Updated October 16, 2026. Quick answer: Oregon taxes 403(b) and 457(b) withdrawals like other income when an Oregon resident receives them: Publication OR-17 says “Most retirement income is subject to Oregon tax when received by an Oregon resident” and defines retirement income to include 403(b) annuity plans and 457 plans. Its main subtraction is for federal pension income, there is a further subtraction for previously taxed contributions made while a nonresident, and the guide says Oregon does not tax a nonresident’s retirement income unless Oregon is still the person’s domicile.
More state retirement-income schedules, line by line: Oregon federal pension subtraction.
Oregon at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | Yes, OR-17 names 403(b) annuity plans and 457 plans as retirement income that is taxed |
| Do the state’s documents name these plans? | The documents read name both 403(b) and 457 plans |
| Retirement exclusion or credit | No general retirement exclusion; a subtraction for federal pension income, and a low-income retirement income credit |
| Public-employee pension rule | No state-pension exclusion was found; the subtraction is for federal pensions |
| Rate in the documents read | Progressive from 4.75% to 9.9%; 9.9% over $125,000 for single filers |
| Changed for 2026? | The documents read describe no 2026 change |
What the Oregon documents say
The OR-17 guide lists the taxed retirement income by plan type, including “Annuity plans [IRC Sections 403(a) and 403(b)]” and “Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]”. It then says a filer with a federal pension “you may subtract some or all of it from Oregon income” in the circumstances it describes.
The marginal rate table in the guide ends at “9.9% Over $125,000”.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The guide is for tax year 2025.
- The federal pension subtraction depends on months of federal service or points earned before October 1, 1991, and the guide’s subtraction section does not mention 403(b) or 457(b) distributions.
- The retirement income credit under ORS 316.157 applies only below a household income limit.
Common mistakes
- Assuming Oregon’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Oregon taxes 401(k) and IRA withdrawals, Oregon retirement taxes, whether Oregon taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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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
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
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.