Washington State Does Not Have an Inheritance Tax

Washington does not tax money or property you inherit from a relative. There is no state inheritance tax, and there has not been one for decades. If someone leaves you money, real estate, or other assets in their will, you will not owe Washington state tax on that inheritance.

This is different from federal estate tax, which applies only to very large estates — currently those worth more than $13.61 million in 2024. Most people never encounter federal estate tax. Washington's lack of a state inheritance tax means residents in this state have one less tax to worry about when they receive an inheritance.

Key Takeaways

  • Washington has no state inheritance tax on money or property you receive from a will or trust.
  • Federal estate tax applies only to estates worth more than $13.61 million in 2024, and most inheritances fall well below that threshold.
  • Some states do have inheritance taxes, but Washington is not one of them.
  • You may still owe income tax on certain types of inherited assets that generate ongoing income, such as rental property or investment accounts.

How Washington Differs From Other States

Twelve states and the District of Columbia currently have inheritance taxes. These states are Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania, and six others. If you live in one of those states and inherit money, you may owe tax on it — the rate and threshold depend on your relationship to the person who died and the size of the inheritance.

Washington chose not to impose an inheritance tax. This means residents here keep 100 percent of what they inherit, with no state tax bite. If you moved to Washington from a state with an inheritance tax, or if you are considering moving here, this is one less tax liability to factor in.

What About Federal Estate Tax

Federal estate tax is separate from state inheritance tax. It applies to the total value of a person's estate — everything they owned — before it is divided among heirs. In 2024, federal estate tax kicks in only for estates worth more than $13.61 million. The executor of the estate (usually named in the will) is responsible for paying it, not the individual heirs.

Because this threshold is very high, most people never deal with federal estate tax. You would need to inherit from someone with substantial wealth — typically a business owner, real estate investor, or someone with a large investment portfolio — for this to affect you. If the estate is below the threshold, no federal estate tax is owed at all.

Income Tax on Inherited Assets That Generate Money

While you do not owe tax on the inheritance itself in Washington, you may owe income tax on money that inherited assets produce after you receive them. For example, if you inherit a rental property, you will owe income tax on the rent you collect. If you inherit a brokerage account with stocks that pay dividends, you will owe tax on those dividends.

This is not a tax on the inheritance — it is income tax on earnings. Washington has no state income tax on wages or salaries, but it does tax capital gains (profits from selling stocks or other investments) at a rate of 7 percent on gains over $250,000 per year. This applies to inherited assets the same way it applies to any other investment you own.

What You Need to Know About Inherited Property

If you inherit real estate in Washington, you do not owe inheritance tax, but you may owe property tax going forward. Property tax in Washington is assessed by county and varies by location — it is not a state-level tax. When you inherit property, the county assessor may reassess its value for tax purposes, which could change your annual property tax bill.

You also do not have to pay capital gains tax on inherited property at the moment you receive it. However, if you later sell the inherited property, you may owe capital gains tax on the profit between what it was worth when you inherited it and what you sell it for. Washington's 7 percent capital gains tax applies to this sale if your total gains exceed $250,000 in a year.

How to Handle Your Inheritance

When you receive an inheritance, keep records of what you inherited and when. If the inheritance includes investments or property that generates income, track that income separately so you can report it correctly on your tax return. If you are unsure whether you owe tax on a specific asset, a tax professional or accountant can review your situation.

The executor of the estate should provide you with documentation of what you inherited. For investment accounts, you will receive statements showing the value on the date of death — this is important for calculating capital gains tax if you later sell. For real estate, you may want a professional appraisal for the same reason.

Frequently Asked Questions

Do I have to report my inheritance on my tax return?

You do not report the inheritance itself as income. However, if the inherited asset generates income — such as rent, dividends, or interest — you must report that income. Keep records from the executor showing what you inherited and its value on the date of death.

What if I inherited money from someone who lived in another state?

If you live in Washington, Washington's tax rules explore to you. The state where the person who died lived does not matter for your tax bill. However, that state's estate tax may explore to the estate itself before it is divided among heirs — your executor will handle that.

Do I owe capital gains tax when I inherit stock or mutual funds?

No, not at the moment you inherit them. You only owe capital gains tax if you later sell them for more than they were worth on the date you inherited them. Washington taxes capital gains over $250,000 per year at 7 percent.

Can I avoid federal estate tax by moving to Washington?

Moving to Washington does not affect federal estate tax. Federal estate tax is based on the total value of an estate, not where the person lived. Only very large estates — over $13.61 million in 2024 — owe federal tax, and that applies regardless of state.

What happens if the person who died left a will?

The will goes through probate, a court process that validates it and distributes assets according to its terms. The executor named in the will manages this process. Probate can take several months to over a year. During this time, you do not owe inheritance tax in Washington, but you may owe income tax on any assets that generate income while the estate is being settled.