Washington rolls back some tax increases amid new income tax

Washington lowered the top estate tax rate from 35% to 20% and included rollbacks of certain sales tax increases on services as part of legislation that also creates a new state income tax.

Washington's Legislature approved changes that roll back several recent tax increases while also enacting a new state income tax. The measure reduces the top estate tax rate and repeals certain sales tax increases on services. Lawmakers framed the rollbacks as a response to concerns about the state's business climate and the mobility of capital. The sales tax rollbacks were described as part of negotiations to secure support for the income tax. Key details: - Senate Bill 6347 lowers the top estate tax rate from 35% to 20%; the top rate affects estates valued at $12 million or more. - The first $3 million of an estate is exempt, and estates valued under $3 million do not pay the estate tax. - The bill repeals recent sales tax increases on services such as information technology support, website development, temporary staffing and live presentations. - Lawmakers said the rollbacks were negotiated to garner votes for the income tax; the revised estate tax rate takes effect in July and most sales tax changes take effect in January 2029. Summary: The legislation reduces the highest estate tax rate and removes certain service-related sales tax increases while establishing a new income tax. Lawmakers presented the package as addressing concerns that higher taxes could affect businesses or prompt capital to move; the estate tax change is effective in July and most sales tax reversals will begin in January 2029.