Oregon Estate Tax Rates: What Couples Actually Owe, With and Without a Plan

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Oregon Estate Tax Rates: What Couples Actually Owe, With and Without a Plan

Oregon’s estate tax runs from 10 percent to 16 percent on the Oregon taxable estate above $1 million, and Oregon’s $1 million exclusion is not portable between spouses. That second fact is the one that costs money.

If you and your spouse leave everything to each other outright, the first spouse’s $1 million exclusion is simply gone. On a combined $2 million estate, that produces $101,250 of Oregon estate tax at the second death. A plan that uses both exclusions is designed to bring that number to zero.

The fix has to be built into the documents while both spouses are alive. It cannot be done afterward. (The plan itself is on my Oregon estate tax page for married couples. This article is the numbers behind it.)

When does Oregon’s estate tax apply?

Two separate questions, and they land on the same number.

A return is required once the gross estate reaches $1 million. The Department of Revenue’s Form OR-706 instructions put it plainly: “A return must be filed if the value of the gross estate at the date of death is $1,000,000 or more.” The statutory filing rule is ORS 118.160(1)(c).

The tax itself is imposed under ORS 118.010, and its rate table also begins at $1 million.

The return and the payment are both due within twelve months of the date of death. That changed for deaths on or after January 1, 2022 — it used to be nine months, and older articles still say so.

What are Oregon’s estate tax rates?

From the rate table in ORS 118.010 and the OR-706 instructions, applied to the Oregon taxable estate:

Oregon taxable estateTax
$1,000,000 to under $1,500,00010.0% of the amount over $1,000,000
$1,500,000 to under $2,500,000$50,000 plus 10.25% of the amount over $1,500,000
$2,500,000 to under $3,500,000$152,500 plus 10.5% of the amount over $2,500,000
$3,500,000 to under $4,500,000$257,500 plus 11.0% of the amount over $3,500,000
$4,500,000 to under $5,500,000$367,500 plus 11.5% of the amount over $4,500,000
$5,500,000 to under $6,500,000$482,500 plus 12.0% of the amount over $5,500,000
$6,500,000 to under $7,500,000$602,500 plus 13.0% of the amount over $6,500,000
$7,500,000 to under $8,500,000$732,500 plus 14.0% of the amount over $7,500,000
$8,500,000 to under $9,500,000$872,500 plus 15.0% of the amount over $8,500,000
$9,500,000 and above$1,022,500 plus 16.0% of the amount over $9,500,000

The Oregon taxable estate starts from the federal number. ORS 118.010(3) provides that “the Oregon taxable estate to be used for purposes of computing the tax imposed under this section shall be the federal taxable estate,” then adjusted.

Why is Oregon’s exclusion not portable, and what does that cost?

At the federal level, a surviving spouse can generally carry over a deceased spouse’s unused exemption. Oregon has no equivalent. Nothing in ORS chapter 118 lets a surviving spouse use what the first spouse did not.

So the exclusion is use-it-or-lose-it at the first death.

Here is what that means in dollars, for a couple with a combined $2 million — a paid-off house in Lake Oswego, two retirement accounts, and a group life policy or two.

Everything to the survivor. Nothing is taxable at the first death, because the marital deduction absorbs it. At the second death the taxable estate is $2,000,000. From the table: $50,000 plus 10.25% of $500,000, or $101,250.

Both exclusions used. The plan funds a share at the first death that stays out of the survivor’s taxable estate. Each side ends up at roughly $1,000,000 — at or under the threshold on both deaths. Zero.

Same assets, same family, same total passing to the same children. A hundred thousand dollars of difference, created by how the documents were written.

Run it at other sizes and the pattern holds. At $1.5 million, doing nothing produces $50,000 of tax and using both exclusions takes it to zero. At $2.5 million, $152,500 against $50,000. At $3 million, $205,000 against $101,250. Above $1.5 million, the second exclusion is worth roughly $100,000 or more, and the figure rises with the marginal rate as the estate grows.

How do Oregon couples use both exclusions?

