Converts the $1 million exclusion for an estate subject to tax to a deduction of $2.5 million
Summary
SB 1511 revises Oregon’s estate tax starting with estates of decedents dying on or after January 1, 2027. The bill replaces the current $1 million exclusion with a $2.5 million deduction, phases in tax liability above that deduction, raises the filing threshold for estate tax returns, and directs annual inflation adjustments to both the deduction/threshold and the filing threshold using the consumer price index. It also updates the estate tax rate table, with lower rates than the prior structure in the bill text, and preserves special rules for resident and nonresident decedents, marital property, and certain federal tax elections.
The measure also changes how Oregon taxable estates are calculated by tying the tax base more explicitly to the federal taxable estate and by adjusting the treatment of Oregon special marital property and other deductions. For estates below the new threshold, no tax is due; for estates just above it, the tax is phased in gradually rather than applying immediately at full rates. The bill applies only prospectively to deaths on or after January 1, 2027, and takes effect 91 days after adjournment of the 2026 regular session.
Impact
SB 1511 would amend ORS 118.010 and 118.160, substantially changing Oregon estate tax administration and liability thresholds. It would increase the amount shielded from estate tax, modify the rate schedule, require annual cost-of-living adjustments, and raise the estate tax return filing threshold to $2.5 million for decedents dying on or after January 1, 2027. These changes would affect estates, executors, personal representatives, and the Department of Revenue, while leaving the tax’s basic structure in place for resident and nonresident estates with Oregon-situs property.
Sentiment
The available voting history suggests the bill had meaningful support but not unanimity. It passed the Senate committee on a 3-2 vote with amendments and later passed Senate third reading 22-5, indicating a generally favorable view among a majority of senators. The committee record and final vote pattern suggest the bill was viewed as a significant but workable estate tax revision rather than a broadly controversial overhaul.
Contention
The main point of contention appears to be the size and structure of the estate tax change, especially the shift from a $1 million exclusion to a $2.5 million deduction and the accompanying rate adjustments. Supporters likely viewed the bill as modernizing the tax and providing inflation protection, while opponents likely objected to the revenue impact of raising the exemption and reducing tax liability for larger estates. Because the bill was amended in committee and still drew five no votes on the floor, the likely disagreement centered on whether the state should collect less estate tax from high-value estates and how much relief should be provided to taxpayers versus preserved for state revenue.