Estate Tax Information

Estate Taxes Generally

An estate tax is a tax imposed on the transfer of the “taxable estate” of a deceased person, whether such property is transferred via a Last Will and Testament, Revocable Living Trust, other Will substitutes, or according to the state laws of intestacy.

Federal and state estate tax may be due on your estate if your gross estate is greater than the federal or state thresholds. The gross estate is the current market value of property you own including: cash and securities, real estate, trusts, insurance, annuities, retirement accounts, business interests, and tangible personal property. The estate tax due is calculated based on the taxable estate which is the gross estate minus specified deductions such as debts on estate property and property transferred to a surviving spouse or qualified charity.

At both the federal and state level, there is an unlimited marital deduction to surviving spouses inheriting from the decedent spouse. Thus, any assets passing to the surviving spouse will pass estate tax free.

1. Federal Estate Taxes

The federal estate tax threshold amount for year 2026 is $15.0 million. Thus, at your death you are allowed to pass on $15.0 million estate tax free at the federal level. This amount is indexed for inflation for every year after 2026.  The federal estate tax has a progressive rate structure where the first one million dollars of a taxable estate is taxed at rates ranging from 18% to 39%.  Every dollar after the first $1.0 million subject to the estate tax is taxed at a flat rate of 40%.

For married couples, the surviving spouse can make a “portability” election, under which, if an election is made, the surviving spouse’s exemption amount is increased by the deceased spouse’s unused exemption amount. This will effectively allow married couples to currently pass $30.0 million on to their heirs free from federal estate taxes with absolutely no planning at all.

2. State of Washington Estate Taxes

On May 20, 2025, Washington State’s Governor Bob Ferguson signed into law Engrossed Substitute Bill 5813.  This bill raises both the estate tax exclusion amount and the rate structures for estate taxes.  The individual Washington estate tax exclusion amount was increased from $2,193,000 to $3,000,000 for persons dying on or after July 1, 2025, but before January 1, 2026.  For every year after 2025, the $3,000,000 amount is indexed for inflation.  Thus, persons dying in 2026 are allowed to pass $3,076,000 million estate tax free at the State of Washington level.

The estate tax rate is a graduated rate.  Prior to July 1, 2025, the rate began at 10% and increased to a maximum of 20%.  For persons dying on or after July 1, 2025, the rate begins at 10% and increases to a maximum of 35%.  The old and new tax rates are reflected in the table below: