Oregon has no sales tax — which retirees love to hear — but it taxes your retirement withdrawals at some of the highest rates in the country. Here's exactly what you'll pay, and where the "no sales tax" win is real versus oversold.
"Oregon has no sales tax" is true and genuinely valuable. But it leads many retirees to assume Oregon is a low-tax state. It isn't — not for someone living on 401(k) and IRA withdrawals. Oregon fully taxes those withdrawals as ordinary income at 4.75% to 9.9%, among the steepest rates in the nation. The retiree who wins big in Oregon is the one living mostly on Social Security and Roth money. The retiree drawing heavily from a traditional 401(k) may pay more total state tax here than in a no-income-tax state — even after the sales-tax savings.
Not taxed: Social Security benefits (fully exempt). Qualified Roth IRA/401(k) withdrawals. There is no state sales tax.
Fully taxed as ordinary income: Traditional 401(k), traditional IRA, and pension withdrawals — at 4.75%–9.9%.
Limited relief: A retirement-income credit exists only for low-income filers (broadly, under about $22,500 single / $45,000 joint). Most active-adult buyers won't qualify. Oregon also allows a federal tax subtraction capped at $8,500 (2025), which modestly reduces the bill.
Four progressive rates. Only income within each band is taxed at that band's rate. Standard deduction for 2025: $2,835 single, $5,670 married filing jointly.
| Rate | Single — taxable income | Married filing jointly |
|---|---|---|
| 4.75% | $0 – $4,400 | $0 – $8,800 |
| 6.75% | $4,400 – $11,050 | $8,800 – $22,100 |
| 8.75% | $11,050 – $125,000 | $22,100 – $250,000 |
| 9.90% | Over $125,000 | Over $250,000 |
Thresholds confirmed against Oregon's official 2025 Form OR-40 tax-rate charts. Beginning in tax year 2026, thresholds are indexed to inflation.
Married filing jointly, standard deduction applied, federal subtraction not modeled (it would reduce these figures somewhat). Think of the monthly-equivalent column as a second housing cost a no-income-tax-state retiree doesn't pay.
| Annual withdrawal (401k / IRA / pension) | Oregon income tax / yr | Monthly equivalent |
|---|---|---|
| $40,000 | $2,386 | $199/mo |
| $60,000 | $4,136 | $345/mo |
| $80,000 | $5,886 | $490/mo |
| $100,000 | $7,636 | $636/mo |
Married filing jointly, 2025 standard deduction applied; the $8,500 federal tax subtraction is not modeled and would reduce these figures. Social Security and qualified Roth withdrawals are exempt. In Multnomah County, add local surtaxes above $125K single / $200K joint.
The Portland metro layers local income taxes on top of the state's:
Metro Supportive Housing Services (SHS): 1% on income over $125,000 single / $200,000 joint. Applies across the Metro district — Multnomah plus the urban parts of Washington and Clackamas counties. Retirement income (other than PERS/FERS) is subject to it.
Multnomah County Preschool for All (PFA): 1.5% on income over $125,000 single / $200,000 joint, rising to 3% total over $250,000 / $400,000. Multnomah County only.
A high-income retiree in Multnomah (e.g., Summerplace) can owe up to ~2.5% — even ~4% at the top — in local income tax that a Salem (Marion/Polk) retiree never pays. Washington County communities (Summerfield, Claremont) face the 1% SHS but not the PFA. Salem communities face neither. For households with large RMDs or a working spouse, this can be the deciding factor between Portland and Salem.
Oregon has one of the lowest estate-tax exemptions in the country: just $1 million, with graduated rates climbing to 16%. It is not indexed to inflation. A paid-off home plus retirement accounts easily exceeds $1M, so many ordinary retirees — not just the wealthy — have taxable Oregon estates even though they owe no federal estate tax (the federal exemption is far higher). If you're moving to Oregon with significant assets, this belongs in your planning conversation early.
Against Washington, Texas, Nevada, or Florida (no state income tax), Oregon's pitch is "no sales tax." Whether that's a net win depends entirely on your income mix:
Your income mix decides whether Oregon is a tax win or a tax cost. Get matched with a specialist who can connect you with the right resources and show you which county minimizes your total bill. This is general information, not tax advice — confirm specifics with a tax professional.
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