Updated October 5, 2026. Quick answer: Yes. Oregon taxes trust income on a 2025 graduated schedule that runs from 4.75% to 9.9%, and a resident trust is one whose fiduciary is an Oregon resident or whose administration is carried on in Oregon.
How Oregon treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Oregon taxes the income of resident trusts and of nonresident trusts with Oregon source income, and the 2025 instructions require a fiduciary return from resident estates or trusts required to file a federal Form 1041 or 990-T. |
| Who counts as a resident trust | The Department of Revenue ties residency to the trustee and the place of administration, stating that “A trust is a resident if the trustee is an Oregon” resident or if the trust administration is in Oregon. |
| Statutory definition | ORS 316.282 defines a resident trust, other than a qualified funeral trust, as one whose fiduciary is a resident of Oregon or whose administration is carried on in Oregon. |
| Rate on trust income | The 2025 rate schedule printed on Form OR-41 is graduated from 4.75% to 9.9%, and the top bracket reads “$10,627 plus 9.9% of the excess over $125,000”. The documents read do not print a separate trust rate. |
| Distribution deduction | Form OR-41 allows a distribution deduction on line 2, and the instructions direct the fiduciary to “Enter the amount from federal Form 1041, Schedule B, line 15” plus Oregon Schedule 1, line 6. |
| Nonresident trusts | A nonresident trust is taxed only on Oregon source income, since Oregon “taxes only Oregon-source income received by the estate” or trust. |
| Return to file | The fiduciary files Form OR-41, and a nonresident trust must file once it has federal gross income of $600 or more from Oregon sources for the tax year. |
| Part-year resident trusts | A trust whose trustee moves in or out of Oregon during the year is split: Oregon taxes gross income from all sources for the part of the year the trust was an Oregon resident, and Oregon source income only while it was a nonresident. |
A $10,000 example
The tax on $10,000 of taxable income a trust keeps depends on the bracket it lands in. Taxed wholly at the lowest printed rate, 4.75%, the tax is computed as $10,000 x 4.75% = $475; taxed wholly at the highest, 9.9%, it is computed as $10,000 x 9.9% = $990. The state’s own schedule decides which applies. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Oregon taxes retirement income, whether Oregon taxes pensions, what a living trust costs in Oregon, and federal trust tax brackets.
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Answer againSources
- 2025 Form OR-41 Instructions, Fiduciary Income Tax (Oregon Department of Revenue): https://www.oregon.gov/dor/forms/FormsPubs/form-or-41-instr_101-041-1_2025.pdf
- 2025 Form OR-41, Oregon Fiduciary Income Tax Return (Oregon Department of Revenue): https://www.oregon.gov/dor/forms/FormsPubs/form-or-41_101-041_2025.pdf
- ORS Chapter 316, Personal Income Tax, including ORS 316.282 (Oregon Legislature): https://www.oregonlegislature.gov/bills_laws/ors/ors316.html
Sources: the primary documents linked above, read on October 5, 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.