Washington Estate Tax: How We Got Here and Who Pays

The Washington estate tax is a state-level levy on the transfer of property at passing. It operates independently from the federal estate tax and has its own rates, exclusions, and rules.

A Brief History

In 1981, voters approved Initiative 402. That measure repealed the state‘s inheritance and gift taxes effective January 1, 1982, and replaced them with a “pick-up” estate tax tied to a federal credit. When Congress phased out that federal credit in the early 2000s, it threw Washington’s system off balance. 

In 2005, the Washington Supreme Court’s Estate of Hemphill decision highlighted how dependent the old scheme was on federal law. Then, the Legislature enacted a stand-alone state estate tax (Chapter 83.100 RCW), breaking the link to the federal credit. Later, two cases—Bracken (2012) and Hambleton (2014)—led to clarifying amendments around QTIP marital trusts. Those changes now shape tax on certain spousal trusts. 

Who Pays Washington Estate Tax

Residents pay tax on property located in Washington State. The statute treats a resident’s intangible property—like stocks or bank accounts—as located in Washington. Therefore, a state resident’s worldwide intangible assets can factor into the Washington estate tax, subject to deductions and the exclusion. 

Nonresidents can still face tax on real estate and tangible personal property sited in the state, such as a vacation home or equipment kept here. The state uses an apportionment formula that taxes the in-state share only. It uses a ratio of Washington property to the gross estate.

(Learn More: Read about revocable trusts in Washington versus Nevada and the cost of probate in Washington.)