wa-law.org > bill > 2025-26 > SB 5813 > Original Bill
The legislature finds that it is the paramount duty of the state to amply provide every child in the state with an education, creating the opportunity for the child to succeed in school and thrive in life. The legislature further finds that high quality early learning and child care is critical to a child's success in school and life, as it supports the development of the child's social-emotional, physical, cognitive, and language skills. The legislature further finds that the state's higher education system ensures Washington residents have the opportunity to succeed in a competitive global economy.
The legislature further finds that in 2024, when given the opportunity to retain investments in the education legacy trust account for high quality early learning and child care, 64.11 percent of Washington voters in 32 of its 39 counties voted to uphold the excise tax on sales of long-term capital assets for this purpose.
Therefore, the legislature will fund ongoing support of public K-12 education, early learning and child care, and higher education, by dedicating revenues from this act to the education legacy trust account. The legislature further recognizes that a tax system that is fair, balanced, and works for everyone is essential to help all Washingtonians grow and thrive. Washington's tax system remains the second most regressive in the nation as it asks those with the least to pay the most as a percentage of their income. Low-income Washingtonians pay at least three times more in state and local taxes as a percentage of their income than the state's highest-income households.
To help increase funding to the education legacy trust account, the legislature intends to levy an additional excise tax on the sale or exchange of long-term capital assets, which equals 2.90 percent multiplied by the portion of an individual's Washington capital gains exceeding $1,000,000, and by creating a more progressive rate structure for the estate tax by increasing the top tier rates up to 35 percent. Further, the legislature intends to increase the exclusion amount to $3,000,000 for the estate tax. The legislature recognizes that levying these taxes with a more progressive rate structure, and increasing the exclusion amount for the estate tax, will have the additional effect of making material progress toward rebalancing the state's tax code.
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Beginning January 1, 2022, an excise tax is imposed on the sale or exchange of long-term capital assets. Only individuals are subject to payment of the tax, which equals seven percent multiplied by an individual's Washington capital gains.
Beginning January 1, 2025, an additional excise tax is imposed on the sale or exchange of long-term capital assets, which equals 2.90 percent multiplied by the portion of an individual's Washington capital gains exceeding $1,000,000.
The tax levied in subsection (1) of this section is necessary for the support of the state government and its existing public institutions.
If an individual's Washington capital gains are less than zero for a taxable year, no tax is due under this section and no such amount is allowed as a carryover for use in the calculation of that individual's adjusted capital gain, as defined in RCW 82.87.020(1), for any taxable year. To the extent that a loss carryforward is included in the calculation of an individual's federal net long-term capital gain and that loss carryforward is directly attributable to losses from sales or exchanges allocated to this state under RCW 82.87.100, the loss carryforward is included in the calculation of that individual's adjusted capital gain for the purposes of this chapter. An individual may not include any losses carried back for federal income tax purposes in the calculation of that individual's adjusted capital gain for any taxable year.
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The tax imposed in this section applies to the sale or exchange of long-term capital assets owned by the taxpayer, whether the taxpayer was the legal or beneficial owner of such assets at the time of the sale or exchange. The tax applies when the Washington capital gains are recognized by the taxpayer in accordance with this chapter.
For purposes of this chapter:
An individual is considered to be a beneficial owner of long-term capital assets held by an entity that is a pass-through or disregarded entity for federal tax purposes, such as a partnership, limited liability company, S corporation, or grantor trust, to the extent of the individual's ownership interest in the entity as reported for federal income tax purposes.
A nongrantor trust is deemed to be a grantor trust if the trust does not qualify as a grantor trust for federal tax purposes, and the grantor's transfer of assets to the trust is treated as an incomplete gift under Title 26 U.S.C. Sec. 2511 of the internal revenue code and its accompanying regulations. A grantor of such trust is considered the beneficial owner of the capital assets of the trust for purposes of the tax imposed in this section and must include any long-term capital gain or loss from the sale or exchange of a capital asset by the trust in the calculation of that individual's adjusted capital gain, if such gain or loss is allocated to this state under RCW 82.87.100.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
A tax in an amount computed as provided in this section is imposed on every transfer of property located in Washington. For the purposes of this section, any intangible property owned by a resident is located in Washington.
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If Washington Taxable
The amount of Tax Equals
Of Washington Taxable Estate Value Greater than
Estate is at least
But Less Than
Initial Tax Amount
Plus Tax Rate %
$0
$1,000,000
$0
10.00%
$0
$1,000,000
$2,000,000
$100,000
14.00%
$1,000,000
$2,000,000
$3,000,000
$240,000
15.00%
$2,000,000
$3,000,000
$4,000,000
$390,000
16.00%
$3,000,000
$4,000,000
$6,000,000
$550,000
18.00%
$4,000,000
$6,000,000
$7,000,000
$910,000
19.00%
$6,000,000
$7,000,000
$9,000,000
$1,100,000
19.50%
$7,000,000
$9,000,000
$1,490,000
20.00%
$9,000,000
ii. For estates of decedents dying on or after January 1, 2025, except as provided in (b) of this subsection, the amount of tax is the amount provided in the following table:
If Washington Taxable
The amount of Tax Equals
Of Washington Taxable Estate Value Greater than
Estate is at least
But Less Than
Initial Tax Amount
Plus Tax Rate %
$0
$1,000,000
$0
10.00%
$0
$1,000,000
$2,000,000
$100,000
15.00%
$1,000,000
$2,000,000
$3,000,000
$250,000
17.00%
$2,000,000
$3,000,000
$4,000,000
$420,000
19.00%
$3,000,000
$4,000,000
$6,000,000
$610,000
23.00%
$4,000,000
$6,000,000
$7,000,000
$1,070,000
26.00%
$6,000,000
$7,000,000
$9,000,000
$1,330,000
30.00%
$7,000,000
$9,000,000
$1,930,000
35.00%
$9,000,000
b. If any property in the decedent's estate is located outside of Washington, the amount of tax is the amount determined in (a) of this subsection multiplied by a fraction. The numerator of the fraction is the value of the property located in Washington. The denominator of the fraction is the value of the decedent's gross estate. Property qualifying for a deduction under RCW 83.100.046 must be excluded from the numerator and denominator of the fraction.
Section 101 of this act applies to taxes imposed in calendar year 2025 for collection in calendar year 2026.
Sections 201 and 202 of this act apply prospectively as well as retroactively to estates of decedents dying on or after January 1, 2025.
This act does not affect any existing right acquired or liability or obligation incurred under the sections amended or repealed in this act or under any rule or order adopted under those sections, nor does it affect any proceeding instituted under those sections.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
This act is necessary for the support of the state government and its existing public institutions, and takes effect immediately.