Oregon Property Tax Rates: Caps, Compression, and Exemptions

Oregon property tax rates produce an effective statewide bill of roughly 0.8% of a home’s market value, kept there by two constitutional limits: operating taxes cannot exceed $15 per $1,000 of real market value, and the taxable (assessed) value of your home can grow no more than 3% per year. The nominal rates charged by your local districts are higher than that 0.8% suggests, but the gap between market value and assessed value, combined with the rate caps, pulls most bills down.

How Your Assessed Value Is Set

Tax rates apply to assessed value, not to what your house would sell for. Under Measure 50, which amended the Oregon Constitution in 1997, the county assessor tracks two numbers for every property: real market value (what it would fetch on the open market) and maximum assessed value (a formulaic cap that grows slowly). Your assessed value is whichever is lower.

The maximum assessed value cannot rise more than 3% a year under normal circumstances.¹ When market prices climb faster than that, a gap opens between what your home is worth and what it is taxed on. A home worth $500,000 on the open market might have an assessed value of $300,000 or less. That gap is the main reason effective rates in Oregon stay modest even where nominal district rates look high.

The 3% cap resets in several situations. New construction, major remodeling, subdivisions, and rezoning all trigger a recalculation that values the new or improved portion at current market ratios rather than the old capped figure.¹ Add a bedroom or convert a garage into living space, and the assessed value jumps by more than the usual 3% because the improvement gets priced at current levels. Buyers of newly built homes feel this hardest: there is no legacy cap, so the assessed value starts at or near full market value.

The $5 and $10 Constitutional Rate Caps

Article XI, Section 11b of the Oregon Constitution splits every property tax dollar into two buckets and puts a ceiling on each. Taxes funding the public school system cannot exceed $5 per $1,000 of real market value. Taxes funding all other government operations cannot exceed $10 per $1,000.² Together, that is a hard $15 ceiling on operating taxes.

Voter-approved bonds for capital construction sit outside those limits. When a school district passes a bond to build a new school, the debt service on that bond is not counted against the $5 cap.² The same applies to general government bonds. So while operating taxes are capped, bond levies can push your total bill above $15 per $1,000.

Compression: When the Caps Cut Your Bill

If the combined rates from every district taxing your property push past a Measure 5 cap, the assessor applies something called compression. Education operating taxes are totaled and compared to the $5 limit. Over the limit, local option levies in that category get cut first. If zeroing those out still leaves the total above the cap, remaining taxes in the category are reduced proportionally.³ The same process runs separately against the $10 general government cap.

Because the Measure 5 limits are based on real market value while your taxes are calculated on assessed value, the gap between the two acts as a buffer. A large gap means compression is unlikely to touch your bill. A small gap, common with newer homes or recently improved properties, makes compression more likely to reduce what you owe.³ Nothing is required of you; the reduced amount appears on your tax statement.

Why Two Similar Homes Pay Different Rates

Your total rate is the sum of rates from every taxing district covering your address: county, city, school district, community college, fire district, library district, and any other special districts. Each district has a permanent rate established under Measure 50 that neither the district’s governing body nor its voters can increase.⁴

When a permanent rate doesn’t raise enough revenue, the district can ask voters for a local option levy. Operating levies run up to five years. Capital project levies run up to ten years or the useful life of the project, whichever is shorter.⁴ Because local option levies get compressed first, they carry more risk than permanent rates.

This layered structure is why two homes with similar market values can have noticeably different bills. A home inside city limits with a local parks levy and a library district faces a higher combined rate than a home just outside the city boundary covered by fewer districts. Your county assessor’s website lists which districts tax your address, and that lookup is the fastest way to understand your actual rate.

