Federal and Oregon tax
Oregon PERS benefits are subject to federal income tax wherever the retiree lives and to Oregon income tax for Oregon residents. Without a W-4P, federal withholding is single with no adjustments and Oregon is single with zero exemptions; nonresidents must file a W-4P to stop Oregon withholding. Taxable rollover-eligible lump sums paid to the member have mandatory 20% federal withholding, and Oregon PERS withholds 8% Oregon tax on IAP rollover-eligible distributions not rolled over unless a W-4R says otherwise. A 10% additional federal tax can apply before 59 1/2 (not after separating at 55+, or for lifetime monthly payments). Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026), pp. 14-15, 24; Oregon PERS OPSRP Preretirement Guide (June 2026), p. 11
The Tier One tax remedy
Tier One members who established membership (including wait time) before July 14, 1995, who pay Oregon income tax as residents and who have 10+ years of service or service before Oct. 1, 1991 get the greater of: the SB 656 increase (1% with 10-19 years, 2% with 20-24, 3% with 25-29, 4% with 30+ for general service) or the HB 3349 increase (9.89% x share of service before Oct. 1, 1991). Since SB 822 (2013) nonresidents get no tax remedy; Oregon PERS checks residency with the Department of Revenue each year (certification due by Dec. 15). Tier Two and OPSRP get none. Oregon PERS Tax Remedy FAQ (Sept. 2026), pp. 1-2; Oregon PERS webpage 'Tax Remedy Elimination' (2013 FAQ, saved Nov. 11, 2026); Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026), p. 9, Important residency information; ORS 238.364(4), (7), (9); ORS 238.366(4)(a)
Only Tier One has the tax remedy; see which tier. It's paid on top of the pension figured by the formula, which the calculator estimates before tax.
| Years of service (SB 656) | Increase |
|---|---|
| 10 to 19 | 1% |
| 20 to 24 | 2% |
| 25 to 29 | 3% |
| 30+ | 4% |
Or, if bigger: 9.89% × your share of service before October 1, 1991 (HB 3349). Oregon PERS Tax Remedy FAQ (Sept. 2026), pp. 1-2; Oregon PERS webpage 'Tax Remedy Elimination' (2013 FAQ, saved Nov. 11, 2026); Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026), p. 9, Important residency information; ORS 238.364(4), (7), (9); ORS 238.366(4)(a)
In dollars, on a $3,000 monthly benefit
| Service | Increase | A month |
|---|---|---|
| 30 yrs, 0 before Oct. 1991 | 4% SB 656 | $120 |
| 30 yrs, 10 before Oct. 1991 | 4% SB 656 | $120 |
| 25 yrs, 20 before Oct. 1991 | 7.91% HB 3349 | $237.30 |
| 20 yrs, 20 before Oct. 1991 | 9.89% HB 3349 | $296.70 |
We model the tax remedy for general service members only. Police and fire schedules and some kinds of service are handled differently.
What we use: the general service schedule and your share of service before Oct. 1991.
Required distributions
Benefits must start by April 1 after the year the member reaches 70 1/2 (born before July 1, 1949), 72 (born July 1, 1949 - Dec. 31, 1950), 73 (born 1951-1959) or 75 (born 1960 or later), or leaves Oregon PERS employment, whichever is later. Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026), pp. 15, 24
What the sources say
- Oregon PERS benefits are subject to federal income tax wherever you live and Oregon income tax if you live in Oregon.Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026), p. 14
- Tier One members who joined before July 14, 1995 and are Oregon residents may get a 'tax remedy' increase of 1% to 9.89%. Non-residents have not received it since 2013.Oregon PERS Tax Remedy FAQ (Sept. 2026), pp. 1-2; ORS 238.364, 238.366
Questions
Is my Oregon PERS pension taxed?
Yes: federal income tax wherever you live, and Oregon income tax if you live in Oregon.
What is the tax remedy?
An extra 1% to 9.89% for Tier One members who joined before July 14, 1995, paid only while they live in Oregon and pay Oregon income tax.
What if I move out of Oregon?
Your pension isn't cut, but Tier One members lose the tax remedy. Oregon PERS checks residency with the Department of Revenue each year.
Do Tier Two and OPSRP get the tax remedy?
No.
Source: Oregon PERS Tier One/Tier Two and OPSRP Preretirement Guides, Published June 2026, Oregon PERS Tier One/Tier Two Preretirement Guide (June 2026) pp. 9, 14, 15; Oregon PERS OPSRP Preretirement Guide (June 2026) p. 11; Oregon PERS Tax Remedy FAQ (Sept. 2026) pp. 1, 2; Oregon PERS webpages: Tax Remedy Elimination; ORS 238.364, 238.366. Last reviewed .