ESB 6347
SignedSenate
Estate tax rates
Undoing the recent changes to the estate tax. (REVISED FOR ENGROSSED: Undoing certain changes to the estate tax.)
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 scheduled to apply from July 1, 2025, through March 31, 2026, and instead restores the pre-2025 tax rates for deaths on or after April 1, 2026. It also temporarily keeps the higher rates in place for deaths during the 2025–26 fiscal year, before reverting to the original schedule.
- Reverts estate tax rates to pre-2025 levels for deaths on or after April 1, 2026 (same as rates for deaths before July 1, 2025).
- Maintains higher estate tax rates for deaths between July 1, 2025, and March 31, 2026, including a top rate of 35% for estates over $9 million.
- Preserves the pro-rata reduction for estates with out-of-state property, calculated using a fraction of Washington-held assets.
- Clarifies that Washington’s estate tax is independent of federal estate tax, and continues to use the federal code as it existed on January 1, 2005, unless it conflicts with state law.
- Repeals the lower estate tax rates enacted in 2025 c 421 s 202, restoring the previous tiered rate structure.
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, especially those with out-of-state property.
- Estate planning professionals — Estate planners and legal professionals who advise clients on Washington estate tax planning and timing of transfers.
- State tax administration agencies — State government agencies responsible for collecting and administering estate taxes, including the Department of Revenue.
- Middle-to-high net worth families — Families with estates valued between $1 million and $9 million who may face significantly higher tax bills if the decedent dies between July 1, 2025, and March 31, 2026.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Maintaining higher estate tax rates for the 2025–26 fiscal year increases state revenue during a critical budget window, supporting public services like education, healthcare, and transportation—benefiting low- and middle-income Washingtonians who rely on those services. This is a temporary but meaningful revenue gain that offsets prior tax cuts.
FinancialPeopleRef: Sec. 1(2)(a)(ii)Reverting to pre-2025 rates after March 31, 2026 avoids a permanent escalation of estate tax rates that could have discouraged charitable bequests or local investment in Washington. The stability of the original tiered structure supports predictable long-term planning for families and local institutions like community colleges and libraries that rely on bequests.
Public SafetyPeopleRef: Sec. 1(2)(a)(iii)The pro-rata reduction for out-of-state property prevents double taxation and helps preserve family farms, rural properties, and second homes in border regions (e.g.,okane, Pend Oreille, or San Juan counties), supporting rural Washington communities with cross-border assets.
HousingPeopleRef: Sec. 1(2)(b)
Potential Concerns (5)
Restoring pre-2025 estate tax rates for deaths on or after April 1, 2026 eliminates the higher top rate (35%) for large estates ($9M+), reducing tax liability for high-net-worth individuals and their heirs. This creates a long-term revenue loss for the state after the 2025–26 fiscal year, potentially affecting public services funded by estate tax revenue.
FinancialRef: Sec. 1(2)(a)(iii)Maintaining the higher 2025–26 estate tax rates (up to 35% for estates over $9M) increases tax burden on middle-to-high net worth families (estates $1M–$9M) who die during that window—especially those with estates near $7M–$9M, where the marginal rate jumps from 19.5% to 30%—but only temporarily. This creates a cliff effect, incentivizing timing of death-related transfers.
FinancialRef: Sec. 1(2)(a)(ii)Preserving the pro-rata reduction for out-of-state property ensures fairness for Washington residents with multi-state holdings, but the formula excludes deductions under RCW 83.100.046, potentially increasing tax liability for estates with significant debt or liabilities offset at the federal level.
FinancialRef: Sec. 1(2)(b)Clarifying that Washington’s estate tax is independent of federal law reinforces state sovereignty, but anchoring to the 2005 federal code creates complexity and potential misalignment with current federal tax policy, increasing compliance burden for estate planners and families.
Rights & LibertiesRef: Sec. 1(3)The bill creates uncertainty for estate planning professionals and financial advisors, who must now advise clients on the precise timing of transfers to avoid the 2025–26 higher-rate window. This may increase demand for estate planning services but also incentivize last-minute transfers that could disrupt intergenerational business succession planning.
Business & EmploymentRef: Sec. 1(2)(a)(ii) & (iii)
Who Is Most Affected
Heirs and beneficiaries of estates valued above $9M benefit significantly from the post-April 2026 rate reversion, saving tens of thousands to hundreds of thousands in taxes. Those with estates between $1M–$9M face a temporary but sharp tax increase if the decedent dies between July 2025–March 2026.
Estate planners face increased demand for timing-sensitive advice during the 2025–26 window, but long-term planning becomes simpler after April 2026. The bill’s clarity on out-of-state property rules reduces ambiguity, though the 2005 federal code anchor adds complexity.
The Department of Revenue gains short-term revenue and administrative clarity during the 2025–26 fiscal year, but long-term revenue declines after April 2026. The bill’s structure simplifies enforcement by reverting to a known rate schedule, reducing audit risk.
Middle-to-high net worth families (estates $1M–$9M) face a steep marginal rate increase (e.g., 19.5% → 30% at $7M–$9M) during the 2025–26 window, but benefit from lower rates afterward. This creates a timing distortion that may incentivize delaying transfers or asset reorganization.