SB 6347 Washington Estate Tax: What the 2025-2026 Threshold Changes Mean for Executors

Washington's estate tax has never been simple, but Senate Bill 6347 created one of the most complicated administrative environments in the state's recent history. Depending on the exact date the decedent died, the filing threshold, the applicable exclusion, and the top marginal tax rate are all different — and the difference can be worth hundreds of thousands of dollars.

If you are administering a Washington estate right now, you need to know exactly which version of the law applies.

What SB 6347 Did

Senate Bill 6347 (also referenced in later adjustments as ESSB 6347) modified Washington's estate tax threshold and rate structure in response to inflation adjustment provisions in prior law. The result was a two-period system within the 2026 calendar year that changed both the exemption amount and the top rate simultaneously.

Before SB 6347's effective changes, the Consumer Price Index adjustment statute automatically increased the exemption each year for inflation. That statute expired, and the legislature chose not to renew it — permanently freezing the threshold at $3,000,000 going forward.

The Two 2026 Regimes

Deaths between January 1, 2026 and June 30, 2026:

• Filing threshold: $3,076,000
• Applicable exclusion amount: $3,076,000
• Top marginal rate: 35% (on amounts exceeding $9,000,000)

Deaths on or after July 1, 2026:

• Filing threshold: $3,000,000
• Applicable exclusion amount: $3,000,000
• Top marginal rate: 20% (on amounts exceeding the highest bracket)

The date-of-death split is absolute. An estate for a decedent who died June 30 operates under the $3,076,000 threshold and the 35% maximum rate. An estate for a decedent who died July 1 operates under the $3,000,000 threshold and the 20% maximum rate. Both 9-month deadlines extend from the actual date of death, not from January 1.

The Rate Compression at the Top

For large estates — those with taxable estates exceeding several million dollars — the rate shift matters enormously. Under the pre-July 2026 structure, rates climbed through multiple brackets to reach 35% on the highest taxable amounts. After July 1, 2026, the top rate compressed back to 20%.

This created a scenario where large Washington estates settling in the first half of 2026 faced significantly higher marginal rates than estates settling after July 1, even if the exemption amounts were similar. For a $10 million taxable estate, the difference between a 35% and a 20% top rate represents a substantial tax liability shift.

The Permanent Freeze and Bracket Creep

The most consequential long-term effect of SB 6347 is the elimination of CPI inflation adjustments to the exemption. The $3,000,000 threshold will remain fixed at $3,000,000 until the legislature acts again.

Washington real estate prices have risen dramatically over the past two decades. A family home in the Seattle metro area that sold for $400,000 in 2005 commonly appraises at $800,000 to $1,200,000 today. For a couple who purchased their home decades ago and accumulated retirement assets, a $3,000,000 gross estate is increasingly within reach for what would once have been considered a middle-class estate.

Because the threshold no longer adjusts for inflation, each year that passes without legislative action pulls more estates into taxable territory. Executors dealing with Washington estates that were previously assumed to be below the threshold — based on prior exemption figures — should recalculate the gross estate carefully using current fair market valuations.

How the Qualified Family-Owned Business Interest Deduction Interacts

The QFOBI deduction — which allows certain farms and closely held family businesses to deduct their value from the gross estate — was capped at $3,076,000 for the entire 2026 tax year, regardless of the date-of-death period. This means the QFOBI cap is the same for both first-half and second-half 2026 decedents, even though the general exemption differs.

The QFOBI deduction requires that the business interest exceed 35% of the adjusted gross estate, that the decedent or a family member materially participated for at least five of the eight years before death, and that an heir continue operating the business for at least three years post-death. Failing the three-year continuation requirement triggers a recapture tax.

What Doesn't Change: Portability Still Doesn't Apply

One feature of federal estate tax law that Washington explicitly rejects is portability. Under federal law, when a spouse dies, the executor can file Form 706 and transfer any unused federal exemption to the surviving spouse — effectively doubling the couple's federal shield.

Washington does not allow this. Each spouse has one $3,000,000 exclusion (or $3,076,000 for early 2026 decedents), and that exclusion expires at death if it is not used. Married couples who transferred all assets to the surviving spouse at the first death and relied on the federal portability model will face a reckoning when the second spouse dies — the entire estate is sheltered by only one exclusion.

The mechanism Washington practitioners use instead is the Credit Shelter Trust. By funneling an amount equal to the exclusion into a trust at the first death, both spouses' exclusions are preserved. The surviving spouse can receive income from the trust but does not own the principal, so it is excluded from the surviving spouse's estate at their subsequent death.

Confirming the Threshold That Applies to Your Estate

The most important step when beginning Washington estate administration is confirming the gross estate value relative to the applicable threshold. The gross estate includes:

• All real estate the decedent owned outright or as a tenant in common
• The decedent's half of community property (not the surviving spouse's half)
• Life insurance where the estate is the beneficiary
• Retirement accounts where the estate is the beneficiary
• Bank accounts and investment accounts in the decedent's sole name
• Joint tenancy property to the extent of the decedent's contribution
• Business interests
• Non-probate transfers still included in the gross estate

If the gross estate exceeds the threshold, a Washington Estate and Transfer Tax Return must be filed within 9 months — even if deductions reduce the net taxable estate to zero.

The Washington Final Tax & Estate Tax Guide includes a gross estate calculation worksheet calibrated to the SB 6347 date-of-death thresholds, Table W rate schedules for both the pre- and post-July 2026 periods, and the QFOBI addendum instructions for eligible business and farm estates.

Practical Implications for Estates Currently Open

If you are administering an estate that began before July 1, 2026 and has not yet filed the state return, verify whether the decedent died before or after that date. The filing forms, rate tables, and applicable exclusion amounts differ, and the Washington DOR issues different versions of the estate tax return keyed to the date of death.

If the estate is near the threshold in either direction, get professional appraisals done quickly. The DOR can audit estate valuations, and appraisals completed close to the date of death — rather than months later — carry more credibility and are harder to challenge.

The combination of a frozen threshold, ongoing real estate appreciation, and volatile rate structures makes Washington one of the most treacherous estate tax environments in the country for middle-class and upper-middle-class estates. Understanding exactly which version of the law governs your specific estate is the first step to navigating it without leaving money on the table.

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