Northwest living offers green landscapes, mountains, beaches, and plenty of outdoor fun. Living in Oregon or Washington, two of these beautiful northwest states, bring very different financial planning considerations. This financial guide to the northwest outlines some of the key factors that impact optimizing after tax investment returns, life transitions, and saving for college.
1. Taxes
Whether you live in Oregon, Washington, or across the country, the same federal tax structure applies to you and needs to be considered in your financial plan. What is different based on the state you live in is your state and local taxes. Some of the differences in these taxes for Oregon and Washington residents are detailed below.
a. Income Tax
Oregon has a progressive income tax system with rates ranging from 4.75% to 9.9%. The highest bracket applies to incomes of $125,000 or more for single filers and $250,000 or more for joint filers and is one of the highest rates in the nation. Oregon capital gains are taxed at the normal personal income rates, an important consideration in managing after tax investment returns. One caveat to Oregon state income tax rates is that the legislature created a “kicker” in 1979 that returns taxes paid to taxpayers when the total revenue collected in a biennium exceeds the official revenue projection for that biennium by more than 2%. In this event, all the surplus revenue is returned to taxpayers. Over a long period of time, this reduces the effective income tax rate paid in the state.
The state of Washington, on the contrary, does not have a state income tax. There is no income tax on wages, salaries, or investment income at the state level. Relative to Oregon, this reduces the combined federal plus state marginal tax rate for Washington residents and is an important consideration in investment decisions such as realizing capital gains and the types of investment vehicles that optimize after tax returns. Effective in 2022, Washington implemented a 7% tax on an individual’s adjusted long-term capital gains that are allocated to Washington, with some exceptions such as real estate. This tax does not apply if an individual’s long-term gains are exempt or below the standard deduction of $250,000. Washington was also the first state in the nation to develop a long-term care payroll tax to help fund a long-term care program. The Washington Cares Fund is being funded with a 0.58% payroll tax on all employee wages beginning July 1, 2023.
b. Sales Tax
While Oregon’s income tax rate is one of the highest in the nation, it is one of the few states including Alaska, Delaware, Montana, and New Hampshire that do not have a sales tax. If you live in Washington near the border with Oregon, this is a great way to save.
For Washington residents, the situation is the opposite. There is no income tax, but the base rate for sales tax in the state is 6.5%. When you add on local sales tax rates, it can reach as high as 10.5%. The positive is that you have some control over this tax. Shopping in Oregon or spending carefully will help add significant savings over time.
c. Property and Local Taxes
Both Oregon and Washington residents pay property taxes.
In Oregon, there are 1,200 local taxing districts, with property tax rates varying between each one. Tax collections are managed primarily by the 36 counties in Oregon, which assess property and calculate taxes owed. Revenue from the property tax typically goes to support local services such as schools and law enforcement. While the rate varies, statewide, the average effective property tax rate (annual property taxes as a percentage of home value) is 0.86%. This is the 26th-highest rate in the country. Because of the inherently local nature of property tax collections in Oregon, rates vary significantly between counties. The lowest rate can be found in Curry County (median rate of 0.48%) and the highest rate is in Umatilla County and has gone as high as 1.35%.
Similarly, in Washington, property tax rates vary considerably. If you’re thinking about buying a house amidst one of Washington’s beautiful landscapes, you’ll want to take the cost of local property taxes into account. Effective property tax rates (property taxes as a percentage of total home value) in Washington generally hover around 1%. This is slightly higher than the average rate in Oregon and the national average of 0.90%. At the county level, effective rates in Washington range from 0.59% in San Juan County up to 0.98% in Pierce County.
There is also a statewide tax on real estate sales in Washington. This tax, officially called the real estate excise tax (REET), is equal to a specific percentage of the price of the home being sold, and it is typically paid by the seller. The rates range from 1.1% to 3% on home sales above $3 million. Cities also have the option to levy an additional 0.25% tax on property sales.
In addition to the wide range of property tax rates levied by individual counties, cities and counties may add to the tax burden with additional levies that should be considered in financial planning and even deciding where to live. For example, Multnomah County in Oregon voted in a Preschool for All tax to be paid by residents of the county starting in 2021. The tax rates range from 1.5% to 3% on incomes over $125,000 and $250,00, respectively. This rate is set to increase by 0.8% in 2026. Residents of the surrounding counties of Clackamas and Washington do not share this tax burden.
With major cities on either side of the Oregon and Washington border and different tax structures between the two states, the “commuter tax” may impact you if you live in Washington and work in Oregon, and we advise individuals to consult a tax advisor to be sure. If you commute to Oregon for work, you owe income tax in the state even if you live in Washington. If you work remotely for an Oregon company, however, you do not have to pay the extra income tax.
