For those who live in Washington and are dealing with a loved one passing away, the estate tax can be a surprise expense as part of that process. It is important to be aware of the costs and rates for the estate tax.
The estate tax is actually made up of federal and state taxes. The federal estate tax does not apply to any estate that is less than 12.06 million dollars. That means few estates will be subject to the tax, as they won’t be near that level of value. For estates that are in that category, the amount they owe will vary based on how much value in assets they have above the minimum. At the low end, the first $10,000 or less of taxable assets are taxed at 18 percent. At the top end, for estates that have over a million in taxable assets beyond the 12.06 million minimum, the owned taxes are a flat $345,800 plus 40 percent of the value over 1 million that is taxable.
For the state of Washington, things work differently. This state has a much lower floor of $2.193 million. The rates range from 10 percent to 20 percent of the taxable amount, which also includes flat tax amounts for categories above the first one. Washington estate taxes can be deducted from the taxable assets for the federal tax rate, which can reduce or eliminate the federal tax burden. Proper estate planning will ensure minimization of taxes and other benefits.
The estate tax can be significant in Washington and some people are surprised when they learn that they owe it and how much they need to pay.