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Washington State Estate Tax Update: What You Need to Know

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What’s Changed

Effective July 1, 2025, Engrossed Substitute Senate Bill 5813 (ESSB 5813) takes effect, bringing two major changes to the estate tax in Washington:

  1. Exemption Increase

    • Individual estate tax exemption rises from $2.193 million to $3 million per person

    • Starting January 1, 2026, the exemption will be adjusted annually for inflation

  2. Steeper Tax Rates for Larger Estates

    • Rates for taxable estates above the exemption have increased progressively:

      • $0–$1M: still 10%

      • $1M–$2M: 15% (was 14%)

      • $2M–$3M: 17% (was 15%)

      • $3M–$4M: 19% (up from 16%)

      • $4M–$6M: 23% (was 18%)

      • $6M–$7M: 26% (was 19%)

      • $7M–$9M: 30% (was 19.5%)

      • Over $9M: 35% (up from 20%)

As a result, estates worth more than $9 million will now face the highest state estate tax rate in the nation

Why It Matters

  • Mid‑sized estates (between ~$2.2M and $3M) now benefit significantly, as they fall below the threshold.

  • High‑value estates face dramatically higher taxes. For instance, an estate over $9M now incurs a 35% state tax, on top of potential federal estate taxes (40%), creating combined rates of around 61%

New Planning Considerations

  • Estate Planning Review: Clients should update wills, trusts, and gifting strategies to optimize the new exemption and bracket changes.

  • Marital Deduction Strategies: For married couples, planning can help preserve both spouses’ exemptions for the next generation

    Business Ownership: The qualified family‑owned business deduction increases to $3 million, which may influence succession planning

  • Inflation Indexing: With indexing beginning in 2026, proactive planning can help capture future exemption growth.

Action Steps for Clients

  1. Assess whether your estate now falls below or above the new $3M exemption.

  2. Review and update estate planning documents to reflect new thresholds.

  3. Consider gifting strategies now—Washington does not tax lifetime gifts.

  4. Explore trust structures (e.g., bypass trusts, SLATs, GRATs) to mitigate exposure.

  5. Schedule an estate planning consultation to tailor strategies based on updated law.

Bottom Line

Washington’s July 1 changes offer relief for moderate estates but impose tougher tax burdens on larger ones. Now more than ever, customized estate planning is essential. Whether you're protecting generational wealth or optimizing exemption use, timely strategy adjustments will pay dividends.

Questions? Van Pelt Law is ready to help you understand how these changes affect your situation and assist in designing tax‑efficient strategies. Reach out today.