If you've ever wondered how the inheritance tax in Washington State evolved, here's the quick story for you. We've included all the relevant twists that turned an old system into today's rules.
For decades, Washington State imposed an inheritance tax (a tax on what heirs receive). In November 1981, voters approved Initiative 402, repealing the inheritance and gift taxes effective January 1, 1982. In their place, the state kept a "pick-up" estate tax equal to the federal state death-tax credit—essentially piggybacking on federal law.
No, Washington does not impose an inheritance tax anymore. It levies an estate tax instead (a tax on the estate itself before assets are distributed). The switch away from an inheritance tax dates to that 1981 vote and took effect in 1982.
Then, in the early 2000s, Congress began phasing out the federal credit that Washington's pick-up system relied on. In Estate of Hemphill (Feb. 3, 2005), the Washington Supreme Court confirmed that, under existing statutes, the state tax was tied to current federal law—so as the federal credit faded, Washington's linked tax did, too.
Inheritance Tax Versus Estate Tax in Washington
To restore stability, lawmakers enacted a stand-alone state estate tax in 2005 (now Chapter 83.100 RCW). This was independent of the federal credit and dedicated to the Education Legacy Trust. This is the framework today—not an inheritance tax in Washington, but a modern state estate tax structure with an exemption of $3,076,000.
Another plot twist came with In re Estate of Bracken (2012), involving QTIP marital trusts. The Court's narrow reading of "transfer" created refunds and uncertainty. In 2013, the Legislature amended the estate-tax statute (retroactive to 2005) to include QTIP property at the surviving spouse's passing. The Washington Supreme Court upheld that fix in In re Estate of Hambleton (2014).
(Learn More: Read about revocable trusts in Washington versus Nevada and the cost of probate in Washington.)
Sources
- Washington Statutes (§ 11.04.015)