For years, Oregon has maintained one of the lowest estate tax filing thresholds in the United States. However, recent legislative developments signal a potential significant shift in how the state handles the transfer of wealth after death. On February 24, 2026, the Oregon Senate passed Senate Bill 1511, a measure designed to provide substantial relief to middle-class families who have found themselves increasingly caught in Oregon’s estate tax net due to rising property values.

 

The Current Landscape: Oregon’s $1 Million Threshold

As of early 2026, Oregon’s estate tax remains governed by the reforms of 2011. Under the current system, an Oregon estate tax return (Form OR-706) must be filed if the decedent’s gross estate is valued at $1 million or more at the date of death.

 

Key features of the current system include:

• Marginal Tax Rates: Once the $1 million threshold is crossed, taxable values are subject to marginal rates ranging from 10% to 16%.
• Progressive Structure: The first $1 million of taxable value is not taxed; the next $500,000 is taxed at 10%, and the rates increase progressively from there.
• Comprehensive Valuation: The gross estate includes all real and personal property, whether tangible or intangible, and whether located inside or outside of Oregon.
• Common Deductions: Estates often reduce their taxable value through marital deductions for surviving spouses, funeral expenses, and debts such as mortgages.

For tax year 2023, the Oregon Department of Revenue processed 3,134 returns, with a median gross estate value of $1.9 million.

 

Why the Change? The Catalyst for Senate Bill 1511

The push for reform stems from “runaway increases in real estate prices” that have pushed many middle-class residents—including teachers, nurses, and firefighters—into the estate tax category simply because the value of their long-held homes has surged. Senator Anthony Broadman, a proponent of the bill, characterized it as the “middle-class tax cut Oregonians are asking for”.

 

Breaking Down Senate Bill 1511

Passed by a 22 to 5 vote in the Senate, SB 1511 proposes several landmark changes to the state’s taxation of wealth transfers:

 

1. Increased Exemption Threshold: Starting in 2027, estates with a gross value below $2.5 million will no longer be required to file an estate tax return.
2. Deduction for Larger Estates: For estates valued at over $2.5 million, a $1 million deduction will be applied before the tax is calculated.
3. Inflation Indexing: Beginning in 2028, the $2.5 million threshold will be tied to inflation, ensuring the exemption keeps pace with the rising cost of living and property values.
4. Targeted Tax Increases: To preserve state revenue for public services like education and health care, tax rates will increase for estates valued above the $2.5 million mark.

The Projected Impact

The data suggests the impact of this bill will be profound. Analysis of 2023 tax filings indicates that more than 80 percent of families who had to file returns that year would owe zero estate taxes under the new $2.5 million threshold. In fact, fewer than 600 households that filed in 2023 would have remained subject to the tax under these proposed rules.

 

Looking Ahead

While SB 1511 has cleared the Senate, its next hurdle is the Oregon House of Representatives. With Oregon’s short legislative session mandated to end by March 8, 2026, the fate of this tax relief measure will be decided quickly. For Oregonians planning their estates, these potential changes underscore the importance of staying informed on legislative shifts that could significantly alter the tax burden on their