If you’ve spent decades building a successful business, growing your investments, or purchasing property in Washington, your estate plan deserves a fresh look. Starting July 1, 2025, Washington is rolling out sweeping changes to its estate tax rules, including:

A higher exemption threshold
A new home exclusion for married couples
Steeper estate tax rates for high-value estates

These updates—paired with potential federal changes just around the corner—create an important window for proactive planning. Here's what’s changing, how real Washington families could be affected, and what to do now to stay ahead of costly estate tax exposure.

What’s Changing in Washington

1. Estate Tax Exemption Increases to $3 Million

On July 1, 2025, Washington will raise its estate tax exemption from $2.193 million to $3 million per person, and begin adjusting it annually for inflation.

This means fewer modest estates will owe tax—but for wealthier families, the real difference depends on how assets are structured.

2. New Exclusion for Primary Residences (Up to $1 Million)

For the first time, married couples may exclude up to $1 million of their primary residence from their estate value—if the following apply:

The decedent was married or in a registered domestic partnership
The home passes to the surviving spouse
Both spouses lived in the home for at least six months before death (Exceptions apply for long-term care situations)

This exclusion is not automatic—it only applies if the value of the estate, after the exclusion, falls below the $3 million exemption. If the estate still exceeds $3 million, the full home value gets included.

3. Estate Tax Rates Will Climb—Dramatically

For larger estates, the top marginal tax rate will rise from 20% to 35%, making Washington’s estate tax one of the most aggressive in the country. Here’s how the brackets change:

Real-Life Scenario: Why These Changes Matter

Business Owner: Rachel

Rachel is a 58-year-old entrepreneur who built and later sold a successful consulting firm. She’s single, has no children, and is committed to leaving a legacy for her nieces, nephews, and a handful of charitable causes. Her assets include:

$3.2 million in investment and savings accounts (from the sale of her business)
A $1.25 million primary residence in Seattle
A small rental property valued at $700,000
No outstanding debt

Under current law:
All assets are included in the taxable estate.
Total estate value = $3.2M + $1.25M + $700K = $5.15M
Federal estate tax is not an issue yet, but at the state level, Rachel’s estate is $2.957M over Washington’s $2.193M exemption → estimated tax = $295,700

Under the new law (effective July 1, 2025):
Washington exemption increases to $3 million
Rachel’s primary residence (up to $1 million) could be excluded—but only if the total estate falls under $3M after the exclusion.

Estate excluding $1M home value: $5.15M – $1M = $4.15M
Still above the $3M exemption → exclusion is disqualified, and the full value of the home is taxed

Final taxable estate = $5.15M – $3M = $2.15M
Estimated state estate tax = $215,000

However, if Rachel makes strategic gifts or charitable contributions now—reducing her estate to below $4 million—she could potentially qualify for the home exclusion and eliminate estate taxes altogether.

Takeaway for Business Owners

Business owners and entrepreneurs often accumulate concentrated wealth in a short period—whether through business sales, retained earnings, or real estate appreciation. Without proactive planning, these estates may become taxable under both Washington’s new estate tax brackets and federal limits if they revert in 2026.

For women like Rachel who plan to leave assets to family or philanthropic causes, now is the time to:

Consider charitable trusts to reduce taxable value
Explore lifetime gifting of cash or appreciated stock
Coordinate with advisors to evaluate how your real estate holdings may be titled or structured for maximum flexibility

What about Federal Estate Tax?

Federal estate tax exemptions remain at historic highs but these thresholds are set to drop sharply in 2026 if Congress doesn’t act. A bill in progress could extend and even expand these limits, but nothing is guaranteed.

Current exemption (2025): $13.99M per person, $27.98M per couple
Set to expire end of 2025: reverts to ~$6.5M per person unless Congress acts
Proposed legislation: would extend and increase to $15M per person—but outcome remains uncertain

If your estate is anywhere near the $6–7M range (individually), now is the time to plan while exemptions are still high.

What You Should Do Now

These changes offer planning opportunities—but only if you act early. Here’s where to start:

Review Your Estate Plan

Are your wills, trusts, and beneficiary designations up to date?
Does your plan reflect Washington’s updated thresholds and exclusions?
Have you reviewed how real estate and investments are titled between spouses?

Consider Gifting Strategies

Maximize annual gift exclusions ($19K per person in 2025)
Consider lifetime gifting to lock in today’s federal exemption
Evaluate grantor trusts, life insurance trusts, or charitable strategies to reduce taxable value

Evaluate Home Ownership and Residency

Will your home qualify for the new exclusion?
Should ownership be shifted or retitled?
Does relocating to a tax-friendly state make sense for your long-term goals?

The Bottom Line

Washington’s updated estate tax law may help many families—but it also increases the stakes for those with growing wealth. Combined with pending federal changes, this is a critical time to ensure your plan protects the people and causes you care about most.

At Infinite Heights, we help ambitious women align their financial lives with their values, legacy, and long-term goals. If your estate is near or above the $3 million mark—including your home—this is the perfect moment to revisit your estate plan.

*The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

Navigating Washington’s New Tax Laws: A Strategic Estate Planning Guide