Washington's Estate Tax Changes: What Kitsap Business Owners Should Know

What changed with Washington's estate tax?

Washington's estate tax has moved through several changes since 2025. As of mid-2026, the exemption is $3 million per person, and the top rate rolled back from 35% to 20% effective July 1, 2026 - reversing a steep increase that had been in place since July 2025. The graduated rates run from 10% on the first million above the exemption up to 20% at the top. These figures change with legislation, so confirm the current numbers with your CPA or estate attorney - this is general information, not tax advice.

To see how the current rules apply to your own estate, try our Washington estate tax calculator.

The short version for a business owner: the rates got better in mid-2026, but the exemption stayed at $3 million and does not automatically rise. That last part is the one that quietly matters most.

Why does a fixed exemption matter for business owners?

Because your business keeps growing, and the exemption doesn't. A $3 million line that stays put means a business - and the estate around it - that grows over time drifts toward and across that threshold on its own, without anyone deciding to make it happen. An estate comfortably under the line today can be over it in a few good years. For owners, that's the real story behind the headline rate changes.

Does my business push my estate over the line?

Often, yes - and it's the part owners miss. Washington's taxable estate includes the value of your business. Add the company to the house, the retirement accounts, and any life insurance, and an owner who thinks of themselves as comfortable rather than wealthy can be surprised to find the estate well over $3 million. There's a deduction for qualified family-owned businesses that can help in specific cases, but it has strict requirements. Whether it applies to you is a question for your CPA and attorney - our role is making sure the whole picture gets looked at.

What should a Kitsap owner do about it?

Start by knowing where you actually stand. That means a real sense of what the business is worth and how it fits into the total estate - because you can't plan around exposure you haven't measured. From there, the tools that reduce estate-tax exposure live with your estate attorney and CPA. What we do, alongside them, is hold the whole financial picture together so the estate plan, the business, and the family's needs are built around the same real numbers, here in Kitsap County.