It has been said (by me) that Oregon is the best state to live, but the worst state to die. Why? Estate taxes. Both the Federal Estate Tax and Oregon Estate Tax can impact what your loved ones receive from your estate. Here’s a clear overview of both taxes and how they differ.
The Federal Estate Tax
The Federal Estate Tax is a tax on the transfer of assets from a deceased person to their beneficiaries. For 2025, the Federal Estate Tax exemption is $13.9 million per person (up from $13.6 million in 2024). If your estate is valued below this amount, you won’t owe federal estate taxes.
However, for estates exceeding $13.9 million, tax rates range from 18% to 40%, depending on the estate’s size.
Key Features of the Federal Estate Tax
- Marital Deduction: You can transfer any amount of assets to your spouse tax-free, both during your lifetime and at death. This deduction is an important tool for minimizing estate taxes for married couples.
- Portability: Any unused portion of a deceased spouse’s Federal Estate Tax exemption can be transferred to the surviving spouse, increasing their exemption. For example, if one spouse uses only $2 million of their exemption, the remaining $11.9 million can be added to the surviving spouse’s exemption.
The Oregon Estate Tax
Oregon is one of only a few states with its own estate tax. Unlike the federal tax, Oregon’s exemption is much lower—$1 million per person. Estates valued above this amount will owe taxes, with rates ranging from 10% to 16%. For those Oregon residents who own their home, estates can hit $1 million quickly.
Assets Subject to the Oregon Estate Tax
Some of the assets included in calculating the Oregon Estate Tax are:
- Real estate (even out-of-state properties for Oregon residents).
- Bank accounts.
- Life insurance proceeds.
- Personal property (e.g., vehicles, jewelry, or collectibles).
Strategies to Reduce Estate Tax Liability
Estate taxes can significantly reduce the assets your beneficiaries receive, but there are ways to minimize their impact:
- Annual Gifting
Take advantage of the annual Federal Gift Tax exclusion, which allows individuals to gift up to $19,000 per person per year ($38,000 for married couples) without incurring gift tax or reducing their lifetime estate tax exemption. This can help reduce the size of your taxable estate over time.
- Spend It!
While perhaps not the most conventional advice, spending your assets during your lifetime ensures that your estate remains under taxable thresholds while enjoying the fruits of your labor. You earned it, go have some fun!
- Strategic Estate Planning
Tools such as gifting above the annual gift tax exclusion, irrevocable trusts, family limited partnerships, or charitable giving can also help reduce estate taxes. Consulting with an estate planning attorney is essential to developing a strategy tailored to your unique circumstances.
Need Help with Estate Planning?
Whether you’re navigating federal or Oregon estate tax laws, planning ahead is the best way to protect your legacy and your loved ones. Contact our office today to schedule a consultation and learn how we can help you create an effective estate plan.
Don’t leave estate taxes to chance—make an appointment with our team and let us guide you through every step of the process.