Washington State’s estate tax might get a major overhaul – Here’s what you need to know.

Caleb Wilson, Attorney | 05.05.25

Washington State is on the verge of a significant shift in its estate tax policy. With the recent passage of Engrossed Substitute Senate Bill 5813 (ESSB 5813) by both the State Senate and House, the proposed changes await only the Governor’s signature to become law. However, the Governor does have the ability to veto the bill, in which case the current estate tax law would remain unchanged.

What’s changing?

If signed into law, ESSB 5813 will increase the estate tax exclusion amount and introduce higher marginal tax rates for taxable estates with the goal of having a more progressive estate tax—changing estate planning for anyone residing in or owning property in Washington State. There are additional changes, but for the purposes of this post, we will focus on these two key changes.

 

  1. Higher Exclusion Amount

    2. Currently, Washington excludes the first $2.193 Million of an estate from taxation. While it was originally supposed to keep pace with inflation, due to some complications with the index used for inflation, this exclusion amount has remained stagnant for years. ESSB 5813 raises this exclusion amount to $3 Million, effective July 1, 2025, with annual inflation adjustments beginning in 2026.

    This is a major benefit for those with estates worth around $3 Million or less.

  2. Higher Marginal Tax Rate Structure.

    3. ESSB 5813 introduces a steeper rate structure for taxable estates which now reaches up to 35%:

Examples of Tax Impact

To illustrate how these changes might impact you, the following examples show the total size of an Estate, what would be owed under the current rates, what would be owed under the new rates if ESSB 5813 is passed into law, and the tax savings or increased taxes owed. Please note, this is a rudimentary example that does not consider other factors that could impact estate taxes owed. As such this is for educational purposes only and you will need to consult an estate planning professional to evaluate how this may apply to your individual situation.

Tipping Point: When Taxes Start to Increase

As is demonstrated by the examples provided above, the increased exclusion amount provides significant relief for small to moderate sized estates. However, eventually the increased marginal tax rates outweigh the benefit of the increased exclusion amount for larger estates. The tipping point for when an estate will start to experience higher taxes under ESSB 5813 compared to current law is once the total estate reaches around $9 Million.

For example, an Estate worth about $9 Million in total under current legislation would owe $1,063,330 under current law but would owe $1,070,000 under ESSB 5813. After reaching this tipping point, estates exceeding $9 Million will quickly owe increasing amounts that greatly exceed what would otherwise be owed under current law.

Bottom Line

ESSB 5813 will:

  • Reduce estate taxes for small and to moderately sized estates under about $9M
  • Increase estate taxes for the wealthiest estates over about $9M

If signed into law, these changes take effect July 1, 2025. Regardless of the size of your total estate, it is important that anyone living or owning property in Washington State consult with an attorney and carefully evaluate how this may impact their estate plans and what opportunities this may present them with.