First, what is an estate tax?
An estate tax is a tax on the transfer of property at death. In Washington, the tax is generally paid by the estate before assets are distributed to beneficiaries. It is not the same thing as an inheritance tax paid directly by the person receiving the assets.
Washington requires an estate tax return if the gross value of the estate is over the filing threshold and the person was domiciled in Washington, or if a nonresident owned Washington real estate or tangible personal property.
What changed?
Washington’s estate tax has had a few changes recently.
Before July 1, 2025, the Washington estate tax exemption was $2.193 million. Beginning July 1, 2025, the exemption increased to $3 million. That means more assets could avoid incurring Washington estate tax.
For January 1- June 30 2026, the exemption has received an inflation adjustment to $3,076,000. But for deaths occurring July 1st 2026 or later, the exemption is reset to $3,000,000 and, is "not set to increase going forward due to an expired CPI in the statute".
Then Washington made another change through SB 6347. For deaths on or after July 1, 2026, the exemption resets to $3 million, and the estate tax rates roll back to the prior rate structure. The top marginal rate drops from 35% back to 20%. This will be a welcome respite for high net worth Washington residents.
A few planning questions to consider
This is a good time to review:
- Your net worth estimate
Include real estate, retirement accounts, taxable investments, business interests, life insurance, and other assets. - How your accounts are titled
Your will or trust matters, but so does the way assets are registered. Joint accounts, transfer-on-death designations, beneficiary forms, and community property considerations can all affect how assets transfer. - Whether your estate documents still work as intended
Some estate plans use formulas tied to exemption amounts. When the exemption changes, those formulas may create a different result than expected. - Liquidity
If most wealth is tied up in real estate or a business, the estate may need a plan for how taxes, expenses, or buyouts would be paid. - Step-up in basis planning
Estate tax and income tax are different issues. Sometimes the goal is not just minimizing estate tax, but also preserving favorable tax treatment for heirs.
Does this mean you need to redo your estate plan?
Not necessarily, but it may mean you should review it. A good estate plan is not something you create once and never look at again. It should evolve as your life, your assets, your family, and the law change.
For many families, the next step is not dramatic. It may simply be:
- updating your net worth statement,
- reviewing your beneficiary designations,
- confirming how accounts and real estate are titled,
- and checking in with your estate planning attorney.
The bottom line
Washington’s estate tax rules have changed, and they may affect more families than people realize. If your estate may be near or above $3 million, or if your documents have not been reviewed in several years, this is a good time to start the conversation with your financial advisor, CPA, and estate planning attorney.
For more info, visit the state website: https://dor.wa.gov/taxes-rates/other-taxes/estate-tax
Please note that this is not tax or legal advice, talk to your professional about your unique situation.