Is Washington’s High Estate Tax Rate Pushing Retirees to Relocate? What Homeowners Should Know

Joe Frank
17 hours ago
6 min read

What WA State Homeowners Nearing Retirement Need to Know

If you’ve lived in Washington State for decades, there’s a good chance your home has become one of your biggest financial assets.

Many homeowners in Snohomish County, Skagit County, and across the greater Seattle area are now sitting on significant equity — often far more than they ever expected when they first bought their homes.

And as retirement approaches, one question is coming up more often:

Does it still make sense to stay in Washington… or could moving to another state better protect your family and your legacy?

Let’s talk honestly about Washington’s high estate tax, how it may impact retirees, and why some homeowners are starting to rethink their long-term housing strategy.

Bur First, Lets Define an Estate Tax

Think of the estate tax as a final "transfer fee" paid to the government on the assets you leave behind. While it’s often called the "death tax," it actually only affects a very small percentage of the wealthiest households.

Who actually pays it? Unlike an inheritance tax (which the person receiving the money pays), the estate tax is paid by the estate itself. The tax is settled using the deceased person’s assets before any inheritance is handed out to family or friends.

What gets taxed? The tax is based on the fair market value of everything you owned at the time of death, including:
- Real Estate: Your home, vacation properties, and land.
- Money & Investments: Bank accounts, stocks, and retirement funds.
- Valuables: Cars, jewelry, artwork, and business interests.

The "Free Pass" (The Exemption)
The good news is that most people are exempt. You only pay if your total value exceeds these "magic numbers":
- Federal Level: In 2026, you can pass on up to $15 million tax-free. If your estate is worth less than that, you owe the federal government $0.
- State Level: Some states (like Washington) have much lower limits.
Common Ways to Lower the Bill
Before the tax is calculated, several "discounts" are applied:
- The Spouse Rule: Anything left to a surviving spouse is generally 100% tax-free.
- Charity: Money left to a qualified non-profit is deducted from the total.
- Debts: Mortgages, final medical bills, and funeral costs are subtracted first.

You can read more on IRS.gov

Washington Has One of the Highest Estate Taxes in the Country

Washington is one of the few states that still has its own estate tax — and the threshold is much lower than many people realize.

Current Washington Estate Tax Overview (Approximate)

Estate tax exemption: about $3.076 million per person
Estates above this amount may owe Washington estate tax
Rates increase as estate value rises — reaching up to about 35% for larger estates

For many families, real estate appreciation alone is enough to push them closer to that threshold.

How Estate Value Is Calculated

Your estate typically includes:

Primary residence
Vacation homes or rental properties
Retirement accounts
Investments and savings
Business ownership
Personal property

This means someone who bought a home decades ago in Mill Creek, Snohomish, Lake Stevens, Everett, or Mount Vernon could now have an estate value much higher than they expected.

Washington Estate Tax Brackets

(Simplified for Planning Conversations)

Approximate Taxable Estate Value	Estimated WA Tax Rate
Up to $1M over exemption	~10%
$1M – $2M	~15%
$2M – $3M	~17%
$3M – $4M	~19%
$4M – $6M	~23%
$6M – $7M	~26%
$7M – $9M	~30%
Over $9M	Up to ~35%

(Exact outcomes depend on deductions and planning — always confirm with tax professionals.)

Why This Matters So Much for Retirees in Western Washington

Ten or fifteen years ago, estate tax planning felt like something only ultra-wealthy families worried about, but today, many long-time homeowners find themselves in a different position.

A home worth $1.3M combined with significant retirement accounts and savings built over decades, and investments or rental properties can cross Washington’s threshold faster than expected.

This is why more and more seniors are asking: Would another state make more financial sense long-term?

The Growing Trend: Seniors Exploring Lower-Tax States

Some Washington retirees are considering relocation to states that:

Have no state estate tax
Offer lower overall tax burdens
Provide more predictable retirement expenses

Common destinations include:

Idaho
Arizona
Nevada
Texas
Tennessee

But taxes alone rarely tell the full story.

