HB 2736
In CommitteeHouse
Estate tax rates
Reinstating estate tax rates that applied immediately before May 20, 2025, for estates of decedents dying on or after July 1, 2026.
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 restores the lower estate tax rates that were in place before May 20, 2025, for people who die on or after July 1, 2026. It reverts the top tax rate from 35% back to 20% for the largest estates and adjusts intermediate rates downward as well.
- Reinstates the estate tax rates that were in effect before May 20, 2025, for people who die on or after July 1, 2026.
- Maintains the existing $1 million exemption threshold—no tax is owed on estates valued at or below $1 million.
- Applies a graduated tax rate schedule, with rates ranging from 10% to 20%, depending on estate size.
- Requires a proportional tax reduction for estates that include property located outside Washington (e.g., if 60% of the estate is in Washington, only 60% of the calculated tax is owed).
- Clarifies that Washington’s estate tax is separate from federal estate tax and continues even if federal estate tax is repealed.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 in Washington may owe less estate tax starting July 1, 2026, compared to rates in effect between July 2025 and June 2026.
- Residents with Washington-based estates over $1 million — People who die between July 1, 2026, and later dates will be subject to the same estate tax rates as before May 20, 2025, potentially reducing their tax burden if their estate is large enough to be taxed.
- Executors and personal representatives of estates — Must calculate estate tax using Washington-only property values and apply a proportional reduction if part of the estate is located out-of-state.
- Washington Department of Revenue — Will collect and administer estate tax payments, including processing returns and refunds for decedents who died on or after July 1, 2026.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Reduces estate tax liability for families and individuals with Washington-based estates over $1 million, potentially preserving intergenerational wealth and enabling reinvestment in local businesses or property.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)Clarifies and simplifies the apportionment rule for out-of-state property, reducing administrative complexity for executors of multi-state estates — though this primarily benefits wealthier families with professional advisors.
Business & EmploymentLean industryRef: Sec. 1, RCW 83.100.040(2)(b)Reaffirms Washington’s independent estate tax system, insulating it from federal policy shifts — a procedural safeguard that supports state sovereignty, though its practical impact on individual rights is minimal.
Rights & LibertiesLean industryRef: Sec. 1, RCW 83.100.040(3)
Potential Concerns (5)
Reduces state estate tax revenue by lowering top rates from 35% to 20% and intermediate rates across the board, which shrinks public funding for essential services like education, healthcare, and infrastructure — ultimately shifting fiscal burden toward working- and middle-class households through service cuts or other taxes.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)The estate tax reduction disproportionately benefits the wealthiest 0.3% of Washingtonians — those with estates exceeding $1 million (and especially those over $7 million), as over 99% of Washington households fall below the exemption threshold and receive no benefit.
FinancialIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)By reducing state revenue, the bill indirectly undermines public safety funding — particularly in rural and under-resourced jurisdictions that rely on state aid for law enforcement, emergency response, and crime prevention programs.
Public SafetyIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(ii) vs (iii)The loss in estate tax revenue may pressure local governments to raise property or business & occupation (B&O) taxes to compensate, disproportionately impacting small businesses and homeowners in districts with limited revenue flexibility.
Local GovernmentIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)While the bill does not directly affect renters or homeowners below the $1M threshold, reduced state revenue may limit funding for affordable housing programs and tenant protections, indirectly increasing housing instability for low- and middle-income households.
HousingIndustryRef: Sec. 1, RCW 83.100.040(2)(a)(iii)
Who Is Most Affected
Beneficiaries of large estates (>$5M) see the largest direct tax savings — e.g., a $10M estate saves ~$250,000 in tax liability under the new 20% top rate vs. 35% under 2025 law. This group is overwhelmingly high-net-worth and already well-resourced.
Executors and estate planners gain clarity on apportionment rules, but the benefit is limited to high-value estates requiring professional assistance — small estates (under $1M) see no change and no benefit.
The Department of Revenue will experience lower collections and may need to reallocate staff/resources, though its core functions remain intact. This is a neutral-to-negative fiscal impact on the agency.
Most Washington households (over 99%) have estates below $1M and receive no benefit, while facing indirect consequences like reduced public service funding — especially impactful in communities already strained by inequitable resource distribution.
Rural counties and small municipalities may face budget pressure due to reduced state revenue sharing, potentially affecting local public safety, road maintenance, and emergency services — though the effect is diffuse and indirect.