Taxes in Oregon
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Even though Oregon does not levy a sales tax, the state taxes almost everything else. Below, we explain various Oregon state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes. We’ve also provided details about tax credits, exemptions, relief programs, and retirement-related tax breaks.
For information regarding taxes in other states, see Retirement Taxes by State.
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Oregon Tax Rates
|State Sales Tax||0%|
|Avg State/Local Sales Tax||0%|
|Gas Tax||$0.38 per gallon|
|Diesel Tax||$0.38 per gallon|
|Cigarette Tax||$3.33 per pack|
|Effective Tax Rate:||9.59%|
|Social Security Tax||None|
|Medical/Dental Deduction:||Federal Amount|
|Federal Income Tax Deduction:||Partial|
Oregon State Taxes Explained
Oregon Sales Tax
Oregon does not levy a sales tax.
Oregon Income Taxes
Oregon’s max income tax rate is 9.9%, but residents are eligible for a “kicker” tax credit (only in odd-numbered years) if the state exceeds forecasted revenues by 2% or more over the two-year budget cycle. For 2021, the credit equaled about 17% of your 2020 Oregon tax liability. The state predicts residents will receive an even larger “kicker” credit on their 2023 taxes when they file returns in 2024.
Oregon’s federal income tax subtraction limit in 2021 was $7,050 ($3,525 if married filing separately). This amount gets adjusted annually and may be affected by restrictions on adjusted gross income (AGI). See “Federal income tax liability” in publication OR-17.
Oregon Property Taxes
Oregon’s effective property tax rate is 0.97%. The median home value of $312,200 comes with an average annual tax of $3,037.
The Oregon Homestead Exemption allows an exemption of up to $40,000 of the value of real property or a floating, manufactured, or mobile home. Married couples are eligible for up to $50,000. Owners of homesteads located outside of town or city limits may protect up to 160 acres, otherwise up to 1 city block may be protected.
Oregon offers the Property Tax Deferral for Disabled and Senior Citizens Program for qualified taxpayers who owned and lived in their homes for at least five years. Homeowners must be 62 or older or disabled and receiving or eligible to receive federal Social Security Disability. Taxes and 6% interest become due when the taxpayer receiving the deferral dies, sells or no longer permanently lives on the property or the property changes ownership.
Taxpayer total household income must be less than $51,000 for the year before application to qualify for the deferral program. Participants may remain in the program if their federal adjusted gross income does not exceed that amount. If their income exceeds 51,000, part of the taxes still may be deferred. Participants can come in and out of the programs if their income changes. Residents must have a net worth under $500,000 to qualify for the Property Tax Deferral for Disabled and Senior Citizens Program.
Oregon Retirement Taxes
Aside from Social Security, Oregon taxes most retirement income at the top rate. This is true even if you were a nonresident when you earned the income. However, the Oregon Retirement Income Credit allows for a credit of up to $6,250, depending on household income and other qualifications.
Pension income from federal employment before October 1, 1991, may be subtracted from income on Oregon state tax returns. This rule applies to retirees and their beneficiaries. See the State of Oregon tax publications for more information.
Military retirees may be able to subtract some or all federal pension income. This includes benefits paid to the surviving spouse. Retirees can subtract their entire federal pension if all federal service months occurred before October 1, 1991. Those who did not serve before October 1, 1991, cannot subtract federal pension. If service included months before and after October 1, 1991, a pension income percentage is eligible for subtraction.
Health care expenses are deductible in Oregon up to the amount that exceeds 7.5% of federal adjusted gross income. Taxpayers may include medical expenses from a spouse or dependents listed on the Oregon tax return if they earned under $4,200.
Oregon allows a tax credit on long-term care insurance premiums. The credit is the 15% of premiums paid or $500, whichever is less.
Oregon Estate and Inheritance Taxes
Oregon’s estate tax is levied on estate amounts over $1 million. The rate spans from 10% to 16%.
Visit the Oregon Department of Revenue for more information