Oregon Estate Tax: The Why and What of It
Learn about the Oregon estate tax, it’s history, why it still exists, and what it’s presence means for residents or property owners.
The Oregon estate tax applies to estates valued at $1 million or more at death—a threshold that hasn’t changed for inflation. That low, fixed threshold is a big reason this tax still shows up in everyday planning for Oregon families.
First, Oregon explicitly chose to keep a state-level estate tax after federal changes in the 2000s eliminated the old system many states used. (Although there’s no inheritance tax.)
Before 2005, Oregon’s system largely piggybacked on a federal credit (the “pick-up tax”). When Congress phased out that credit, states had a choice: drop their tax or rewrite it. Oregon “decoupled” from those federal changes and kept its own revenue stream. The state opted to maintain an independent estate tax tied to 2010 federal estate-tax law as a reference point for calculating the Oregon taxable estate—a structure still referenced in legislative summaries today.
Second, voters have repeatedly declined to repeal it—Ballot Measure 84 in 2012, for example, failed—so the tax remains part of the state’s revenue mix.
The Oregon Estate Tax Today
Threshold and Filing
If the gross estate is $1,000,000 or more, an Oregon return (Form OR-706) is required. The tax is graduated, roughly 10% to 16% on the Oregon taxable estate above the exemption.
No State Portability
Unlike federal law, Oregon does not allow a surviving spouse to automatically use any unused portion of the first spouse’s $1 million exemption—at least not under current law. Bills to add portability have been proposed (e.g., HB 3934 in 2025) but didn’t pass. Therefore, couples often rely on planning tools (like credit-shelter or bypass trusts) to preserve both exemptions.
Residents vs. Nonresidents
Oregon taxes resident estates on all property (with apportionment for out-of-state assets) and nonresident decedents on Oregon-sited real or tangible personal property. If you own a vacation home or business equipment here, your estate (or your heirs) may still be dealing with Salem even if you live elsewhere. The state’s own instructions and rules outline the apportionment mechanics and the schedules used for nonresident returns.
Marital Deduction & QTIP Nuances
Oregon generally follows federal concepts for the marital deduction and allows Oregon-only QTIP elections. These defer tax until the surviving spouse’s death. But you must make and track those elections carefully on the Oregon return.
Special Assets
Oregon provides credits and elections for certain natural resource and commercial fishing properties. These can meaningfully reduce or defer state estate tax when meeting the statutory conditions.
What All This Means for Oregon Residents
The Oregon estate tax is here. It kicks in at a comparatively low $1 million threshold. And it comes with complexities that reward proactive planning. Those include no state portability, apportionment for nonresidents, and special elections for marital and resource property.
Estate Size Matters Sooner
The $1 million threshold isn’t indexed. So ordinary growth in home values, retirement accounts, and small businesses can push families into estate-tax territory. That’s true even when they’re far below the federal estate-tax threshold. That’s why many Oregonians benefit from early planning (trust structure, lifetime gifting strategy, beneficiary designations, and asset titling).
Married Couples Need a Plan
Without state portability, failing to use the first spouse’s exemption can increase the surviving spouse’s future Oregon tax. Well-drafted revocable trusts (with credit-shelter provisions) are a common fix.
Out-of-State Owners Should Check Exposure
Nonresidents with Oregon property may owe Oregon estate tax on those Oregon-sited assets. Coordinating deeds, entity ownership, and situs can help manage the exposure.
Precise Paperwork Is a Must
Expect to file Form OR-706 (with supporting schedules) when you cross the threshold. Pay close attention to separate Oregon elections that may differ from your federal return. The Department of Revenue’s instructions spell out required attachments and timing.
(Read More: Learn about revocable trusts in Oregon versus Nevada.)