Oregon State Taxes: What You Owe in the 2026 Tax Season

How about other pension or retirement income?

Most retirement income — including from pensions, annuities, 401(k)s and IRAs — are subject to Oregon state income tax. However, federal pension income may be eligible for a full or partial subtraction from Oregon taxable income.

Also, some retirees age 62 or older may be eligible for a retirement income credit depending on their income. For the 2025 tax year, household income must be less than $22,500 for single individuals or $45,000 for those married and filing jointly. See Oregon’s 2025 individual income tax guide beginning at page 106 for details.

How is property taxed in Oregon?

Oregon’s statewide average property tax rate is 0.81 percent of assessed value, according to the most recent data from the Tax Foundation. Actual rates vary by county. Those rates ranged from 0.41 percent in Grant County to 1.02 percent in Multnomah County. The lowest median property tax amount paid was $1,563 in Lake County, and the highest was $5,301 in Multnomah County.

What about sales and other taxes?

• Sales tax: Oregon does not have statewide or local sales taxes.
• Vehicle use tax: The state has a vehicle use tax that applies to new vehicles purchased outside the state. One-half of 1 percent (.005) is due on the retail price of any taxable vehicle. The use tax must either be collected by the seller at the time of purchase or paid by the purchaser within 30 days of the vehicle purchase.
• Gas tax: Oregon taxes gas and diesel at 40 cents per gallon.
• Alcohol tax: Oregon levies a “privilege” tax on makers of alcohol. It has one of the lowest taxes on beer in the country at 8 cents per gallon, according to the Tax Foundation. Table wine is taxed at 67 cents per gallon and dessert wine at 77 cents per gallon. Oregon does not levy a direct excise tax on distilled spirits because all spirits are distributed and sold by the Oregon Liquor and Cannabis Commission. In lieu of a tax, the OLCC marks up the wholesale cost, with proceeds used to finance the distribution and sale of spirits and to generate revenue for the state’s general fund, counties and cities.
• Cigarette tax: The state’s cigarette tax is $3.33 for a pack of 20 cigarettes. The tax also applies to little cigars under a law passed by voters in 2021.
• Marijuana tax: There is a 17 percent tax on recreational marijuana items sold by Oregon Liquor and Cannabis Commission–licensed retailers.
• Lottery winnings: For traditional lottery games such as Scratch-its and draw games, prizes of more than $600 are reported to the state and IRS. Prizes between $1,500 and $5,000 have 8 percent withheld for state tax. Prizes of more than $5,000 have 8 percent state tax and 24 percent federal tax withheld. Oregon also has a video lottery, and those prizes have 8 percent state tax withheld.
• Gross receipts tax: Oregon is one of seven states with a gross receipts tax. This is levied on companies with commercial activity of more than $1 million and is assessed on gross sales before adjusting for operating costs, such as compensation, dividends and materials costs. Learn more about how gross receipts taxes work and what they mean for consumers here.

Will my estate or my heirs have to pay inheritance and estate tax?

Oregon does not have an inheritance tax , but it is one of 12 states with an estate tax. The state taxes the estate, not the heirs, and it applies to estates worth more than $1 million. That $1 million threshold is the lowest in the nation and therefore impacts both wealthy and upper-middle-income households, according to the Tax Foundation.

The tax rates increase progressively with the size of the estate, from 10 percent for the first taxable bracket ($1 million to $1.5 million) to 16 percent for estates worth $9.5 million or more. For deaths on or after Jan. 1, 2022, the tax return and payment are due 12 months from the date of death.

Does Oregon tax military retirement income?

The state generally treats military retirement pay as ordinary income subject to the state’s graduated income tax. However, veterans age 62 or older who meet income requirements may be eligible for the state’s retirement income credit, which includes federal pensions. For the 2025 tax year, household income must be less than $22,500 for single individuals or $45,000 for those married and filing jointly. See page 106 of the state’s individual income tax guide to learn more.

Are there tax breaks for disabled veterans or surviving spouses?

Disabled veterans and their surviving spouses or registered domestic partners may qualify to have part of their primary home’s assessed value excluded from property taxes. Deployed members of the Oregon National Guard or Reserve may be able to exclude part of their primary home’s assessed value from property taxes.

Are there any tax breaks for older Oregon residents?

Some homeowners who are age 62 and older or are disabled residents may qualify, depending on their income, to borrow from the state to cover their property taxes. When approved, the Oregon Department of Revenue will pay the county property taxes each Nov. 15. Applications are due April 15; those made between April 16 and Dec. 1 come with a late filing fee. The state will place a lien on the property, and the Department of Revenue will hold a security interest in it until the debt is paid. Learn more here.

When is the deadline for filing taxes?

The filing deadline for 2025 returns was April 15, 2026. If you filed an extension, the due date is Oct. 15, 2026. However, if you did not pay the taxes you owe by the April deadline, you may owe interest and face penalties. Learn more here.

More AARP Financial Resources

• AARP Retirement Calculator Determine if you are saving enough to retire when — and how — you want.
• AARP Social Security Calculator Figure out when to claim and how to maximize your Social Security benefits.
• AARP Tax Tools Explore resources to help you calculate and prepare taxes.