You’ve worked hard to build a life you’re proud of, whether that’s through smart investing, a long career, or a successful business. Now you want to make sure what you’ve built ends up with the people and causes you care about, not with the state of Oregon.

Here’s the catch: Oregon’s estate tax exemption is only $1 million. Between your house, business equity, and retirement accounts, you could easily pass that threshold without realizing it.

Let’s walk through what that means, why it’s not all bad news, and how to plan ahead while you still have time and options.

What Is the Oregon Estate Tax?

Oregon has a state-level estate tax with an exemption of just $1 million.

That means if your total estate, including real estate, investments, business value, and even life insurance, is over $1 million at death, Oregon will want a cut.

How much is the Oregon Estate Tax?

Estate tax rates in Oregon range from 10% to 16% on the amount above $1 million.

Compare that to the federal estate tax exemption, which is $13.99 million per person in 2025, and you can see how Oregon’s limit is easy to hit for many families.

What Counts Toward Your Oregon Taxable Estate?

Here’s what’s included:

• Your home and any other real estate

• Business interests (even small businesses or LLCs)

• Investment and retirement accounts (IRAs, 401(k)s, brokerage accounts)

• Life insurance if you’re the owner of the policy

• Personal property (cars, art, collectibles)

If you’re a long-time Oregon homeowner and have retirement assets, your estate could go past that $1 million mark.

This Isn’t About Avoiding Tax at All Costs

Oregon’s estate tax isn’t evil. It just requires a strategy.

For many families, it’s not about avoiding the tax altogether; it’s about making sure your estate has enough liquidity to pay it without having to sell property or business assets in a hurry.

Let’s say your estate is worth $5 million, but most of it is tied up in real estate and businesses. If your heirs suddenly owe $400,000+ in estate tax, where does that money come from?

Without liquidity, they may be forced into a fire sale situation, and that’s when good assets get sold at bad prices.

Planning ahead lets you:

• Build up more liquid assets (like investment accounts) to cover taxes

• Use gifting strategies to reduce your taxable estate

Don’t let a lack of preparation become a burden for your heirs.

Smart Ways to Plan Around Oregon’s Estate Tax

There’s no one-size-fits-all strategy, but here are a few tools that might make sense depending on your situation:

1. Lifetime Gifting

• You can give up to $19,000 per year per recipient (as of 2025) without triggering a gift tax return

• Larger gifts may also be possible using your lifetime federal exemption

• Gifting business shares, real estate, or investments early lets future appreciation grow outside your estate

2. Irrevocable Trusts

• Common strategies include a Bypass Trust or A/B Trust, which moves assets out of the surviving spouse’s estate after the first spouse passes away

• Move high-growth or taxable assets outside your estate permanently

• Useful for business interests, life insurance, or investment accounts

• Reduces both Oregon and federal estate exposure if structured right

3. Life Insurance

• If you own your own policy, the death benefit is counted toward your estate

• But if an irrevocable life insurance trust (ILIT) owns the policy, the proceeds are generally excluded

• This can create a tax-free pool of money for your heirs to pay the Oregon estate tax without touching your other assets

4. Charitable Giving

• Donate appreciated assets during life or at death to reduce estate value

• Charitable Remainder Trusts (CRTs) to give while keeping income

• Giving to a Donor-Advised Fund (DAF) during your lifetime to receive a tax deduction and remove growth from your estate

5. Family Limited Partnerships (FLPs)

• Useful for consolidating family-owned businesses or real estate

• Allows for valuation discounts when gifting shares, helping reduce the overall taxable estate

These strategies work best before a sale or death occurs. Once your business is sold or the asset appreciates, you may lose the window to shift it out of your estate without tax consequences.

What Happens If You Do Nothing?

If your estate is over $1 million and you haven’t done any planning:

• Your family may owe a big Oregon estate tax bill

• Your estate may have to go through probate, a public and time-consuming process (If you don't have a Trust)

• Assets may be sold under pressure to cover taxes and expenses

This can create stress, delay, and financial strain at an already emotional time.

Estate Planning Is a Team Sport

Coordinating Oregon estate tax planning takes more than reading a few articles.

The right team includes:

• A financial planner to coordinate your goals, assets, and liquidity

• An estate planning attorney who understands Oregon-specific laws

• A CPA or tax strategist who can run projections and gifting strategies

The earlier you start, the more options you have.

Final Thoughts

Oregon’s $1 million exemption can sneak up fast, especially if you’re a successful saver, business owner, real estate investor, or high-income earner.

But don’t panic and don’t let perfect be the enemy of done.

You don’t have to eliminate the estate tax entirely. You just need a plan to reduce the hit and make sure your heirs have the liquidity to pay what’s owed.

The sooner you plan, the more choices you have.

Want to see what your Oregon estate tax exposure might look like?
Schedule a Strategy Call, let’s run the numbers, and connect you with a team that can help.

FAQs

1. What is the Oregon estate tax exemption in 2025?

The exemption remains at $1 million, unchanged for over a decade. Anything above that is taxed at 10-16%.

2. How does Oregon’s estate tax compare to the federal estate tax?

The federal exemption is $13.99 million in 2025 (per person), far higher than Oregon’s. Many Oregonians aren’t exposed to the federal estate tax, but still owe the Oregon estate tax.

3. Can gifting help reduce Oregon estate taxes?

Yes. Annual and lifetime gifting strategies can move assets out of your estate over time, reducing the amount subject to tax.

4. Is life insurance taxed in Oregon?

If you’re the owner of the policy, the death benefit is included in your estate. But using a trust to own the policy can remove it from your taxable estate.

5. What assets are included in your Oregon estate?

Real estate, investments, business equity, retirement accounts, and even personal property like vehicles and collectibles all count.

6. When should I start planning for estate tax in Oregon?

Ideally, start at least 5-10 years before a major liquidity event or transition. The earlier you plan, the more options you have to minimize the impact.

Disclaimer:

This content is for informational and educational purposes only and should not be construed as individualized financial, tax, or legal advice. The information provided reflects general planning concepts and may not be suitable for your specific situation. Always consult with a qualified financial advisor, tax professional, or attorney before making decisions based on this content. Harbor Horizon Financial is a Registered Investment Adviser in the state of Oregon. Registration does not imply a certain level of skill or training.