Oregon Estate Tax Bill Would Raise Threshold to $2.5 Million

What Happened

Oregon’s Senate approved Bill 1511 on February 24, 2026, by a 22-5 vote, sending legislation to the House that would significantly reform the state’s estate tax structure. The Democrats on the Revenue committee had previously approved the measure on February 13 by a 3-2 margin.

The proposed legislation would raise Oregon’s estate tax threshold from $1,000,000ORS 118.010Verified Sep 15, 2026View source to $2.5 million, meaning estates valued below the new threshold would face no state estate tax obligations. The bill includes a trade-off provision that would increase tax rates on estates exceeding $3 million to offset revenue losses through 2029.

Currently, Oregon maintains the lowest estate tax threshold among the 12 states and District of Columbia that impose such taxes. The existing $1,000,000ORS 118.010Verified Sep 15, 2026View source threshold has remained unchanged since 2011, creating tax exposure for middle-class families who own homes and retirement accounts.

What It Means

This proposed change would provide substantial relief for Oregon families caught in an estate tax structure designed for different economic conditions. With Oregon’s current $1,000,000ORS 118.010Verified Sep 15, 2026View source exemption, homeowners who purchased property years ago now find their estates approaching taxable levels due to property appreciation and accumulated retirement savings.

The practical impact extends beyond wealthy families. A homeowner with a $400,000 house, $60,000 in checking accounts, and a modest 401(k) balance of $540,000 would currently face Oregon’s estate tax. Under the proposed $2.5 million threshold, these middle-class estates would gain complete exemption from state estate tax obligations. This change would eliminate the need for many families to navigate Oregon’s probate process with tax complications, which currently requires 4 monthsORS 115.005Verified Sep 8, 2026View source for creditor claims and can extend 6 months to 12 months overall.

The legislation creates a two-tier impact structure. Estates valued between $1,000,000ORS 118.010Verified Sep 15, 2026View source and $2.5 million would benefit from complete tax elimination. However, estates exceeding $3 million would face increased tax rates, with the top marginal rate rising by 3.9 percentage points above the current 16%ORS 118.010Verified Sep 15, 2026View source maximum. This progressive approach aims to maintain state revenue while providing relief to middle-class families who never intended to build taxable estates.

Context from SimplyTrust

Oregon residents planning their estates must consider both federal and state tax implications when structuring their legacy plans. While the $15,000,00026 USC 2001(c), 2010; P.L. 119-21 §70106Verified Sep 15, 2026View source federal exemption shields most families from federal estate tax, Oregon’s lower state threshold creates planning challenges that affect middle-class families throughout the state.

For Oregonians approaching the current or proposed thresholds, proper estate planning becomes essential regardless of the bill’s outcome. Revocable living trusts can help families avoid Oregon’s probate process, which typically costs 2%ORS 116.183 (reasonable compensation; no statutory percentage)Verified Sep 8, 2026View source to 3.2%ORS 116.183 (reasonable compensation; no statutory percentage)Verified Sep 8, 2026View source of the estate value in attorney fees. Understanding these planning tools helps families protect their assets and minimize administrative burdens for their beneficiaries.

Source: Oregon estate tax bill heads to House, would increase threshold