Tax rates/cap. gains, estate

AN ACT Relating to increasing funding to the education legacy 1
trust account for public education, child care, early learning, and 2
higher education by creating a more progressive rate structure for 3
the capital gains tax and estate tax; amending RCW 82.87.040 and 4
83.100.040; reenacting and amending RCW 83.100.020; creating new 5
sections; and providing an effective date. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
NEW SECTION. Sec. 1. (1) The legislature finds that it is the 8
paramount duty of the state to amply provide every child in the state 9
with an education, creating the opportunity for the child to succeed 10
in school and thrive in life. The legislature further finds that high 11
quality early learning and child care is critical to a child's 12
success in school and life, as it supports the development of the 13
child's social-emotional, physical, cognitive, and language skills. 14
The legislature further finds that the state's higher education 15
system ensures Washington residents have the opportunity to succeed 16
in a competitive global economy. 17
(2) The legislature further finds that in 2024, when given the 18
opportunity to retain investments in the education legacy trust 19
account for high quality early learning and child care, 64.11 percent 20
H-2240.1
HOUSE BILL 2082
State of Washington 69th Legislature 2025 Regular Session
By Representatives Street, Thai, Ryu, Ramel, Peterson, Pollet,
Parshley, Scott, Reed, Berry, Santos, Macri, and Tharinger
Read first time 04/16/25. Referred to Committee on Finance.
p. 1 HB 2082
of Washington voters in 32 of its 39 counties voted to uphold the 1
excise tax on sales of long-term capital assets for this purpose.2
(3) Therefore, the legislature will fund ongoing support of 3
public K-12 education, early learning and child care, and higher 4
education, by dedicating revenues from this act to the education 5
legacy trust account. The legislature further recognizes that a tax 6
system that is fair, balanced, and works for everyone is essential to 7
help all Washingtonians grow and thrive. Washington's tax system 8
remains the second most regressive in the nation as it asks those 9
with the least to pay the most as a percentage of their income. Low-10
income Washingtonians pay at least three times more in state and 11
local taxes as a percentage of their income than the state's highest-12
income households. 13
(4) To help increase funding to the education legacy trust 14
account, the legislature intends to levy an additional excise tax on 15
the sale or exchange of long-term capital assets, which equals 2.90 16
percent multiplied by the portion of an individual's Washington 17
capital gains exceeding $1,000,000, and by creating a more 18
progressive rate structure for the estate tax by increasing the top 19
tier rates up to 35 percent. Further, the legislature intends to 20
increase the exclusion amount to $3,000,000 for the estate tax. The 21
legislature recognizes that levying these taxes with a more 22
progressive rate structure, and increasing the exclusion amount for 23
the estate tax, will have the additional effect of making material 24
progress toward rebalancing the state's tax code. 25
PART I26
INCREASING THE CAPITAL GAINS TAX RATE ON ANNUAL LONG-TERM CAPITAL 27
GAINS IN EXCESS OF $1,000,00028
Sec. 101. RCW 82.87.040 and 2021 c 196 s 5 are each amended to 29
read as follows: 30
(1)(a) Beginning January 1, 2022, an excise tax is imposed on the 31
sale or exchange of long-term capital assets. Only individuals are 32
subject to payment of the tax, which equals seven percent multiplied 33
by an individual's Washington capital gains. 34
(b) Beginning January 1, 2025, an additional excise tax is 35
imposed on the sale or exchange of long-term capital assets, which 36
equals 2.90 percent multiplied by the portion of an individual's 37
Washington capital gains exceeding $1,000,000.38
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(2) The tax levied in subsection (1) of this section is necessary 1
for the support of the state government and its existing public 2
institutions. 3
(3) If an individual's Washington capital gains are less than 4
zero for a taxable year, no tax is due under this section and no such 5
amount is allowed as a carryover for use in the calculation of that 6
individual's adjusted capital gain, as defined in RCW 82.87.020(1), 7
for any taxable year. To the extent that a loss carryforward is 8
included in the calculation of an individual's federal net long-term 9
capital gain and that loss carryforward is directly attributable to 10
losses from sales or exchanges allocated to this state under RCW 11
82.87.100, the loss carryforward is included in the calculation of 12
that individual's adjusted capital gain for the purposes of this 13
chapter. An individual may not include any losses carried back for 14
federal income tax purposes in the calculation of that individual's 15
adjusted capital gain for any taxable year. 16
(4)(a) The tax imposed in this section applies to the sale or 17
exchange of long-term capital assets owned by the taxpayer, whether 18
the taxpayer was the legal or beneficial owner of such assets at the 19
time of the sale or exchange. The tax applies when the Washington 20
capital gains are recognized by the taxpayer in accordance with this 21
chapter. 22
(b) For purposes of this chapter: 23
(i) An individual is considered to be a beneficial owner of long-24
term capital assets held by an entity that is a pass-through or 25
disregarded entity for federal tax purposes, such as a partnership, 26
limited liability company, S corporation, or grantor trust, to the 27
extent of the individual's ownership interest in the entity as 28
reported for federal income tax purposes. 29
(ii) A nongrantor trust is deemed to be a grantor trust if the 30
trust does not qualify as a grantor trust for federal tax purposes, 31
and the grantor's transfer of assets to the trust is treated as an 32
incomplete gift under Title 26 U.S.C. Sec. 2511 of the internal 33
revenue code and its accompanying regulations. A grantor of such 34
trust is considered the beneficial owner of the capital assets of the 35
trust for purposes of the tax imposed in this section and must 36
include any long-term capital gain or loss from the sale or exchange 37
of a capital asset by the trust in the calculation of that 38
individual's adjusted capital gain, if such gain or loss is allocated 39
to this state under RCW 82.87.100. 40
p. 3 HB 2082
