Oregon Federal Estate Tax

Most Oregon estates never owe federal estate tax. The Internal Revenue Service puts the filing threshold at $15,000,000 for a death during 2026, and 26 U.S.C. 2010(c)(3)(A) sets that figure in the Code. Oregon's own estate transfer tax starts fifteen times lower, at a $1,000,000 gross estate under ORS 118.160(1)(c). Oregon charges no tax that varies by who inherits.

So the return an Oregon executor actually files is almost always the state one. Below is what each threshold measures, why the two returns fall due three months apart, how the state tax lands on the federal return and then gets added straight back, and the single real exemption Oregon grants. Every Oregon rule here was read at the 2025 Edition of the Oregon Revised Statutes on August 25, 2026, and every federal figure at the Code or the IRS.

Two Taxes, Two Thresholds, Two Deadlines

The first two lines are different taxes that happen to share a name. The federal one taxes a fortune. The Oregon one reaches a paid-off house in Portland plus a retirement account, which is why an executor who reads a national article and relaxes is the executor who misses a filing.

The Federal Line Moved, And The Instructions Have Not Caught Up

The IRS filing-threshold table by year of death reads $13,990,000 for 2025 and $15,000,000 for 2026. 26 U.S.C. 2010(c)(3)(B) then indexes the figure for a decedent dying in a calendar year after 2026, rounded to the nearest $10,000, so the 2027 number does not exist yet and no honest page can print one.

Watch the paperwork, because it lags the statute. The Instructions for Form 706 currently in circulation are written for a 2025 death: their What's New section states the exclusion as $13,990,000, and Which Estates Must File repeats it. That is correct for the year it addresses and wrong for a death this year. Take the year-of-death figure from the Code or the IRS threshold table, not from the front of the instruction booklet.

Two federal rules matter even to an estate that owes nothing.

Portability has to be claimed. 26 U.S.C. 2010(c)(5)(A) lets a surviving spouse use the deceased spousal unused exclusion amount only where the first spouse's executor files a return computing it and elects on that return, and the election is irrevocable. The Form 706 instructions add that the filing has to be timely, meaning within nine months or before a six-month extension ends. An executor who missed it, and who had no filing requirement under section 6018(a), may still file to elect portability on or before the fifth anniversary of the death under Rev. Proc. 2022-32.

The federal clock is nine months. The instructions say Form 706 is filed within nine months after the date of death, with Form 4768 available for an automatic six-month extension of time to file.

Oregon's Line Is $1,000,000 Of Gross Estate

ORS 118.160(1)(c) is one sentence and it does the work: an estate tax return is not required for a decedent dying on or after January 1, 2012 unless the value of the gross estate is $1 million or more.

Two words in it decide most Oregon cases.

Gross. Not net, not probate. ORS 118.005(6) points gross estate straight at section 2031 of the Internal Revenue Code, which sweeps in life insurance on the decedent's life, retirement accounts, survivorship property and anything passing by beneficiary designation. A mortgage does not come off the top of that test. So an estate that skipped probate entirely can still owe Oregon a return, and our guide on how to avoid probate in Oregon says the same thing from the other direction: avoiding probate does not avoid this tax.

Executor. ORS 118.005(4) defines it to include the personal representative, and, where nobody has been appointed, any person who is in the actual or constructive possession of any property includable in the estate of the decedent for estate tax purposes whether or not such estate is subject to administration. A daughter holding her mother's accounts under a beneficiary designation, with no court case open, can be the person on the hook for the return.

ORS 118.160(2) goes further still. In every estate, whether or not subject to administration and whether or not a federal estate tax return is required, the executor files a list of the lifetime transfers the decedent made as a division or distribution of the estate, in the form and at the times the Department of Revenue requires.

Earlier deaths use earlier numbers, and the statute prints its own history at ORS 118.160(1)(b): $700,000 for 2003, $850,000 for 2004, $950,000 for 2005, and $1 million from 2006. For a death on or after January 1, 1987 and before January 1, 2003, no Oregon return was required unless a federal one was.

The Million Is A Trigger, Not A Deduction

This is where most published summaries go wrong. Oregon does not subtract $1,000,000 and tax the rest. The $1,000,000 is the filing test in ORS 118.160(1)(c), and separately it is the floor of the rate table in ORS 118.010(4). The tax is computed on the Oregon taxable estate, which ORS 118.010(3) builds from the federal taxable estate.

