Relating to estate tax treatment of natural resource property; and prescribing an effective date.

Family businesses get conditional estate tax relief

For deaths on or after July 1, 2025, qualifying estates can exclude up to $15 million from Oregon estate tax. The exemption covers qualifying farm, forestry, and fishing property interests. The decedent must have held the interest for five years before death. The decedent or a family member must have actively participated on at least 75% of relevant business days each year. That work test applies to each of the five years before death. The property must pass to family members or eligible entities and stay family-owned for five consecutive calendar years after transfer. Family members must also actively participate in the business during each of the five years after death. Eligible businesses must be fully owned by family members or eligible entities; eligible trusts must limit distributions to those groups. Estates using this exemption cannot also claim the estate tax credit under ORS 118.140. A disqualifying transfer, loss of entity eligibility, or failure to meet participation rules triggers extra tax equal to the tax avoided. Payment is due within six months of a disqualifying disposition. Replacing the property with property used in the related business avoids this tax when completed within one year. The replacement window is two years for qualifying involuntary conversions, such as condemnation. For cross-state estates, the exemption is removed from both parts of the fraction used to calculate Oregon’s tax share. This applies to Oregon residents with real or tangible property elsewhere and nonresidents with such property in Oregon. For residents, intangible property taxed at death by another jurisdiction remains outside the Oregon share.