PART II1
MODIFYING THE ESTATE TAX2
Sec. 201. RCW 83.100.020 and 2013 2nd sp.s. c 2 s 2 are each 3
reenacted and amended to read as follows: 4
The definitions in this section apply throughout this chapter 5
unless the context clearly requires otherwise. 6
(1)(a) The applicable exclusion amount for the decedent's estate 7
is the applicable exclusion amount in effect as of the date of the 8
decedent's death. "Applicable exclusion amount" means:9
(i) ((One million five hundred thousand dollars )) $1,500,000 for 10
decedents dying before January 1, 2006; 11
(ii) ((Two million dollars )) $2,000,000 for estates of decedents 12
dying on or after January 1, 2006, and before January 1, 2014; 13
((and))14
(iii) $2,012,000 for estates of decedents dying on or after 15
January 1, 2014, and before January 1, 2015;16
(iv) $2,054,000 for estates of decedents dying on or after 17
January 1, 2015, and before January 1, 2016;18
(v) $2,079,000 for estates of decedents dying on or after January 19
1, 2016, but before January 1, 2017;20
(vi) $2,129,000 for estates of decedents dying on or after 21
January 1, 2017, but before January 1, 2018;22
(vii) $2,193,000 for estates of decedents dying on or after 23
January 1, 2018, but before January 1, 2025;24
(viii) $3,000,000 for estates of decedents dying on or after 25
January 1, 2025, but before January 1, 2026; and26
(ix) For estates of decedents dying in calendar year ((2014)) 27
2026 and each calendar year thereafter, the amount in (a)(((ii))) 28
(viii) of this subsection must be adjusted annually, except as 29
otherwise provided in this subsection (1)(a)(((iii))) (ix). The 30
annual adjustment is determined by multiplying ((two million 31
dollars)) $3,000,000 by the sum of one ((plus)) and the percentage by 32
which the most recent October consumer price index exceeds the 33
consumer price index for October ((2012)) 2024, and rounding the 34
result to the nearest ((one thousand dollars )) $1,000. No adjustment 35
is made for a calendar year if the adjustment would result in the 36
same or a lesser applicable exclusion amount than the applicable 37
exclusion amount for the immediately preceding calendar year. ((The 38
applicable exclusion amount under this subsection (1)(a)(iii) for the 39
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decedent's estate is the applicable exclusion amount in effect as of 1
the date of the decedent's death.))2
(b) For purposes of this subsection (1), "consumer price index" 3
means the consumer price index for all urban consumers, all items, 4
for the Seattle ((-Tacoma-Bremerton)) metropolitan area as calculated 5
by the United States bureau of labor statistics. For the purposes of 6
this subsection (1)(b), "Seattle metropolitan area" means the 7
geographic area sample that includes Seattle and surrounding areas.8
(2) "Decedent" means a deceased individual. 9
(3) "Department" means the department of revenue, the director of 10
that department, or any employee of the department exercising 11
authority lawfully delegated to him or her by the director.12
(4) "Federal return" means any tax return required by chapter 11 13
of the internal revenue code. 14
(5) "Federal tax" means a tax under chapter 11 of the internal 15
revenue code. 16
(6) "Federal taxable estate" means the taxable estate as 17
determined under chapter 11 of the internal revenue code without 18
regard to: (a) The termination of the federal estate tax under 19
section 2210 of the internal revenue code or any other provision of 20
law, and (b) the deduction for state estate, inheritance, legacy, or 21
succession taxes allowable under section 2058 of the internal revenue 22
code. 23
(7) "Gross estate" means "gross estate" as defined and used in 24
section 2031 of the internal revenue code. 25
(8) "Internal revenue code" means the United States internal 26
revenue code of 1986, as amended or renumbered as of January 1, 2005.27
(9) "Person" means any individual, estate, trust, receiver, 28
cooperative association, club, corporation, company, firm, 29
partnership, joint venture, syndicate, or other entity and, to the 30
extent permitted by law, any federal, state, or other governmental 31
unit or subdivision or agency, department, or instrumentality 32
thereof. 33
(10) "Person required to file the federal return" means any 34
person required to file a return required by chapter 11 of the 35
internal revenue code, such as the personal representative of an 36
estate. 37
(11) "Property" means property included in the gross estate.38
(12) "Resident" means a decedent who was domiciled in Washington 39
at time of death. 40
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(13) "Taxpayer" means a person upon whom tax is imposed under 1
this chapter, including an estate or a person liable for tax under 2
RCW 83.100.120. 3
(14) "Transfer" means "transfer" as used in section 2001 of the 4
internal revenue code and includes any shifting upon death of the 5
economic benefit in property or any power or legal privilege 6
incidental to the ownership or enjoyment of property. However, 7
"transfer" does not include a qualified heir disposing of an interest 8
in property qualifying for a deduction under RCW 83.100.046 or 9
ceasing to use the property for farming purposes. 10
(15) "Washington taxable estate" means the federal taxable estate 11
and includes, but is not limited to, the value of any property 12
included in the gross estate under section 2044 of the internal 13
revenue code, regardless of whether the decedent's interest in such 14
property was acquired before May 17, 2005, (a) plus amounts required 15
to be added to the Washington taxable estate under RCW 83.100.047, 16
(b) less: (i) The applicable exclusion amount under subsection (1) of 17
this section ; (ii) the amount of any deduction allowed under RCW 18
83.100.046; (iii) amounts allowed to be deducted from the Washington 19
taxable estate under RCW 83.100.047; and (iv) the amount of any 20
deduction allowed under RCW 83.100.048. 21
Sec. 202. RCW 83.100.040 and 2013 2nd sp.s. c 2 s 4 are each 22
amended to read as follows: 23
(1) A tax in an amount computed as provided in this section is 24
imposed on every transfer of property located in Washington. For the 25
purposes of this section, any intangible property owned by a resident 26
is located in Washington. 27
(2)(a) ((Except)) (i) For estates of decedents dying before 28
January 1, 2025, except as provided in (b) of this subsection, the 29
amount of tax is the amount provided in the following table:30
31
32
33

