Washington State Does Have an Estate Tax, But It Only Affects Large Estates
Washington State has an estate tax, but it applies only to estates worth more than $2.193 million as of 2024. The threshold changes each year based on inflation. If an estate falls below that amount, no state estate tax is owed, regardless of how the assets are distributed.
The tax rate ranges from 10% to 20% on the portion of an estate that exceeds the threshold. This means a smaller portion of a very large estate is taxed at the lowest rate, and only the amount above certain brackets reaches the higher percentages. Washington is one of only 17 states that currently impose an estate tax.
The federal government also has a separate estate tax with a much higher threshold — $13.61 million per person in 2024. An estate can owe both Washington State tax and federal tax if it exceeds both thresholds, though federal law allows a credit for state taxes paid.
Key Takeaways
- Washington's estate tax applies only to estates exceeding $2.193 million in 2024, a threshold that rises each year with inflation.
- The state tax rate ranges from 10% to 20% depending on how much the estate exceeds the threshold, not a flat percentage on the whole estate.
- Estates below the threshold owe no Washington State estate tax, even if they owe federal estate tax.
- The person who inherits property does not pay the tax — the estate itself pays it before assets are distributed to heirs.
How Washington's Estate Tax Threshold Works
The $2.193 million threshold is adjusted annually for inflation. The Washington Department of Revenue publishes the new threshold each year, usually in late fall for the following year. If you are managing an estate, check the current year's threshold on the Department of Revenue website rather than relying on an older figure.
The threshold applies to the total value of the estate, not to individual gifts or inheritances. An estate includes real property, bank accounts, investments, retirement accounts, life insurance proceeds, and any other assets the deceased owned at death. Some assets, like those in a living trust or those passing directly to a named beneficiary (such as a spouse), may be excluded depending on how they are titled.
If an estate is worth $2.2 million, only the amount above $2.193 million — roughly $7,000 — is subject to the tax. The tax is not applied to the entire $2.2 million.
Washington Estate Tax Rates and How They Are Calculated
Washington uses a progressive tax structure for estates. The tax brackets are set by law and do not change annually, though the threshold itself does. The rate starts at 10% on the first portion of taxable estate and increases to 20% on the largest portions.
Here is how the brackets work: if an estate exceeds the threshold by $100,000, that $100,000 is divided into brackets. The first portion falls into the 10% bracket, the next into the 11% bracket, and so on, up to 20%. Only the amount in each bracket is taxed at that rate.
The executor or personal representative of the estate is responsible for calculating and paying the tax. They file Form WA-706 with the Washington Department of Revenue within nine months of the death, though an extension can be requested.
Who Pays the Estate Tax and When
The estate itself pays the tax, not the individual heirs. The executor uses estate assets to pay the tax before distributing the remaining property to beneficiaries. This means heirs may receive less than they would have if the estate had been smaller.
The tax is due nine months after the date of death. If the estate cannot pay in full by that date, the executor can request an extension or, in some cases, arrange to pay in installments. Penalties and interest explore if the tax is not paid on time.
If the estate includes illiquid assets — such as real estate or a family business — the executor may need to sell some assets to raise cash for the tax bill. This is one reason people with large estates sometimes use trusts or other planning strategies during their lifetime.
Difference Between Washington State Estate Tax and Federal Estate Tax
Washington State estate tax and federal estate tax are separate taxes with different thresholds and rules. The federal threshold is much higher — $13.61 million per person in 2024 — so most estates that owe Washington tax do not owe federal tax.
However, an estate large enough to exceed both thresholds owes both taxes. Federal law allows the estate to claim a credit for state taxes paid, which reduces the federal tax owed. This prevents the same estate from being taxed twice on the same dollars.
The federal threshold is set to drop to roughly $7 million per person in 2026 unless Congress changes the law. This means more estates may become subject to federal tax in the future, even if they are well below Washington's threshold.
Planning Strategies for Estates Near the Threshold
People with estates approaching or exceeding Washington's threshold sometimes use legal strategies to reduce the taxable estate. A revocable living trust does not reduce the taxable estate but can simplify the process of transferring property to heirs and may avoid probate.
An irrevocable life insurance trust (ILIT) can remove life insurance proceeds from the taxable estate if set up correctly and at least three years before death. Charitable donations during life or through a will can also reduce the taxable estate.
Married couples can each use the full threshold, so a married couple with a combined estate of $4.386 million may owe no Washington State estate tax if the estate is structured properly. This requires careful planning and the right legal documents.
These strategies require professional guidance from an attorney or tax professional familiar with Washington law. The cost of planning is often far less than the tax saved.
What Happens If an Estate Does Not Pay the Tax
If an estate owes Washington State estate tax and does not pay it, the Department of Revenue can place a lien on estate property. This prevents the property from being sold or transferred until the tax is paid. The state can also pursue collection against the executor personally in some cases.
Heirs cannot receive their inheritance until the tax is resolved. This can delay the distribution of assets by months or longer. Interest and penalties accumulate on unpaid tax, making the total amount owed grow over time.
If you are an executor managing an estate, it is important to determine whether the estate owes tax and to file the required form on time, even if you believe no tax is owed. Filing protects you from personal liability and starts the statute of limitations for the Department of Revenue to audit the return.
Frequently Asked Questions
Does Washington have an inheritance tax on money I receive from a relative?
No. Washington has no inheritance tax on heirs. The estate tax is paid by the estate before you receive your share, not by you after you receive it. Some states tax heirs directly, but Washington does not.
If I inherit property worth $500,000, do I owe estate tax?
Not directly. You do not owe tax on the inheritance itself. However, if the entire estate exceeds $2.193 million, the estate may owe tax, which could reduce the amount you ultimately receive. The tax is paid from the estate's assets before distribution.
What if the estate is worth exactly $2.193 million?
No tax is owed. The threshold is $2.193 million, so an estate at that exact amount is not subject to Washington State estate tax. Only amounts above the threshold are taxable.
Can I reduce my estate to avoid the tax while I am still alive?
Yes, but it requires planning. Gifts to family members, charitable donations, and certain trusts can reduce your taxable estate. However, gifts over a certain amount may have tax consequences, and some strategies require professional guidance to be effective.
Does a living trust avoid the estate tax?
A revocable living trust does not reduce the taxable estate for tax purposes, though it can simplify the transfer of property and may avoid probate. An irrevocable trust set up correctly can reduce the taxable estate, but it has other legal consequences you should understand before creating one.