QUESTION: Can you confirm whether or not the latest version of the WA Estate Tax exemption increases each year with an inflation index? And, if so, what is the index it is tied to? Thank you.
ANSWER:
Short answer: No, the latest version of the WA Estate Tax exemption does NOT adjust for inflation. There IS an inflation adjustment in the statute, BUT it's tied to a CPI index that doesn't exist anymore.
Last year's bill (ESSB 5813) that increased the top estate tax rate to 35% updated the inflation adjustment reference to the current "Seattle metropolitan area" CPI, which meant the amount would have adjusted annually for inflation. But SB 6347 this session, which lowered the top rate back to 20%, reverted the language back to the old "Seattle-Tacoma-Bremerton" index, which BLS stopped publishing years ago.
So, the $3M exemption is effectively frozen starting July 1, 2026, and the Dept. of Revenue will likely administer the new statute as not tied to inflation. It's the same problem that kept the exemption stuck at $2.193M for years before last year's fix.
The legislative record doesn't really explain whether the reversion was intentional or a drafting mistake.