Washington State now has the highest estate tax in the nation

With only a few months left in 2025, it is important to evaluate your philanthropy sooner rather than later. Recently passed tax laws may throw a curveball into the financial planning strategies you’ve set in motion with your advisors.

Here are five tips to help you and your attorney, CPA, and financial advisor evaluate whether adjustments to your charitable plan might be in order. Of course, the team at Kitsap Community Foundation would be honored to join your meeting for the charitable giving conversation. There are so many ways we can help!

Understand Washington State’s estate tax changes

A series of changes enacted by the Washington State Legislature increased the state’s capital gains tax and modified its estate tax, effective July 1, 2025.

The estate tax exemption amount will increase from $2,193,000 to $3,000,000. As before, transfers to a surviving spouse or to charity remain fully exempt from the tax.

The new law also changes the tax rates applied to the net taxable estate. This means that while an additional $807,000 of an estate is exempt, the portion above the exemption may be subject to higher gradual tax rates.

Keep planning!

If you are a high-net-worth individual, this is no time to become complacent. If you expect your estate may exceed these thresholds, we encourage you to consult your professional advisor and our team at KCF to discuss strategies for potentially reducing your tax burden.

2025 is important if you itemize deductions on your income tax return.

If you itemize deductions on your income tax return, 2025 presents a window of opportunity: the One Big Beautiful Bill Act (OBBBA) increases the standard deduction in 2025. This is because your itemized charitable deductions will be subject to a “floor” and cap starting in 2026. A technique called “bunching” could allow you to make big contributions to your donor-advised fund at Kitsap Community Foundation in 2025 so that you can benefit from itemizing your deductions. In turn, over the coming years, you can use your donor-advised fund to support your favorite charities.

Stick to the basics.

Sure, a lot is changing, but a lot isn’t! Appreciated stock is still likely to be a much more tax-savvy gift to charity than cash, and it’s important to keep this top of mind. In addition, IRAs remain a powerful charitable planning tool. For instance, when you name a fund at Kitsap Community Foundation as the beneficiary of an IRA, the gift avoids estate tax and income tax, both of which can hit your heirs hard.

Know the opportunities if you are 70 ½ or older.

If you are 70 ½ or older, the Qualified Charitable Distribution (“QCD”) is a great way to transfer up to $108,000 (2025’s per taxpayer limit) income-tax free to a qualified charity, including some types of funds at Kitsap Community Foundation.

Please reach out to the Kitsap Community Foundation team. We’re honored to be your first call on all things charitable giving!