Estate Tax Updates in Oregon and Washington
You don’t have to consider yourself ultra wealthy to leave behind a taxable estate. Even when no federal tax is due, Oregon and Washington residents can be quietly pushed into higher estate tax thresholds through retirement savings, years of homeownership, investments, and life insurance. Understanding the rules now can help preserve more of what you’ve built, reduce surprises for loved ones, and create a smoother transfer of your legacy.
Federal Exemption Set at $15 Million
The One Big Beautiful Bill Act, introduced in 2025, raised the federal estate tax to $15 million and indexed it for inflation, providing a safe harbor for most of the American middle class. Although most states are also moving towards less inheritance taxation, there are about nine states that still have an estate or inheritance tax—Washington and Oregon are among those states.
While Oregon and Washington have tried to tinker with the rates or exemption amounts and even attempted an outright abolishment, Washington has been successful(ish) in changing the state’s estate tax in 2025 and quickly altering it again in 2026.
Washington State Estate Tax Whiplash
Washington’s estate tax landscape has undergone a highly volatile two-year cycle following recent legislative adjustments.
2025: Pedal to the Metal
Effective July 1, 2025, the exclusion was raised to $3,076,000 (adjusted for inflation). The rates also increased to 35% for estates over $8.8 million.
2026: Back Pedal
Currently, for individuals passed away between January 1, 2026, and June 30, 2026, the exclusion amount is still set at $3,076,000. However, for deaths occurring on or after July 1, 2026, the exemption drops slightly to a flat $3,000,000.
In regard to tax rates, Governor Ferguson recently signed a new bill into law that effectively rolls back the rate hike enacted the prior year.
For deaths between January 1, 2026, and June 30, 2026, the state's top marginal tax rate hits 35% (on estate values exceeding $9 million above the exemption).
For deaths on or after July 1, 2026, the top marginal estate tax rate is scaled back to 20%.
Oregon Holds the Honor
Oregon continues to hold the high honor and distinct privilege of having the lowest estate tax exemption threshold in the United States.
Estate Tax exemption in Oregon is held at $1 million. It is not currently indexed for inflation, meaning anyone with an estate (including real estate and retirement accounts) totaling over $1 million is subject to the tax.
Tax Rates: The tax is progressive across 10 brackets, ranging from 10% to 16%.
As with every year, a number of bills to raise the exemption threshold were introduced to the legislature during the last session, but none went the distance. Momentum recently built toward a total overhaul of the state's estate tax. A citizen-led initiative attempted to have the topic added to the upcoming ballot, but it fell short in gathering enough signatures to qualify for the November 3, 2026, general election ballot.
Most anticipate continued attempts at estate tax legislation and believe it will receive a lot of attention in the 2027 legislative session.
With the Federal estate tax laws bringing more of a safe harbor to the middle class, it is important to remember that living in Oregon and Washington the miserly exemptions can still, and often do, result in a burdensome estate tax situation. Understanding the rules now can help preserve more of what you’ve built, reduce surprises for loved ones, and create a smoother transfer of your legacy. Regular conversations with legal, tax and financial professionals can help ensure your plan continues to reflect your wishes and the people who matter most.
Tara M. Hendison, JD, CTFA, is a Certified Trust and Financial Advisor and an attorney. She is a sought-after speaker on the subject of probate and trust administration. To speak with Tara Hendison, call our office at 503-292-1041.