Washington does not have an inheritance tax. Washington does have an estate tax.
During a general election in November 1981, the voters repealed an inheritance tax and enacted an estate tax. The change from an inheritance tax to an estate tax became effective January 1, 1982. Due to this change, Washington no longer has an inheritance tax waiver.
In general terms, an inheritance tax is a tax on the beneficiaries of an estate whereas an estate tax is a tax on the decedent’s estate.
If you are a person living in Washington who inherits property or money, you do not owe Washington taxes on your inheritance.
The estate tax is a tax on the right to transfer property at the time of death. A person residing in Washington or a non-resident who owns property in Washington may owe an estate tax depending on the value of their estate.
A Washington estate tax return filing is required if a decedent's gross value of all of their property, wherever located, is over the filing threshold (fair market value without any deductions) and:
If the above requirements are met, a filing is required even if no tax is due.
If the decedent's estate is under the filing threshold, an estate tax return does not need to be filed and no estate taxes would be due.
"Property" includes but is not limited to, real estate, stocks, bonds, interest in business entities, cash, notes, life insurance policies, assets owned jointly with a spouse, assets owned jointly with others, vehicles, recreational vehicles, royalties, pension plans, refunds, assets held in trust, annuities, etc.
The executor must file a Washington estate tax return if the decedent owned property in Washington state and the gross estate exceeds the filing threshold.
For estate tax filing amounts, see the Filing thresholds and exclusion amounts table.
Note: If the gross estate is over the filing threshold an estate tax return is required, even if no tax is due.
The applicable exclusion amount is an amount deducted prior to calculating estate tax due. For dates of death of January 1, 2014, and after, the exclusion amount may be adjusted annually using the Seattle-Tacoma-Bremerton metropolitan area October consumer price index.
For applicable exclusion amounts, see the Filing thresholds and exclusion amounts table.
The estate tax funds are deposited into the Education Legacy Trust Fund.
The Education Legacy Trust Fund provides funding for:
When you are appointed as the Personal Representative of an estate, you are now an officer of, and responsible for, the proper administration of the estate’s assets. It is recommended that you seek an attorney's advice on all matters concerning the estate.
Here are a few items you should pay special attention to:
The estate tax section employees are not attorney’s, and cannot provide legal advice. The above are general guidelines all personal representatives should follow in their duties as an officer of the estate.
The due date of the Washington State Estate and Transfer Tax Return is nine months after the date of death.
A timely filed extension application will automatically extend the return due date six months.
Note: Any tax due must be paid within the nine months after the date of death or interest will accrue.
When you are applying for your federal extension, send us a copy of the Federal Form 4768 at the time of filing, and include estimated Washington tax due, if any. If you are not filing a Federal Form 706, submit the Application for Extension of Time to File a Washington State Estate and Transfer Tax Return.
To request an additional extension in excess of the six month extension submit an Application for Extension of Time to File a Washington State Estate and Transfer Tax Return along with a statement explaining in detail why it is impossible or impractical to file by the due date. Please note, an additional extension will not be granted unless the executor is abroad. Be sure to mark the additional extension box and enter the date of the extension on the application form.
Note: Payment received after the original nine month due date will accrue interest. One of the following items must be received by the original nine month due date:
The tax is calculated using the Washington taxable estate and Table W. The Washington taxable estate is the gross estate less all allowable deductions, including the applicable exclusion amount.
The tax rates range from 10% to 20% of the Washington taxable estate. The taxes are calculated on a graduated scale; each range is taxed at a different rate. See Table W-Computation of Washington estate tax.
Note: The Washington taxable estate is the amount after all allowable deductions, including the applicable exclusion amount.
Before sending the filing, please read the following:
Please assemble in the order listed below (unstapled, no binding, and no tabs):
Note: All documentation must reflect the proper actual or fair market value of an asset as of the valuation date. For most estates, the valuation date will be the date of death of the decedent. However, if alternate valuation is elected, then assets will have two valuation dates; the date of death and typically a date six months after the date of death (see Internal Revenue Code § 2032 for further clarification). When alternate valuation is reported, two sets of supporting documentation must be sent; one showing date of death values and one showing values as of the alternate valuation date.
