Updated October 7, 2026. Quick answer: Generally no, if you qualify for the federal exclusion. Oregon’s policy is to “Make the Oregon personal income tax law identical in effect” to the federal measure of taxable income, and the nonresident sale form treats gain “is excludable from federal tax under IRC Section 121” as excluded. Gain above it is taxed at graduated rates up to 9.9%.
Oregon tax on home sale profit at a glance
| Item | What the documents say |
|---|---|
| Profit on your main home | Follows the federal exclusion: the statute makes Oregon law identical in effect to the federal measure, and Form OR-18-WC excuses gain excludable under section 121 |
| Rate on gain above the exclusion | Graduated: 4.75% on the first $2,000 rising to 9.9% over $125,000 (single, 2025) |
| Collected at the sale | Nonresident sellers only: the least of 4 percent of the sales price, net proceeds, or 8 percent of the Oregon-includable gain withheld; none if the entire gain is excludable under section 121. Washington County also charges a transfer tax of one dollar per thousand dollars of the selling price |
| Source | Oregon Legislature; Oregon Department of Revenue |
What the Oregon documents say
ORS 316.007 states the policy to “Make the Oregon personal income tax law identical in effect” to the federal Internal Revenue Code’s measurement of taxable income, and the 2025 Form OR-40 starts from federal adjusted gross income. The OR-18-WC instructions treat gain that “is excludable from federal tax under IRC Section 121” as excluded. No Oregon document read says in one line that Oregon follows the exclusion; the answer is reasoned from the statute and that form.
ORS 316.037 prints the rates, starting at “Not over $2,000 4.75% of taxable income”. The 2025 instructions’ top single bracket reads “your tax is $10,627 plus 9.9% of excess over $125,000”.
What the federal exclusion requires
Most state answers start here. The statute says “Gross income shall not include gain from the sale or exchange” of property that, during the five years before the sale, you owned and used as your principal residence for periods adding up to two years or more. The limit is “shall not exceed $250,000”, or $500,000 for a husband and wife who make a joint return and meet the statute’s conditions. See CMG’s home sale taxes page and exclusion calculator.
A worked example at a $400,000 gain
An illustration, not a return: a married couple in Oregon sells their main home with a gain of $400,000 and meets the federal ownership and use tests. The gain is below the $500,000 joint exclusion, so it is not in federal adjusted gross income and, on the documents read, $0 is taxed by Oregon. As a second illustration, computed below, suppose the gain were $600,000. The amount above the exclusion would then be $100,000, which is taxed at Oregon’s graduated rates; this page computes no tax because the bracket depends on the rest of the return.
What is collected at the sale
ORS 314.258 requires escrow agents to withhold from a nonresident transferor: “Four percent of the consideration for the conveyance”, the net proceeds, or “Eight percent of the gain that is includable in Oregon taxable income”, whichever is least. The OR-18-WC instructions say no withholding is required when the seller gives written assurance that the gain is excludable under section 121. These rules apply to nonresident transferors, not Oregon-resident sellers.
Washington County, Oregon, charges a transfer tax on a sale. Its Assessment and Taxation page says “The tax is one dollar per thousand dollars of the selling price.” and “Liability for the tax is between the purchaser and seller.” Other Oregon counties were not read.
What changes in 2026
The documents read for Oregon announce no change for 2026 that is specific to the tax on a home sale. The forms and instructions read are for tax year 2025 or the newest page archived; check the state agency for 2026 forms when they are published.
What the documents do not say
- No single Oregon document says in one line that Oregon follows the exclusion for residents; the answer is reasoned from the policy statute and the OR-18-WC form. The brackets read are for 2025 and the OR-18-WC instructions for 2024. No 2026 change is printed in the documents read.
Common mistakes
- Treating the OR-18-WC withholding as a rule for Oregon residents; it applies to nonresident transferors.
- Applying the top rate to the whole gain; the 9.9% rate applies only above $125,000 of taxable income in the single chart.
- Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the sale.
Related: home sale taxes, state tax on home sale profit, how Oregon taxes capital gains, Oregon retirement taxes, and home sale exclusion calculator.
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Answer againSources
- ORS Chapter 316 Personal Income Tax: https://www.oregonlegislature.gov/bills_laws/ors/ors316.html
- ORS Chapter 314 Income Taxes Generally: https://www.oregonlegislature.gov/bills_laws/ors/ors314.html
- 2024 Form OR-18-WC Instructions: Report of Tax Payment or Written Affirmation for Oregon Real Property Conveyance: https://www.oregon.gov/dor/forms/FormsPubs/form-or-18-wc-instructions_101-284-1_2024.pdf
- 2025 Form OR-40 Instructions (150-101-040-1): https://www.oregon.gov/dor/forms/FormsPubs/form-or-40-inst_101-040-1_2025.pdf
- 26 U.S.C. 121, Exclusion of gain from sale of principal residence (U.S. Code, GovInfo): https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partIII-sec121.htm
- Transfer Tax, Washington County Assessment and Taxation (read October 8, 2026): http://www.washingtoncountyor.gov/at/recording/transfer-tax-exemption
Sources: the primary documents linked above, read on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.