Oregon legislators recently made significant modifications to Oregon’s inheritance tax laws. House Bill 2541 changes the manner in which Oregon estate taxes are imposed. The new law also changes the Oregon death-tax reference from “inheritance taxes” to “estate taxes,” utilized with respect to federal death taxes.
The new law will continue to require that an estate tax return be filed with the Oregon Department of Revenue for any gross estate of $1 million or more. However, under prior law, if a given estate was valued at as little as $1.00 more than $1 million, then a large inheritance tax was imposed against it. Under the new law, if an estate’s value exceeds $1 million, then the Oregon estate tax which is imposed against it is equal to 10 percent of the excess, up to estates valued at $1.5 million or more. As shown below, the death tax rates increase more rapidly than under the prior laws and continue to a maximum tax rate of 16 percent, for all estates with a value in excess of $9.5 million.
| Taxable Estate Value is at least (Column 1): |
But less than: | Base Tax: | Plus % of Excess over Column 1: |
| 1,000,000 | 1,500,000 | 0 | 10.0% |
| 1,500,000 | 2,500,000 | 50,000 | 10.25% |
| 2,500,000 | 3,500,000 | 152,500 | 10.5% |
| 3,500,000 | 4,500,000 | 257,500 | 11.0% |
| 4,500,000 | 5,500,000 | 367,500 | 11.5% |
| 5,500,000 | 6,500,000 | 482,500 | 12.0% |
| 6,500,000 | 7,500,000 | 602,500 | 13.0% |
| 7,500,000 | 8,500,000 | 732,500 | 14.0% |
| 8,500,000 | 9,500,000 | 872,500 | 15.0% |
| 9,500,000 | 1,022,500 | 16.0% |
HB 2541 also ties Oregon death tax laws to the new federal legislation which have extended the time for making a qualified disclaimer, so that beneficiaries of Oregon estates can take advantage OREGON’S NEW ESTATE TAX LEGISLATION of the extended period for estates of decedents who became deceased during calendar year. The new Oregon laws have extended the statute of limitations for estate tax returns to five years after a return is filed, but only if the gross estate is undervalued by 25 percent or more. Finally, HB 2541 clarified the taxation of property held in Oregon by decedents who were non-residents, and added substantive details in determining whether farm or forest land will qualify for the natural resource property credit.
The new death tax provisions are generally effective for taxpayers who die on or after January 1,2012. However, the extension of time for a qualified disclaimer applies to decedents who die on or after January 1, 2011.