Oregon: No Place to Die
Our death tax is the greediest in the nation.
By Steve Duin - stephen.b.duin@gmail.com
Imagine this:
You recently retired in the state you love. You’ve raised a family, paid off a mortgage. Supported nonprofits and the local restaurants in your community. Against all odds, you’ve even put some money away for the grandkids.
You’ve prospered through a good life, most of it in Oregon, but your accountant has just lowered the boom:
You can’t afford to die here.
When taxpayers breathe their last in 38 other states, including true-blue California and blood-red Idaho, those state governments have no interest in claiming a share of the savings, retirement accounts, and family homes they leave behind.
Of the dozen states that do, none is so greedy as Oregon.
Connecticut has an estate tax, but—mirroring the federal government—it exempts the first $15 million of an individual estate or the first $30 million for a married couple.
Oregon’s exemption is $1 million, the lowest in the land (see chart).
If your savings and home equity total, say, $1.5 million at death, Oregon will claim 10% of the amount that exceeds its exemption, or $50,000. If you’re the rare Oregonian with investments of $10 million at death, the state will pinch 16% of the amount that is not transferred to a surviving spouse. That pencils out to $1.4 million.
State economists predict Oregon will collect $422.8 million in estate taxes in fiscal year 2025. While that figure pales beside the $13 billion due in personal income taxes, our state government can’t curb its addiction to seizing a share of your nest egg.
Oregon’s $1 million exemption was set in stone in 2002. It has never been indexed for inflation. (If the amount had simply increased with inflation, it would be $1.83 million today. Meanwhile, home values, the greatest sources of most families’ wealth, have more than doubled since 2002.) That means more estates are paying the tax—the number more than doubled from 2012 to 2022, state figures show, and today’s total is expected to nearly triple by 2050.
Appeals to the Legislature to mitigate the damage routinely go down in flames, or vanish in committee. At the same time, Republican state Rep. Kevin Mannix of Salem and John von Schlegell, co-founder of Endeavour Capital, have separately filed 2026 ballot initiatives to abolish estate taxes. (Editor’s note: Von Schlegell is a member of the board of directors of OJP.)
The Democratic majority in the Legislature is unconcerned that Oregonians in their golden years are advised to leave the state to avoid the tax, and no one is tracking the number who do. In a society where high-speed internet and home delivery of virtually everything have made it easier to live just about anywhere, Oregon is betting that people will, in effect, pay extra to die here. That’s a risky bet when other states—including all that abut Oregon—offer a dramatically cheaper final chapter.
While Oregonians are dang proud of billionaires Phil Knight and Tim Boyle, they don’t lose much sleep over their tax issues.
But the increasingly insidious problem with Oregon’s estate tax is not what it does to the wealthy, but what it does for families who still buy most of their Nike and Columbia Sportswear gear at the outlet stores.
The argument for the status quo is eloquently delivered by Daniel Hauser, deputy director of the Oregon Center for Public Policy, a lefty think tank.
Noting that Oregon expects to collect more than $1.1 billion in estate taxes during the 2027–29 biennium, Hauser says, “If you asked me to find a way to raise $1 billion that would have the smallest impact on low-income and working families, I think the estate tax is where we should start.
“We want the richest, wealthiest tax-paying families to be the ones supporting the services Oregonians depend on, not the lowest-income, working families.”
Quite reasonable, that. I hear voters cheering in the wings. Rather than balance the books with a sales tax—which hits low-income families the hardest—Oregon taxes the rich.
While Oregonians are dang proud of billionaires Phil Knight and Tim Boyle, they don’t lose much sleep over their tax issues.
But the increasingly insidious problem with Oregon’s estate tax is not what it does to the wealthy, but what it does for families who still buy most of their Nike and Columbia Sportswear gear at the outlet stores.
Richard Solomon, a Portland accountant and former member of the Oregon Investment Council, shares Hauser’s concern for preserving essential state services.
But Solomon adds: “The primary argument for maintaining the estate tax rests on the idea that it only impacts the wealthy, who warrant little sympathy.
“That assumption is flawed. The tax isn’t exclusively paid by the rich. It impacts people like police, teachers, and skilled laborers.”
