Oregon Senate Passes Estate Tax Overhaul: What SB 1511 Would Change Starting in 2027
The Oregon Senate passed SB 1511 on February 25, 2026. The bill still needs to pass the House and be signed by the Governor before anything changes. If it becomes law, the changes would take effect January 1, 2027. Here's what the bill would do and why it matters.
For years, Oregon's estate tax has been a rude surprise for families who didn't think of themselves as wealthy. The $1 million filing threshold — unchanged since 2012 — has been quietly catching more and more middle-class Oregonians as home values and retirement accounts climbed. A house in the Willamette Valley, a modest investment account, and a life insurance policy can easily push an estate over the line.
That may be about to change — but it isn't law yet.
On February 25, 2026, the Oregon Senate passed SB 1511, a bill that would significantly overhaul the state's estate tax. It still needs to clear the House and be signed by the Governor. If that happens, the changes would take effect January 1, 2027. Here's what the bill would do.
What SB 1511 Would Do
The threshold would nearly triple. Under current law, estates with a gross value of $1 million or more are required to file an Oregon estate tax return — and potentially owe tax. SB 1511 would raise that filing threshold to $2.5 million for decedents dying on or after January 1, 2027.
The $1 million exclusion would become a $2.5 million deduction. This is more than a number change. Under the current structure, Oregon uses a $1 million exclusion — meaning the first million of your Oregon taxable estate is simply not counted. SB 1511 would convert this to a $2.5 million deduction applied to the Oregon taxable estate before tax is calculated.
The tax would phase in above the deduction. Rather than jumping immediately to full rates once you cross the threshold, the bill includes a phase-in mechanism. Estates that exceed the $2.5 million threshold by $500,000 or less would pay a fraction of what the full rate table would otherwise require. This would soften the so-called "cliff effect" that has long been a criticism of Oregon's estate tax — where an estate just over $1 million can owe tens of thousands of dollars in tax on the entire amount.
The rates would change too. SB 1511 would replace the existing rate table with a new one. The current table starts at 10% and tops out at 16%. The new table would run from 12.75% at the low end to 19.9% at the top. Larger estates would pay more per dollar — but many families who currently owe something would owe nothing at all.
Both the deduction and the filing threshold would be indexed to inflation. Starting after 2026, the Department of Revenue would adjust the $2.5 million figures annually based on the Consumer Price Index. This addresses the core structural problem that let the current threshold become so burdensome — the $1 million threshold was set in 2012 and never adjusted for inflation.
Who This Would Help
If your estate is currently valued between $1 million and $2.5 million, this bill — if it becomes law — could eliminate your Oregon estate tax liability entirely.
That group includes a lot of Oregon families who didn't set out to have estate tax exposure: people who bought homes in the Willamette Valley decades ago and watched values climb, small business owners whose primary asset is the business itself, farmers and ranchers holding land, and retirees with pension assets and life insurance.
For estates above $2.5 million, the picture would be more nuanced. The larger deduction reduces the taxable base, which helps. But the new rate table is steeper for larger estates. High-net-worth families would still need careful planning — possibly more than before.
What Wouldn't Change
Even if SB 1511 becomes law, several things would remain the same:
Oregon would still have an estate tax at all. Most states don't. If you move to Idaho, there's no state estate tax. That calculation wouldn't change under this bill.
Married couples would still need to plan carefully. Portability — the ability to carry an unused federal exemption to a surviving spouse — does not apply to Oregon's estate tax. Each spouse's estate is evaluated separately. A credit shelter trust remains one of the primary tools for married couples who want to make full use of both Oregon exemptions. That strategy would become even more valuable at $2.5 million per person.
The federal estate tax is a separate system. The federal exemption is currently over $13 million per person (though scheduled to drop significantly after 2025 under current federal law). Oregon's proposed changes would have no effect on federal exposure. As covered in the Oregon vs. Federal Estate Tax post, you may need to plan for both.
Life insurance would still count. A $2 million term policy would still be part of your gross estate for Oregon purposes. If that's what pushes an estate over the threshold, an irrevocable life insurance trust (ILIT) may still be worth considering.
What to Watch For
The right move right now is to understand what this bill would mean for your situation — not to make changes based on legislation that hasn't passed yet.
If SB 1511 becomes law, the most important group to revisit their plans would be Oregonians with estates currently valued between $1 million and $2.5 million. Many of those plans were built around avoiding a tax that, under the new rules, wouldn't apply. Some of that complexity may no longer be necessary.
For estates above $2.5 million, the rate table changes and phase-in mechanics are worth a specific conversation with an estate planning attorney once the bill is finalized.
For Oregonians who don't yet have an estate plan: watch this space. If the bill passes, the estate tax threshold would no longer be a reason to assume this doesn't apply to you — and it's a good prompt to get a plan in place regardless.
Bottom Line
SB 1511 would be the most significant change to Oregon's estate tax in over a decade. The bill passed the Senate today. It still needs to pass the House and be signed by the Governor before anything changes — and even then, the earliest it would take effect is January 1, 2027.
We'll update this post when the bill moves. In the meantime, if you want to understand how the proposed changes could affect your situation, we're happy to talk through it.
This post is for general informational purposes only and does not constitute legal advice. Estate tax law is complex and fact-specific. Contact a licensed Oregon estate planning attorney to discuss your individual situation.
Questions about how SB 1511 could affect your estate plan? [Contact Track Town Law to schedule a consultation.]
