How Oregon taxes retirement income
Oregon does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are taxed as ordinary income. Social Security and Tier 1 Railroad Retirement benefits included in federal AGI are fully subtracted on the Oregon return and are not taxed. Pension income and 401(k)/IRA withdrawals are taxed as ordinary income at Oregon's graduated rates (up to 9.9%), same as federal treatment. Two narrow exceptions: a subtraction is allowed for the portion of a federal pension attributable to service before October 1, 1991, and lower-income retirees may qualify for a retirement income credit that offsets some tax on pension/retirement income.
Retirement income tax in Oregon, at a glance
| Income type | Taxed by Oregon? |
|---|---|
| Social Security | No |
| Pensions | Yes |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | Estate tax (exemption $1,000,000) |
| Avg. property tax rate | 0.81% of home value |
Does Oregon tax Social Security benefits?
No. Oregon does not tax Social Security benefits.
Does Oregon tax pensions and 401(k) or IRA withdrawals?
Yes. Oregon taxes pension income and 401(k)/IRA withdrawals as ordinary income. Social Security and Tier 1 Railroad Retirement benefits included in federal AGI are fully subtracted on the Oregon return and are not taxed. Pension income and 401(k)/IRA withdrawals are taxed as ordinary income at Oregon's graduated rates (up to 9.9%), same as federal treatment. Two narrow exceptions: a subtraction is allowed for the portion of a federal pension attributable to service before October 1, 1991, and lower-income retirees may qualify for a retirement income credit that offsets some tax on pension/retirement income.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Oregon taxation of retirement income (Social Security, pensions, 401(k)/IRA): Oregon Department of Revenue / Taxation.
- Oregon estate / inheritance tax: Oregon tax authority.