“Oregon’s economy isn’t working for most people right now,” Tobias Read said. “Fixing one policy isn’t going to change everything, but the estate tax should be part of a much larger discussion about how we can jump-start the economy...”
Kotek, who just announced she will run for reelection, did not return our calls.
What amount of “wealth” does it take for an Oregonian to eventually feel the sting of our estate tax?
For many, a mortgage-free home and a 401(k).
“Paying off your mortgage and saving for retirement is often enough to have Oregon estate tax liability,” says Steven Bell, senior vice president at Ferguson Wellman Capital Management.
When the Common Sense Institute crunched the numbers on Oregon’s estate tax last spring, the nonpartisan research group reported that 1,668 Oregonians with property and savings valued at $2.5 million or less were levied another $75 million in estate taxes. That’s an average hit of more than $45,000 for each of them.
Is it any wonder, then, that families are calculating the cost of retiring to Boise or Eureka, rather than hunkering down in Bend or Enterprise, in order to dodge Oregon’s estate taxes?
Financial advisers and estate planners routinely hear such anguished questions.
“Clients will ask what it would take to change their domicile, and how much would that save in taxes?” Bell says. “I’ve seen it pencil out once or twice where the answer when considering income and estate tax estimates is:
“It will pay for the new house.”
Ponder that for a moment. The new house.
“In financial and tax planning,” Bell reminds us, “there’s an incentive to structure your affairs so that your tax burden is the lowest it could be. If you run through that analysis for a lot of Oregonians, one of the best tax-planning choices is to move out of state.”
Estate planning, like the rest of the end game, is complicated. Few people cavalierly trade a lifelong commitment to a tight circle of friends and their community for a new patio and a well-deserved tax break. If you want to do the grandkids proud, fishing the Deschutes or following those new salmon up the old Klamath, it’s a lot tougher to do from those new digs in Eureka.
But it’s painfully instructive that Oregon puts its native sons and daughters in that bind, while neighboring California and Idaho do not. (Washington? The state has a $3 million exemption—a calculation which will be tied to the consumer price index beginning in 2026.)
Of course, without data on how many people are leaving Oregon to avoid the estate tax, it’s hard to quantify the damage.
But three of the financial advisers I spoke with said they had clients who have left Oregon, realizing their economic self-interest and the state’s long ago diverged.
That’s precisely why critics say Oregon’s estate tax has become so self-defeating.
When Oregonians migrate to one of the 38 states without an estate tax, Bell notes, “they rarely move in the last six months of their lives. They are spending years in that other jurisdiction, and that is income tax that is also not coming to the Oregon Department of Revenue.”
“There’s also the intangible losses,” Solomon adds. “Residents moving out of state include those who served on boards and contributed to schools, churches and other charities. Those contributions are now lost.”
Hauser recognizes the problem. “Sure, some people may move out of Oregon, or choose not to move in, because of the estate tax,” he says. “But is it three people or three thousand? I think it’s very easy to blow that out of proportion.”
The tax isn’t exclusively paid by the rich. It impacts people like police, teachers, and skilled laborers.
For Oregon lawmakers, it’s easy to ignore the problem altogether. I reached out last week to Gov. Tina Kotek and Secretary of State Tobias Read. When some very successful Oregonians are leaving the state to avoid paying its estate tax, I asked, do they still believe that tax is good public policy?
“Oregon’s economy isn’t working for most people right now,” Read said. “Fixing one policy isn’t going to change everything, but the estate tax should be part of a much larger discussion about how we can jump-start the economy, spur investments in Oregon, and ultimately put more money in all Oregonians’ pockets.”
Kotek, who just announced she will run for reelection, did not return our calls.
Solomon argues this: “I’m not advocating getting rid of the Oregon estate tax. But doing so might actually increase state revenue. The income tax collected from wealthy residents who choose to stay could potentially exceed the revenue lost from eliminating the estate tax.”
If the public employee unions who call most of the shots in Salem reach the same conclusion, the Legislature may finally boost the estate tax exemption to make Oregon more competitive with other states.
In the meantime, a great many Oregonians who managed to pay off a mortgage and squirrel a little money away will continue to ask themselves if they best serve their children and grandchildren by calling the moving van and putting a little distance between themselves and their heirs.
Oregon isn’t going to like what they decide.