Three worked results, on the assumption that every asset sits in Oregon and no deduction beyond the ordinary ones applies:

• A gross estate of $1,200,000 that nets to an Oregon taxable estate of $780,000 files a return and owes nothing. No row of the table reaches down that far.
• An Oregon taxable estate of $1,300,000 lands in the first row: 10 percent of the $300,000 above $1,000,000, or $30,000.
• An Oregon taxable estate of $2,000,000 lands in the second row: $50,000 plus 10.25 percent of the $500,000 above $1,500,000, or $101,250.

The gap between the first and second bullets is the point. A return can be required while the tax is zero, and skipping it because the arithmetic came out flat is how penalties start. Our Oregon estate tax calculator walks the brackets for you before you build a return around a figure.

ORS 118.010(3) also lists what moves the Oregon taxable estate away from the federal one. It goes up by the section 2058 state death tax deduction, and by property that got an Oregon special marital property deduction or a separate state section 2056 election at the first spouse's death. It comes down by the date-of-death value of Oregon special marital property under ORS 118.013, by the ORS 118.145 natural resource exemption, and by any other applicable exclusions or deductions.

The Two Returns Feed Each Other

Executors treat the federal and Oregon returns as separate errands. They are wired together, in both directions.

Federal law deducts what Oregon takes. 26 U.S.C. 2058(a) allows a deduction from the gross estate for estate, inheritance, legacy, or succession taxes actually paid to any State, and the Form 706 instructions put it on line 3b with no dollar limit. You may claim an anticipated amount before the state tax is paid, but under section 2058(b) the deduction is finally allowed only if the state tax is paid and the deduction claimed within four years after the return is filed. The IRS also wants proof: a certificate from the state's proper officer showing the tax imposed, any discount, the penalties and interest, the amount actually paid in cash, and the date of payment.

Oregon then adds that deduction straight back. ORS 118.010(3)(a)(A) increases the Oregon taxable estate by the section 2058 deduction, so the state's own tax cannot shrink the state's own base.

Now put the two deadlines beside each other. The federal return is due at nine months. The Oregon return and payment are due at twelve. An executor who files Form 706 on time is filing it three months before Oregon has been paid, which is exactly the case section 2058's anticipated-deduction rule exists for. Build the Oregon number before you close the federal one.

Oregon Freezes Federal Law At December 31, 2010

Here is the structural reason Oregon's threshold never follows the federal one upward. ORS 118.007 pins every reference to the Internal Revenue Code in ORS 118.005 to 118.540 to the Code "as amended and in effect on December 31, 2010, except where the Legislative Assembly has specifically provided otherwise."

Congress can raise the federal exclusion every few years and none of it reaches Oregon. Oregon's $1,000,000 moves only when the Oregon Legislative Assembly moves it, and nothing in ORS 118.010 or ORS 118.160 indexes the figure or the rate table to inflation. The filing threshold has read $1,000,000 for a death since January 1, 2006, first at ORS 118.160(1)(b)(D) and then at (1)(c).

What Oregon Offers Instead Of Portability

Federal portability lets a widow inherit her husband's unused exclusion. ORS chapter 118 has no equivalent, and this is a read of the chapter rather than an inference: the words portability, deceased spousal unused exclusion and unused exclusion appear nowhere in it.

Oregon's answer is the special marital property election.

ORS 118.013(2) defines Oregon special marital property as a trust or other property interest, or a portion of one, in which principal or income may be accumulated or distributed only to or for the benefit of the surviving spouse during that spouse's lifetime, in which nobody may transfer or appoint any part to anyone else during that lifetime, and for which the executor has made the ORS 118.016(1) election. That election is made by attaching a statement to the estate tax return identifying the property and affirming it meets and will be administered under ORS 118.013.

The value of that property comes out of the Oregon taxable estate at the first death under ORS 118.010(3)(b)(A), and goes back in at the second under ORS 118.010(3)(a)(B). It defers rather than erases.

The subsection that makes this usable is ORS 118.010(8)(a). Where the federal taxable estate is set by an election under section 2031(c), 2032, 2032A, 2056 or 2056A of the Internal Revenue Code, or where no federal return is required at all, an executor may make separate elections for state estate tax purposes under that same provision. ORS 118.010(8)(c) makes those elections irrevocable. A married Oregon couple worth $2,500,000 sits far under the federal line and squarely over the Oregon one, and this is the subsection that lets their executor act on that.

