.00 to $3,000,000.00.
- Annual inflation adjustments to Washington’s exemption will begin on January 1, 2026.
- Estate tax rates will increase from a maximum rate of 20% to a maximum rate of 35%.
How Much More Tax is That?
Before Bill 5813 was signed into law, the exemption from estate tax was $2,193,000.00 per person, meaning the first $2.193 million of assets in an individual’s estate was not subject to Washington’s estate tax. That exemption amount had not changed since 2018.
Assets above the $2.193 million exemption amount that were subject to Washington’s estate tax on a graduated scale from 10% to 20% in accordance with the chart below:
After July 1, 2025, the applicable exemption amount for a given individual estate is raised to $3 million for 2025, and law provides that the exemption amount will change each year in accordance with the consumer price index for the Seattle Metropolitan Area. The exemption amount that will be applicable to a given individual estate is the amount in effect as of the date of death of the individual. The higher exemption amount will be beneficial to estates between $2.193 and $3 million, but for all estates above that exemption, the taxes have been substantially increased.
Starting on July 1, 2025, the amount an estate must pay will change according to the rates reflected in the chart below:
With the new changes to the law, Washington has increased tax rates for every bracket but the first with the highest rate now 35% for estates with net assets exceeding $9 million above the exclusion, and these estates are now subject to the highest state-level estate tax rate in the nation by a large margin.
The federal estate tax is levied at 40% for taxable estates over $13.99 million for 2025. Though state estate taxes paid can be deducted against federal estate taxes, the result from the change is that for large estates subject to both the federal and state-level estate taxes, the combined marginal tax rate will be approximately 61%.
How will this Affect My Estate Plan?
These changes to the law will apply to every individual estate where the death occurs after July 1, 2025, regardless of the current estate plan and asset protection that you may currently have in place. Speaking to an estate planning professional to ensure your estate and assets are protected is imperative with these changes now in place, and all Washington residents with taxable estates would benefit from proactive estate planning to help mitigate some of these increased estate tax impacts.
This is intended to be a source of general information, not an opinion or legal advice on any specific situation, and does not create an attorney-client relationship with our readers. If you would like more information regarding whether we may assist you in any particular matter, please contact one of our lawyers, using care not to provide us with any confidential information until we have notified you in writing that there are conflicts of interest and that we have agreed to represent you on the specific matter that is the subject of your inquiry.