Oregon’s veteran benefit package has a distinctive profile: the state is one of five in the country with no sales tax — saving military retirees and veterans $1,500 to $4,000 or more annually depending on spending — but taxes military retirement pay as regular income for most retirees. A property tax credit for disabled veterans transitions to a new flat $575 credit structure starting in the 2026–27 tax year. Oregon also operates one of the most active state veteran home loan programs in the country through the Oregon Department of Veterans’ Affairs (ODVA), which has issued over $8 billion in mortgage loans since 1945.
Oregon is home to approximately 290,000 veterans. The state has no major active duty military installation, but is close to Joint Base Lewis-McChord in Washington (3–4 hours from Portland), which serves many Oregon veterans for commissary, exchange, and VA healthcare access.
USMilitary.org is an independent educational resource, not affiliated with the Oregon Department of Veterans’ Affairs, the VA, or any government agency. For official benefit information, visit oregon.gov/odva.
- Oregon has no state sales tax — saving veterans and retirees an estimated $1,500–$4,000+/year compared to neighboring states
- Beginning July 1, 2026, the disabled veteran property tax exemption transitions to a flat $575 annual tax credit for veterans with 40%+ disability — replacing the prior assessed value reduction
- Military retirement pay earned for service before October 1, 1991 may be deducted from Oregon income tax; post-1991 retirement income is taxed as regular income
- All veterans discharged from active duty and living in Oregon receive in-state tuition at Oregon state colleges and universities regardless of residency duration
- The ODVA home loan program provides below-market interest rate mortgages to Oregon veterans — one of the most active state home loan programs in the country
- Oregon National Guard members may receive tuition waivers after exhausting other benefits; the Veterans Educational Bridge Grant provides up to $5,000 to complete a degree program
- Income Tax Benefits
- No Sales Tax Advantage
- Property Tax: Disabled Veteran Credit (2026 Change)
- ODVA Home Loan Program
- Education Benefits
- Employment Benefits
- Oregon Veterans’ Homes
- Surviving Spouse Benefits
- How to Access Oregon Veteran Benefits
- Frequently Asked Questions
Income Tax Benefits
Military Retirement Pay — Pre-October 1991 Service Exempt; Post-1991 Taxable
Oregon’s treatment of military retirement pay is one of the more complex in the country and the most important factor for Oregon veterans to understand before establishing residency for retirement purposes.
Pre-October 1, 1991 service: Retired service members can subtract military retirement pay attributable to service before October 1, 1991 from their Oregon income taxes. If you served exclusively before that date, your full pension may be deductible. If your career spans both sides of that date, only the portion attributable to pre-1991 service is deductible.
Post-October 1, 1991 service: Military retirement income attributable to service after September 30, 1991 is taxed as regular Oregon income at rates ranging from 4.75% to 9.9%.
TSP distributions: Once a service member retires, TSP withdrawals are eligible for the same pre-1991 service subtraction based on dates of service. Withdrawals prior to retirement are not eligible. If TSP funds are rolled into another account, the pre-1991 subtraction no longer applies to future withdrawals from that account.
Pending legislation: Senate Bill 519 and House Bill 2050, introduced in the 2025 Oregon Legislature session, both proposed fully exempting military retirement pay from Oregon state income tax. As of mid-2026, neither bill has been enacted. Oregon has approximately 21,000 military retirees receiving an average of $30,000 annually. Veterans and advocates should monitor the Oregon Legislature for updates.
Active Duty Pay — Partial Exemption
Military pay earned by resident service members stationed outside Oregon is fully exempt from Oregon state income tax. Up to $6,000 of active duty pay earned while stationed in Oregon is deductible. National Guard and Reserve members away from home for at least 21 days on assignment also qualify for this deduction.
Military Disability Retirement Pay — Exempt
Military disability retirement pay received for service-connected injury or illness is excluded from Oregon taxable income.
VA Disability Compensation — Exempt
VA disability compensation and DIC are federally tax-free and carry no Oregon state tax liability.
No Sales Tax Advantage
Oregon is one of only five states with no state or local sales tax. For veterans and military retirees, this translates to real annual savings on everyday purchases, vehicles, home improvement, and other consumer spending. At an average combined sales tax rate of 7–10% in neighboring states like Washington and California, an Oregon veteran spending $30,000 per year on taxable goods saves $2,100–$3,000 annually compared to those states.
