Olympia cut the estate tax this year, and the headlines called it relief. For deaths on or after July 1, 2026, the top rate fell from 35% back to 20%. That part is real.

The part that did not make the headlines is the part that costs families money. Washington still taxes estates above $3 million. That threshold is now frozen. And unlike the federal system, Washington does not let a surviving spouse use the exemption the first spouse never used.

Put those together and you get a tax that is easy to ignore and expensive to discover. A Bellingham couple with a paid-off house, two retirement accounts and a brokerage account can be over the line without ever thinking of themselves as wealthy. If their wills simply leave everything to each other, Washington can collect hundreds of thousands of dollars that a few pages of planning would have avoided.

Washington is not playing by the federal rules

Most of the estate tax coverage you read is about the federal tax. In 2026 the federal exemption is $15 million per person, and a surviving spouse can pick up whatever the first spouse did not use. A married couple can pass roughly $30 million before the IRS takes anything.

Washington runs its own estate tax with its own rules, and on two of them it is far stricter.

/// Two exemptions, very different rulesMarried couple, 2026
Federal estate tax
$30,000,000$15 million each, and the unused amount passes to the surviving spouse
Washington, with no planning
$3,000,000One exemption per person, frozen, and it does not pass to a spouse
Both bars use the $30 million federal figure as their scale. Washington's $3 million exclusion applies to deaths on or after July 1, 2026. A couple can use two Washington exemptions, but only if their planning puts assets in a position to use the first one.

The $3 million line stopped moving

The 2026 law set the exclusion at $3 million and tied future increases to a Seattle-area inflation index that no longer exists. The Department of Revenue says it plainly: the amount "is not set to increase going forward." Your house, your portfolio and your retirement accounts will keep growing. The line will not.

The tax is also built on everything you own, not just what you think of as investments. A Washington estate generally includes:

  • Your home and any other real estate, wherever the house sits in the Bellingham price range
  • IRAs, 401(k)s and other retirement accounts, at their full pre-tax value
  • Brokerage and bank accounts
  • Life insurance death benefits on policies you own
  • A business interest or a share of rental property

Add those up for a lot of households in their sixties and the total lands well past $3 million. Above it, rates run from 10% to 20% on the amount over the line, so the bill climbs fast.

One exemption, unless you plan for two

Here is the mistake in its most common form. Each spouse's will leaves everything to the other. That feels right, and at the first death there is no Washington tax at all, because transfers to a surviving spouse are deductible.

The problem arrives later. The first spouse's $3 million exemption was never used, and Washington law states that it "does not have, nor does it incorporate, the federal provisions of portability." The exemption is simply gone. When the surviving spouse dies, everything is taxed against one $3 million exclusion.

A credit shelter trust, sometimes called a bypass trust, fixes this. At the first death, assets up to the exemption go into a trust that can support the surviving spouse but is not part of the survivor's estate. Both exemptions get used.

/// Same couple. Same $6 million.Illustrative example

A married couple owns $6 million in total. One spouse dies, then the other. Values do not change in between.

Wills leave everything to the spouse
$390,000Washington estate tax at the second death
Credit shelter trust at the first death
$0Washington estate tax at either death
Without a trust, $3 million is taxable at the second death: 10% on the first $1 million, 14% on the next $1 million and 15% on the next $1 million, for $390,000. With a trust holding $3 million from the first death, each estate stays within its own $3 million exclusion. Hypothetical figures using rates for deaths on or after July 1, 2026; they exclude growth, expenses, deductions and federal tax, and are not a forecast or legal advice.

The real gap is usually larger. Assets in the trust can keep growing for the rest of the survivor's life without being added back to the survivor's estate. Assets left outright keep growing inside it.

The cost of doing nothing is not a penalty. It is a tax bill your heirs pay because a document was never updated.

Washington gives couples tools to fix it

None of this requires exotic planning. It requires current documents and a few deliberate decisions, made with an estate attorney who works in Washington.

  • Credit shelter or disclaimer trust language. A disclaimer trust lets the surviving spouse decide after the first death how much to place in the trust, which keeps the plan flexible as values and laws change.
  • Community property works in your favor. Washington is a community property state, so each spouse generally owns half of what was earned during the marriage. That makes it easier to fund the first spouse's trust, but titles and beneficiary designations still need to line up with the plan.
  • Beneficiary designations. An IRA left directly to a spouse never reaches the trust. Retirement accounts are often a large share of the estate, so who inherits them can matter as much as the will.
  • Lifetime gifts. Washington has no separate gift tax, and the Department of Revenue says outright gifts made before death are generally not taxable for the estate tax, with limited exceptions. Gifts to children, to charity or to education can shrink the estate while you watch the money do some good.
  • Life insurance ownership. A policy you own is part of your estate. Owned the right way, often through a trust, the same death benefit can stay outside it.

The rest of the 2026 tax picture

The estate tax is not the only new math for Washington households with real savings.

Capital gains. Washington taxes long-term capital gains at 7% above an annual standard deduction, which was $278,000 for 2025, plus an additional 2.9% on gains above $1 million, for 9.9% at the top. Real estate and assets held in retirement accounts are exempt. A concentrated stock position or the sale of a business can still trigger it, so the timing of large sales deserves a plan.

The new income tax on high earners. Starting January 1, 2028, Washington will tax income above $1 million at 9.9%. Married couples share a single $1 million deduction rather than getting one each. Voters rejected the repeal measure, Initiative 645, on November 3, though a constitutional challenge is still in the courts. As written, the tax starts from federal adjusted gross income, so a large Roth conversion, IRA distribution or business sale in a single year can count toward the threshold. Capital gains tax paid for the same year is credited against it.

That last point creates a window. If your plan calls for large Roth conversions or a big income year anyway, 2026 and 2027 may be cheaper years to do it than 2028 and beyond. Whether that holds for you depends on the numbers, and on what the courts decide.

The short versionWashington lowered its estate tax rates but froze a $3 million exemption that a spouse cannot inherit. If your household is anywhere near $3 million, including the house and retirement accounts, read your wills for credit shelter or disclaimer trust language, check every beneficiary designation, and run your 2026 to 2028 income through the new tax rules before year end.

Find out where you stand

Most families who owe this tax never sat down and decided to pay it. They just never checked. The first step is a number: what your estate is worth today, what it is likely to be worth at life expectancy, and what Washington would take at each point under your current documents.

The free Stock Pro Plan includes a Washington estate check that prices exactly that, including an honest "no trust needed" when that is the answer. Bring the result to your estate attorney and the conversation starts with numbers instead of guesses.