Mail extensions, estate tax returns and estate tax correspondence to:
Washington State Department of Revenue
PO Box 47474
Olympia WA 98504-7474
To overnight an item, the address is as follows:
Private carrier / courier service:
Washington State Department of Revenue Estate Tax
Attn Treasury Management
6500 Linderson Way SW Ste 227
Tumwater WA 98501-6561
Note: Extensions, estate tax returns, and payments received are receipted by the postmark date. It is not necessary to overnight items.
An extension form, with no estimated payment due, may be faxed to 360-534-1499.
The IRS closing document should be mailed to:
Washington State Department of Revenue
PO Box 47474
Olympia WA 98504-7474
or faxed to 360-534-1499.
To pay the estate tax, send the payment with either a timely filed extension application or the Washington State Estate and Transfer Tax Return.
Mail the payment and form to:
Washington State Department of Revenue
PO Box 47474
Olympia WA 98504-7474
Make the check payable to: Washington State Department of Revenue.
The estate has nine months from the date of death to pay any tax due. If the estate tax liability is unknown at the nine month due date an estimated tax payment should be made. An extension to file does not give an estate an extension to pay. Interest accrues on any unpaid tax outstanding after the nine month due date.
An estate that includes a qualifying closely-held business may be able to enter an installment payment plan for the portion of taxes attributable to the closely-held business.
If an estate is unable to file a timely return, an Application for Extension of Time to File form (either the Washington form or a copy of the Federal Form 4768, if applicable) must be submitted prior to the due date of the estate tax return.
For any late payment of estate tax, interest should be included with the payment. Interest accrues daily on any unpaid principal. The interest is calculated using simple interest, not compound interest. For assistance with computing interest on an estate tax return, call the estate tax section at 360-704-5906.
You may use the software to complete the schedules only. You must complete the first three pages of the Washington estate tax return and any applicable addendums. If you are filing the 706, you will need to include two sets of schedules (one for the Washington return and one for the 706).
The interest rate for estate tax changes annually. See our interest rate table for current rates. Interest accrues daily on any unpaid principal. The interest is calculated using simple interest, not compound interest. For assistance with computing interest on an estate tax return, call the estate tax section at 360-704-5906, select option 1.
There is no late payment penalty. Interest will accrue on any late payment.
A late filing penalty will apply only if the department notifies the executor in writing that we have determined a filing is required prior to the estate voluntarily notifying us a filing is required (e.g. written notification, filed extension, filed return). If a penalty is applied, it is 5% of the tax due per month (up to 25% or $1,500, whichever is less).
The Washington Estate and Transfer Tax Return has a checkbox on the form to designate the return as an amended return. To amend a previous filing, simply complete a new estate tax form with the amended return box checked. The first page, along with any other return, schedule, and/or addendum pages that have been changed, must be sent with all supporting documentation showing why the return is being amended. We do not need a complete filing of the original return, only the pages that have been changed and documentation explaining those changes.
Call 360-704-5906, enter option 2 at the prompt, and then leave your voice message.
Please be sure to hit # after recording your message, in order to save and send your message. Failure to do so will prevent your message from being sent. We aim to return calls within two business days.
All assets owned by the decedent on the date of death should be included in the estate. All assets, even if located in another state, should be reported on the estate tax return (see the Estate tax apportionment for out of state property page).
For the estate of a married decedent, all of the community property and all of the decedent’s separate property are reported on the estate tax return. The community property assets are then reduced by 50% to reflect the decedent’s share of the property. Even if the entire estate will pass to the surviving spouse and no taxes may be due, an estate tax return must be filed if the decedent’s half of the community property, plus the decedent’s separate property, meets the filing threshold.
Yes. All property owned by a decedent must be included on the estate tax return. The estate tax is calculated on the entire estate as if all property is in Washington, then a calculation is done to apportion the tax between the Washington property and the out of state property.
The decedent’s state of domicile at the time of death is what determines if property is in state or out of state property. For a Washington domiciled decedent, any tangible personal property located outside of Washington and any real property located outside of Washington are considered out of state property. For an out of state domiciled decedent, all intangible property, any tangible property located outside of Washington, and any real property located outside of Washington, are considered out of state property.
For more details, see the Estate tax apportionment for out of state property page.
All assets owned by a decedent are valued at their actual value or fair market value for the valuation date.
The “actual value” of an asset is its cash value or unpaid principal plus any interest accrued to the valuation date.
