Oregon Estate Tax Guide
Oregon Estate Tax Guide
Oregon Estate Tax & Probate — Complete Guide
What executors and families need to know about Oregon probate and estate tax: revenue context, court process, who is taxed, what’s taxed, filing thresholds, situs & proration, GST, forms, deadlines, and planning considerations.
Oregon Inheritance & Probate Basics
Intestacy & probate courts
Probate is handled by Oregon’s Circuit Courts (probate jurisdiction). If there is no will, distribution follows Oregon’s intestate succession rules (ORS Title 12 context).
How Oregon probate works
Typical steps: file petition, appoint personal representative, notice to interested parties/creditors, inventory, pay debts & taxes, interim/final accountings, decree of distribution, close estate. Simplified procedures may apply for smaller estates subject to statutory criteria.
Oregon Estate Tax — At a Glance
Oregon imposes an estate transfer tax on estates of Oregon residents, and on nonresidents to the extent of Oregon-situs property (real property and tangible personal property).
Start with a worldwide taxable estate (federal concepts), then apply a $1,000,000 Oregon exemption and Oregon adjustments (incl. Natural Resource Exemption/credit). Tax is ultimately prorated by the Oregon-situs fraction.
Graduated rates ~10% up to 16% on the Oregon taxable estate above $1,000,000 (via OR-706 schedule).
Compute tentative tax on the worldwide taxable estate, then multiply by (Oregon-situs property ÷ worldwide gross estate).
Real property sits where located; tangible personal property where normally kept; most intangibles by domicile (nonresident intangibles generally not Oregon-situs).
OR-706 due by 12 months after death; Oregon allows extensions to file and, in limited cases, to pay (Form OR-706-EXT).
Official Pages, Forms & Where to File
- Oregon Dept. of Revenue — Estate Transfer & Fiduciary Taxes (filing threshold $1M; worldwide base; proration; forms).
- Statutes: ORS Chapter 118 (Estate Tax) — imposition; taxable estate; proration; Oregon Special Marital Property (OSMP); QTIP provisions.
- Oregon return: Form OR-706 & instructions; extensions: Form OR-706-EXT.
- Federal: IRS Form 706 & instructions (9-month federal due date; coordinate with Oregon timelines).
Generation-Skipping Transfer (GST) — Oregon Context
Oregon does not impose a separate GST tax like Vermont’s § 7460; GST planning still matters for federal purposes and to align with Oregon’s estate tax computation and proration.
Oregon Situs vs. Non-Situs Property (for Nonresidents)
| Asset type | Oregon treatment | Reference |
|---|---|---|
| Real property in Oregon | Included in Oregon gross estate; counts in OR-situs numerator | ORS 118.010 (proration); OR-706 instr. |
| Tangible personal property kept in Oregon | Included in Oregon gross estate | ORS 118.010; OR-706 instr. |
| Intangibles (e.g., stock, bank accts.) | Generally by domicile; for nonresidents, usually not Oregon-situs | ORS 118.010; OR-706 instr. |
Filing Mechanics & Deadlines
- When to file: Oregon Form OR-706 is due 12 months after death. Extensions to file/payment via Form OR-706-EXT (payment extension only for cause in limited circumstances).
- Who files: The personal representative files the Oregon estate transfer tax return and includes required federal schedules (or pro forma if no federal filing is triggered).
- Where to file & pay: Oregon Department of Revenue (see the Estate Transfer page and form instructions for addresses and payment vouchers).
Planning Ideas to Reduce Oregon Estate Tax
- Marital & charitable transfers: Use federal deductions to shrink the taxable estate before Oregon’s $1M threshold applies.
- Lifetime giving & timing: Earlier gifts shift future growth out of the estate. Oregon doesn’t have a state gift tax, but watch federal reporting and basis rules.
- Situs/proration: Because Oregon prorates by OR-situs ÷ worldwide, exposure depends on the Oregon property share. Entity/titling strategies must be balanced with substance and income-tax considerations.
