Washington State Estate Tax: The Rules for 2026 and Beyond
Washington’s estate tax rules changed more than once in a short period. For deaths on or after July 1, 2026, the current rule is a $3,000,000 applicable exclusion amount and graduated marginal rates from 10% to 20%.
Estate Tax Changes
(Rules for deaths on or after July 1, 2026)
Exemption Increase:
The applicable exclusion amount is $3,000,000. Under the law as currently written, it is not expected to increase annually because the statute refers to an expired CPI series.
Rate Adjustments:
The current marginal rate schedule ranges from 10% to 20%. The 20% bracket applies above $9 million of Washington taxable estate.
Impact:
The applicable rule depends on the date of death. The $3,076,000 exclusion and 10%–35% rate schedule applied only from January 1 through June 30, 2026.
What This Means for Planning:
The rollback lowered the top marginal rate, but it did not eliminate Washington estate tax. Families near or above the exclusion should review their current tax assumptions, ownership, liquidity, and projected growth.
Capital Gains Tax Changes (Effective for Tax Year 2025)
New Top Bracket Introduced:
Washington’s capital gains tax will no longer apply a flat 7% rate across the board. Starting with the 2025 tax year, gains exceeding $1 million will be taxed at 9.9%, while gains below that amount will continue to be taxed at 7%.
This change primarily affects households with significant annual investment gains—such as those from business sales or large stock transactions—and marks a shift toward a more income-sensitive approach to taxing capital gains.
Broader Legislative Context
These reforms aim to increase funding for the Education Legacy Trust Account, which supports public education, childcare, early learning, and higher education in Washington State.
Federal Estate Tax Context
For 2026, the federal estate tax exemption is $15 million per individual and the federal top rate is 40%. Federal and Washington planning should be coordinated, but they are separate systems with different exemptions and calculations.
Looking Ahead
The estate-tax discussion above is general educational information, not legal or tax advice, and does not create an attorney-client relationship. Estate-tax results depend on the date of death, asset values, deductions, ownership, and the structure of the plan.
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