2. Life Transitions
A related, and important topic is the tax and legal structure in each state around life’s important transitions. Whether you are getting married or divorced or planning for your heirs, where you live can impact your financial planning.
a. Estate Planning
Planning for your estate can be a difficult topic to think about as you are busy living life, but where you live can significantly impact the assets available for the legacy you choose. Oregon and Washington are both on the short list of states that have estate taxes.
Oregon has one of the highest estate tax rates in the country and the lowest estate tax exemption threshold at $1 million. Beyond $1 million, estate taxes are charged based on the scale below. These hefty rates and the minimal exemption level are things to consider in estate planning and maybe even where you choose to live as you age.
- $1M to $1.5M = 10% tax rate
- $1.5M to $2.5M = 10.25% tax rate
- $2.5M to $3.5M = 10.5% tax rate
- $3.5M to $4.5M = 11% tax rate
- $4.5M to $5.5M = 11.5% tax rate
- $5.5M to $6.5M = 12% tax rate
- $6.5M to $7.5M = 13% tax rate
- $7.5M to $8.5M = 14% tax rate
- $8.5M to $9.5M = 15% tax rate
- Above $9.5M = 16% tax rate
Washington’s estate tax exemption is higher at $3,000,000, but the tax rates are also somewhat higher. The tax rates beyond the exclusion amount are detailed below.
- $0 to $1.0M = 10% tax rate
- $1.0M to $2.0M = 14% tax rate
- $2.0M to $3.0M = 15% tax rate
- $3.0M to $4.0M = 16% tax rate
- $4.0M to $6.0M = 18% tax rate
- $6.0M to $7.0M = 19% tax rate
- $7.0M to $9.0M = 19.5% tax rate
- $9.0M million and up = 20% tax rate
b. Getting Married or Divorced
State marital laws are important to know when you are getting married so that you can know what to expect and plan for the unexpected. In some cases, this may mean considering a prenuptial agreement to protect pre-marital assets and specify what will happen with marital assets.
Oregon is an equitable distribution state, meaning that property acquired during the marriage is to be divided fairly, but not necessarily equally, in a divorce. When it comes to divorce, the court divides the assets between the parties in a fair and equitable manner. The goal is that each spouse should emerge on equal footing and maintain a standard of living similar to what they enjoyed during the marriage.
In contrast, Washington is one of the few remaining community property states, so property and debts acquired during a marriage belong equally to both spouses. The law assumes joint ownership, regardless of who acquired a particular asset. For example, if you buy a house, even if only one name appears on the title, it belongs to both spouses. Therefore, in a divorce, all assets are available for division.
3. College: 529 Plans
Oregon and Washington both offer 529 plans that are designed to help families save for education expenses. However, there are some significant differences between the two plans as outlined below.
a. Oregon Plan
Oregon’s plan is called the Oregon College Savings Plan.
State Tax Benefit: Oregon residents get a state income tax credit of $180 for single filers and $360 for joint filers per year. Your income determines the amount you must contribute to get this credit. This is a benefit to Oregon residents.
Contribution Limit: Contributions are limited to a maximum account value of $500,000.
Investment Options: Oregon’s plan offers all-in-one diversified portfolios that automatically more to more conservative investments as the beneficiary approaches the targeted year of college enrollment. Alternatively, they offer static portfolios to select from.
Fees: The fees, including fund fees and the state administrative fee, range from 20-65 basis points depending on which investment portfolio has been selected, but typically the fee has an average of 0.28% of the invested assets per year.
b. Washington Plan
Washington has two education savings plans, WA529GET and WA529INVEST. The GET plan is a prepaid tuition plan and the state chooses the investments and assumes the investment risks. Account values for the GET program are measured in units and each 100 units equals the cost of one year of resident, undergraduate tuition, and state-mandated fees at Washington’s highest-priced public university. The INVEST plan is a traditional college savings plan in which the account holder chooses the investments and assumes the investment risks. The value of the account is based upon the performance of the investments, whereas the GET plan has a guaranteed value by the state to keep pace with tuition and fees at the most expensive Washington public university.
State Tax Benefit: Unlike Oregon’s, Washington’s plan does not offer a state income tax deduction for contributions for Washington residents.
Contribution Limit: Contributions are limited to a maximum account value of $500,000 for the Oregon College Savings Plan and the WA529INVEST plan. For the WA529GET plan, the contribution limit is 800 units per student.
Fees: The fee, including fund fees, service fees, and state administrative fees for the year of enrollment funds range from 25 to 38 basis points, plus a $35 annual maintenance fee per account. For the static GET portfolio program, the fees are factored into the unit purchase price.
There are many financial considerations to navigating life in Oregon and Washington. The states have different tax, estate, and marital laws to navigate, and the details outlined in this guide are a snapshot of where things stand today.
Please note that the rates and fees in this article are subject to change. This article was updated as of July 10, 2025.
