Is There Inheritance Tax in Washington State?

Washington State does not impose an inheritance tax on beneficiaries receiving assets from a deceased individual’s estate. Instead, Washington State levies an estate tax, which is a tax on the deceased person’s right to transfer property at the time of their death. This estate tax is applied to the value of the entire estate before assets are distributed to heirs, making it distinct from an inheritance tax paid by the recipient.

Understanding the Washington Estate Tax

The Washington State Estate Tax is a levy on the fair market value of a deceased individual’s estate before its distribution to heirs. This tax applies to the estates of Washington residents and non-residents who own real estate or tangible personal property in Washington State at the time of death. A Washington estate tax return must be filed if the gross value of all property, regardless of location, exceeds a certain threshold.

For individuals dying on or after July 1, 2025, the exemption threshold for the Washington estate tax increased to $3 million. Only the portion of the estate exceeding this amount is subject to the state’s estate tax; estates valued below this threshold are not taxed. The Washington estate tax features a progressive rate structure, with rates ranging from 10% to 35% of the taxable estate for amounts above the exemption.

Calculating the Taxable Estate

Determining the Washington taxable estate involves valuing all assets and subtracting allowable deductions. The gross estate includes all property owned by the decedent at the time of death, wherever located. This encompasses real estate, tangible personal property, vehicles, collectibles, business interests, stocks, bonds, bank accounts, and cash. Life insurance proceeds, retirement accounts, and assets held in revocable trusts are also included. For married individuals, all community property and the decedent’s separate property are reported, with community property assets then reduced by 50% to reflect the decedent’s share.

Once the gross estate is determined, deductions can be applied to reduce it to the taxable estate. Allowable deductions include funeral expenses and costs associated with administering the estate, such as attorney and executor fees. Debts of the decedent, including mortgages and outstanding bills, also qualify. The marital deduction allows for the deduction of any property transferred to a surviving spouse. Gifts to qualifying charities are also deductible.

Deductions also include a farm deduction for qualifying farming property and a qualified family-owned business interests deduction. The Washington taxable estate is the gross estate minus these allowable expenses and deductions, including the applicable exclusion amount. This calculation determines the final figure upon which any estate tax is levied.

Filing and Paying the Estate Tax

The Washington State Estate and Transfer Tax Return (Form REV 85 0001) must be filed within nine months after the date of the decedent’s death, even if no tax is expected. A six-month extension for filing can be requested if additional time is needed. However, an extension to file does not extend the deadline for paying any tax due; payment is still required within the original nine-month period.

Forms and instructions for the estate tax return are available from the Washington State Department of Revenue website. The completed return, along with supporting documentation, should be submitted to the Department of Revenue. Payment can be made by check, payable to the Washington State Department of Revenue, with the decedent’s name and Social Security number noted. Electronic funds transfer (EFT) and credit card payments are also accepted.

Interest accrues daily on any unpaid tax amounts remaining after the nine-month due date. Penalties for late filing are assessed if the return is not submitted by the due date or extended due date. If an estimated tax payment is anticipated, submit it with the extension request to avoid interest charges.