Washington has highest estate tax in the nation

Last month the Tax Foundation came out with a special report on state's inheritance and estate taxes, which included a special distinction for Washington state:

The Evergreen State imposes the highest top marginal estate tax rate in the nation, imposing a 20 percent rate on taxable estate values above $9 million. The state has an inflation-adjusted exemption which currently stands at $2.129 million.

Only 18 states impose inheritance and/or estate taxes. The Tax Foundation notes the important distinctions between the two types of taxes:

Taxes can be imposed on the entirety of a decedent’s bequests (an estate tax) or on the receipt of an estate’s proceeds (an inheritance tax). The differences are not merely semantic, and diverge in both their legal and economic incidence. Estate taxes are imposed on the net value of an estate, after any exclusions or credits, at the rate indicated by the total value of all taxable bequests and before any distribution to heirs. Inheritance taxes are paid by legatees based on their share of the inheritance and, often, their relationship with the deceased. Whereas estate taxes are paid by the decedent’s estate before assets are distributed to heirs, inheritance taxes are remitted by the recipient of a bequest. Both inheritance and estate taxes exempt transfers made to a spouse after death.

The report also points out the obvious problems inherent in these taxes, in terms of competition with other states:

Estate and inheritance taxes place states and their residents on less competitive footing. They reduce investment, discourage business expansion, and sometimes drive wealthy taxpayers out of state. 

You can read the entire report here.

Washington Research Council estate tax Tax Foundation

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