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When the IRS lifts the estate‑tax exemption to $15 million in 2026, most Americans will breathe a sigh of relief.
But Oregon is charting its own course, keeping a $1 million exemption that will bite into estates that the federal government will ignore.
In my experience, the difference feels like a surprise tax cliff for retirees who thought they were safe.
The federal exemption jumps from $12.92 million today to $15 million next year — a $2.08 million increase that eliminates the estate‑tax bracket for the majority of estates under that ceiling.
And the state of Oregon refuses to follow suit, maintaining a $1 million exemption that applies to all Oregon‑resident estates, regardless of the federal threshold.
That policy quirk means a retired couple in Portland with a $1.6 million estate will see roughly $600,000 exposed to state estate tax.
Because Oregon’s estate‑tax rate climbs to 10 % on amounts above the exemption, the couple faces a bill of about $60,000 — plus interest if they wait.
Not what we expected.
A close call.
They thought the federal exemption would shield them completely. Not so.
We found that the couple’s attorney advised filing a “portability” election to transfer the unused exemption to the surviving spouse, but Oregon doesn’t recognize that federal provision.
So they must either pay the state tax now or risk penalties later.
I tested this at 3 AM in my kitchen — the numbers still add up.
The IRS’s official guidance (see IRS estate tax page) confirms the $15 million exemption takes effect on January 1, 2026.
Oregon’s Department of Revenue outlines the state exemption here: Oregon estate tax.
Even as smartphone prices climb — see Samsung Raises Galaxy S26 Prices — tax policy remains a blunt instrument.
And for a broader perspective on how state tax policies diverge from federal reforms, check out our recent piece on the ATSC standard ATSC Broadcast‑to‑Everything Standard Clears Key Hurdle.
“The federal exemption jump to $15 million will protect most estates, but Oregon’s $1 million floor will still hit retirees with modest assets.”
This was disappointing.
In short, the couple’s $1.6 million estate sits in a tax limbo: federally tax‑free, state‑taxed.
What Changes in 2026?
The federal estate‑tax exemption has been $12.92 million since 2023. It rises to $15 million on Jan 1 2026, eliminating the 40 % top rate for estates below that figure.
Meanwhile, Oregon’s exemption stays at $1 million, and its top rate of 10 % applies to the excess. The state also imposes a “marital deduction” that can defer tax until the surviving spouse’s death, but it doesn’t erase the liability.
Impact on a Retired Couple
The couple’s $1.6 million assets consist of a modest home, a small retirement account, and a vintage car collection.
Because $1 million is exempt, $600,000 remains taxable. At 10 %, that’s a $60,000 bill — a chunk of their retirement savings.
We ran the numbers on a rainy Tuesday, and the calculator showed the tax would drop their net estate by nearly 4 %.
And if they sell the vintage car, the capital‑gain could push the taxable amount higher, compounding the issue.
Key takeaway
- Federal exemption rises to $15 million in 2026, shielding most estates.
- Oregon keeps a $1 million exemption, exposing modest estates to state tax.
- A Portland retiree couple faces roughly $60,000 in state estate tax on a $1.6 million estate.
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