Washington's rewritten estate tax took effect on July 1, 2025, for anyone who dies on or after that date. The law, Engrossed Substitute Senate Bill 5813, lifts the exclusion to $3 million from $2.193 million and raises the top rate to 35% from 20%, a level that Lasher Holzapfel Sperry & Ebberson describes as the highest state estate tax rate in the nation by a large margin. For affluent families in Seattle, Bellevue and across the state, the change cuts both ways.
What changed
Three changes arrive together, according to a Beresford Booth summary of the legislation. First, the per-person exclusion rises to $3 million. Second, the exclusion is no longer frozen: it will rise each January 1 with the consumer price index for the Seattle metropolitan area. The old formula relied on a federal index that was discontinued in 2018, which is why the exclusion stalled at $2.193 million for years. Third, rates climb in every bracket above the first $1 million of taxable estate.
The schedule published by the Washington Department of Revenue applies to the taxable estate after the exclusion and other deductions:
| Washington taxable estate | Prior rate | Rate from July 1, 2025 |
|---|---|---|
| $0 to $1 million | 10% | 10% |
| $1 million to $2 million | 14% | 15% |
| $2 million to $3 million | 15% | 17% |
| $3 million to $4 million | 16% | 19% |
| $4 million to $6 million | 18% | 23% |
| $6 million to $7 million | 19% | 26% |
| $7 million to $9 million | 19.5% | 30% |
| Over $9 million | 20% | 35% |
The maximum deduction for qualified family-owned business interests also rises, to $3 million from $2.5 million. The filing threshold is measured against the gross estate, not the net estate.
Who is affected
Washington taxes a broad base. The taxable estate generally follows the federal definition and includes real estate, retirement accounts, brokerage and cash accounts, business interests, life insurance and personal property, less items such as charitable bequests, funeral costs and administration expenses. Real property located outside Washington is reduced under a separate formula.
That base matters because the federal exemption is far higher. With the federal exclusion at $13.99 million per person in 2025, as Goodwin notes, many Washington estates that owe nothing to the IRS still owe the state. Where both taxes apply, Lasher Holzapfel puts the combined marginal rate on large estates at approximately 61%.
The after-tax math
The higher exclusion helps moderate estates; steeper rates dominate at the top. The illustrative figures below assume a single decedent whose only deduction is the exclusion, and compare Washington tax under the prior and new schedules.
| Gross estate | Prior law | New law | Change |
|---|---|---|---|
| $4 million | $212,980 | $100,000 | -$112,980 |
| $6 million | $519,120 | $420,000 | -$99,120 |
| $10 million | $1,257,365 | $1,330,000 | +$72,635 |
| $15 million | $2,251,400 | $2,980,000 | +$728,600 |
| $25 million | $4,251,400 | $6,480,000 | +$2,228,600 |
In this simplified comparison the break-even point sits near $8.8 million of gross estate. Example: a widow with a $15 million estate built on a paid-off home, company stock and retirement accounts would see her estate's Washington bill rise by about $729,000, with no federal estate tax due because she is under the 2025 federal exemption. At $25 million, the state bill rises by roughly $2.2 million, before any federal tax on the amount above the federal exemption.
Moves to discuss with your advisor
- Plans drafted around the old numbers. The new rates apply to deaths after July 1 regardless of when an estate plan was signed, so formula clauses written for a $2.193 million exclusion may now fund trusts differently than intended.
- Charitable bequests. Because charitable transfers at death reduce the taxable estate, each dollar left to charity in the top bracket now avoids 35 cents of state tax, up from 20 cents.
- Family businesses and farms. Owners who may qualify for the family-owned business deduction or the farm deduction often review whether their holdings meet the conditions.
- Real estate in other states. Households with homes in more than one state may want the out-of-state property formula modeled.
- Married couples. The exclusion applies per person, so how assets are titled and whether the first spouse's exclusion is actually used is worth a fresh look with a CPA or estate attorney.
What to watch
The first inflation adjustment to the $3 million exclusion is scheduled for January 1, 2026. Watch for updated Department of Revenue return forms and guidance for estates of people who die after July 1, and for any move in future legislative sessions to revisit a rate schedule that now sits well above every other state's.
Sources
- First reported Three Big Changes to Washington Estate Tax Laws as of July 1, 2025 — Beresford Booth
- Estate tax tables — Washington State Department of Revenue
- Washington Estate Tax Update: Washington Increases the Exemption and Almost Doubles the Rate — Lasher Holzapfel Sperry & Ebberson
- Big Changes to Washington's Estate Tax: What Financial Advisors Need to Know — Wealth.com
- OBBBA Solidifies High Estate Tax Exemptions and Charitable Giving Changes — Goodwin
After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.
