SB 5813 Washington State Legislature
Governer Ferguson signed sweeping new tax bills into law on Tuesday. These new laws include ramifications for estate taxes, which we've summarized below.
Key Takeaways
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Beginning July 1, 2025, the Washington estate tax exemption will increase from $2,193,000 to $3,000,000, adjusted annually for inflation.
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The annual inflation adjustments will begin on January 1, 2026.
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Beginning July 1, 2025, the estate tax rates are increased from a top rate of 20% to a top rate of 35%.
The bill creates a more progressive rate structure for the capital gains tax and estate tax to increase funding of the education legacy trust account. The new law makes two significant changes to the Washington estate tax. First, the increase to the estate tax exemption to $3 million for deaths occurring on or after July 1, 2025, and updates the reference to the Consumer Price Index to allow for annual inflation adjustments (using an index for the Seattle metropolitan area). The WA exemption is currently $2,193,000 per person and it has been this amount since 2018. Second, estate tax rates are being increased for almost every bracket. The highest rate is now 35% for estates with net assets exceeding $9 million.
Other changes included in the legislation:
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Increases qualifying family-owned business interests’ (QFOBI) deduction from $2,500,000 to $3,000,000. The deduction is limited to the lesser of the value of the QFOBI or $3,000,000.
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Extends the agricultural deduction to property passing to a “qualified nonfamilial heir” for decedents dying on or after July 1, 2025.