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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 3630
Sponsored by Representative MANNIX
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: The Act would make it so estates would not pay estate tax for farm, forestry or fishing
interests that are owned by trusts and businesses. (Flesch Readability Score: 63.0).
Modifies exemption from the taxable estate for the value of natural resource property to ac-
commodate interests owned through a trust or business entity. Adds detail to look-back and look-
forward provisions as applicable to entities. Allows for replacement property. Applies to estates of
decedents dying on or after July 1, 2025.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to estate tax treatment of natural resource property; creating new provisions; amending
ORS 118.010 and 118.145; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 118.145 is amended to read:
118.145. (1) As used in this section:
(a) “Eligible business entity” means a business entity that is owned 100 percent by family
members or eligible entities.
(b) “Eligible entity” means an eligible business entity or an eligible trust.
(c) “Eligible trust” means a trust or subtrust whose permissible distributees are all
family members or eligible entities.
[(a)] (d) “Family member” means a person within the third degree of relation, by blood, mar-
riage, adoption, civil union or domestic partnership, to another person.
(e) “Interest in natural resource property” means:
(A) Any direct ownership interest in natural resource property;
(B) An ownership interest or beneficial interest in a business entity that owns natural
resource property, either directly or indirectly through other business entities, but only to
the extent of the value of that portion of the interest that is attributable to natural resource
property and to the associated farm business, forestry business or fishing business owned
by the decedent; or
(C) Any beneficial interest in a trust that owns natural resource property, but only to
the extent of the value of that portion of the interest that is attributable to natural resource
property and to the associated farm business, forestry business or fishing business owned
by the decedent.
[(b)] (f) “Materially participate” means to engage in the active management, as defined in sec-
tion 2032A of the Internal Revenue Code, of a farm business, forestry business or fishing business
owned by the decedent on the date of the decedent’s death. The Department of Revenue may adopt
rules to administer this section consistent with this definition.
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 206 HB3630
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[(c)] (g) “Natural resource property” has the meaning given that term in ORS 118.140.
(h) “Permissible distributee” has the meaning given that term in ORS 130.010.
(i) “Relevant business days” means those days during which a person that is engaged in
active management of natural resource property would customarily be expected to exercise
significant management activities, given the nature of the industry in which the business is
operating.
(2) An interest in natural resource property is exempt from the tax imposed under this chapter
if:
(a) The [property] interest is held by a decedent for at least five years before the death of the
decedent;
(b) During at least 75 percent of the relevant business days of each of the five calendar years
immediately prior to the date of the decedent’s death, the decedent or any family member of the
decedent materially participates in the farm business, forestry business or fishing business;
(c) The interest is transferred, as a consequence of the decedent’s death, to one or more family
members of the decedent or eligible entities [and is subsequently owned by family members of the
decedent for at least five consecutive calendar years beginning with the calendar year immediately fol-
lowing the date of the decedent’s death]; and
(d) During [at least 75 percent of the days of] each of the five calendar years immediately fol-
lowing the date of the decedent’s death, any family member of the decedent materially participates
in the farm business, forestry business or fishing business.
(3) If, after the date of death of the decedent, natural resource property previously
transferred from the decedent as a consequence of the decedent’s death:
(a) Is subsequently transferred to a family member, the property shall be deemed to have
been owned by the family member during the time that the property was held or deemed to
have been held by the transferor.
(b) Is subsequently transferred to an eligible entity, the property shall be deemed to have
been owned by the eligible entity during the time that the property was held or deemed to
have been held by the transferor.
(c) Is subsequently transferred and replaced by other property in a like-kind exchange
as provided in section 1031 of the Internal Revenue Code, or is otherwise replaced with other
property within 180 days of the transfer, the replacement property shall be deemed to have
been owned by the transferor during the time that the transferred property was held or
deemed to have been held by the transferor.
[(3)] (4) An additional tax under ORS 118.005 to 118.540 shall be imposed if:
(a) [The] An interest in natural resource property for which an exemption is allowed under this
section is, during the five calendar years following the date of the decedent’s death, subsequently
sold or otherwise transferred to a person other than a family member of the decedent or an eligible
entity;
(b) The natural resource property is held by an entity that ceases to be an eligible entity
because the permissible distributees or owners no longer consist solely of family members
and the interest is deemed sold or otherwise transferred ; or
[(b)] (c) The material participation requirement of subsection (2)(d) of this section is not met.
(5) Natural resource property may be replaced with real property or personal property
after the exemption under this section is claimed and not result in a disposition subject to
an additional tax if the replacement property is used in the operation of the farm business,
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forestry business or fishing business. Real property for which an exemption is claimed under
this section may be replaced only with real property that would otherwise qualify as natural
resource property, and that replacement must be made within one year to avoid a disposition
and additional tax, except that a replacement of property that is involuntarily converted
under section 1033 of the Internal Revenue Code must occur within two years.
