Updated October 16, 2026. Quick answer: Yes, unless you opt out. Under ORS 316.189 the payer of a periodic pension payment must withhold as if it were wages unless you elect none, and with no current form on file the last-resort default is eight percent, after any older Oregon W-4 or pre-2022 federal W-4P.
Oregon pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | Yes, unless you elect no withholding (a federal no-withholding election also opts you out of Oregon withholding unless you tell the payer otherwise) |
| Default rate if you give the payer no form | With no Form OR-W-4 on file the payer uses an Oregon-only W-4 from before 2020 or a federal W-4P from before 2022, and failing those withholds eight percent of your wages or other income subject to withholding |
| Lump sum or one-time payment | A nonperiodic distribution is withheld in an amount the Department determines, never more than 10 percent, and not at all if no federal withholding applies |
| Form to start, change or stop it | Form OR-W-4 (2026 instructions Rev. 02-17-26), given to the payer |
| Changed for 2026? | No pension-specific change stated |
What the Oregon documents say
The statute says “The payer of any periodic payment shall withhold from the payment” unless the individual elects no withholding. The Department of Revenue’s instructions add that if you opt out of federal withholding on your pension, “you’re automatically opted out of Oregon withholding also”.
If you have no Form OR-W-4, the instructions say the default is “Eight percent of your wages or other income subject to withholding”.
For one-time payments the statute says “The payer of any nonperiodic distribution shall withhold from the distribution” in an amount the Department determines, and no more than 10 percent of the distribution. A written notice to the payer revokes an election of no withholding.
What the printed rate means in dollars
For a pension of $2,000 a month with no Form OR-W-4 or earlier W-4 on file: 8% of $2,000 is $160 (computed as $2,000 times 8%).
These are illustrations of the rate the state document prints, not a prediction of how your payer will calculate or what you will owe at filing.
What a mover should know
This page is about Oregon as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it, state tax withholding on IRA and 401(k) withdrawals in Oregon covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The 2026 instructions publish no separate lump-sum rate beyond the 10 percent cap in the statute, and describe no pension-specific change for 2026.
Common mistakes
- Giving the payer a federal W-4P and assuming it also settles the state; check whether the state’s own form is needed.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state tax withholding on IRA and 401(k) withdrawals in Oregon, Oregon retirement taxes, whether Oregon taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- Oregon Revised Statutes Chapter 316, section 316.189 Withholding of state income taxes from certain periodic payments: https://www.oregonlegislature.gov/bills_laws/ors/ors316.html
- 2026 Form OR-W-4 Instructions (150-101-402-1, Rev. 02-17-26): https://www.oregon.gov/dor/forms/FormsPubs/form-or-W-4-instr_101-402-1_2026.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 16, 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.