If Washington Taxable

The amount of Tax Equals
Of Washington
Taxable Estate Value
Greater than
34 Estate is at least But Less Than Initial Tax Amount Plus Tax Rate %
35 $0 $1,000,000 $0 10.00% $0
36 $1,000,000 $2,000,000 $100,000 14.00% $1,000,000
37 $2,000,000 $3,000,000 $240,000 15.00% $2,000,000
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1 $3,000,000 $4,000,000 $390,000 16.00% $3,000,000
2 $4,000,000 $6,000,000 $550,000 18.00% $4,000,000
3 $6,000,000 $7,000,000 $910,000 19.00% $6,000,000
4 $7,000,000 $9,000,000 $1,100,000 19.50% $7,000,000
5 $9,000,000 $1,490,000 20.00% $9,000,000
(ii) For estates of decedents dying on or after January 1, 2025, 6
except as provided in (b) of this subsection, the amount of tax is 7
the amount provided in the following table:8
9
10
11

If Washington Taxable

The amount of Tax Equals
Of Washington
Taxable Estate Value
Greater than
12 Estate is at least But Less Than Initial Tax Amount Plus Tax Rate %
13 $0 $1,000,000 $0 10.00% $0
14 $1,000,000 $2,000,000 $100,000 15.00% $1,000,000
15 $2,000,000 $3,000,000 $250,000 17.00% $2,000,000
16 $3,000,000 $4,000,000 $420,000 19.00% $3,000,000
17 $4,000,000 $6,000,000 $610,000 23.00% $4,000,000
18 $6,000,000 $7,000,000 $1,070,000 26.00% $6,000,000
19 $7,000,000 $9,000,000 $1,330,000 30.00% $7,000,000
20 $9,000,000 $1,930,000 35.00% $9,000,000
(b) If any property in the decedent's estate is located outside 21
of Washington, the amount of tax is the amount determined in (a) of 22
this subsection multiplied by a fraction. The numerator of the 23
fraction is the value of the property located in Washington. The 24
denominator of the fraction is the value of the decedent's gross 25
estate. Property qualifying for a deduction under RCW 83.100.046 must 26
be excluded from the numerator and denominator of the fraction.27
(3) The tax imposed under this section is a stand-alone estate 28
tax that incorporates only those provisions of the internal revenue 29
code as amended or renumbered as of January 1, 2005, that do not 30
conflict with the provisions of this chapter. The tax imposed under 31
this chapter is independent of any federal estate tax obligation and 32
is not affected by termination of the federal estate tax.33
PART III34
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MISCELLANEOUS1
NEW SECTION. Sec. 301. Section 101 of this act applies to taxes 2
imposed in calendar year 2025 for collection in calendar year 2026.3
NEW SECTION. Sec. 302. Sections 201 and 202 of this act apply 4
prospectively as well as retroactively to estates of decedents dying 5
on or after January 1, 2025.6
NEW SECTION. Sec. 303. This act does not affect any existing 7
right acquired or liability or obligation incurred under the sections 8
amended or repealed in this act or under any rule or order adopted 9
under those sections, nor does it affect any proceeding instituted 10
under those sections.11
NEW SECTION. Sec. 304. If any provision of this act or its 12
application to any person or circumstance is held invalid, the 13
remainder of the act or the application of the provision to other 14
persons or circumstances is not affected.15
NEW SECTION. Sec. 305. This act is necessary for the support of 16
the state government and its existing public institutions, and takes 17
effect immediately.18
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