Washington Estate Tax Changes
July 1 falls on a Wednesday this year, but it is anything but an ordinary Wednesday for Washington estate tax. July 1, 2026, is the date Washington’s estate tax rates are scheduled to change once again—and this time, the news is mostly good for estates of all sizes.
Washington’s estate tax has been in flux since July 2025. Here’s how the rates have evolved:
Before July 1, 2025: The estate tax exclusion amount was frozen at $2.193 million since 2018, and estate tax rates ranged from 10% on the first million dollars of taxable estate value to 20% on the portion of a taxable estate greater than $9 million.
July 1, 2025 – June 30, 2026: The estate tax exclusion amount increased to $3 million July 1, 2025, increased again to $3.076 million on January 1, 2026, and was set to continue to increase annually in line with inflation. Rates increased significantly, ranging from 10% on the first million to a top rate of 35% on estates with a taxable value greater than $9 million.
Starting July 1, 2026: Rates return to the pre-2025 structure, with a 10% bottom rate and a 20% top rate on estates exceeding $9 million. The estate tax exclusion amount has been reset to $3 million, and that exclusion amount will not increase until another legislative update.
What’s Changing on July 1, 2026
For estates of people who die on or after July 1, 2026, Washington’s estate tax will be calculated using the below rate schedule, which is applied to the value of an estate greater than the $3 million exclusion amount:
- $0 to $1 million: 10% on the taxable estate value
- $1 million to $2 million: $100,000 plus 14% on the amount over $1 million
- $2 million to $3 million: $240,000 plus 15% on the amount over $2 million
- $3 million to $4 million: $390,000 plus 16% on the amount over $3 million
- $4 million to $6 million: $550,000 plus 18% on the amount over $4 million
- $6 million to $7 million: $910,000 plus 19% on the amount over $6 million
- $7 million to $9 million: $1,100,000 plus 19.5% on the amount over $7 million
- Over $9 million: $1,490,000 plus 20% on the amount over $9 million
What This Means in Practice
The July 1, 2026, changes represent a significant tax reduction compared to the rates in effect during the last year, when the top estate tax rate reached 35 percent. Here are some real-world examples:
Example 1: $8 Million Estate
- After the $3 million exclusion, the value of the Washington taxable estate is approximately $5 million
- Under the July 2025 – June 2026 rates: $610,000 base tax plus 23% on $1 million = $840,000 total estate tax
- Under the July 2026 rates: $550,000 base tax plus 18% on $1 million = $730,000 total estate tax
- Savings: $110,000
Example 2: $13 Million Estate
- After the $3 million exclusion, the value of the Washington taxable estate is approximately $10 million
- Under the July 2025 – June 2026 rates: $1,930,000 base tax plus 35% on $1 million = $2,280,000 total estate tax
- Under the July 2026 rates: $1,490,000 base tax plus 20% on $1 million = $1,690,000 total estate tax
- Savings: $590,000
The larger the estate, the more substantial the savings under the new rate structure.
Looking Ahead
The July 1, 2026, rate changes are unlikely to be the end to this transitional period in Washington estate tax law. Additional changes to the Washington estate tax laws are expected in 2027 to address the exclusion amount and allow it to increase in step with inflation. Washington estate tax planning remains essential for anyone with assets approaching or exceeding the $3 million exemption threshold.
To learn more please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.