The mechanism is not exotic, but it has to be deliberate.

At the first death, the trust divides. One share — up to the Oregon exclusion amount — is funded in a way that does not qualify for the marital deduction and therefore does not land in the surviving spouse’s taxable estate at the second death. The survivor can still benefit from it during life, depending on how it is drafted. It simply is not hers for transfer tax purposes.

The rest passes to or for the surviving spouse and is deducted at the first death.

That division is the whole strategy. It is also why a standard revocable living trust does not solve this problem. A standard trust says everything continues for the survivor. It is a probate-avoidance instrument, and probate-avoidance is a different job from tax structuring. (I describe the plan I draft for this on my Oregon estate tax page, and its flat fee is on my pricing page.)

Two warnings worth stating plainly.

A plan drafted only to the federal exemption gets Oregon wrong. If your trust funds a bypass share “up to the applicable exclusion amount” and that means the federal number, the formula can sweep the entire estate into the bypass share, because the federal figure is many times Oregon’s. That uses the Oregon exclusion, but it also makes everything above $1 million taxable in Oregon at the first death — unless the executor makes the Oregon election described below. National templates and generic AI-generated documents often default to the federal framing, because most of what is written about estate tax is federal.

And funding matters as much as drafting. A division that exists on paper but never happens — because nobody retitled anything at the first death — produces the unplanned result.

Oregon special marital property, the election most people have never heard of

Oregon has a state-level election that gets overlooked, and for larger estates it can be the difference between paying Oregon tax at the first death and deferring it.

Under ORS 118.013 and ORS 118.016, an executor can elect to treat qualifying property as Oregon special marital property. ORS 118.010(3) then reduces the Oregon taxable estate by “the value on the date of the decedent’s death of all Oregon special marital property under ORS 118.013.”

The election is made by the executor attaching a statement to the return that “affirms that the identified property meets the requirements of Oregon special marital property under ORS 118.013.” Where the trust also allows distributions to people other than the surviving spouse (ORS 118.013(3)), the surviving spouse and each permissible distributee who may be eligible for a distribution must also elect and give written consent. Under ORS 118.016(3), the elections are irrevocable.

Why it matters: Oregon lets you make a state election that differs from your federal one. The OR-706 instructions call for an Oregon-only Schedule M identifying the specific property, a box to check when a separate Oregon election is claimed, and Schedule OR-OSMP where applicable.

That flexibility is the point. A couple whose federal plan funds a large bypass share would otherwise owe Oregon tax at the first death on the amount in that share above $1 million. The Oregon election can let the estate defer that portion instead.

Deferral is the right word. It is not forgiveness. The OR-706 instructions are explicit that the return for the second spouse to die must include property previously claimed for a QTIP or Oregon special marital property deduction. The tax comes back at the second death.

Which is exactly why the use-it-or-lose-it exclusion planning above still matters. The election defers. The division uses the first exclusion.

The mechanics of combining the two are technical and depend on the size and composition of the estate. That part belongs in a conversation, not an article.

Did Oregon raise the estate tax exemption?

No. This comes up constantly right now and a lot of what is published about it is wrong, so here is the current status.

Senate Bill 1511 in the 2026 session would have converted Oregon’s $1 million exclusion into a $2.5 million deduction for deaths on or after January 1, 2027. It passed the Senate on February 24, 2026 by a vote of 22 to 5, went to the House Revenue Committee, and was still in committee when the session adjourned on March 6, 2026.

It died there. The exemption remains $1 million.

Separately, House Bill 3630 and Senate Bill 485, both from the 2025 session, did change Oregon estate tax law — but they modified the natural resource property exemption under ORS 118.145, not the rates or the $1 million threshold.

Plan around $1 million. If the legislature changes it later, a trust can be drafted to adjust; a plan built on a rumored increase that never arrived cannot.

What counts toward the $1 million?

The gross estate, which is broader than most people’s mental picture of their net worth. The house at full value, not equity — debts come off later in computing the tax, but the filing threshold looks at the gross number. Retirement accounts. Brokerage and bank accounts. Business interests. Personal property.