- High-gain step-up vs. no-gain gifts: Keep step-up-eligible, high-gain assets until death; give away no/low-gain assets earlier.
- Natural Resource Exemption: Consider Oregon NRE/credit for qualifying farm/forest/fishing assets if available.
- Liquidity: Coordinate life insurance ownership/beneficiaries to cover Oregon and federal taxes.
- Oregon QTIP/OSMP: Evaluate state-level marital elections to optimize state tax while aligning with federal estate plan.
Oregon Estate Tax Calculator
Estimator based on OR-706: worldwide base, $1M exemption, graduated schedule, then proration by Oregon-situs fraction. For education only.
Results
FAQs
Does Oregon have an inheritance tax?
No. Oregon has a state estate tax (paid by the estate), not an inheritance tax.
What is the Oregon estate tax exemption and rate?
The exemption is $1,000,000. Oregon uses a graduated schedule ~10%–16% applied to the taxable estate, then prorated by the OR-situs fraction.
When is the return due and can I extend?
OR-706 is due within 12 months of death. You can request an extension to file (and, in limited cases, to pay) via OR-706-EXT. Interest/penalties may apply.
Does Oregon allow a state transfer tax on real estate?
Oregon law prohibits a state-level real property transfer tax; however, Washington County imposes a local transfer tax.
Cross-Border Example — Oregon & Germany (Why planning matters)
Assumptions (fixed): Oregon domiciliary (U.S. resident). One child (no spouse/charity deductions; no debts). Assets at death (FMV/basis): Oregon real estate $10.0M / $5.0M; Germany real estate $10.0M / $5.0M. Worldwide gross estate: $20.0M. Year: 2025. Currency kept in USD for readability (Germany actually assesses in EUR at ECB rate).
A) At death — Estate / Inheritance taxes
- U.S. Federal estate tax (simplified): $20.0M − $13.99M ≈ $6.01M taxable → ~40% ≈ $2.40M tentative. Reliefs:
- State death tax deduction (IRC §2058): Deduction for Oregon estate tax paid (reduces federal, circular calculation on the form).
- Foreign Death Tax Credit (IRC §2014): Credit for German inheritance tax on the German property, capped at ~$2.40M × (10/20) = $1.20M.
- Oregon estate tax: Compute on the worldwide taxable estate after $1M exemption, then prorate by the Oregon-situs fraction (OR-situs ÷ worldwide). No Oregon credit for German inheritance tax.
- Germany — Inheritance tax on the German real estate: Limited tax liability (non-resident decedent). Child’s allowance €400,000 prorated by 10/20 → €200,000. Illustrative Class I rate ~23% → ≈ $2.254M German inheritance tax. This feeds the U.S. §2014 credit up to the ~$1.20M cap; no impact on Oregon.
B) After death — Basis, then sales a year later
- U.S. rule (IRC §1014): Step-up — both properties’ U.S. income-tax basis becomes FMV at death = $10.0M each.
- Germany: No step-up. The heir steps into the decedent’s shoes: historical cost basis and holding period carry over.
- Illustrative sales (12 months after death):
- Oregon property sells for $10.8M → U.S. post-death gain $0.8M (taxed at federal long-term capital gains + NIIT, if applicable).
- Germany property sells for $10.5M → U.S. post-death gain $0.5M; Germany can be taxable if combined holding period ≤ 10 years; tax-free if > 10 years. U.S. FTC may offset U.S. tax on the foreign gain up to the U.S. tax on that gain; no Oregon offset for foreign income taxes (estate tax is separate).
Need help filing or planning?
We assist with Oregon probate coordination, federal Form 706, and the Oregon return (OR-706), including situs analysis, proration, and cross-border coordination.
Educational content and calculator — not legal or tax advice. Outcomes depend on full facts (statutes in force at death/transfer, elections, deductions, appraisals, situs/proration, treaties, credits, currency).
Our U.S. CPAs and our German Wirtschaftsprüfer can advise you on your specific situation.