Important Update: Washington Estate Tax Changes
We want to make you aware of a significant change that may impact estate planning for many Washington residents. Yesterday Governor Ferguson signed into law the largest estate tax increase in Washington State history. While we are still reviewing the full details, we are closely monitoring these changes and evaluating their potential impact on your planning.
Key Highlights:
- Washington Estate tax exemption increases from $2.193 million to $3 million, effective July 1, 2025, and will adjust annually for inflation going forward.
- Washington Estate tax rates increase significantly, with a new top rate of 35% (up from the previous 20%).
- A new 9.9% Washington State capital gains tax applies to gains over $1.27 million. This is retroactive to January 1, 2025 and not indexed for inflation.
While the increased exemption may benefit smaller estates, larger estates—particularly those over $8.8 million for individuals or $13.8 million for couples—could face a substantially higher estate tax burden under the new law. These changes highlight the importance of reviewing your estate planning strategy. For those impacted, this may be a timely opportunity to consider new estate planning strategies, such as lifetime gifting, advanced trust structures, and potential changes in state residency to mitigate exposure.
What This Means for You
We are currently assessing how this update may affect our clients and will be reaching out directly to those whose plans may require adjustments. In the meantime, this is a timely opportunity to revisit your estate planning—especially if:
- You haven’t reviewed your plan recently
- You’re unsure whether your estate is exposed to Washington’s new tax brackets
- You’re considering large gifts or liquidity events in the near future
How We Can Help
As your wealth management team, we work in coordination with your estate attorney to ensure your planning is aligned and up to date. We’re here to:
- Identify whether your current plan is impacted
- Coordinate with your estate attorney or refer you to a trusted resource if needed
- Guide conversations around appropriate strategies going forward
If you have any questions or would like to schedule a time to discuss your estate plan, please don’t hesitate to reach out. We’re on top of it, so you don’t have to be.
With Optimism,
Kelli Porter, CFP®, ADVISOR | DIRECTOR OF PLANNING & SERVICE
Important Disclosures
The content of this article is provided for general information purposes only and is presented solely as our opinion. The information was compiled from sources that we believe to be reliable, however, we cannot guarantee its accuracy, completeness, or timeliness. This article is based on the information available to us as of the date of this article and may change at any time. Tschetter Group does not provide tax and legal advice. Please consult your legal and tax professional for specific information.
Tschetter Group (“TG”) is a registered investment adviser with the Securities and Exchange Commission. The information provided by TG (or any portion thereof) may not be copied or distributed without TG’s prior written approval. All statements are current as of the date written and does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Different types of investments involve varying degrees of risk. Risk Disclosure Statement: All investments include a risk of loss that clients should be prepared to bear.