Whether a particular trust qualifies is a drafting question for an Oregon estate planning attorney or a CPA, not a decision to make from a table.

Farms, Forestland And Fishing Boats

The one meaningful exemption in the chapter is narrow and specific, and ORS 118.010(3)(b)(B) advertises it misleadingly as the exemption allowed under ORS 118.145. Read the catchline of that section: Natural resource property exempted. It is not a general exemption available to every estate.

ORS 118.145(2) exempts an interest in natural resource property, meaning property used in a farm business, forestry business or fishing business as ORS 118.140 defines those, where four conditions hold. The decedent held the interest for at least five years before death. The decedent or a family member materially participated in the business during at least 75 percent of the relevant business days in each of the five calendar years before the death. The interest passes as a consequence of the death to family members or eligible entities. And a family member materially participates in each of the five calendar years after the death.

ORS 118.145(3) adds a second route for a small forestland owner, defined as a decedent owning at least 10 and fewer than 5,000 acres of forestland throughout the five years before death, keyed to active management with documentation rather than to material participation.

Three limits worth knowing before anyone plans around it:

• ORS 118.145(9) caps the exemption at $15 million for the estate.
• ORS 118.145(8) blocks an estate claiming this exemption from also claiming the ORS 118.140 credit. It is one or the other.
• ORS 118.145(5) imposes an additional tax if the property is sold or transferred outside the family within five years, if the holding entity stops being an eligible entity, or if the material participation requirement fails. ORS 118.145(7) makes that liability the responsibility of whoever owns the property at the time, due within six months of the event.

Two 2025 acts wrote the section as it stands. Oregon Laws 2025, chapter 577 (House Bill 3630) rewrote the ownership and participation conditions and applies to estates of decedents dying on or after July 1, 2025. Oregon Laws 2025, chapter 595 (Senate Bill 485) added the small forestland owner route and applies to estates of decedents dying on or after January 1, 2026. Both took effect September 26, 2025. Neither touched the $1,000,000 threshold or the rate table.

Deadlines, Extensions, Penalties And Getting Off The Hook

ORS 118.100(1) is the operative sentence: the tax accrues at death, and a return shall be filed and the tax shall be paid to the Department of Revenue no later than 12 months following the date of death of the decedent. Section 2 of Oregon Laws 2021, chapter 372 applied that to decedents dying on or after January 1, 2022. For an earlier death the tax fell due when the federal tax was payable, or at nine months where no federal return was required.

The Department of Revenue grants a six-month extension of time to file on Form OR-706 EXT, and states that an extension to file does not extend the time to pay. Extensions to pay come only under OAR 150-118-0150. Beyond that, ORS 118.225 lets the department extend payment for up to 14 years from the ORS 118.100 date, once the tax is secured by bond, deposit or other good collateral it accepts, and ORS 118.260(5)(b) keeps interest running through the extension at the ORS 305.220 rate.

The penalties in ORS 118.260 stack, and the second one is the expensive one:

• No return filed: a delinquency penalty of five percent of the tax.
• Failure to file continuing more than three months past the due date: a further failure to file penalty of 20 percent of the tax, on top of the five.
• Tax not paid by the ORS 118.100 date: five percent, in place of the first penalty rather than added to it.
• Any part of a deficiency due to fraud with intent to evade: 100 percent of the deficiency.

Interest runs from the date the tax became due at the rate established under ORS 305.220. Payments land on penalty and interest first and principal last under ORS 118.260(8). If the tax has not been figured yet, ORS 118.260(7) lets you deposit against it to stop interest, and refunds the excess with interest.

Two more dates belong on the calendar. ORS 118.100(2) gives an executor who files an amended federal return 90 days to file an amended Oregon return. ORS 118.165 gives the department three years from the filing to issue a notice of deficiency, five where the gross estate was undervalued by more than 25 percent, and no limit at all on a false or fraudulent return or where nothing was filed. Our Oregon probate deadlines guide sets these beside the probate clocks that run at the same time.

An executor can close the file properly rather than waiting the three years out. ORS 118.265(1) lets the executor or trustee apply in writing for a determination of the tax due and a discharge from personal liability. The department answers within 18 months of the application, or, where the application precedes the return, within 18 months of the return. Once the amount in that notice is paid, ORS 118.265(2) discharges the executor from personal liability for any deficiency and the department issues a writing showing it. For a personal representative closing an estate under our Oregon executor duties guide, that receipt is what makes distribution safe.

