The Federal Estate Tax Won’t Start Until $15 Million in 2026. Oregon’s Starts at $1 Million, and $600,000 of a Retired Couple’s $1.6 Million Estate Will Be Exposed to It

A retired couple in Salem, both in their early 70s, owns a house bought in the 1990s, two retirement accounts, and a life insurance policy totaling $1.6 million. They assume estate tax is for the very rich.

On the federal side, they are correct. The IRS sets the lifetime basic exclusion amount at $15,000,000 per person for 2026, according to Internal Revenue Service. Most donors are unlikely to ever owe federal gift, estate or GST tax due to the lifetime basic exclusion amount of $15,000,000, according to Internal Revenue Service. This couple will never owe federal estate tax.

Oregon’s $1 Million Line Is Where the Exposure Starts

Oregon requires an estate tax return once the gross estate at death reaches $1 million. That threshold is set in Oregon’s estate tax statute, ORS Chapter 118, and it is current as of October 2026. It also is not indexed for inflation, so every rise in home prices pulls more families over it without any change in the law.

For this couple, $600,000 of the estate sits above that line. Oregon taxes that amount at graduated rates.

Oregon Has No Portability, So the Bill Waits for the Second Death

Federal law lets a surviving spouse take over a late spouse’s unused exclusion, called the DSUE amount, when the executor elects portability on Form 706. Oregon has no portability between spouses. If the first spouse’s Oregon threshold goes unused, it is gone for good.

When the first spouse dies, everything usually passes to the survivor. Assets left to a surviving spouse generally qualify for the marital deduction, so typically no Oregon tax is due at that point. The survivor then owns the full $1.6 million and has only one $1 million threshold to set against it. The tax arrives at the second death.

A Paid-Off House and Two IRAs Clear the Line

Oregon’s taxable estate starts from the federal definition of gross estate. That means it counts the house at full market value, every dollar in 401(k)s and IRAs, brokerage and bank accounts, and the death benefit on any life insurance policy the deceased owned.

A policy bought decades ago to protect the household adds its full payout to the estate on death. A Portland-area house together with two retirement accounts and a policy tops $1 million for a couple who never thought of themselves as wealthy.

A Credit Shelter Trust Preserves the First Threshold

The standard fix in a state without portability is a credit shelter trust, also called a bypass trust. It is funded when the first spouse dies. The will or revocable trust sends part of that spouse’s assets into the trust instead of leaving everything to the survivor directly.

The survivor can still get income from the trust and principal as well. The trust’s assets stay out of the survivor’s taxable estate, putting the first spouse’s Oregon threshold to work. Holding more than $600,000 of the couple’s assets in the trust drops the survivor’s estate below the line.

Oregon law also allows an Oregon special marital property election, which gives executors flexibility after a death. Both tools require drafting that follows Oregon rules.

Four Moves for Oregon Couples Before Either Spouse Dies

• List every asset with its ownership. Joint accounts and a jointly owned house go straight to the survivor and never reach a bypass trust. Each spouse needs enough property in their own name to fund the trust.
• Read the will or revocable trust for Oregon language. A plan written around the federal exclusion leaves the state threshold unused.
• Pull every beneficiary form. Retirement accounts and life insurance pass by beneficiary designation and ignore the will.
• Check who owns the life insurance policy. If the insured spouse owns it, the death benefit counts toward the estate.

Form OR-706 is due once the gross estate reaches $1 million, whether or not any tax is owed. Take these documents to an estate tax attorney who practices in Oregon (most estate messes trace back to a missed form or stale ownership, which is why we put the full cleanup checklist in a free guide).

The number to remember is $600,000. That is how much of this couple’s estate sits above Oregon’s threshold, and a trust set up while both spouses are alive can protect it.

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