Federal and Washington Estate Tax Overview
Washington families face two separate estate tax systems: the federal estate tax and Washington’s own state estate tax. The two have very different thresholds, and it is entirely possible to owe Washington estate tax on an estate that owes nothing federally. With Puget Sound home values, a long-time homeowner with retirement savings and life insurance can cross the state threshold without ever feeling wealthy. This guide explains both layers and the planning strategies that can reduce them. For strategy tailored to your estate, talk with a Seattle estate planning attorney at Latterell Law.
The Washington Estate Tax
Washington imposes an estate tax on the estates of residents, and of nonresidents who own Washington real estate or tangible property, under Chapter 83.100 RCW. Key features:
- Exclusion amount. For deaths on or after July 1, 2026, the exclusion is $3 million per person, following legislative changes that raised it from the long-frozen $2.193 million figure. The exclusion was $3,076,000 for deaths in the first half of 2026, and current amounts are always published by the Washington Department of Revenue.
- Graduated rates. Tax applies only to the value above the exclusion, starting at 10 percent on the first $1 million of taxable estate and rising to a top rate of 20 percent on amounts over $9 million for deaths on or after July 1, 2026. A temporary 35 percent top rate applied to deaths between July 1, 2025 and June 30, 2026, so the date of death can significantly change the bill.
- No portability. Unlike the federal system, a surviving spouse cannot inherit a deceased spouse’s unused Washington exclusion. Without planning, a married couple can effectively lose one $3 million exclusion at the first death. Credit shelter trust planning, built with the help of a Seattle trust lawyer, preserves both.
- Filing deadline. A Washington estate tax return and any tax due are generally required nine months after death for estates above the filing threshold.
- Family business relief. A deduction is available for qualified family-owned business interests, which matters for owners planning succession.
The Federal Estate Tax
The federal estate tax reaches far fewer families. For deaths in 2026, the federal exemption is $15 million per person, indexed for inflation going forward, with a top rate of 40 percent above that amount. The federal system does allow portability, so a surviving spouse can elect to use a deceased spouse’s unused exemption.
The practical takeaway for Washington residents: the gap between the $15 million federal exemption and Washington’s $3 million exclusion is enormous. Many families who will never owe a dollar of federal estate tax still face a meaningful Washington estate tax bill, and planning aimed only at the federal threshold misses the tax most likely to apply.
Planning Strategies That Reduce Estate Taxes
- Credit shelter (bypass) trusts. For married couples, this is the workhorse of Washington estate tax planning, capturing the first spouse’s exclusion instead of losing it.
- Lifetime gifting. Washington has no gift tax, and federal law allows annual exclusion gifts to each recipient without gift tax consequences. Consistent gifting can move meaningful value out of a taxable estate over time.
- Irrevocable trusts. Properly structured irrevocable trusts can remove assets, including life insurance proceeds, from your taxable estate. See our Seattle irrevocable trust lawyer page for how these work.
- Charitable giving. Gifts to qualified charities at death are deductible from the taxable estate, and charitable trusts can benefit both your family and your causes, as covered in our charitable giving guide.
- Valuation and timing strategies. For larger estates and business owners, additional techniques exist, and families with significant assets can learn more on our Seattle high-net-worth estate planning page.
A caution: because Washington’s exclusion, rates, and rules have changed multiple times in recent years, plans drafted under the old $2.193 million exclusion or funded with outdated formulas deserve a fresh review.
Does Washington Have an Inheritance Tax?
No. An estate tax is paid by the estate before distribution; an inheritance tax is paid by the people who receive property. Washington has only an estate tax. Beneficiaries do not pay Washington tax on what they inherit, though inherited retirement accounts carry their own income tax rules.
Get Ahead of the Tax
Estate tax planning works best years before it is needed. Latterell Law founder Angel M. Latterell has more than 20 years of experience helping Washington families structure their estates, from credit shelter trusts to gifting and charitable strategies, so more of what they built reaches the people they love. Contact Latterell Law today to schedule a consultation.
