Most people assume estate taxes only affect the ultra-wealthy. That’s partially true at the federal level, but Washington state tells a different story. If you own property in King County or have built up retirement accounts over the years, you might be closer to state estate tax territory than you think. Understanding these thresholds matters because they directly affect how much your family inherits after you’re gone.
Federal Estate Tax Exemption
The federal estate tax exemption for 2025 sits at $13.99 million per individual. Married couples can combine their exemptions for a total of $27.98 million. Anything above these amounts gets taxed at rates up to 40%. For most Washington residents, the federal estate tax isn’t a concern. But here’s where things get tricky. The state has its own rules.
Washington State Estate Tax Kicks In Much Lower
Washington maintains one of the lowest estate tax exemptions in the country. The state threshold is $2.193 million for deaths occurring in 2024. This amount adjusts annually for inflation, but it hasn’t increased dramatically in recent years. What does this mean practically? If you own a home in Bothell that’s worth $800,000, have $500,000 in retirement accounts, $300,000 in investment accounts, and a $200,000 life insurance policy, your estate totals $1.8 million. You’re still under the threshold. But add another paid-off rental property or watch your home value appreciate significantly, and suddenly you’re in taxable territory. A Bothell estate planning lawyer can calculate your current estate value and project whether you’ll exceed the exemption based on your assets.
How Washington Calculates Estate Tax
Washington doesn’t have an inheritance tax. There’s a difference. An inheritance tax is paid by the people receiving assets. An estate tax is paid by the estate itself before distribution. The state uses a graduated rate structure:
- Estates valued at $0 to $1 million: 10% on amounts over the exemption
- $1 million to $2 million: $100,000 plus 14% of excess
- $2 million to $3 million: $240,000 plus 15% of excess
- Rates continue increasing up to 20% for estates over $9 million
These calculations happen on the total estate value above the exemption amount. The math gets complicated quickly, which is why professional guidance matters.
What Counts Toward Your Estate
Washington includes pretty much everything you own at death. Real property, bank accounts, investment portfolios, business interests, vehicles, personal property, and life insurance death benefits all count. Even assets held in revocable trusts get included in the calculation. Some things don’t count. Property owned jointly with a spouse typically passes to the surviving spouse without triggering estate tax. Assets with designated beneficiaries, like retirement accounts and life insurance, can bypass probate but still count toward the estate tax calculation.
Planning Strategies That Actually Work
You can’t avoid death, but you can reduce your taxable estate through legitimate planning. Gifting assets during your lifetime removes them from your estate. The annual gift tax exclusion allows you to give $18,000 per person in 2024 without filing a gift tax return. Irrevocable trusts remove assets from your taxable estate. Charitable donations reduce estate size while supporting causes you care about. Life insurance trusts can keep policy proceeds outside your taxable estate if structured correctly. These strategies require careful implementation. A Bothell estate planning lawyer can structure these tools properly, so they accomplish your goals without triggering unintended tax consequences.
When To Start Planning
Don’t wait until you’re elderly to think about estate taxes. If your net worth approaches $1.5 million, it’s time to start planning. Real estate appreciation alone could push you over the threshold within a few years. Eastside Estate Planning helps Washington residents understand their estate tax exposure and implement strategies to protect family wealth. Whether you’re just crossing into taxable territory or managing a substantial estate, proper planning reduces tax burden and maximizes what your loved ones receive.
