Washington’s New Estate Tax Explained: What Bellingham & Whatcom County Homeowners Need to Know
How much time do you spend thinking about your estate, its net value, and the tax implications your heirs will encounter when you pass away?
If you've peeked at the Federal estate tax limit (or exemption), you've seen that it's at a healthy $13,990,000 per individual (and yeah, double that if you're married.)
*And it goes to a cool $15M (and $30M for couples) in 2026.
So, unless you're in the top 0.14% of wealthy Americans, this is a non-issue.
But again, that's at the FEDERAL level.
Washington State's estate tax limit is much, much lower, and is certainly worth knowing about.
It also just recently got a healthy bump -- saving your heirs real money if you fit into the bucket of wealth I'm about to describe in today's newsletter.
Try this test: Even if you don't think this info applies to you, speed-read this blog and see how long it takes for this specific topic to come up in your conversations.
Then report back to me on that!
Alright, let's talk next-generation-wealth-preservation, shall we?
First: SeaFeast Date Correction
In the last newsletter, I mistakenly wrote the dates for the upcoming SeaFeast Festival.
The CORRECT dates are Saturday and Sunday, September 27th and 28th.
Here's the link to the official SeaFeast website, with full info:
https://www.bellinghamseafeast.org/
Let's meet up there, nerd out on some carving projects, and EAT SEAFOOD!!!
Washington’s New Estate Tax Explained
On July 1, 2025, Washington State made some big changes to how estates are taxed.
And if you own real estate here, and have been riding the overall, long-term appreciation wave of Bellingham and Whatcom County real estate, these changes (are very like are going to) matter.
For years, Washington’s estate tax exemption was set at $2.193 million.
Here’s what that means:
When someone passes away, the value of everything they own is added up.
That includes:
Their house (or houses)
Retirement, checking, savings account
Life insurance payouts
Vehicles
Investments
Random belongings with value like jewelry or art collections
That total value of all those things combined is called an "estate."
If the estate was worth less than $2.193 million, no Washington estate tax was owed.
But if it was worth more than that, the amount above $2.193 million was taxed by the state before it passed on to heirs.
Now, as of July 1, 2025, the exemption has been raised to $3 million.
That’s a meaningful relief for a lot of families, especially here in Washington, where real estate values have climbed materially over the past decade and beyond.
A Curveball for the Wealthier Set
If you're on the higher-net-worth end of things, though, as in "north of $9M" in your estate's total value, this new rule has some hard news.
For Washington estates over $9 million, the top tax rate has gone up.
The highest bracket used to be 20%.
Now it has almost doubled to 35%.
So smaller and mid-sized estates got some breathing room, but very large estates just got a bigger tax bill.
It's a tiered system.
The tax doesn’t jump straight from 0% to 35%. Washington uses a bracketed system, like income tax.
Here’s what that looks like once you pass the $3 million exemption:
Taxable Value Over $3M Marginal Tax Rate
$3,000,001 – $4,000,000: ~19%
$4,000,001 – $6,000,000: ~23%
$6,000,001 – $7,000,000: ~26%
$7,000,001 – $9,000,000: ~30%
Over $9,000,000 ~ 35%
Example: A $5 Million Estate
Let’s say your estate is worth $5 million.
Here’s how the tax would apply:
The first $3,000,000 → no estate tax (that’s the exemption).
The next $1,000,000 (from $3M to $4M) → taxed at ~19%.
The next $1,000,000 (from $4M to $5M) → taxed at ~23%.
So your estate doesn't pay 23% on the whole $5M -- just on the parts above the exemption.
That’s how the brackets keep things proportional.
Why It Matters Locally
If you own a home in Bellingham, plus maybe a second property -- be it a rental, or a weekend place near Mt. Baker or Winthrop -- and you’ve been saving steadily for retirement… your estate value adds up faster than you might think.
Remember, 98% of Warrent Buffett's net worth was realized AFTER he turned 65!
That’s why this estate tax law change matters.
It raises the taxable threshold, making it less likely for many heirs to get surprised by an estate tax bill.
BONUS: The Inflation adjustment
Another big update:
Starting Jan 1, 2026, the $3 million exemption will adjust each year for inflation.
That’s critical.
Without that adjustment, our typical year-over-year rise in home prices in Bellingham and the rest of Whatcom County -- not to mention normal economic inflation -- would undoubtedly push more and more estates into the taxable zone, even if they weren’t particularly wealthy to begin with.
Now, the Washington law builds in an automatic “catch-up” to help keep pace.
So what does this mean for you?
If your total estate value is under $3 million, you’re in the clear. No Washington estate tax owed.
If you’re in that $3–9 million range, you just got some extra breathing room.
If you’re north of $9 million, you’ll want to meet with your estate planner or tax professional, because your tax liability may have increased.
Key Take-Aways
As a Realtor, I’m not here to give tax or legal advice.
But we all know how much real estate values tie into estate planning.
Your home is often your single biggest contributor to the value of your estate.
So when laws like this change, it has a direct impact on your heirs, your legacy, and what you’re ultimately able to pass on.
Q: Should you be making changes to your will or estate plan because of this?
Maybe.
If your estate is under $3M, you probably don’t need to worry about the tax side of things.
If it’s larger -- ESPECIALLY above $9M -- you’ll want to talk with an estate attorney or financial planner to review your options.
Hit me up if you'd like some recommendations -- I've gotten great feedback in both categories of those professional referrals recently.
SeaFeast: September 27th & 28th
Remember to come down to Zuanich Park if you're in town that weekend.
I'd love to see you, and I'd love to grab or reserve one of my carvings, and let's FOR SURE feast on some local seafood together!
Meanwhile, have an AWESOME rest of the week, and I'll see you again soon!
