Washington has had an inheritance or estate tax since 1901. From 1982 to 2001, Washington’s estate tax was fully deductible from the amount owed in federal estate taxes. In 2001, Congress voted to lower the federal tax and phase out the state estate tax credit. In 2005, Washington adopted a new estate tax law that is not affected by phase out of the federal credit or by possible future changes to the federal estate tax.
The state estate tax raises about $100 million annually, on average. This revenue is dedicated to the Education Legacy Trust Fund, which finances lower class sizes in public schools, academic help for struggling students, additional enrollments in higher education, and financial aid for low and moderate income students in higher education.
Initiative 920, which will appear on the statewide ballot in November 2006, would repeal Washington’s estate tax.
Washington’s state estate tax exempts estates of less than $2 million and all family farms. Married couples with $4 million or more in assets can completely avoid the tax with minimal planning. About 200 estates per year in Washington pay taxes out of 45,000 deaths – less than half of 1%.
Washington’s overall tax structure is highly regressive, with lower income residents paying a much higher percentage of their income in state and local taxes than high income residents. In addition, the state suffers from a structural deficit, with tax revenues overtime growing at a slower pace than the economy and demands for public services. The estate tax is one of the few progressive taxes we have and provides funding for education we cannot afford to lose.
More To Read
November 27, 2023
We’re hiring: EOI is seeking our next Executive Director!
Apply by January 5th, 2024
November 21, 2023
Why I’m grateful for Washington’s expanded Paid Family & Medical Leave
This one is personal.
November 9, 2023
Jeff Bezos is Leaving Seattle – So What?
What can we really learn about taxes, wealth, and policy from the behavior of one person?