In our August 2025 update, we reported on several proposals to reform Oregon's estate tax that were introduced during the 2025 legislative session. None of those bills passed. Now, in the 2026 session, a new bill is gaining real traction — and it could meaningfully change estate tax planning for many Oregon families.
What Is SB 1511?
Senate Bill 1511, sponsored by Senator Anthony Broadman (D-Bend), passed out of the Senate Finance and Revenue Committee on February 18, 2026. The bill proposes two major changes to Oregon's estate tax.
First, the exemption threshold would increase from $1 million to $2.5 million. This would be the first increase since the current estate tax structure was enacted in 2011. Under the bill, the $2.5 million threshold would also be indexed to inflation going forward.
Second, to offset the revenue lost by exempting more estates, tax rates would increase for larger estates. Estates valued at $2.9 million and above would see rate increases of between 2.75% and 4.25%, with a new top rate of 19.9% for estates exceeding $8.5 million — among the highest estate tax rates in the nation.
According to the Legislative Revenue Office, the changes would eliminate or reduce estate taxes for roughly three-quarters of the returns that paid estate taxes in 2023. Currently, Oregon's estate tax affects approximately 5% of estates.
Why This Matters
Oregon has the lowest estate tax threshold of any state in the country. The $1 million exemption has not changed in over two decades, even as property values — particularly in the Portland metro area and across the West Coast — have risen dramatically. Many families whose estates consist primarily of a home and retirement savings now find themselves subject to the estate tax in ways that were never originally intended.
Raising the exemption to $2.5 million would provide meaningful relief for middle-class families while keeping the tax in place for larger estates.
Other Activity to Watch
SB 1511 is not the only estate tax proposal in play. Representative Kevin Mannix (R-Salem) continues to pursue a ballot initiative to repeal Oregon's estate tax entirely, which could appear on the November 2026 ballot. That effort has shown limited fundraising activity so far, but it remains a possibility.
Meanwhile, business groups including the Oregon Bankers Association have expressed support for raising the exemption but argue that $2.5 million does not go far enough, noting that Oregon's threshold would still be lower than 9 of the 11 other states that impose an estate tax. Oregon Business and Industry has also raised a constitutional concern, arguing that because SB 1511 raises tax rates, it should have originated in the House rather than the Senate.
On the other side, SEIU Local 503 supports the rate increases and the higher exemption but opposes indexing the threshold to inflation, citing concerns about long-term revenue impacts.
What This Means for Your Estate Plan
If SB 1511 becomes law, many Oregon families who currently face estate tax exposure would no longer be affected. However, the bill must still pass the full Senate and then the House before reaching the Governor's desk. Its final form could change during that process.
Regardless of what happens with this legislation, the current $1 million exemption remains in effect today. If you have not reviewed your estate plan recently — particularly if your assets include real property — now is a good time to do so.
At Hillsboro Law Group, we help Oregon families navigate estate planning with an eye toward minimizing tax exposure and protecting the assets you have worked to build. If you have questions about how the Oregon estate tax affects your family, we encourage you to schedule a consultation.
Our Take
As we said in August, the Oregon estate tax is an important source of state revenue and should not be repealed entirely. But the $1 million exemption is long overdue for an increase. SB 1511 represents a reasonable compromise — raising the threshold to provide relief for middle-class families while asking more of the wealthiest estates. While budgetary constraints may limit what is possible this year, we would prefer to see the top rate max out at less than 20% to help counter Oregon's negative reputation as a high-tax state.