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Read Time - Est: Most people know about the federal estate tax, but far fewer realize that Oregon imposes a separate state-level estate tax with a significantly lower exemption. While the federal exemption sits at approximately $13.99 million per person in 2025, Oregon's exemption has remained at $1 million under ORS 118.010, unchanged since 2002. Oregon's estate tax is calculated and paid separately from any federal tax owed.
This gap between the state and federal thresholds is one of the most important planning considerations for Oregon residents with accumulated assets, including those whose primary wealth is tied up in a home that has appreciated significantly in value.
Who Is Affected in Portland
Portland and the surrounding area have seen substantial real estate appreciation over the past two decades. A home purchased decades ago for a modest price may now be worth $800,000 or more. Combined with retirement accounts, life insurance proceeds, and other assets, a household that would not think of itself as wealthy may have a gross estate that exceeds the $1 million Oregon threshold.
Estates that exceed the threshold are not taxed on the entire value. The first $1 million is exempt, and the estate tax applies only to the value above that amount. The graduated rate starts at 10 percent and rises to 16 percent on the highest bracket.
How Oregon's Estate Tax Is Calculated
Oregon's estate tax applies to the Oregon taxable estate, which is generally the gross estate minus allowable deductions. Deductions include debts, funeral and administrative expenses, and property passing outright to a surviving spouse, which is fully deductible under Oregon's marital deduction.
The Marital Deduction and the Second-Death Problem
The marital deduction means that the estate tax is typically not triggered at the death of the first spouse, assuming assets pass to the surviving spouse. The issue arises at the death of the second spouse, when the full combined estate is subject to tax with only one $1 million exemption available. Oregon does not allow portability of the exemption between spouses.
Planning Strategies for Oregon Residents
Estates approaching or exceeding the Oregon threshold appear frequently in the practice of a Portland estate tax planning lawyer, where the gap between each client's total asset value and the $1 million exemption shapes the planning work required. Common strategies include:
- Using a bypass trust, sometimes called a credit shelter trust, to preserve each spouse's $1 million exemption rather than collapsing both into one
- Making annual gifts within the federal annual exclusion amount to reduce the taxable estate over time
- Charitable bequests that reduce the taxable estate while supporting causes the client values
- Irrevocable trust structures that remove appreciating assets from the estate before their value grows further
Oregon Estate Tax and Portland Families
NW Legacy Law works with Portland-area clients on estate tax planning designed to protect wealth from Oregon's uniquely low exemption threshold. Many families are surprised to learn that their estate is subject to Oregon tax at all, and that the planning steps available to address that exposure are often straightforward when addressed early.
Getting Started in Portland
Oregon's estate tax can affect families who have worked and saved carefully over a lifetime without ever considering themselves wealthy. Speaking with a Portland estate tax planning lawyer is the most direct way to understand whether your estate is at risk and what planning options are available. Our team can evaluate your asset picture and design a plan that reduces your Oregon estate tax exposure while keeping your wishes intact.
