Updated September 5, 2026. Quick answer: Oregon has no general sales tax but taxes nearly all retirement income, public pensions, private pensions, and IRA or 401k distributions, as ordinary income. The one notable break is a subtraction for federal pension income, including military retirement, that is attributable to federal service performed before October 1, 1991.
Confidence note: medium. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Oregon taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Oregon PERS and other state or local government pensions are fully taxable as ordinary income. No PERS specific subtraction was found in the sources reviewed this session. |
|---|---|
| Private (employer) pensions | Private employer pensions are fully taxable as ordinary income, with no special Oregon subtraction identified. |
| Federal government pensions (FERS/CSRS) | Federal pension income attributable to federal employment occurring before October 1, 1991 can be subtracted from Oregon taxable income, calculated by multiplying the total federal pension by the ratio of months of creditable service before that date to total months of creditable service. The portion attributable to service on or after October 1, 1991 is fully taxable. |
| Military retirement pay | Military retirement pay is treated as a form of federal pension for this purpose and follows the same pre-October 1991 service ratio described above. There is no separate full exemption specifically for military retirees. This is distinct from active duty military pay, which has its own separate subtraction rules, including a subtraction of up to $6,000 for remaining taxable military pay and larger subtractions for pay earned while stationed outside Oregon or on certain Guard or Reserve orders. |
| IRA and 401(k)/403(b) distributions | IRA and 401k or 403b distributions are fully taxable as ordinary income in Oregon and do not qualify for the federal pension subtraction. |
| General retirement-income exclusion | Oregon’s Retirement Income Credit, a credit equal to the lesser of tax liability or 9 percent of net pension income for filers who have reached age 62, with household income limits near $15,000 for single filers and $30,000 for joint filers reduced by Social Security benefits received, cannot be claimed for tax years beginning on or after January 1, 2026 under the statute’s own sunset language. That means this general offset is no longer available for the current tax year. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Oregon does not tax Social Security benefits at all; see the sibling page for details. Social Security has its own rules in every state; see the full breakdown in how Oregon taxes retirement income generally.
Statute and sources
Governing citation: Or. Rev. Stat. sec. 316.680(1)(e); Or. Rev. Stat. sec. 316.157.
- Oregon Law, statute text of ORS 316.680, Modification of Taxable Income
- Oregon Law, statute text of ORS 316.157, Credit for Retirement Income
- Oregon Department of Revenue, Military Personnel page
- Oregon State Legislature, Oregon Revised Statutes Chapter 316 index
Read September 5, 2026.
Related: how Oregon taxes retirement income generally · does Oregon tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.