Estate Tax Alert: New Washington Estate Tax Spousal Personal Residence Exclusion

Related Practice: Estate Planning & Administration

Many Washington residents know that the state has no income tax, but fewer realize that Washington has an estate tax that can impact families at the time of death. A recent change in the law—the Spousal Personal Residence Exclusion—potentially shields an estate from having to file a Washington estate tax return in certain circumstances. This change, which went into effect January 1, 2025, could reduce tax reporting burdens for surviving spouses.

First, the Basics.
Washington imposes an estate tax on estates that exceed the filing threshold—currently $2,193,000. If a decedent’s assets exceed this amount, their estate must file a Washington state estate tax return, even if no taxes are ultimately going to be owed.

What’s Changed? The Spousal Personal Residence Exclusion.
Under the new law, if a married person passes away on or after January 1, 2025, their estate may exclude the value of the primary residence when determining whether their gross estate meets the filing threshold. This means that more estates may avoid filing an estate tax altogether.

Key Requirements for the Exclusion.
To qualify for the Spousal Personal Residence Exclusion:

1. The decedent must have been married at time of death.
2. The residence must pass to the surviving spouse.
3. Both spouses must have lived in the residence for at least 6 months before the first spouse’s passing.
4. After excluding the residence’s value, the remaining gross estate must be below the $2,193,000 filing threshold.

Impact of the Exclusion
Below is an example calculation demonstrating the potential impact of the exclusion for married Washington decedent who owns property only in Washington.

Without the Exclusion (Prior Law)

• Retirement Assets: $1,000,000
• Personal Residence: $2,000,000
• Investments: $2,000,000
• Total Community Property Assets: $5,000,000
• Deceased spouse’s share: $2,500,000

Because the deceased spouse’s share exceeds $2,193,000, a WA state estate tax return is required.

With the Exclusion (Current Law)

• Retirement Assets: $1,000,000
• Personal Residence: $2,000,000 (excluded)
• Investments: $2,000,000
• Total Community Property Assets: $3,000,000
• Deceased spouse’s share: $1,500,000

Because the deceased spouse’s share is now below $2,193,000, no Washington state estate tax return is required.

Is This Really a Tax Savings?
While the new Spousal Personal Residence Exclusion may seem like a tax break, it’s primarily a form of administrative relief rather than a true tax savings. The exclusion only applies when determining whether a return must be filed—not in calculating the actual taxable estate if a return is required.

For many families, this new exclusion simplifies estate administration by avoiding the costs and complexities of filing a Washington state estate tax return. However, those with larger estates should not assume it results in tax savings. Proper estate planning is still critical for minimizing overall tax burdens.

For more information regarding the Spousal Personal Residence Exclusion, see RCW 83.100.050, WAC 458-57-135, or visit the Washington Department of Revenue's page here. To discuss issues specific to your circumstances, contact one of our Estate Planning attorneys.