Does Oregon Tax Retirement Income?

No. Oregon does not tax Social Security benefits.

Social Security and Tier 1 Railroad Retirement benefits are subtracted from Oregon income; whatever was taxable federally comes back out.

The Oregon answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Oregon does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Oregon sits among the states that still tax benefits.

Yes. Oregon generally taxes pension income.

Private and state pensions are fully taxable. Federal pensions, including military retirement, can be subtracted in proportion to the months of service or retirement points earned before October 1, 1991; a federal retiree whose entire career came after that date gets no subtraction.

There is no general retirement-income exclusion. The small retirement income credit under ORS 316.157 (9% of eligible pension income, capped at a $7,500 single or $15,000 joint base that was reduced by Social Security and by household income over a low limit) is scheduled to sunset for tax years beginning on or after January 1, 2026, and a 2025 bill to extend it did not pass. Oregon does allow a federal tax subtraction (capped at roughly $8,750 for 2026), an additional standard deduction for age 65 (about $1,200), and a special medical subtraction for taxpayers 66 and older with income limits.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Yes. Oregon generally taxes traditional 401(k) and IRA withdrawals.

Traditional 401(k) and IRA withdrawals are fully taxable at Oregon's regular rates. There is no age-based subtraction for account withdrawals.

Two timing points matter in Oregon. A Roth conversion is taxable in the year it is done, and Oregon starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Oregon rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A single 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension subtracts the Social Security and reports $60,000 of Oregon income. After the federal tax subtraction and the standard deduction, roughly $47,700 is taxable, mostly in the 8.75% bracket, and the Oregon tax is roughly $3,600.

Start with federal AGI of about $85,500, subtract the $25,500 of taxable Social Security, and Oregon income is $60,000. Subtract the federal income tax paid (roughly $8,200 for this profile, under the cap), the $2,900 standard deduction, and the roughly $1,200 additional deduction for age 65, leaving about $47,700 of taxable income. Tax is $678 on the first $11,400 plus 8.75% of the next $36,300, roughly $3,850, less the $260 exemption credit, for roughly $3,600. Contrast: a $150,000 lump-sum IRA withdrawal pushes taxable income to roughly $197,700, the amount above $125,000 is taxed at 9.9%, the exemption credit disappears because federal AGI exceeds $100,000, and the Oregon tax rises to roughly $17,800, about $14,200 more than the base year.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Washington: has no individual income tax at all.
• Nevada: has no individual income tax at all.
• California: treats Social Security as exempt, pensions as taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 13.30% and $20,000 military-pay exclusion with income limits.

The 9.9% headline rate is not the retiree problem; the 8.75% rate is, because it starts at $11,400 of taxable income. A retiree with a modest pension and IRA is already paying close to the top rate on most withdrawals.

Military retirement: Military retirement pay is taxed as a federal pension: the portion attributable to service before October 1, 1991 is subtracted, and the rest is taxable. A 2025 bill (HB 2050) to exempt military retirement for disabled veterans and reserve or National Guard retirees beginning in 2026 did not become law. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Oregon has an estate transfer tax on estates of $1,000,000 or more, with graduated rates from 10% to 16% on the taxable estate above that threshold. The threshold is not indexed and has not moved since 2012.

Selling a home or investments in Oregon: retirement-income rules do not cover capital gains. See Oregon capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. There is no general retirement-income exclusion. The small retirement income credit under ORS 316.157 (9% of eligible pension income, capped at a $7,500 single or $15,000 joint base that was reduced by Social Security and by household income over a low limit) is scheduled to sunset for tax years beginning on or after January 1, 2026, and a 2025 bill to extend it did not pass. Oregon does allow a federal tax subtraction (capped at roughly $8,750 for 2026), an additional standard deduction for age 65 (about $1,200), and a special medical subtraction for taxpayers 66 and older with income limits.
• Part-year residents. If you moved into or out of Oregon during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Oregon tax. If Oregon taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Federal pension retirees should get the pre-October 1, 1991 service months or points documented now, because the subtraction percentage is fixed for life and often goes unclaimed. For everyone else, the federal tax subtraction rewards paying federal tax evenly across years rather than in one large withdrawal year where the cap binds.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.