Federal Estate Tax Exemption Jumps to $15 Million: But Washington’s Tax Landscape Remains Unique

As the federal estate tax exemption is set to increase to a substantial $15 million per person on January 1st, it’s a timely moment to review how this change contrasts with Washington State’s own estate tax rules.

The upcoming federal exemption step-up, as under prior law, provides a significant advantage: portability. This means a surviving spouse can utilize any unused portion of the deceased spouse’s federal exemption, effectively doubling the amount shielded from federal tax.

In sharp contrast, the Washington State estate tax exemption, which recently increased to $3 million per person (indexed for inflation as of July 1, 2025), remains non-portable. For Washington residents, this “use it or lose it” scenario means that careful planning is required to ensure both spouses maximize their respective exemptions upon the first death. Typically, this involves utilizing trusts to preserve the first spouse’s $3 million exemption amount.

Furthermore, individuals whose estates are valued just above the Washington $3 million threshold may have an advantageous planning tool: lifetime gifts. Unlike the federal system and many other states, Washington State currently does not have a gift tax. Considering substantial lifetime gifts is a strategy that can reduce exposure to the Washington estate tax without incurring a separate state-level gift tax, making it a critical consideration for targeted estate planning in the state.