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.
More state retirement-income schedules, line by line: Oregon federal pension subtraction.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Oregon tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Oregon tax 403(b) and 457(b) withdrawals.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Oregon tax withholding on pension payments.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Oregon a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Oregon tax the profit from selling your home?.
The state’s income tax schedule: the Oregon tax brackets for 2026.
The Portland Fire and Police Disability and Retirement fund rules, from the fund’s own documents: Portland FPDR retirement decisions.
A pension earned in another state, or paid after a move, is covered here: does Oregon tax out-of-state pensions.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Oregon tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Oregon tax TSP withdrawals?.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Oregon have an inheritance tax?.
Trusts have their own page: does Oregon tax trust income.
Dividends and interest have their own page: does Oregon tax dividends and interest.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Oregon tax HSA contributions?.
Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does Oregon have a gift tax?.
Annuity payments have their own page: does Oregon tax annuity income.
Saving for a child’s college? The state’s 529 break has its own page: Oregon 529 plan tax deduction.
Military retired pay has its own page: does Oregon tax military retirement.
Selling stocks, funds or real estate has its own page: does Oregon tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Oregon tax 401(k) and IRA withdrawals.
More on Oregon: How Much Does a Living Trust Cost in Oregon?
Related state retirement tax guides: Leaving Oregon in Retirement and Oregon to Arizona Retirement Taxes.
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, is still available: the statute’s own sunset now reads January 1, 2032 (as amended by 2025 Oregon Laws chapter 562). The pension income counted is capped at $7,500 for single filers or $15,000 for joint filers, reduced by Social Security benefits received and by household income above $15,000 (single) or $30,000 (joint). That means this general offset can still be claimed for the current tax year, subject to those limits. |
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How our partner relationships workSocial 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.
Figures verified against the 2025 Edition of Oregon Revised Statutes chapter 316 and the Oregon Laws 2026 amendment tables on the Oregon Legislature website, enrolled 2026 SB 1507, the ORS 316.680 text on oregon.public.law and the Oregon Department of Revenue military page on September 30, 2026; whether Oregon PERS benefits for pre-1991 service carry any subtraction and the Social Security subtraction text were not re-checked.
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.