(The Center Square) – As majority Democrats in Olympia push ahead with a controversial income tax bill, they are also moving to roll back another tax-the-rich policy passed during the 2025 session.
Senate Bill 6347, authored by Sen. Claudia Kauffman, D-Kent, would change the rates approved a year ago for all eight brackets exactly to where they were before the last change. The wealthiest were hardest hit by last year’s change, and thus are the biggest beneficiary in the proposal.
The Center Square was unsuccessful prior to publication getting comment from Kauffman.
“I suspect that the projections of the revenue that they’re seeing from this estate tax is not panning out to be what they thought,” said Mark Harmsworth, the director of the Small Business Center at the Washington Policy Center. “It’s relatively easy for somebody in that position where they’ve retired and all they need to do is move and they won’t have to pay it in another state. I think they’ve realized that they put this thing so high, that the incentive to stay is not high enough. So I suspect that’s why they’re rolling it back.”
Last year’s change for those with estates of $9 million or more sent the rate from 20% to 35%, highest in the nation. The $7 million to $9 million bracket was raised from 19.5% to 30%, according to the bill language; the $6 million to $7 million bracket from 19% to 26%; and the $4 million to $6 million bracket from 18% to 23%.
Lesser than 5% impacts were in the $3 million to $4 million bracket, going from 16% to 19%; the $2 million to $3 million bracket from 15% to 17%; and the $1 million to $2 million bracket from 14% to 15%.
The $0 to $1 million bracket was 10%, stayed there, and would remain there, according to Kauffman’s proposal.
Critics often call the estate tax a death tax. It is applied to the estate of those who die. A dozen states and the District of Columbia impose estate taxes, according to the Tax Foundation, in addition to the federal estate tax.
Top marginal federal rate is 40%.
Five states levy inheritance taxes. Maryland is the only state that imposes both an estate and an inheritance tax.
The 35% tax assessed on estate values of $9 million or more includes additional assets including investment accounts and insurance payouts. Hawaii has the next highest estate tax rate at 20% on estate values exceeding $10 million.
First introduced on Feb. 4, the legislation was given a brief public hearing on Feb. 6 in the Senate Ways and Means Committee, right after a two-hour hearing on Senate Bill 6346, the millionaires’ tax.
As the noisy hearing room was clearing out of the masses that came to testify or witness testimony on the income tax bill, a staff member briefed the estate-tax rollback.
No one testified on the bill and three days later, the measure passed out of the committee on a bipartisan vote with no substantive debate, setting up a potential full Senate vote this week.
Harmsworth said it’s the combined impact of recent tax hikes on the wealthy and new proposals in Washington that have pushed many to the breaking point.
“I think when you tie this in with the income tax, and then you tie it in with capital gains taxes and the uncertainty of all three taxes, maybe they’ve realized it’s just too much,” he said.
The impact of the 2025 estate tax increase isn’t known yet since changes only went into effect last June, and those estate tax payments are coming due April 1.
SB6346 the income tax bill is expected to get a vote on the Senate floor later Monday.