Payment Dates, Discounts, and Late Interest

Oregon splits the annual bill into three installments:

November 15: first installment due
February 15: second installment due
May 15: final installment due

Paying the full year by November 15 earns a 3% discount. Paying two-thirds by that date earns a 2% discount on the amount paid.⁵ On a $4,000 bill, the 3% discount saves $120. To qualify for either discount, you must first clear any delinquent taxes, penalties, and interest from prior years.⁶

Miss a deadline and interest runs at 1.333% per month, roughly 16% a year, on the unpaid balance. That makes property tax one of the most expensive debts a homeowner can carry. Interest on the first installment begins accruing December 15 if unpaid, giving a one-month grace window after November 15. If your total bill is under $40, installments are not allowed; the full amount is due November 15.⁵

Exemptions and Deferrals That Can Lower Your Bill

Disabled Veteran Exemption

Oregon reduces the assessed value of a disabled veteran’s home directly. For the 2026 tax year, the exemption removes either $27,092 or $32,512 from your homestead’s assessed value, depending on the nature and severity of your disability.⁷ The amounts adjust annually for inflation.

Eligibility requires a disability rating of at least 40%, certified by the U.S. Department of Veterans Affairs, a branch of the Armed Forces, or a licensed physician. Service-connected disability qualifies for the higher amount. A non-service-connected disability of 40% or more qualifies for the lower amount, but only if total gross income (including VA payments) stays within 185% of federal poverty guidelines. Surviving spouses and registered domestic partners of qualifying veterans can also claim it. You must file a claim with your county assessor; the reduction is not automatic.⁸

Senior and Disabled Deferral

Oregon’s deferral program lets qualifying homeowners postpone property tax payments indefinitely. The state pays your taxes to the county each November and places a lien on the home. When you sell, move out permanently, or pass away, the deferred taxes plus 6% annual interest come due.⁹

To qualify for the 2026 tax year you must be at least 62 or have a qualifying disability, have household income in 2025 of $70,000 or less, and have a net worth below $500,000 (excluding the home itself, life insurance cash values, and personal property like vehicles and furniture).¹⁰ The income limit catches many applicants off guard because it counts the income of everyone living in the home. The 6% deferral interest is well below the 16% delinquency rate, which makes deferral a much better option than simply skipping payments if you qualify.

No General Homestead Exemption

Unlike many states, Oregon offers no broad homestead exemption that reduces property taxes for all owner-occupied homes. A narrow homestead exemption under ORS 307.286 exists only for active-duty military members deployed to qualifying service. For other owner-occupants, the 3% assessed value cap and the Measure 5 rate limits do the protective work the system provides.

Challenging an Assessment That Looks Too High

If your assessed value or real market value seems off, you can petition the county Board of Property Tax Appeals (called the Property Value Appeals Board in some counties). Petitions must be filed between the date your tax statement is mailed and December 31 of that year.¹¹ Because statements typically arrive in late October, that is a two- to three-month window.

The petition must be in writing, signed under oath, and explain the facts supporting your claim that the value is wrong. If you request a hearing, the board must give at least five days’ written notice. You do not need a lawyer; Oregon law lets property owners represent themselves.¹¹ Comparable sales data and evidence of condition problems that reduce value are the useful things to bring.

1
FindLaw. Oregon Constitution Art XI Section 11
2
Oregon State Legislature. Oregon Constitution Article XI Section 11b
3
Oregon Department of Revenue. Property Assessment and Taxation
4
Oregon State Legislature. The New Property Tax System
5
Oregon Public Law. Oregon Code ORS 311.505 – Due Dates; Interest on Late Payments
6
Oregon Department of Revenue. Property Tax Payment Procedure
7
Oregon Department of Revenue. Disabled Veteran or Surviving Spouse Property Tax Exemption
8
Oregon Public Law. Oregon Revised Statutes ORS 307.250 – Property of Veterans or Surviving Spouses
9
Oregon Public Law. Oregon Code ORS 311.668 – Eligibility of Individuals by Age or Disability
10
Clackamas County. Property Tax Deferral for Disabled and Senior Citizens
11
Oregon Public Law. Oregon Code ORS 309.100 – Petitions for Reduction of Property Value; Filing