December 16, 2025 | Ashley Boustany FEDERAL ESTATE AND GIFT TAX EXEMPTION– $15 million threshold for 2026 THE FEDERAL ESTATE TAX is, for 2026, generally triggered if you pass more than $15 million to someone other than your US citizen spouse. This $15 million value is called the federal estate and gift tax exemption and is adjusted annually for inflation. Given how high the Federal estate tax exemption is, our concern, in Washington State, is usually more about the State estate tax. Other considerations: location of assets, citizenship status of spouses, types of assets, and gifts made during your lifetime that chip away at the federal exemption. These topics are each their own discussion, so be sure to ask your estate planning attorney about these topics too. WASHINGTON ESTATE TAX-$3,000,000 threshold starting July 1, 2025 THE WASHINGTON STATE ESTATE TAX is triggered if you pass more than $3 million to someone other than your US citizen spouse. This value also gets adjusted for inflation annually and was only recently increased to $3 million in July of 2025. The new law effective July of 2025 also raised the estate tax rate which now starts at 10% and tops out at 35%. An important planning consideration is often preserving a deceased spouse’s exemption. There is very common and usually easy to implement trust planning that avoids “wasting” the first spouse to pass away’s exemption. GIFT TAX THE FEDERAL GIFT TAX EXCLUSION for 2026 is $19,000. Washington State has no gift tax. For those whose have more than $3 million potentially passing to the next generation, gifting now, instead of after death, may be a good estate planning strategy to reduce estate taxes owed to the State. This strategy works because Washington State will not tax you on gifts you make while you are alive, and the federal gift tax only applies if you gift more than $15 million. Many people believe their gifts will be taxed by the federal government if they give more than their allowed $19,000 annual exclusion, but that is an incorrect understanding. The $19,000 exclusion only refers to how much you can give to someone else before you have to let the IRS know you made the gift. If you do gift more than $19,000, then whatever exceeded that amount is, in effect, deducted from your $15 million exemption. Other things to consider when making lifetime gifts include: capital gains tax issues (the receiver gets your tax basis for capital gains tax purposes), the funds you will need long term for your care, whether someone is on benefits like Medicaid or SSI, and the beneficiary’s money/asset management skills. For a tailored analysis on estate tax planning, discuss your particular facts with an estate planning attorney.