Overview
May 20, 2025, Washington State enacted significant changes to its estate tax and capital gains tax laws. These measures are intended to increase state revenue and address budgetary concerns while adjusting tax rates for high-income individuals and large estates.
Estate Tax Changes
- The estate tax exemption has been increased from $2.193 million to $3 million, effective July 1, 2025.
- The estate tax rates have been adjusted, with the highest rate now set at 35% for estates exceeding $9 million.
- The law also expands deductions for family-owned businesses and agricultural property.
Capital Gains Tax Changes
- A new progressive rate structure has been introduced:
- 7% tax on capital gains up to $1 million, after the standard deduction of $270,000.
- 9.9% tax on capital gains exceeding $1 million, retroactive to January 1, 2025.
- The tax applies to long-term capital assets such as stocks and bonds, but excludes real estate transactions.
Implications
These tax changes are expected to generate hundreds of millions in additional revenue for Washington State, funding education and other public services. However, they may also impact high-net-worth individuals and businesses, prompting discussions on economic competitiveness and tax policy. If you would like to learn additional information about this law change, please click here to read the full Senate Bill. If you are single with an estate exceeding $3 million or married with an estate exceeding $6 million and you’d like to schedule an appointment to learn how this affects your plan, please contact us.
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