Inheritance tax laws in Washington have been revised and rewritten several times since their 1901 inception. The state's high threshold of $2 million after deductions means that a small percentage of estates are taxed under current laws. Becoming familiar with Washington's inheritance tax laws may help you or a family member prepare for the possibility of a tax being levied against your estate in the future.
Determining the Tax Basis
Current inheritance taxes are based on the value of all property located in Washington. Estates are subject to federal taxation through the Internal Revenue Service, and a tax return must be filed. After determining the amount of the federal taxable estate, two million dollars and any applicable deductions are deducted to find the Washington taxable estate amount. A graduated tax rate table is used to determine the exact amount of tax owed.
Washington state tax rates range from 10 to 19 percent of the value of the estate, which may be in addition to an initial tax amount. For estates valued up to $1 million, the tax rate is 10 percent. Estates between one and two million dollars are subject to an initial tax rate of $100,000 plus 14 percent of the value. The largest estates, valued at $9 million or more, are subject to an initial tax amount of $1,440,000 plus 19 percent, as of 2011.
In addition to the $2 million deduction, other exemptions, deductions or credits may ultimately reduce the amount of inheritance tax due to the state of Washington. Because a taxable estate in Washington is linked to guidelines established by the Internal Revenue Code, available deductions may include funeral expenses, debts and other claims against the estate, administrative costs, and charitable donations. Spouses and domestic partners are also entitled to specific deductions. Property used for farming purposes, including poultry, dairy, stock, fruit, ranches and nurseries are all exempt from estate taxes if qualifying conditions are met.
The administrator or personal representative should file a Washington estate tax return if the estate exceeds two million dollars. A copy of the estate's federal tax return should be included, and the federal deadline also applies to the state return. Once the inheritance taxes are filed and paid, a release is issued, and the property may be transferred to the heirs or beneficiaries.