Oregon retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 9.9%Oregon has graduated rates from 4.75% to 9.9%. Surplus revenue can trigger a 'kicker' refund. |
|---|---|
| Social Security | Not taxedOregon does not tax Social Security benefits. |
| Pensions | TaxedPensions are taxed at regular rates. Low-income retirees 62+ may get a credit of 9% of taxable retirement income. |
| 401(k) and IRA withdrawals | TaxedIRA and 401(k) withdrawals are taxed at regular rates. They count as retirement income for the low-income 9% credit. |
| Government pensions | Partly taxedFederal pensions (including military) can be subtracted in proportion to service before October 1, 1991. Oregon PERS and other government pensions are otherwise taxed. |
| Military retirement pay | Partly taxedMilitary retirement is taxed, except the share earned for service before October 1, 1991, which can be subtracted. |
| Estate tax | Yes, above $1,000,000Oregon taxes estates over $1 million, the lowest threshold in the nation, at rates from 10% to 16%. |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 62 and older (or disabled) can defer property taxes through a state loan program; the state places a lien on the home. |
| Sales tax | Oregon has no state or local sales tax. |
Recent changes and good to know
- The retirement income credit (9% of the lesser of net pension income or tax) is limited to people 62+ with household income plus Social Security under $22,500 single or $45,000 joint. It was due to sunset for 2026, but the 2025 Legislature reportedly extended it through tax years beginning before 2032 (2025 c.562).
- SB 1511, which would have raised the estate tax exemption to $2.5 million, failed on March 6, 2026, so the $1 million exemption stays.
- An initiative to repeal the estate tax was proposed for the 2026 ballot; its status was not verified.
How to lower your retirement taxes in Oregon
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Oregon too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Oregon tax retirement income?
Yes. Oregon does not tax Social Security, but it taxes pensions, IRA/401(k) withdrawals, and most military pay at rates up to 9.9%.
Does Oregon tax Social Security?
Oregon does not tax Social Security benefits.
Does Oregon tax pensions?
Pensions are taxed at regular rates. Low-income retirees 62+ may get a credit of 9% of taxable retirement income.
Does Oregon tax 401(k) and IRA withdrawals?
IRA and 401(k) withdrawals are taxed at regular rates. They count as retirement income for the low-income 9% credit.
Does Oregon tax military retirement pay?
Military retirement is taxed, except the share earned for service before October 1, 1991, which can be subtracted.
Does Oregon have an estate or inheritance tax?
Oregon taxes estates over $1 million, the lowest threshold in the nation, at rates from 10% to 16%.
Sources (last verified 2026)
- Oregon Tax Facts for 2026 Tax Season — AARP (2026-04-28)
- ORS 316.157 Credit for retirement income — Oregon Law (public.law) (2026-09-24)
- ORS 316.157 (2025) — Justia (2025)
- Certain Retirement Income Tax Credit: 2025 Tax Credit Review — Oregon Legislative Revenue Office (2025-02-11)
- Senate Bill 1511 Fails to Pass Leaving Oregon's Estate Tax Exemption at 1 Million — Southwest Portland Law Group (2026-03)
- State Individual Income Tax Rates and Brackets, 2026 — Tax Foundation (2026-02-17)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.