[(4)] (6) The additional liability imposed under subsection [(3)] (4) of this section shall be the
amount of additional tax that would have been imposed had the transferred [property] interest been
included in the decedent’s taxable estate. The additional tax liability is the responsibility of the
owner of the property at the time of the disposition or disqualifying event and is due within
six months after the date on which the disposition or event occurs. Upon receiving notice of
a subsequent sale or other transfer of property for which an exemption has been claimed, or upon
receiving notice that the material participation requirement of subsection (2)(d) of this section has
not been met, the department shall immediately proceed to collect the additional tax.
[(5)] (7) An estate claiming the exemption under this section may not claim the credit allowed
under ORS 118.140.
[(6)] (8) The exemption allowed under this section may not exceed $15 million for the estate.
SECTION 2. ORS 118.010 is amended to read:
118.010. (1) As used in this section:
(a) “Nonresident decedent” means an individual who is domiciled outside of Oregon on the date
the individual dies.
(b) “Resident decedent” means an individual who is domiciled in Oregon on the date the indi-
vidualdies.
(2) A tax is imposed upon a transfer of the property of each:
(a) Resident decedent; and
(b) Nonresident decedent whose estate includes any interest in:
(A) Real property located in Oregon; or
(B) Tangible personal property located in Oregon.
(3) The Oregon taxable estate to be used for purposes of computing the tax imposed under this
section shall be the federal taxable estate:
(a) Increased by:
(A) The deduction for state estate, inheritance, legacy or succession taxes allowable under sec-
tion 2058 of the Internal Revenue Code; and
(B) If the decedent is a surviving spouse owning the property at death, the value of the following
property unless included in the federal taxable estate:
(i) Property for which a deduction for Oregon special marital property under ORS 118.016 was
previously allowed; or
(ii) Property for which a separate Oregon election under section 2056 or 2056A of the Internal
Revenue Code was previously allowed; and
(b) Reduced by:
(A) The value on the date of the decedent’s death of all Oregon special marital property under
ORS 118.013;
(B) The exemption allowed under ORS 118.145; and
(C) Any other applicable exclusions or deductions.
(4) The tax imposed under this section shall be calculated by applying the rates in the following
table. If the Oregon taxable estate is at least the amount in column 1, but less than the amount in
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column 2, the tax is the amount in column 3, increased by the excess above the amount in column
1 multiplied by the percentage in column 4:
_______________________________________________________________________________________
1 2 3 4
$1,000,000 $1,500,000 $0 10.0%
1,500,000 2,500,000 50,00010.25%
2,500,000 3,500,000 152,500 10.5%
3,500,000 4,500,000 257,500 11.0%
4,500,000 5,500,000 367,500 11.5%
5,500,000 6,500,000 482,500 12.0%
6,500,000 7,500,000 602,500 13.0%
7,500,000 8,500,000 732,500 14.0%
8,500,000 9,500,000 872,500 15.0%
9,500,000 1,022,500 16.0%
_______________________________________________________________________________________
(5)(a) In the case of a resident decedent owning, on the date of the decedent’s death, real
property located outside Oregon or tangible personal property located outside Oregon, the tax im-
posed under this section shall be the amount determined under subsection (4) of this section multi-
plied by a ratio.
(b) The numerator of the ratio:
(A) Shall be the sum of the value of the decedent’s real property located in Oregon, tangible
personal property located in Oregon and intangible personal property.
(B) [The numerator] May not include any intangible personal property subject to a tax imposed,
as a result of the death of the decedent, by another state or country.
(C) May not include the value of the exemption allowed under ORS 118.145.
(c) The denominator of the ratio shall be the total value of the decedent’s gross estate, less the
value of the exemption allowed under ORS 118.145 .
(6) In the case of a nonresident decedent owning, on the date of the decedent’s death, real
property located in Oregon or tangible personal property located in Oregon, the tax imposed under
this section shall be the amount determined under subsection (4) of this section multiplied by a ratio.
The numerator of the ratio shall be the sum of the value of the decedent’s real property located in
Oregon and tangible personal property located in Oregon, less the value of the exemption allowed
under ORS 118.145. The denominator shall be the total value of the decedent’s gross estate, less
the value of the exemption allowed under ORS 118.145 .
(7) Payment, in whole or in part, of estate taxes from funds of an estate or trust on any benefit
subject to tax under ORS 118.005 to 118.540 is not to be considered a further taxable benefit, when
such payment is directed by the decedent’s will or by a trust agreement.
(8)(a) If the federal taxable estate is determined by making an election under section 2031(c),
2032, 2032A, 2056 or 2056A of the Internal Revenue Code or another provision of the Internal Re-
venue Code, or if a federal estate tax return is not required under the Internal Revenue Code, an
executor may make separate elections for state estate tax purposes under that same provision.
(b) An executor may make elections under ORS 118.013, 118.140 and 118.145 and section 2056
of the Internal Revenue Code for state estate tax purposes.
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(c) Elections described in this subsection are irrevocable.
SECTION 3. The amendments to ORS 118.010 and 118.145 by sections 1 and 2 of this 2025
Act apply to estates of decedents dying on or after July 1, 2025.
SECTION 4.This 2025 Act takes effect on the 91st day after the date on which the 2025
regular session of the Eighty-third Legislative Assembly adjourns sine die.
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