Where Disputes Go, And Where The Money Goes

Two closing facts that surprise executors.

An estate tax dispute does not belong to the probate judge. ORS 118.410 gives the Oregon Tax Court sole jurisdiction to hear and determine all questions arising under ORS 118.005 to 118.540, and ORS 118.171 routes the audit, deficiency, refund, conference and appeal machinery through ORS chapter 305. The circuit court supervising the estate under our Oregon probate guide has no say in it.

The revenue is not earmarked. ORS 118.510 credits the net revenue from the chapter, after refunds, to the General Fund, available to meet any expense or obligation of the state lawfully incurred.

What This Costs An Heir

Nothing directly. Oregon taxes the transfer of the decedent's property under ORS 118.010(2), not the receipt of it. What can reach a beneficiary later is income tax on the gain when an inherited asset is sold, and our Oregon step-up in basis guide covers the reset that usually keeps that gain small. Selling a house out of the estate raises its own set of questions, handled in our guide to selling inherited property in Oregon.

Next Steps

Value the gross estate first, on section 2031 terms, counting the retirement accounts and the life insurance and the survivorship property. That single figure decides whether Oregon is in the picture. If it lands anywhere near $1,000,000, calendar the twelve-month date the day you take the appointment and prepare Form OR-706 even if the arithmetic points to zero tax. If the estate holds a farm, timber or a fishing operation, or if a surviving spouse is involved and the combined estate clears $1,000,000, bring in an Oregon CPA or a tax attorney early enough for the ORS 118.016 election to be available. Smaller estates that never approach the threshold may qualify for the shorter route described in our Oregon small estate guide, which is a probate procedure rather than a tax exemption.

This page describes the Oregon statutes, federal Code sections and agency guidance as they read on the date above, and it is general information about Oregon law rather than advice about one estate. Valuation, residency, which assets sit in Oregon, whether a trust qualifies as special marital property and whether a farm clears the material participation test all turn on facts a statute cannot settle from a distance.

Sources:

• Title: ORS Chapter 118, Estate Tax (2025 Edition), sections 118.005, 118.007, 118.010, 118.013, 118.016, 118.100, 118.140, 118.145, 118.160, 118.165, 118.171, 118.225, 118.260, 118.265, 118.410 and 118.510. Publisher: Oregon State Legislature, Legislative Counsel Committee. Publication Date: 2025 Edition. URL: https://www.oregonlegislature.gov/bills_laws/ors/ors118.html
• Title: Chapter 372, Oregon Laws 2021 (House Bill 3138), Relating to due date of estate tax return, section 2. Publisher: Oregon State Legislature. Publication Date: Approved June 23, 2021; effective September 25, 2021. URL: https://www.oregonlegislature.gov/bills_laws/lawsstatutes/2021orLaw0372.pdf
• Title: Chapter 577, Oregon Laws 2025 (House Bill 3630), Relating to estate tax treatment of natural resource property, section 3. Publisher: Oregon State Legislature. Publication Date: Approved July 24, 2025; effective September 26, 2025. URL: https://www.oregonlegislature.gov/bills_laws/lawsstatutes/2025orLaw0577.pdf
• Title: Chapter 595, Oregon Laws 2025 (Senate Bill 485), Relating to estate tax, sections 1 to 3. Publisher: Oregon State Legislature. Publication Date: Approved July 24, 2025; effective September 26, 2025. URL: https://www.oregonlegislature.gov/bills_laws/lawsstatutes/2025orLaw0595.pdf
• Title: Estate Transfer and Fiduciary Income Taxes. Publisher: Oregon Department of Revenue. Publication Date: Not listed. URL: https://www.oregon.gov/dor/programs/businesses/Pages/estate.aspx
• Title: Estate tax (federal filing threshold by year of death). Publisher: Internal Revenue Service. Publication Date: Page last reviewed or updated 22-Dec-2025. URL: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
• Title: Instructions for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Publisher: Internal Revenue Service. Publication Date: Not listed. URL: https://www.irs.gov/instructions/i706
• Title: 26 U.S.C. 2010, Unified credit against estate tax. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Not listed. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2010&num=0&edition=prelim
• Title: 26 U.S.C. 2058, State death taxes. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Not listed. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2058&num=0&edition=prelim
• Title: 26 U.S.C. 2031, Definition of gross estate. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Not listed. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2031&num=0&edition=prelim

It is not legal advice.