Long awaited changes are coming soon to Washington’s estate tax rules — and whether you’re a high-net-worth individual, a business owner, or someone planning for the future, these updates could have a major impact.
The Engrossed Substitute Senate Bill 5813, signed into law on May 20, 2025, makes several key adjustments to the state’s estate tax rates, exemption thresholds, and deductions for family-owned businesses and farms. Most changes go into effect starting July 1, 2025.
Let’s break down what’s changing and how it might affect your estate plan.
Estate Tax Exemption Increased to $3 Million
Beginning July 1, 2025, the portion of your estate that is exempt from Washington estate tax — called the “exemption amount” — will rise from $2.193 million to $3 million.
Starting in 2026, this exemption will be adjusted annually for inflation, based on the Consumer Price Index (CPI) for the Seattle metropolitan area. This addresses a long-standing issue where the exemption had remained frozen since 2018 due to a technical reference to an outdated CPI.
New, Steeper, Estate Tax Rate Structure
In addition to raising the exemption, the law also increases the tax rates on estates that exceed the exemption threshold. The first million over the $3 million exemption will be taxed at 15%. Rates then increase in brackets, up to a top marginal rate of 35% for amounts exceeding $9 million. This means that smaller estates will benefit from the higher exemption amount and larger estates will owe more due to the higher top tax brackets. See the illustration below for an example:
Estate of $5 million
- Before: Exemption = $2.193M; tax = $361,050
- After 7/1/2025: Exemption = $3M; tax = $250,000
Estate of $10 million
- Before: Exemption = $2.193M; Tax = $1,257,365
- After 7/1/2025: Exemption = $3M; Tax = $1,330,000
Many tax avoidance planning techniques are available. See your estate planning attorney to make sure your estate does not pay avoidable estate taxes.