Oregon’s $1 Million Estate Tax Threshold—What It Is, Who It Hits, and How to Plan Around It
In Oregon, your estate can owe thousands in taxes—even if you don’t consider yourself wealthy. That’s because unlike the federal estate tax, which applies only to estates over $13.99 million (as of 2025), Oregon sets the bar much, much lower.
The Oregon estate tax threshold is $1 million, and it hasn’t changed since 2006. That figure includes almost everything you own at the time of your death. Which means more Oregonians owe estate tax than you might expect—and many families don’t realize it until it’s too late to plan around it.
Here’s how Oregon’s estate tax works, who needs to worry about it, and what kind of planning actually makes a difference.
What Is the Oregon Estate Tax?
The estate tax is a tax on your right to transfer property after death. It’s based on the gross value of your estate—not just what’s in your bank account.
Your Oregon taxable estate includes:
Real estate (residences, land, investment property)
Retirement accounts (even if tax-deferred)
Bank and brokerage accounts
Life insurance proceeds (if the policy is owned by you)
Business interests and closely held stock
Personal property—vehicles, collectibles, heirlooms, farm equipment
If the total value of your estate exceeds $1 million, Oregon requires your executor to file an OR706 estate tax return and potentially pay a tax bill out of the estate.
What Happens If You Cross the Line?
Oregon has a graduated rate structure that kicks in for everything above that million-dollar line. The marginal rates range from 10% to 16%.
Common Situations That Trigger Estate Tax in Oregon
A modest home in Portland, Bend, or Eugene worth $600,000
Retirement accounts worth $300,000
Life insurance policy of $250,000
That’s $1.15 million—enough to require a return and tax.
Even a primary residence and a couple of solid IRAs can push a middle-class estate above the line.
What the Estate Pays—And When
If your estate is over the threshold, your personal representative must:
File the OR706 estate tax return within 9 months of death
Pay any estate tax due, along with interest if the deadline is missed
Provide supporting documentation: asset values, debts, deductions
The tax is paid out of the estate before distributions to heirs. If liquid assets are limited, the executor may need to sell property—or take out a loan—to cover the bill.
How to Reduce or Avoid Oregon Estate Tax
The good news: estate tax can often be planned around. But it requires action during your lifetime. Here are some common strategies:
1. Use Both Spouses’ Exemptions
Oregon doesn’t offer automatic “portability” of the $1 million exemption between spouses. But with proper planning—such as a credit shelter trust—you can preserve both exemptions and shelter up to $2 million.
Without this planning, the first spouse’s exemption is often wasted.
2. Gifting During Life
Gifting removes assets from your estate, and Oregon doesn’t currently have a gift tax. But the timing and method matter. You’ll want to avoid triggering capital gains issues or Medicaid lookbacks.
3. Irrevocable Life Insurance Trusts (ILITs)
If your life insurance is owned by an irrevocable trust, the proceeds aren’t counted in your taxable estate. This can protect otherwise tax-triggering policies.
4. Charitable Bequests
Gifts to qualified charities reduce your taxable estate. In some cases, you can offset estate tax entirely by directing a percentage to a cause you support.
Don’t Confuse Estate Tax with Capital Gains
Oregon’s estate tax is separate from the capital gains tax. And while many assets receive a step-up in basis at death (which can eliminate built-in capital gains), this doesn’t reduce the value of the estate for estate tax purposes.
Your heirs may avoid capital gains, but the estate may still owe estate tax. Two different issues—both important.
Final Thought
If you live in Oregon and own a home, have retirement accounts, or carry life insurance, it’s time to stop assuming “estate tax doesn’t apply to me.” You may be closer to that $1 million line than you think.
Good planning—done in advance—can preserve exemptions, reduce exposure, and keep your heirs from selling property just to pay a surprise tax bill.
I offer flat-fee estate planning services designed for real Oregon families—not just the ultra-wealthy. If you’d like to know whether the estate tax is likely to hit your estate—and how to plan around it—schedule a free consultation here.
