Estate and Gift Tax Figures

When most people contemplate their estate plan, they focus on how their assets will be distributed after their death. While that is an important part of any comprehensive estate plan, it is equally important to protect your assets during your lifetime and to ensure that taxes do not unnecessarily diminish the value of your estate after you are gone. To do that, you must have at least a basic understanding of federal and state gift and estate taxes, as well as the estate planning tools and strategies available to help minimize taxes.

For Washington residents, state estate tax rules are often the first and most immediate consideration in estate planning. The Bellevue estate planning attorneys at Legacy Estate Planning, LLC have created the following overview of Washington and federal estate and gift tax figures and planning resources. If you have specific questions or concerns, please contact our office to schedule a consultation.

• • Washington State Estate Tax

  • Washington is one of the few states that imposes a state-level estate tax in addition to the federal estate tax. Similar to the federal estate tax system, Washington allows a lifetime estate tax exemption (the amount that can pass tax-free when a person passes away). Washington’s estate tax rates range from 10 percent to 35 percent, depending on the size of the taxable estate. An estate may owe Washington estate taxes if the gross value of the decedent’s assets exceeds the applicable exemption amount and:

    • The decedent was domiciled in Washington at the time of death, or
    • The decedent was a non-resident but owned real estate or tangible personal property located in Washington.

    The Washington estate tax applies to the total value of assets owned or controlled by the decedent, including certain assets held in trust. Importantly, Washington does not impose a gift tax, which means lifetime gifts generally are not taxed at the state level. Because of this distinction, lifetime gifting can be a particularly valuable strategy in Washington estate planning. As of July 1, 2025, the exemption amount was $3 million, with adjustments for inflation expected in future years. Unlike the federal system, Washington does not allow portability of a deceased spouse’s unused exemption, which makes planning for married couples particularly important. Without proper planning, a couple may lose the benefit of the first spouse’s exemption.

• • Potential Changes to Washington Estate Tax Law

  • Washington estate tax laws are currently under legislative review, and policymakers have discussed potential revisions to exemption levels, tax rates, and other provisions. Because of this ongoing review, the rules governing Washington estate taxation may change in the future, making periodic review of your estate plan especially important.

• • Federal Lifetime Gift and Estate Tax Exclusion for 2026

  • Beginning January 1, 2026, the federal lifetime exclusion for gift and estate taxes rises to $15 million per person. Married couples can combine their exemptions, enabling up to $30 million to pass free of federal gift and estate tax. The same increased threshold applies to the generation-skipping transfer tax exemption, creating broader opportunities for multigenerational wealth transfers.

    This change benefits individuals who previously felt constrained by lower limits. If you used a substantial portion of your exemption in prior years, the new higher threshold may restore planning capacity and allow additional lifetime gifting that avoids transfer taxes. Using the expanded exclusion strategically can lower your taxable estate while allowing you to observe the impact of your planning during your life.

    From a planning standpoint, the change encourages renewed consideration of advanced techniques. Trust structures such as dynasty trusts, irrevocable life insurance trusts, and family investment entities can help secure the benefit of the increased exclusion while providing creditor protection and long-term control over assets.

• • Federal Tax Rates

  • While exclusion amounts increase, the federal tax rates for gifts, estates, and generation-skipping transfers remain unchanged for 2026. The top transfer tax rate continues at 40 percent. Income tax rates for estates and non-grantor trusts also remain steady, with the highest marginal rate at 37 percent on taxable income above relatively modest thresholds.

    Because rates remain substantial, assets exceeding available exemptions are still subject to significant taxation. Thoughtful timing and structure are essential to reduce exposure to these high rates. Coordinating lifetime gifts, trust arrangements, and charitable strategies can improve overall tax efficiency even in the face of unchanged tax rates.

• • Annual Exclusion

  • In addition to the lifetime exemption, the annual exclusion is one of the most powerful and straightforward tax-saving opportunities available. This exclusion allows individuals to make yearly gifts up to a specified dollar amount to as many recipients as they wish without those gifts counting toward their lifetime exemption. For 2026, the annual exclusion amount is $19,000 per recipient. Married couples can combine their exclusions to gift up to $38,000 per recipient each year. Over time, these gifts can substantially reduce the taxable value of your estate while allowing you to experience the joy of helping loved ones during your lifetime. For example, if a married couple with three children uses the annual exclusion every year for ten years, they can transfer $114,000 annually, or $1.14 million over a decade, completely free of federal gift tax.

• • Portability

  • Portability of a deceased spouse’s unused exclusion remains available in 2026. This rule allows a surviving spouse to use a deceased spouse’s unused federal estate tax exclusion, expanding total available exemption. To preserve portability, a federal estate tax return (Form 706) must be filed after the first spouse’s death, even if no federal tax is due. The period to elect portability extends up to five years from the date of death.

    For Washington State residents, portability can be especially useful when combined with spousal planning tools such as credit shelter trusts or marital deduction planning. Families that lost a spouse within the past five years and did not elect portability initially may still have the opportunity to preserve unused exclusion amounts, potentially sheltering millions from federal estate tax.

    The annual federal gift tax exclusion remains $19,000 per recipient for 2026. Married couples may elect gift splitting, effectively doubling this amount per beneficiary. Consistent use of annual exclusions remains a powerful long-term strategy to reduce the size of a taxable estate without tapping into lifetime exemptions.

• • Charitable Deduction Changes for 2026

  • One notable shift for 2026 involves limits on charitable contribution deductions. Taxpayers may deduct only the portion of charitable gifts that exceeds one-half of one percent of adjusted gross income. This limitation may restrict the immediate deductibility of smaller gifts, particularly for high-income taxpayers.

• • Retirement Account and Distribution Updates for 2026

  • Retirement accounts continue to evolve with respect to distribution and contribution rules. A key point for inherited pre-tax individual retirement accounts is that beneficiaries of accounts owned by individuals who reached the required beginning date may be required to take annual distributions. Failing to comply with these rules can result in steep penalties.

    Inherited Roth IRAs follow different distribution regimes, making it critical to understand the specific type of account when planning. Your estate plan should align beneficiary designations and tax objectives for retirement assets. Additional considerations for 2026 include:

    • Qualified charitable distributions (QCDs) allow individuals age 70½ and older to direct up to $111,000 annually from an IRA to qualified charities, excluding those amounts from taxable income.
    • New rules require high-income participants in employer-sponsored plans to make catch-up contributions on a Roth basis, allowing tax-free growth but no immediate deduction.
    • Required minimum distribution (RMD) rules that apply to most non-Roth accounts beginning at age 73, while Roth accounts in employer plans remain exempt from pre-death RMDs.

Contact Us

For more information, contact the experienced Bellevue estate planning attorneys at Legacy Estate Planning, LLC by calling (425) 455-6788 to schedule an appointment.