SB 5813 — Increasing funding to the education legacy trust account by creating a more progressive rate structure for the capital gains tax and estate tax.

ENGROSSEDS-3137.5 SUBSTITUTE SENATE BILL 5813 State of Washington 69th Legislature 2025 Regular Session By Senate Ways & Means (originally sponsored by Senators C.

Wilson, Stanford, Alvarado, Frame, Nobles, Pedersen, and Valdez)Valdez READRead FIRSTfirst TIMEtime 04/19/25.04/16/25.

Referred to Committee on Ways & Means.

amending RCW 82.87.040,82.87.040 83.100.040, and 83.100.048;83.100.040;

1 ESSBSB 5813 of Washington voters in 32 of its 39 counties voted to uphold the excise tax on sales of long-term capital assets for this purpose.

2 ESSBSB 5813 (2) The tax levied in subsection (1) of this section is necessary for the support of the state government and its existing public institutions.

3 ESSBSB 5813 PART II MODIFYING THE ESTATE TAX Sec.

4 ESSBSB 5813 decedent's estate is the applicable exclusion amount in effect as of the date of the decedent's death.)) (b) For purposes of this subsection (1), "consumer price index" means the consumer price index for all urban consumers, all items, for the Seattle((-Tacoma-Bremerton)) metropolitan area as calculated by the United States bureau of labor statistics.

5 ESSBSB 5813 (13) "Taxpayer" means a person upon whom tax is imposed under this chapter, including an estate or a person liable for tax under RCW 83.100.120.

6 ESSBSB 5813 $3,000,000 $4,000,000 $390,000 16.00% $3,000,000 $4,000,000 $6,000,000 $550,000 18.00% $4,000,000 $6,000,000 $7,000,000 $910,000 19.00% $6,000,000 $7,000,000 $9,000,000 $1,100,000 19.50% $7,000,000 $9,000,000 $1,490,000 20.00% $9,000,000 (ii) For estates of decedents dying on or after January 1, 2025, except as provided in (b) of this subsection, the amount of tax is the amount provided in the following table:

PART III p.

7 ESSBSB 5813 Sec.MISCELLANEOUS NEW SECTION.

203.

RCW 83.100.048 and 2013 2nd sp.s.

c 2 s 3 are each amended to read as follows:

(1) For the purposes of determining the tax due under this chapter, a deduction is allowed for the value of the decedent's qualified family-owned business interests, not to exceed ((two million five hundred thousand dollars)) the applicable deduction amount, if:

(a) The value of the decedent's qualified family-owned business interests exceed ((fifty)) 50 percent of the decedent's Washington taxable estate determined without regard to the deduction for the applicable exclusion amount;

(b) During the eight-year period ending on the date of the decedent's death, there have been periods aggregating five years or more during which:

(i) Such interests were owned by the decedent or a member of the decedent's family;

(ii) There was material participation, within the meaning of section 2032A(e)(6) of the internal revenue code, by the decedent or a member of the decedent's family in the operation of the trade or business to which such interests relate;

(c) The qualified family-owned business interests are acquired by any qualified heir from, or passed to any qualified heir from, the decedent, within the meaning of RCW 83.100.046(2), and the decedent was at the time of his or her death a citizen or resident of the United States;

and (d) The value of the decedent's qualified family-owned business interests is not more than ((six million dollars)) $6,000,000.

(2)(a) Only amounts included in the decedent's federal taxable estate may be deducted under this subsection.

(b) Amounts deductible under RCW 83.100.046 may not be deducted under this section.

(3)(a) There is imposed an additional estate tax on a qualified heir if, within three years of the decedent's death and before the date of the qualified heir's death:

(i) The material participation requirements described in section 2032A(c)(6)(b)(ii) of the internal revenue code are not met with respect to the qualified family-owned business interest which was acquired or passed from the decedent;

(ii) The qualified heir disposes of any portion of a qualified family-owned business interest, other than by a disposition to a p.

8 ESSB 5813 member of the qualified heir's family or a person with an ownership interest in the qualified family-owned business or through a qualified conservation contribution under section 170(h) of the internal revenue code;

(iii) The qualified heir loses United States citizenship within the meaning of section 877 of the internal revenue code or with respect to whom section 877(e)(1) applies, and such heir does not comply with the requirements of section 877 (g) of the internal revenue code;

or (iv) The principal place of business of a trade or business of the qualified family-owned business interest ceases to be located in the United States.

(b) The amount of the additional estate tax imposed under this subsection is equal to the amount of tax savings under this section with respect to the qualified family-owned business interest acquired or passed from the decedent.

(c) Interest applies to the tax due under this subsection for the period beginning on the date that the estate tax liability was due under this chapter and ending on the date the additional estate tax due under this subsection is paid.

Interest under this subsection must be computed as provided in RCW 83.100.070(2).

(d) The tax imposed by this subsection is due the day that is six months after any taxable event described in (a) of this subsection occurred and must be reported on a return as provided by the department.

(e) The qualified heir is personally liable for the additional tax imposed by this subsection unless he or she has furnished a bond in favor of the department for such amount and for such time as the department determines necessary to secure the payment of amounts due under this subsection.

The qualified heir, on furnishing a bond satisfactory to the department, is discharged from personal liability for any additional tax and interest under this subsection and is entitled to a receipt or writing showing such discharge.

(f) Amounts due under this subsection attributable to any qualified family-owned business interest are secured by a lien in favor of the state on the property in respect to which such interest relates.

The lien under this subsection (3)(f) arises at the time the Washington return is filed on which a deduction under this section is taken and continues in effect until:

(i) The tax liability under this subsection has been satisfied or has become unenforceable by reason p.

9 ESSB 5813 of lapse of time;