Oregon’s Estate Tax: Reform, Repeal, or Stay the Course?

For years, Oregon’s estate tax debate has felt like background noise. This year, it’s different.

There are now two very real proposals in play:

1. Senate Bill 1511 – Raise the exemption and increase top rates

2. A ballot initiative effort – Repeal the estate tax entirely

Neither outcome is guaranteed. Both could change significantly. But for families with taxable estates, and for those getting close, this matters a lot.

Where Oregon Stands Today

Oregon is one of a shrinking number of states that still imposes a state-level estate tax.

Current structure:

• Exemption: $1,000,000

• Rates: 10% to 16%

• Threshold unchanged since 2011

Oregon has the lowest estate tax exemption in the country among states that impose one. And because West Coast real estate has appreciated dramatically over the last 15–20 years, more estates are being pulled in — often unintentionally. Here, we are talking about middle class families.

A $1 million exemption in 2011 meant something very different than it does in 2026.

Proposal #1: SB 1511 – Raise the Floor, Raise the Ceiling

SB 1511 would:

• Increase the exemption to $2.5 million

• Index that exemption for inflation going forward

• Increase rates for larger estates

• Raise the top rate to 19.9%

The structure is designed to be “revenue neutral” in the near term.

The theory:

• Fewer middle-tier estates pay

• Larger estates pay more

Revenue impact:

• Minimal initially

• Possibly modest reductions over time as inflation adjustments grow (i.e., as the exemption starts to move up from $2.5M)

This proposal attempts a political middle ground.

Proposal #2: Full Repeal

A separate effort seeks to eliminate the Oregon estate tax entirely through a ballot initiative.

That would move Oregon into alignment with:

• California – No estate tax

• Idaho – No estate tax

• Nevada – No estate tax

This would be a much more dramatic shift.

At present, the repeal effort appears early-stage, and political viability is unclear.

How Oregon Compares to Washington and California

This is where things get interesting.

California has no estate tax and only the federal estate tax applies. For wealthy families, California is materially more favorable than Oregon from an estate tax standpoint

Washington

• Exemption: $3M

• Top rate: 35%

• No portability between spouses

• No gift tax, but strong estate tax structure

Washington has one of the highest top estate tax rates in the country — and lawmakers there are now reconsidering recent increases amid concerns about mobility.

Oregon (Current)

• Exemption: $1 million

• Top rate: 16%

Oregon Under SB 1511

• Exemption: $2.5 million (indexed)

• Top rate: 19.9%

That would put Oregon:

• Somewhat closer to Washington’s exemption

• Far below Washington’s top rate

• Still far less favorable than California

Does Estate Tax Influence Mobility?

This is where the debate becomes more philosophical.

Some argue: “People don’t move just because of estate tax.”

In my experience, that’s not entirely accurate.

Do people move solely because of estate tax? Rarely.

The absolutely consider it when:

• Retiring?

• Selling a business?

• Relocating closer to children?

• Establishing domicile in a tax-friendlier state?

Estate tax is often not the first domino — but it can be the one that tips the decision.

When the difference is potentially hundreds of thousands — or millions — of dollars, families at certain wealth levels notice.

And Oregon sits in a unique geographic position:

• Bordering Washington (with a higher rate but similar structure)

• Close to Idaho and Nevada (no estate tax)

• Competing indirectly with California (no estate tax)

What This Means for Planning Today

Right now:

• Nothing has changed.

• The $1 million exemption still applies.

• Rates remain 10–16%.

But the conversation matters.

For clients with estates between $1M and $3M, SB 1511 would be significant relief.

For larger estates, the proposal may increase exposure.

For families considering domicile planning, repeal would materially change the calculus.

For now, prudent planning still includes:

• Marital planning (credit shelter / bypass structures where appropriate)

• Liquidity analysis for estate tax exposure

• Life insurance modeling

• Entity valuation and discount strategies

• Domicile documentation where relevant

And, importantly:

Flexibility. Because legislative outcomes can shift.

A Broader Question

There is also a policy question underneath all of this:

• Should Oregon aim to be more competitive with neighboring states?

• Or should it prioritize revenue stability and redistribution goals?

That debate will continue in Salem. While policy debates play out, your planning should not wait.