Federal Tax
Several deductions and other values for federal tax law are adjusted each year based on the Consumer Price Index for all-urban consumers (CPI-U) nationally for the 12-month period ending August 31 of the prior year, as determined by the federal Bureau of Labor Statistics (BLS). Among the values adjusted for 2026 are the following that have particular relevance for estate planning:
- Federal estate and gift tax exclusion and GST exemption: $15,000,000 (this amount was set by statute and will adjust for inflation in future years)
- Gift tax annual exclusion: $19,000 (no change)
- Non-citizen spouse gift tax annual exclusion: $194,000
- Special use valuation limit for estate tax under section 2032A: $1,460,000
- Portion of estate subject to 2% interest for deferral under section 6166: $1,940,000
- Average annual income tax threshold for covered expatriate tax purposes: $211,000
- Exclusion of gain for covered expatriate upon expatriation: $910,000
- Trust ordinary income taxable at highest 37% marginal rate: $16,000
Washington Capital Gains Tax
The Washington capital gains tax standard deduction, and a few other values related to calculation of tax due, adjust annually based on the most recent CPI-U for the Seattle area available on October 1. The BLS reports this index every other month, and the August index, generally reported in mid-September determines the annual adjustments. Unlike most inflation adjustments, the Washington capital gains tax adjustments apply to the current year, not the following year. The Washington Department of Labor is required to announce the adjustments for each year by October 31, and the adjustments for the year 2025 are as follows:
- Standard deduction: $278,000
- Charitable donation deduction threshold: $278,000
- Cap on amount of charitable donation deduction: $111,000
- Worldwide gross revenue limit for QFOBI deduction: $11,095,000
Washington Estate Tax
In 2025, the Washington legislature reset the state estate tax exclusion at $3,000,000, effective for deaths from July 1, 2025 to December 31, 2025. Beginning in 2026, the legislature reintroduced an annual inflation adjustment, which had been frozen since 2018 at $2,193,000 due to a change in the manner the Bureau of Labor Statistics measured CPI-U for the Seattle area.
In 2026, the exclusion amount is $3,076,000.