Updated October 4, 2026. Quick answer: Yes. Oregon’s Publication OR-17 says “Most retirement income is subject to Oregon tax”, and “Oregon taxes any taxable IRA distribution you received during the year”. No age or dollar exclusion for 401(k) or IRA withdrawals is printed.
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.
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?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Oregon tax HSA contributions?.
What Oregon does with 401(k) and IRA withdrawals
Publication OR-17 lists “Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]” as retirement income. The only retirement subtraction it describes is for federal pension income: a filer can “subtract 100 percent of the taxable federal pension income” if all federal service was before October 1, 1991, and none if none was.
| Item | What the documents say |
|---|---|
| Treatment | Taxable; the printed subtraction is for federal pensions by service date |
| State rates | 4.75%, 6.75%, 8.75% and 9.9%; 9.9% over $125,000 (single) or $250,000 (joint) on 2025 |
| Source | Oregon Department of Revenue, Publication OR-17 and 2025 OR-40 instructions; ORS chapter 316 |
A $40,000 withdrawal
All $40,000 of a traditional withdrawal is part of Oregon income. The tax it adds depends on your other income: the schedule starts at 4.75% and the top rate is 9.9%.
Top bracket
On the 2025 OR-40 chart, for taxable income over $125,000, “your tax is $10,627 plus 9.9% of excess over $125,000”.
What changes in 2026
The documents read print no 2026 rate or rule change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Oregon taxes pensions, how Oregon taxes retirement income, whether Oregon taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Publication OR-17, 2025 Oregon Individual Income Tax Guide (Rev. 01-29-26): https://www.oregon.gov/dor/forms/FormsPubs/publication-or-17_101-431_2025.pdf
- 2025 Form OR-40 Instructions (Rev. 01-29-26): https://www.oregon.gov/dor/forms/FormsPubs/form-or-40-inst_101-040-1_2025.pdf
- Oregon Revised Statutes Chapter 316 (incl. ORS 316.680 subtractions): https://www.oregonlegislature.gov/bills_laws/ors/ors316.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.