A bill that would raise the threshold on Oregon’s estate tax and increase taxes on estates above $3 million was approved by the Senate on Feb. 24 and referred to the House.

The bill moved on a 22-5 vote.

Democrats on the Revenue committee approved Bill 1511 on a 3-2 vote Feb. 13, which would raise Oregon’s estate tax threshold from $1 million to $2.5 million.

This means estates worth $1 million would no longer be subject to an estate tax after the owner dies, and those who inherited the estate will no longer have to worry about that tax burden.

The trade-off is that the tax on estates worth more than $3 million would increase, which would make up for the funds the state collected through the current estate tax until 2029.

What is an estate tax?

An estate tax can be levied on things a deceased person owned or had certain interests in when they die. The tax is paid by the person’s estate, cutting into the beneficiaries’ inheritance.

The federal government charges an estate tax, but the threshold is high enough in most states that many people don’t have to worry about it: $15 million. However, in some states, including Oregon, the threshold is much lower.

How much is Oregon’s estate tax?

Oregon currently has the lowest threshold estate tax in the country, which includes 12 states and the District of Columbia. Compared to Connecticut’s $13 million threshold, or Washington’s $3 million threshold, Oregonians don’t necessarily have to be millionaires to be affected by the tax.

The tax threshold has also not changed since 2011, which means many Oregonians are getting closer to that number.

With Oregon’s exemption set at $1 million, Oregonians who own a home, have $60,000 in their checking accounts and a 401(k) will likely be exposed to an estate tax, according to Sam Tutko, vice president of Miser Wealth Partners.

“I think this is the middle-class tax relief our constituents are asking for,” said Sen. Anthony Broadman, D-Bend. “The nurses, the police officers, the firefighters who purchased a home in 2005 for $200,000 are finding themselves subject to filing an estate tax return.”

Some senators who voted no, had thoughts against increasing the taxes on those who fall outside of the threshold.

“When you increase incentives for people with larger estates to relocate, which they can, the likelihood is they will,” said Sen. Mike McLane, R-Powell Butte. “We already have folks who are being advised by estate planners to purchase a home in another state and establish residency.”

If the bill passes, the top marginal tax rate for high-value estates would increase by 3.9 percentage points.

Ginnie Sandoval is the Oregon Connect reporter for the Statesman Journal. Sandoval can be reached at GSandoval@statesmanjournal.com or on X at @GinnieSandoval.

This article originally appeared on Salem Statesman Journal: Oregon estate tax bill heads to House, would increase threshold