As of June 4, 2025, the Oregon Legislature is actively considering multiple bills aimed at reforming the state's estate tax, which currently has the nation's lowest exemption threshold at $1 million and a top rate of 16%. These proposals seek to modernize the tax structure, reduce its burden on families and small businesses, and address concerns about taxpayer outmigration.taxfoundation.org+1commonsenseinstituteus.org+1
Key Legislative Proposals
- SB 485 – Forestland Estate Tax Exemption Reform
This bill revises the estate tax exemption criteria for small forestland owners. It adjusts management requirements to better reflect forestry practices, moving away from rigid participation thresholds. The Senate unanimously passed SB 485 on May 20, and a public hearing was scheduled in the House Revenue Committee on June 4. - HB 2058 – Aligning with Federal Exemption
Proposes increasing Oregon's estate tax exemption to match the federal level of $13.99 million for decedents dying on or after January 1, 2026. This change would significantly reduce the number of estates subject to the tax. - SB 405 and SB 648 – Federal Conformity Measures
Both bills aim to raise the estate tax exemption to $13.61 million, aligning with the federal basic exclusion amount. SB 648 has undergone a public hearing in the Senate Finance and Revenue Committee. - HB 2301 – Flat Tax Rate Introduction
Suggests replacing the current progressive estate tax rates with a flat 7% rate and increasing the exemption to $7 million. This approach seeks to simplify the tax system and reduce administrative complexity. - HB 3737 – Inflation-Adjusted Exemption
Proposes raising the exemption to $4 million and indexing it for inflation, ensuring the threshold remains relevant over time. - HB 2112 and HB 2362 – Graduated Exemption Models
These bills introduce a sliding scale for exemptions, ranging from $1.5 million to $0, depending on the estate's value. This model aims to provide relief to smaller estates while maintaining revenue from larger ones.
Our Take: SB 485 would not impact most Oregonians. SBs 2058, 405, and 468 have zero chance of being passed as they would create a huge hole in Oregon's budget. SBs 648, 3737, 2112, and 2362 are serious proposals worthy of further discussion and debate.