Retiring in Oregon: Financial Insights, Pros and Cons
By Vanessa DeHaan
Oregon has much to offer people approaching and living in retirement, especially those seeking an active, outdoorsy lifestyle. There’s always something to see and do, from taking in the area’s diverse landscapes to attending a cultural event or visiting the latest restaurant. While the cost of living is higher than in other parts of the U.S., it’s relatively affordable compared to neighboring states. Let’s explore the financial benefits and drawbacks of choosing Oregon as your retirement home.
Advantages of Retiring in Oregon
Hiking trails, cycling routes, fishing spots and camping areas abound throughout the state, offering endless opportunities for outdoor recreation. It’s also easy to plug into a social network, as many communities foster strong social connections through farmers’ markets, community gardens and a plethora of volunteer opportunities.
A study by Mayo clinic revealed that people who stay active and feel socially connected tend to stay healthier and live longer than their peers. But if you do need medical care, Oregon is home to excellent health care facilities, including Oregon Health and Science University, a leading academic medical center. Plus, major health care systems provide comprehensive care options for retirees with various medical needs.
Oregon Tax Breaks
Oregon retirees enjoy several notable tax advantages. Unlike most states, Oregon doesn’t impose a sales tax on purchases, a benefit that’s particularly valuable for residents on fixed incomes. Social Security benefits are also exempt from Oregon state income tax.
Oregon Surplus Refund
Retirees are often pleasantly surprised to find they may qualify for a special tax credit. Known as the “kicker” credit, this is a surplus refund system that returns excess revenue to taxpayers during odd-numbered years and can provide an unexpected financial “bonus” for Oregon residents.
Unique Oregon Tax Credits
Residents who are charitably inclined can also take advantage of unique tax credit opportunities. Through the Oregon Individual Development Account (IDA) Initiative, donors can help low-income residents build financial stability. In return, donors receive a 90% state tax credit, with the remaining 10% potentially deductible on their federal tax return.
If supporting research is more your thing, residents can donate to the University Venture Development Fund to support innovation at Oregon universities. Donors to the fund can receive a 60% state tax credit (up to $600,000 annually) and possibly deduct the remaining 40% on their federal taxes.
Property Tax Deferral
Homeowners who are 62 and older and meet certain income requirements can also take advantage of a property tax deferral program. This program allows eligible seniors to take a loan from the state of Oregon to pay their property taxes. One thing to keep in mind: The loan accrues interest and must be repaid when the property changes ownership.
Things to Consider Before Retiring in Oregon
Although Oregon offers many opportunities for outdoor activities, the rain can frequently wash out plans. The climate isn’t ideal for everyone, especially those accustomed to sunnier environments.
Cost of Living
A higher cost of living can also dampen retirees’ enthusiasm for living in Oregon, which ranked 10th on the list of most expensive states in 2024. (Neighbors California and Washington ranked #3 and #8, respectively.) Oregon also came in 31st on the list for disposable income, as housing, utilities and groceries tend to be more expensive than the national average.
Income Taxes
Taxes can also be a big expense for retirees. Oregon maintains a graduated personal income tax system, with rates ranging from 4.75% to 9.9%. The highest rate applies to single taxpayers with over $125,000 of taxable income and joint filers with over $250,000.
Residents also pay these tax rates on investment income. And while social Security benefits are not taxed by the state, retirement account withdrawals and pension payments remain fully taxable.
Local Taxes
Certain areas of the state impose local income taxes. For example, residents in the Portland area whose incomes exceed certain thresholds ($125,000 for individuals and $200,000 for joint filers) may be subject to 1.0-2.5% of additional personal income tax on income exceeding those thresholds.
Estate Taxes
Retirees who plan to live out their later years in Oregon should also consider the state’s estate tax rules. Oregon has the lowest estate tax exemption in the U.S., as estates with $1 million or more are subject to estate tax rates between 10% and 16%. It’s a good idea to consult with qualified professionals to find strategies for reducing your future estate tax liability, especially if you have substantial assets or are married. (Oregon’s $1 million exemption isn’t automatically portable between spouses.)
Summary
Your retirement decision should balance lifestyle preferences with financial realities. Consider consulting with a financial professional who understands Oregon’s specific tax landscape and can help analyze how these factors might impact your retirement plan. To find a licensed CPA, visit the AICPA directory or the Oregon Society of CPAs website. Or click here to get assistance from a CERTIFIED FINANCIAL PLANNER™ professional near you.
About the Author: Vanessa DeHaan, CPA, CFP
Vanessa DeHaan is a lead financial adviser at Vista Capital Partners in Portland, Oregon. She graduated from Loyola University Chicago with a degree in accounting, finance, and mathematics. She has obtained the CERTIFIED FINANCIAL PLANNER™ certification and is also a Certified Public Accountant. She has been featured in the Oregon Society of CPAs magazine.
