11 May

Washington’s Estate Tax Just Changed! Here’s the Good and the Bad | Rich Life Letter #102

Estate Planning, Newsletters, May 11, 2025

It’s been a long time coming, but Washington State FINALLY updated their estate tax laws.

However, as is to be expected, when updates happen, there is a mix of good and bad.

The good news is the exemption went UP and it will continue going up every year:

  • Washington’s estate tax exemption is increasing from $2.193 million to $3 million for anyone that passes away after July 1, 2025.
  • That exemption will now adjust for inflation each year.

The bad news, however, is once you get over that exemption amount, the tax is HIGHER:

Here’s a quick run down of the new tax structure:

  • Your first million after $3m (so from $3m to $4m) is taxed at 10%
  • The next million ($4m to $5m) = 15%
  • The next million ($5m – $6m) = 17%
  • The next million ($6m – $7m) = 19%
  • The next million ($7m – $9m) = 23%
  • The next million ($9m – $10m) = 26%
  • The next million ($10m – $12m) = 30%
  • Everything over $12m = 35%

This is significantly higher than it used to be (capped at 20%).

Here’s a quick example: A person dies with $10m in assets in WA state. The estate tax gets calculated like this:

  • First $3m = $0
  • $3m – $4m = $100k (10%)
  • $4m – $5m = $150k (15%)
  • $5m – $6m = $170k (17%)
  • $6m – $7m = $190k (19%)
  • $7m – $9m = $460k (23%)
  • $9m – $10m = $260k (26%)
Total bill = $1,330,000!


And, remember, if you are married and you don’t create the proper trust structure, you only get to use one of your $3m exemptions.

The state isn’t shy about taking its share. The question is – are you going to let them?

With smart planning (gifting strategies, revocable trusts, life insurance trusts, etc.), you can reduce or even eliminate that future tax bill. But you need to act before the clock runs out.

Next week I’ll talk about how to make sure you get both $3m exemptions if you’re married.

Have a great week!

Cheers,

Christopher Small
Founder/CEO
CMS Law Firm LLC
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