Washington has no income tax for now and that single fact gives a lot of people the wrong idea about what happens to their money when they die. 

Because there is no income tax, many assume the state stays out of the way at the end of life too. It does not. Washington has one of the most aggressive estate taxes in the country, the rules changed again this summer, and the threshold that decides who pays is now frozen while nearly everything it measures keeps climbing. 

Here is the part that surprises people most: You do not have to feel wealthy to get caught. 

Start with what counts. When Washington calculates your estate, it does not just look at the cash in your bank account. It includes your home, even if the mortgage is long gone. It includes your retirement accounts, every dollar in the individual retirement account and the 401(k). It includes your brokerage account. And it includes the one almost nobody expects, the death benefit on your life insurance. A couple who own a Spokane home free and clear, hold a solid retirement balance, and carry a life insurance policy meant to protect the family, can cross the line without ever having felt rich a day in their lives. 

Picture a couple with a $650,000 home in Spokane and $2.5 million built up across their IRAs and a brokerage account. That is already $3.15 million, which is over the state's estate tax threshold, and neither of them ever earned what most people would call a fortune.

Retirement accounts get hit especially hard, because they can be taxed twice. The balance counts toward Washington's estate tax, and then the heirs who inherit it owe federal income tax as they draw it down.

Then there is the wrinkle almost no one sees coming. Washington does not allow portability between spouses. At the federal level, when one spouse dies, the survivor automatically picks up whatever exemption the first spouse did not use. Washington state doesn't. Without planning, the first spouse's exemption can simply disappear, leaving far more of the estate exposed when the second spouse passes. Married couples who assume they have two exemptions to work with often end up with only one. 

So what changed this summer? For deaths on or after July 1, lawmakers rolled the top estate tax rate back to 20%, down from the 35% that applied over the prior year. That sounds like relief, and for larger estates it is — but in the same move, the exemption was reset to $3 million and frozen, with no annual inflation adjustment going forward. 

That freeze is why you may run into two different numbers. For deaths in the first half of 2026, the exemption was $3,076,000, an inflation-adjusted figure. For deaths on or after July 1, it dropped back to an even $3 million and stopped moving. The number that matters now is $3 million, and because it no longer rises with inflation, the same house and the same accounts drift closer to the line every year. 

None of this means a family is stuck. There are ways to plan around it. A credit shelter trust lets married couples preserve both exemptions despite the portability gap, and for many couples this is simply a provision their attorney builds into the will or living trust. An irrevocable life insurance trust can move a policy's death benefit out of the estate. 

The two strategies that resonate most with clients are more straightforward. The first is gifting during your lifetime, so you get to watch your heirs actually enjoy the money. The second, is charitable giving. For retirees age 70 1/2 or older, qualified charitable distributions paid straight from your IRA to your church or a cause you love comes out tax-free, which lowers your taxable income now and shrinks the balance your heirs would owe income tax on later. 

The common thread is that these strategies require planning ahead of time. None of them can be arranged after the fact.

If your home, your retirement accounts, and other assets might eventually add up to more than $3 million, it's worth an afternoon with your fiduciary adviser and an estate attorney while there is still time to act. The frozen threshold is patient. It will wait for your estate to grow into it.