No, Oregon does not tax Social Security benefits. Under ORS 316.054, any Social Security or Tier 1 railroad retirement income that shows up in your federal adjusted gross income is subtracted before Oregon calculates your state tax, no matter how high your income is or how large your monthly benefit is.1Oregon State Legislature. Oregon Revised Statute Chapter 316 – Personal Income Tax
How the Subtraction Works on Your Return
Oregon starts its income tax calculation from your federal adjusted gross income. If a portion of your Social Security was taxable federally, that amount initially flows into your Oregon numbers. The state then removes it entirely through a subtraction you claim on Schedule OR-ASC, or Schedule OR-ASC-NP if you file as a part-year resident or nonresident.2Oregon Department of Revenue. Publication OR-17, Oregon Individual Income Tax Guide
The subtraction isn’t automatic. You have to report it. If you prepare your own return, make sure the Social Security line on the Oregon schedule matches the taxable Social Security amount from your federal return.
Federal Tax on Social Security Still Applies
Oregon’s exemption only governs state tax. The federal government may still tax part of your benefits based on your “combined income,” which is your adjusted gross income plus any nontaxable interest plus half of your Social Security.
For single filers, combined income between $25,000 and $34,000 makes up to 50% of benefits taxable; above $34,000, up to 85% can be taxed. For married couples filing jointly, the thresholds are $32,000 and $44,000.3IRS. IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable These thresholds have never been adjusted for inflation. So if you also draw a pension, take IRA distributions, or earn part-time wages, the federal bill on your benefits is real even though Oregon won’t add to it.
What Oregon Does Tax in Retirement
Most other retirement income is fully taxable in Oregon. Distributions from pensions, 401(k) plans, traditional IRAs, and deferred compensation are taxed at the state’s regular income tax rates, which run from 4.75% to 9.9%.4Oregon Department of Revenue. Personal Income Tax Oregon PERS pension payments, OPSRP pension payments, and Individual Account Program distributions are taxable to Oregon residents, and have Oregon tax withheld by default.
There is a narrow subtraction for federal government pensions covering service performed before October 1, 1991. The subtractable share equals your pension income times the ratio of pre-October 1991 months of federal service to your total months of federal service.1Oregon State Legislature. Oregon Revised Statute Chapter 316 – Personal Income Tax
Credits and Subtractions That May Still Help You
Retirement Income Credit
Oregon offers a credit for taxpayers age 62 or older who receive taxable retirement income. The credit equals 9% of the lesser of your retirement income or a base amount reduced by your Social Security benefits and by household income over a limit.5Cornell Law School. Oregon Admin Code 150-316-0225 – Retirement Income Credit
The base is $15,000 for joint filers and $7,500 for other filers. From that base, you subtract your Social Security benefits dollar-for-dollar, then subtract any household income above $30,000 (joint) or $15,000 (other). Social Security itself doesn’t count toward the household income figure for this test.
As a worked example: a married couple with $8,000 in taxable retirement income, $4,000 in Social Security, and $31,000 in other household income starts with the $15,000 base, drops $4,000 for Social Security, then drops $1,000 for income over $30,000, leaving $10,000. The credit is 9% of the lesser of $10,000 or $8,000, which is $720.5Cornell Law School. Oregon Admin Code 150-316-0225 – Retirement Income Credit The credit phases out at higher incomes, so it mainly reaches retirees with modest resources.
Medical Expense Subtraction at Age 66
If you are 66 or older, Oregon lets you subtract certain unreimbursed medical and dental expenses from state taxable income, independent of any federal medical deduction. The cap is $1,800 per qualifying person, or $3,600 on a joint return where both spouses qualify.6Oregon State Legislature. Oregon Code 316 – Section 316.693
The cap tightens as income rises. Joint filers with federal AGI between $50,000 and $100,000, or other filers between $25,000 and $50,000, are capped at $1,400 per person. Joint filers between $100,000 and $200,000, or other filers between $50,000 and $100,000, are capped at $1,000 per person. Joint filers above $200,000, or other filers above $100,000, cannot claim the subtraction.6Oregon State Legislature. Oregon Code 316 – Section 316.693 Expenses already deducted elsewhere on the Oregon return don’t count twice.
Property Tax Deferral for Older Homeowners
Homeowners 62 or older can apply to have the state pay their county property taxes each November. The deferred amount accrues 6% simple interest, and the state records a lien on the property. You repay the balance when the home is sold, title changes, or you permanently move out for non-medical reasons.7Oregon Department of Revenue. Oregon Property Tax Deferral for Disabled and Senior Homeowners Program
For 2026, household income (including all taxable and nontaxable income from the prior calendar year) must be $70,000 or less, and the home must have a real market value of at least $301,000.7Oregon Department of Revenue. Oregon Property Tax Deferral for Disabled and Senior Homeowners Program Applications filed after April 15 incur a late fee between $20 and $180. This is deferral, not forgiveness, but it can preserve cash flow on a fixed income.
Do You Still Need to File in Oregon?
Social Security being exempt doesn’t automatically excuse you from filing. For tax year 2025, a single filer 65 or older must file an Oregon return if gross income exceeds $9,135. A joint return where one spouse is 65 or older must be filed if gross income exceeds $16,865; where both spouses are 65 or older, the threshold is $17,865.8Oregon Department of Revenue. Do I Need to File? Thresholds for 2026 had not been published at the time of writing but typically adjust modestly each year.
One wrinkle worth catching: Social Security benefits that Oregon exempts from tax still count as gross income when deciding whether you have to file. And even when you don’t technically owe anything, filing can be worthwhile if a refundable credit or the retirement income credit would put money back in your pocket.