The “fair market value” is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. The fair market value would be a sale in an arm’s-length transaction and never determined by a forced sale. Fair market value for a business entity would include any goodwill inherent in the business. For most stocks and bonds, the fair market value is the mean between the highest and lowest selling prices quoted on the valuation date.
The “valuation date” is the date of death of the decedent. However, an alternate value date (six months after the date of death) may be elected. See the instructions for the estate tax return to determine if alternate value may be elected for an estate.
When filing the estate tax return, be sure to include all supporting documentation showing the actual or fair market value. Supporting documentation can include, but is not limited to, real estate appraisals, date of death brokerage statements, and business appraisals.
The best way to determine the value of real estate is an actual arms-length sale within a reasonable time after the date of death of the decedent. When real estate is not sold, the way to determine fair market value is through the use of a certified appraisal.
Search for an accredited appraiser in the real estate’s county using the U.S. Department of Housing and Urban Development's appraisers search.
Generally, outright gifts given prior to the date of death are not taxable for Washington estate tax purposes.
However, federal gift tax paid, or payable, within three years of the date of death is included as an asset of the estate on Schedule G - Transfers During Decedent’s Life. The federal gift tax paid or payable is reported on the schedule, not the amount of the gift.
Also, any transfers that meet one of the four Internal Revenue Code provisions listed below are considered part of the decedent’s estate because the decedent retained a life interest. If the decedent had any of these four types of assets prior to death and gave the asset outright within three years of death, those gifts are added back into the value of the gross estate and reported on Schedule G - Transfers During Decedent’s Life.
The IRC provisions are:
A gift made beyond three years of the date of death, or that does not meet one of the four IRC provisions listed above, is not included in the Washington gross estate.
Yes. Although property may be distributed directly to a surviving beneficiary after the decedent’s death, the property is considered an asset of the decedent on the date of death and must be included on the Estate Tax return.
Payment of estate taxes on TOD property is determined by RCW 83.110A.
Yes. For details, see the Estate tax qualified terminable interest property page.
The value of farm property (land, stock, produce, equipment, etc.) can be deducted from the taxable value of an estate as long as the value of farm property comprises at least half of the total adjusted value of the estate, and it meets other statutory requirements. The farm deduction is unlimited and is in addition to the applicable exclusion amount.
A tenant farmer may qualify for the farm deduction if certain requirements are met.
The definition of a farm includes stock, dairy, poultry, fruit, furbearing animals, and truck farms; plantation; ranches; nurseries; ranges; greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities; and orchards and woodlands.
For more details, including the requirements for the farm deduction, see the Estate tax deduction for farms page.
Yes, there is a deduction for qualified family-owned business interests (QFOBI). The QFOBI must meet certain requirements in order to be deducted from the estate.
The heirs of the QFOBI must continue the operation of the trade or business for three years after the decedent's death. If the heirs do not continue operation of the trade or business, additional tax will be due.
For more details, including the requirements for the QFOBI deduction, see the Estate tax qualified family-wwned business interests deduction page.
A portion of estate taxes owing may be deferred, but only on the part attributable to a qualified closely-held business. Estate taxes attributable to the remainder of the estate, or to an estate without a qualified closely-held business, cannot be deferred.
Computing the estate tax due for an estate with a closely-held business is the same as for other estates. The ability to defer the estate taxes attributable to a closely-held business is done by electing an installment plan consistent with §6166 of the Internal Revenue Code.
The purpose of an installment election is to prevent the forced liquidation of a closely-held business. The election allows for an installment payment plan over ten or fifteen years. Typically, an installment payment plan involves paying only the accrued interest on the deferred tax for the first five years. For the next ten years, the estate pays 1/10th of the deferred tax (principal), plus the accrued interest. There is no penalty for paying an installment plan off early.
For more details, including the qualifications for an installment election consistent with §6166, see the Estate tax installment plans for closely-held businesses page.
Washington law does not have, nor does it incorporate, the federal provisions of portability for estate tax. Each estate is entitled to the applicable exclusion amount based on the decedent’s date of death.
Send this notification to the Bankruptcy Unit in the Compliance Division.
Bankruptcy Unit, Compliance Division
Department of Revenue
2101 4th Ave, Suite 1400
Seattle, WA 98121