The state of Oregon is currently evaluating several legislative proposals aimed at reforming its estate tax system. As one of 12 states that impose an estate tax, Oregon's threshold is set at $1 million, the lowest in the nation. This affects not only wealthy households but also many upper middle-income families due to asset appreciation from inflation and favorable market conditions.
The state's estate tax, which features a progressive rate structure with ten brackets and a top rate of 16 percent, generates less than 2 percent of general fund revenues. This revenue is partly offset by taxes lost when residents relocate to avoid the estate tax impact.
In the ongoing 2025 legislative session, multiple bills have been introduced to address these issues. Notable among them are H.B. 2058, S.B. 405, and S.B. 648, which propose increasing the estate tax exemption to align with federal levels. Meanwhile, H.B. 2301 suggests a flat 7 percent tax rate to simplify the current system.
Oregon legislators are urged to consider interstate migration trends while reviewing these proposals. The state ranks 34th in net migration and experiences significant outmigration of taxpayers nearing retirement age (55-64), who often move to states without an estate tax like Washington or Texas.
According to IRS data, individuals aged 55-64 with incomes above $200,000 contribute significantly to Oregon's adjusted gross income loss through interstate migration—accounting for approximately $532 million in 2022 alone.
Given these dynamics, there is pressure on Oregon lawmakers to reform its estate tax system by potentially increasing exemptions and lowering rates or considering full repeal to remain competitive with neighboring states like Idaho and Nevada.