And life insurance you own. Not the cash value — the death benefit.

That last one is what pushes ordinary Portland-metro couples over the line without their realizing it. A $900,000 house, $600,000 across two 401(k)s, and a $500,000 group policy through an employer is $2 million. Nobody in that household feels wealthy. Oregon’s estate tax does not ask how you feel.

Add it up honestly before deciding this article is not about you.

Farms, forestland, and fishing

Oregon provides relief for working natural resource property, and if that describes your family it is worth real money.

ORS 118.140 allows a natural resource credit for farm, forest, and commercial fishing property. Among the conditions: the total adjusted gross estate may not exceed $15 million, natural resource property must make up at least 50 percent of the adjusted gross estate in Oregon, the property must pass to a family member, and the decedent or a family member must have operated the business for five of the eight years before death. Any operating allowance may not exceed the lesser of $1 million or 15 percent of the total value of natural resource property claimed.

There is also a separate natural resource property exemption under ORS 118.145, and this is where the 2025 legislation landed. HB 3630 applies to deaths on or after July 1, 2025; SB 485 limits the forestland exemption to small forestland owners for deaths on or after January 1, 2026. The OR-706 instructions state that an estate cannot claim both the exemption and the credit on the same return, that the Oregon percentage calculation changed for decedents dying on or after July 1, 2025, and that new certification forms replaced the old ones.

If you own a farm, a woodlot, or a commercial fishing operation, this area changed recently and is worth a current review rather than reliance on anything written before mid-2025.

What if you live in Washington but own property in Oregon?

Oregon taxes nonresidents on Oregon property. Under ORS 118.010(2), the tax reaches a nonresident decedent whose estate includes an interest in real property located in Oregon or tangible personal property located in Oregon.

The amount is apportioned. Under ORS 118.010(6), the tax is the full computed amount multiplied by a ratio: the numerator is the value of the decedent’s Oregon real property plus Oregon tangible personal property, less the ORS 118.145 exemption, and the denominator is the total gross estate, less the same exemption.

So a Vancouver family with a beach house in Lincoln City or a rental in Portland has an Oregon exposure even though they do not live here. It is proportional rather than total, but it exists, and it is easy to miss when the rest of the plan is written to Washington law. (More on planning for Vancouver, Camas, and Clark County families.) I walk through the full math, with a worked example, in Oregon estate tax for Washington residents.

What to do

Add it up at gross value. House, retirement, brokerage, business, personal property, and the death benefit on any life insurance you own. If the total is over $1 million, or heading there, you are in this conversation.

Read your trust for a division at the first death. If it says everything continues for the surviving spouse, the first exclusion is not being used.

Check what number your plan is drafted to. If it funds a share “up to the applicable exclusion amount” and nobody told you whether that means Oregon’s figure or the federal one, find out. For an Oregon couple the answer can matter by six figures.

Confirm the plan was actually funded. A division that exists in the document and not in the account titling produces the unplanned result.

If you own farm, forest, or fishing property, get a current review. The rules changed for deaths on or after July 1, 2025, and again for forestland on January 1, 2026.

Do not wait for the legislature. SB 1511 died in committee. Planning around a change that has not happened is not planning.

One thing this does not do

A living trust is not asset protection.

Where to start

I work with families in Wilsonville, Lake Oswego, West Linn, Tualatin, Sherwood, Tigard, and Beaverton, across Clackamas and Washington Counties, and in Vancouver, Camas, and Clark County.

If you already have a trust, bring it. The question I will answer first is whether it divides at the first death and what number it divides to. That one answer tells you whether you have an Oregon plan or a national template with your name on it. See how I handle estate planning in Oregon and SW Washington, then book a free 15-minute call or call (888) 773-9399.

Structure before stress.

Sources

General educational information, not legal advice. No attorney-client relationship is formed by reading this article. Attorney advertising. Brian T. Bradley, Esq., Bradley Legal Corp, Wilsonville, Oregon. Licensed in Oregon, Washington, and California. Figures are stated as of October 2026.