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WashingtonSB 58132025-2026 Regular SessionSenateWALLET

Increasing funding to the education legacy trust account by creating a more progressive rate structure for the capital gains tax and estate tax.

Sponsored By: Claire Wilson (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 3 benefits, 2 costs, 0 mixed.

Estates get a larger tax exclusion

For deaths from July 1 through December 31, 2025, Washington's estate tax exclusion is $3 million. This exclusion reduces the estate value subject to state estate tax. For deaths in 2026 and later, the amount adjusts annually using the Seattle area's October consumer price index. The calculation compares that index with October 2024 and rounds the amount to the nearest $1,000. The exclusion does not decrease.

Family businesses get larger estate deductions

For deaths from July 1, 2025, through June 30, 2026, the maximum family business estate deduction rises from $2.5 million to $3 million. The law also specifies annual inflation adjustments for deaths in 2026 and later, rounded to the nearest $1,000. Adjustments use October's consumer price index compared with October 2024 and cannot lower the amount. Business interests must exceed 50% of the Washington taxable estate, calculated before the estate tax exclusion. Ownership and active business participation by the decedent or family must total at least five of the eight years before death. The interests must pass to a qualified heir, and the decedent must have been a U.S. citizen or resident. Qualifying business interests must be worth no more than $6 million.

Farm estate relief includes employee heirs

For deaths on or after July 1, 2025, qualifying farm estates can deduct tangible farm property used by a nonfamily employee heir. The property must be used mainly for farming, and the employee must have actively participated in farm operations. The employee must receive the property from the decedent and have been hired by the decedent or a family member. The employee must receive wages, salary, or benefits and be actively employed on the date of death. Self-employed people, independent contractors, and tenant farmers are excluded; the estate must also satisfy the existing farm deduction requirements.

Investors pay more on large gains

Beginning January 1, 2025, individuals pay an extra 2.9% tax on Washington capital gains above $1 million. The existing 7% tax remains, making the combined rate 9.9% on the portion above $1 million. Taxes on 2025 gains are collected in 2026. Gains through pass-through businesses also count based on the individual's ownership. All capital gains tax revenue goes to the Education Legacy Trust Account for schools, early learning, child care, and higher education.

Large estates face higher tax rates

For deaths on or after July 1, 2025, Washington applies higher estate tax rates as taxable estate value rises. The first $1 million of taxable value is taxed at 10%. Successive rates are 15%, 17%, 19%, 23%, 26%, and 30%, with 35% applying to the portion above $9 million. These thresholds refer to taxable value, not the estate's total value before exclusions and deductions. The tax covers Washington property, including intangible assets owned by Washington residents.

Sponsors & Cosponsors

Sponsor

  • Claire Wilson

    Democratic • Senate

Cosponsors

  • Derek Stanford

    Democratic • Senate

  • Emily Alvarado

    Democratic • Senate

  • Jamie Pedersen

    Democratic • Senate

  • Javier Valdez

    Democratic • Senate

  • Noel Frame

    Democratic • Senate

  • T'wina Nobles

    Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 107 • No: 87

Senate vote • 4/24/2025

Final Passage as Amended by the House

Yes: 27 • No: 21

House vote • 4/23/2025

Final Passage as Amended by the House

Yes: 53 • No: 45

Senate vote • 4/19/2025

3rd Reading & Final Passage

Yes: 27 • No: 21 • Other: 1

Actions Timeline

  1. Effective date 5/20/2025.

    5/20/2025Senate

  2. Chapter 421, 2025 Laws.

    5/20/2025Senate

  3. Governor signed.

    5/20/2025legislature

  4. Delivered to Governor.

    4/27/2025legislature

  5. Speaker signed.

    4/26/2025legislature

  6. President signed.

    4/25/2025legislature

  7. Passed final passage; yeas, 27; nays, 21; absent, 0; excused, 0.

    4/24/2025Senate

  8. Senate concurred in House amendments.

    4/24/2025House

  9. Third reading, passed; yeas, 53; nays, 45; absent, 0; excused, 0.

    4/23/2025Senate

  10. Rules suspended. Placed on Third Reading.

    4/23/2025Senate

  11. Committee amendment(s) adopted with no other amendments.

    4/23/2025Senate

  12. Rules Committee relieved of further consideration. Placed on second reading.

    4/23/2025Senate

  13. Referred to Rules 2 Review.

    4/22/2025Senate

  14. Minority; do not pass.

    4/22/2025Senate

  15. FIN - Majority; do pass with amendment(s).

    4/22/2025Senate

  16. FIN - Executive action taken by committee.

    4/22/2025Senate

  17. First reading, referred to Finance.

    4/21/2025Senate

  18. Third reading, passed; yeas, 27; nays, 21; absent, 0; excused, 1.

    4/19/2025Senate

  19. Rules suspended. Placed on Third Reading.

    4/19/2025Senate

  20. Floor amendment(s) adopted.

    4/19/2025Senate

  21. 1st substitute bill substituted.

    4/19/2025Senate

  22. Passed to Rules Committee for second reading.

    4/19/2025Senate

  23. Placed on second reading by Rules Committee.

    4/19/2025Senate

  24. Minority; without recommendation.

    4/18/2025Senate

  25. Minority; do not pass.

    4/18/2025Senate

Bill Text

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