MORE State Estate Tax Law Changes

Confused yet?  You are not alone.  Washington State tax laws have been changing dramatically in recent years.  I will very briefly summarize the 2026 state estate tax law changes below.  

As explained in my prior post, for deaths as of July 1, 2025, the legislature increased the individual exclusion amount to $3,000,000 per person (to be adjusted for inflation).  The estate tax rate also increased, including to a top rate of 35%, whereas previously the top rate had been 20%.  In 2026, an inflation adjustment was duly made, taking the individual exclusion up to $3,076,000.  

In spring 2026, the legislature changed the law again.  The exclusion was reduced to $3,000,000 for deaths July 1, 2026–December 31, 2026, with an inflation adjustment to be made in 2027 and subsequent years.  However, in instructing how to calculate the inflation adjustment, the legislature again referenced a consumer price index area that no longer exists, with the widely expected result that there will be no inflation adjustment made to the $3,000,000 figure.  The legislature also changed the law to adopt the lower estate tax rate table that existed immediately before July 1, 2025 (a graduated rate between 10% and 20%), for deaths on or after July 1, 2026.  

What does this mean?  Among other things, this means that if an individual dies on or after July 1, 2025 and before July 1, 2026, with an estate exposed to Washington State estate tax, the rate is higher than if the individual died before or after that period.   

Estate tax is a truly complex subject with many variables.  This post is intended to merely highlight some of the issues, and shouldn’t be considered a substitute for personalized professional guidance.