Oregon Tax Guide 2026: No Sales Tax, 9.9% Top Income Rate, and $1M Estate Tax

Oregon occupies a unique position in the American tax landscape: no sales tax whatsoever, yet an income tax rate of 9.9% that rivals California and New York. The absence of sales tax is genuinely significant for everyday consumers — shopping in Oregon saves 6–10% on most purchases compared to neighboring California or Washington — but high earners face some of the steepest income tax rates in the country.

Portland-area residents face an additional layer that out-of-state observers often miss: Multnomah County’s 1.5% income tax (effective 2021) plus the Metro Supportive Housing Services tax of 1%, creating a combined additional burden of approximately 2.5% on top of the state rate for households earning above $125,000 single or $200,000 joint. For top earners in Portland, the combined Oregon state-plus-local income tax burden approaches 12.4%.

Oregon also has one of the country’s most aggressive estate tax structures: a threshold of just $1 million that has not been significantly adjusted for inflation, capturing estates that would otherwise be solidly middle-class by asset value in today’s market. This guide covers all of Oregon’s 2026 tax rules in detail.

Oregon Income Tax: 4.75% to 9.9% Brackets

Oregon’s state income tax has four brackets for 2026:

In practice, most of Oregon’s middle class pays the 8.75% bracket on the vast majority of their income, since the lower brackets cover only very small income amounts. The jump to 9.9% at $125,000 single is relatively modest by income standards in Portland’s housing market, where many dual-income households exceed this threshold.

Oregon vs Neighboring States Income Tax Comparison

Washington State’s lack of income tax makes the Oregon–Washington border one of the most tax-consequential state lines in the country for earners above $125,000. Many Clark County, Washington residents work in Portland, Oregon — they generally do not owe Oregon income tax on wages earned in Oregon if they are Washington residents (Washington does not have a reciprocity agreement with Oregon, so the rules are nuanced; professional advice is recommended for this specific situation).

Social Security and Retirement Deduction

Oregon fully exempts Social Security benefits from state income tax. Oregon also offers a special retirement income deduction: Oregon residents over age 62 can deduct up to $6,250 (single) or $12,500 (married filing jointly) of qualifying pension, annuity, and retirement account income. This deduction phases out for higher-income taxpayers (above $22,500 single / $45,000 joint).

Portland’s Additional Income Taxes: The Hidden 2.5% Layer

One of the most significant and often underestimated aspects of Oregon taxes — particularly for Portland-area residents — is the additional income taxes levied by Multnomah County and the Metro regional government. These are separate from Oregon state income tax and were both introduced in 2021.

Multnomah County Preschool for All Tax

• Rate: 1.5% on taxable income above $125,000 single / $200,000 married filing jointly
• Above $250,000 single / $400,000 MFJ: Rate increases to 3%
• Applies to: Multnomah County residents; non-residents who earn income in Multnomah County
• Filed separately from Oregon state income tax

Metro Supportive Housing Services Tax

• Rate: 1% on taxable income above $125,000 single / $200,000 married filing jointly
• Applies to: Residents of the Metro service area (most of Portland metro, including parts of Washington and Clackamas counties) and non-residents earning Metro-area income above the threshold
• Filed separately from Oregon state income tax

Combined Portland-Area Income Tax Burden

For high earners in Multnomah County (Portland proper), the combined burden approaches California’s rates — without Oregon’s famously no-sales-tax advantage offsetting it at higher income levels. The transition to the Portland metro from California or Washington for high earners requires careful tax modeling.

Statewide Transit Tax

Oregon levies a statewide transit tax of 0.1% on employee wages. This is withheld by employers on behalf of employees and applies statewide, not just in transit districts. It is a small additional tax on earned income.

Oregon’s $1 Million Estate Tax: The Lowest Threshold in the USA

Oregon has an estate tax with a threshold of $1 million — the lowest estate tax threshold of any state in the country. This threshold has not been significantly indexed for inflation for many years, meaning it captures an increasing number of estates simply due to property appreciation, particularly in the Portland metro housing market.

Oregon Estate Tax Details

• Threshold: $1 million (gross estate value)
• Rates: 10% to 16%, graduated on the amount above $1M
• No portability: Like most state estate taxes, Oregon does not offer portability. A surviving spouse cannot use the deceased spouse’s unused $1M exemption.
• Who it affects: Oregon residents (taxed on worldwide assets) and non-residents who own Oregon real estate or tangible personal property in Oregon
• Marital deduction: Assets passing to a surviving US-citizen spouse qualify for a marital deduction, deferring Oregon estate tax until the second death

Oregon vs Other States: Estate Tax Comparison

A Portland-area homeowner whose residence alone is worth $900,000 (well within range of metro Portland home values) may have a gross estate approaching or exceeding $1 million when retirement accounts, life insurance, and other assets are included. Oregon estate planning is critical for property owners in the Portland metro, even those who would not consider themselves “wealthy” by national standards.

Planning Strategy: AB Trusts for Oregon Married Couples

Since Oregon does not have estate tax portability, married Oregon couples with combined estates above $1 million often use an AB Trust (also called a Bypass Trust or Credit Shelter Trust) to ensure both spouses’ exemptions are utilized. Without such planning, the full estate could pass to the surviving spouse, and on the second death, only one $1M exemption is available.

Oregon Property Tax, No Sales Tax, and the Washington Border Effect

Oregon Property Tax

Oregon’s effective property tax rate averages approximately 0.93% — below the national average of about 1.1%. Oregon’s property tax is governed by Measure 50 (passed in 1997), which limits the annual increase in each property’s assessed value to 3% per year regardless of market value increases. This means long-term homeowners can accumulate significant protection from rising property taxes as Oregon home values have soared.

No Oregon Sales Tax

Oregon is one of only five states in the country with no state or local sales tax. The others are New Hampshire, Montana, Delaware, and Alaska (though some Alaska localities have sales taxes). For consumers, this means:

• A $50,000 car purchase in Oregon saves $3,000–5,000 in sales tax compared to neighboring California or Washington
• Daily grocery, clothing, and household purchases are not subject to any sales tax
• Oregon’s lack of sales tax does not mean the state has no consumption taxes — specific excise taxes apply to tobacco, alcohol, and cannabis

The Washington Border Shopping Effect

Because Washington State has a sales tax (6.5% state + local, totaling 8.6–10.4% in most areas) while Oregon has none, there is a well-documented border shopping effect: Washington residents regularly cross the Columbia River to shop in Portland and the surrounding Oregon metro for major purchases. Oregon retailers are not required to collect Washington use tax, though Washington technically requires its residents to self-report such purchases (a rule very rarely enforced for individuals).