HB 2725
In CommitteeHouse
Estate tax rates
Undoing the recent changes to the estate tax.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill undoes a temporary increase in Washington’s estate tax rates that was set to apply from July 2025 through March 2026, restoring the prior lower rates for deaths occurring on or after April 1, 2026. It maintains the higher rates only for the interim period and keeps the original 2023–2024 rates for earlier deaths.
- Reverts estate tax rates to pre-2025 levels for deaths on or after April 1, 2026, with top rate of 20% for estates over $9 million.
- Maintains temporarily increased rates for deaths between July 1, 2025, and March 31, 2026, with top rate of 35% for estates over $9 million.
- Keeps the original 2023–2024 rates for deaths before July 1, 2025, with top rate of 20% for estates over $9 million.
- Preserves the existing method for calculating tax on estates with out-of-state property, using a proportional fraction based on Washington-located assets.
- Confirms Washington’s estate tax is separate from federal estate tax and remains in effect even if federal estate tax is repealed.
Who is affected
- Heirs and beneficiaries of large estates — Heirs and beneficiaries of estates valued above $1 million who may owe less or more estate tax depending on when the decedent died.
- Wealthy Washington residents with estates over $1 million — People who own significant assets (like real estate, investments, or businesses) and may need to plan for estate taxes differently based on the timing of their death.
- Estate planning professionals — Legal and financial professionals (e.g., estate planners, accountants) who advise clients on Washington estate tax obligations and timing of transfers.
- Washington State Department of Revenue — State government agencies responsible for collecting and enforcing estate taxes, including the Department of Revenue.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Restores predictability and continuity for estates of decedents dying before July 1, 2025, by maintaining the original 2023–2024 rates, reducing uncertainty for families and planners during an emotionally vulnerable period.
FinancialPeopleRef: Sec. 1, RCW 83.100.040(2)(a)(i)Reduces estate tax burden on family-owned businesses and farms valued over $9 million (e.g., timber, agriculture, retail), potentially helping intergenerational succession and preventing fire sales—though most benefit flows to larger operations with professional advisors.
Business & EmploymentLean peopleRef: Sec. 1, RCW 83.100.040(2)(a)(iii)By reverting to pre-2025 rates, the bill avoids imposing an additional temporary tax spike that could have strained rural counties with fewer estate tax-paying households, preserving local budget stability in lower-population areas.
Local GovernmentLean peopleRef: Sec. 1, RCW 83.100.040(2)(a)(iii)
Potential Concerns (4)
Reduces estate tax revenue for the state starting April 1, 2026, by reverting to pre-2025 rates for deaths occurring on or after that date, which will shrink the state’s general fund and may lead to reduced public services or higher taxes elsewhere.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)Lowers estate tax liability for individuals with estates over $9 million (top rate drops from 35% to 20%), disproportionately benefiting high-net-worth individuals and their heirs, especially those whose deaths occur after April 1, 2026.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)Creates a complex, time-sensitive estate tax regime with three different rate schedules depending on exact date of death, increasing compliance costs and administrative burden for families and professionals navigating timing-sensitive planning.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(ii) and (iii)May incentivize wealthy households to accelerate asset transfers or death timing to avoid higher 2025–2026 rates, potentially distorting housing and business succession decisions in ways that undermine long-term stability for working-class renters and neighbors.
HousingLean industryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)
Who Is Most Affected
Beneficiaries of large estates (e.g., heirs of $10M+ estates) will pay significantly less tax if the decedent dies after April 1, 2026, versus during the temporary spike (July 2025–March 2026). A $10M estate saves ~$450,000 in estate tax by dying in Q2 2026 vs. Q1 2026.
Wealthy residents with estates over $9 million benefit most—especially those who can time death or asset transfers (e.g., via trusts, life insurance). Lower rates after April 2026 reduce planning urgency but do not meaningfully help middle-class Washingtonians with typical homes or retirement accounts.
Estate planners and attorneys will face increased complexity due to the three-tiered rate schedule, requiring more time and documentation to advise clients on timing and structuring—benefiting firms with high-end clients, not small practitioners.
The Department of Revenue will collect less revenue starting in 2026, reducing funds available for state services. However, the agency gains administrative clarity by reverting to a simpler, pre-2025 structure—though revenue loss outweighs this benefit.