Is Moving Out of Washington a Good Idea? A Balanced Look

Potential Benefits

Reduced or eliminated estate tax exposure
Potentially lower cost of living
Opportunity to unlock equity at strong market values
Fresh start in a home better suited for aging in place

Important Tradeoffs

Leaving family, friends, and long-time community and support networks
Healthcare access differences
Insurance costs or climate risks in other regions
Emotional impact of relocating later in life

The right decision isn’t just financial — it’s deeply personal.

Top Estate Tax States: Highest & Lowest

States With the Highest Estate Tax Impact

These states tend to have lower tax exemptions, higher tax rates, or both. This means more homeowners — especially high-equity retirees — may be affected.

Top 10 High Estate-Tax States to Know

(Not ranked strictly by rate alone — but overall impact on estates.)

Washington – Among the highest rates, up to ~20%+ and relatively low exemption.
Oregon – Very low $1M exemption — one of the lowest in the country.
Massachusetts – Low $2M exemption makes many middle-class estates taxable.
Minnesota – $3M exemption with progressive rates.
Illinois – $4M exemption and “cliff tax” structure in some cases.
Rhode Island – Low exemption (~$1.8M).
Maryland – Estate + inheritance taxes possible.
New York – High exemption but complex “tax cliff” rules.
Hawaii – High top rates reaching around 20%.
Vermont – Flat 16% estate tax structure.

Only about a dozen states plus Washington D.C. still have estate taxes, which is why relocation discussions come up often for higher-equity individuals living in WA state among other states listed above.

States With No Estate Tax (Lowest Estate-Tax Impact)

The following states are often considered more tax-friendly from an estate planning perspective, and often sought out by retirees to explore:

Idaho
Arizona
Nevada
Texas
Florida
Wyoming
South Dakota
Tennessee
New Hampshire
Colorado

Most U.S. states actually do NOT impose an estate tax, which is why relocation conversations are increasing among high-equity homeowners nearing retirement.

To investigate further, you can do a deep dive and find state-by-state breakdowns on taxfoundation.org

A Quick Self-Check for Golden-Years Homeowners

You may want to explore your options if:

✔ Your home value has doubled or tripled over the years

✔ You’re relying heavily on home equity for retirement planning

✔ You want to simplify things for your children or heirs

✔ You’re already thinking about downsizing or relocating

Even if you ultimately stay in Washington, understanding your options can bring peace of mind.

Why Planning Early Matters

Many families wait until probate to think about estate taxes — but by then, choices may feel limited.

Planning earlier can help you:

Decide how and when to use your equity
Avoid rushed decisions later
Align housing choices with long-term lifestyle goals
Protect flexibility for your loved ones

And sometimes, the best strategy isn’t complicated — it’s simply moving into a home that better fits the next phase of life.

Before Making Any Major Decisions…

I always encourage homeowners to work closely with:

Their financial planner or wealth advisor
A CPA or tax professional
An estate planning attorney

Taxes should inform decisions — not drive them alone.

Once you have clarity from your financial team, that’s where I can help from a housing and lifestyle perspective.

If You’re Considering a Move — You Don’t Have to Start From Scratch

One of the biggest advantages I offer clients is connection.

Over the years, I’ve built strong relationships with an incredible nationwide network of real estate professionals — many of whom are SRES® (Senior Real Estate Specialist) certified and experienced in helping retirees relocate smoothly and confidently.

Whether you’re thinking about Idaho, Arizona, Nevada, or somewhere completely different, I can connect you with trusted agents. These agents will know the area you're interested in very well, and understand senior transitions and long-term planning.

But first — start with your financial and tax advisors. Once you have a strategy, I’m here to help you explore the housing side of what comes next.

Thinking About Downsizing or Relocating?

If you’re entering retirement and wondering how your home fits into your long-term plan, I’m always happy to have a conversation — no pressure, just guidance.

Thanks for reading!

-Joe