For large one-time purchases — vehicles, appliances, furniture, home improvements — the savings are immediate and significant. A $40,000 vehicle purchase saves $2,800–$4,000 in sales tax compared to purchasing in a neighboring state. This tax advantage partially offsets Oregon’s less favorable military retirement income treatment for many retirees.
Property Tax: Disabled Veteran Credit
New $575 Annual Tax Credit (Effective July 1, 2026)
Beginning with property tax years starting July 1, 2026, Oregon transitions from its prior assessed value reduction to a flat $575 annual property tax credit for eligible disabled veterans. This structural change is designed to ensure veterans in areas with lower property assessments receive the same dollar benefit as veterans in high-value markets — under the old system, the credit’s value varied significantly based on local assessed values and tax rates.
Eligibility:
- Service-connected disability rating of 40% or higher from the VA
- Oregon resident homeowner, primary residence
- Honorably discharged
- Income limits apply — contact your county assessor for current thresholds
The $575 credit is applied directly to the property tax bill. Apply using Oregon Form 303-086 with your county assessor by April 1 each year. Under the prior system, the exemption reduced assessed value by approximately $26,000–$31,000 — worth roughly $259 per year at typical Oregon tax rates. The new flat $575 credit more than doubles the dollar benefit for most veterans.
Property Tax Deferral for Disabled Veterans
Oregon offers a Property Tax Deferral Program for veterans receiving Social Security disability benefits, allowing eligible homeowners to defer property tax payments on their primary residence. Deferred taxes accrue interest and must be repaid when the property is sold or transferred. Contact the Oregon Department of Revenue for current eligibility requirements and interest rates.
ODVA Home Loan Program
The Oregon Department of Veterans’ Affairs operates one of the most established state veteran home loan programs in the country, having issued over $8 billion in mortgages since 1945. The ODVA loan program provides below-market interest rate mortgages to eligible Oregon veterans for home purchases and construction.
Key features:
- Below-market fixed interest rates — typically 0.25%–0.5% below comparable conventional rates
- Available for home purchase and construction
- Oregon resident veterans with qualifying service
- Can be combined with VA loan benefits
- Home must be in Oregon and used as primary residence
ODVA home loan rates are set periodically by the agency. Contact ODVA directly at oregon.gov/odva for current rates, income limits, and eligibility requirements.
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Education Benefits
In-State Tuition for All Veterans
All veterans discharged from active duty who are living in Oregon receive in-state tuition rates at Oregon public colleges and universities, regardless of how long they have been Oregon residents. This eliminates the out-of-state tuition surcharge for recently relocated veterans. Certain online programs may not qualify — verify with individual institutions.
Veterans Educational Bridge Grant — Up to $5,000
The Veterans Educational Bridge Grant provides up to $5,000 to veterans who have exhausted other education benefits (Post-9/11 GI Bill, federal grants) and need additional funding to complete a degree or certificate program. Contact ODVA or the Oregon Student Aid Commission for current eligibility requirements and application deadlines.
Oregon National Guard Tuition Waiver
Members of the Oregon National Guard may receive tuition waivers at Oregon University System institutions after all other state and federal benefits have been exhausted. This functions as a supplement to federal GI Bill benefits rather than a standalone benefit. Contact your unit’s education officer or individual Oregon institutions for current program availability.
Oregon Veteran Employment Preference in Education Hiring
Beginning January 1, 2026, Oregon extended its veterans’ hiring preference to include current and former Oregon National Guard members applying for state employment — including positions at state educational institutions.
Employment Benefits
Veterans’ Preference in State Employment
Oregon law requires veterans’ hiring preference for state employment. Veterans receive five percentage points added to their competitive examination score; disabled veterans receive 10 percentage points. Beginning January 1, 2026, the preference was expanded to include current and former Oregon National Guard members. Preference also applies to promotions to civil service positions with higher maximum salaries.
Oregon Veterans’ Homes
Oregon operates veterans’ homes in The Dalles and Lebanon providing long-term skilled nursing and residential care for eligible Oregon veterans. A third home is in development. Learn more about current admission criteria, availability, and eligibility requirements.
The Oregon Veterans’ Cemetery in Willamette National Cemetery near Portland provides burial services for eligible veterans. Oregon operates additional veterans’ cemeteries in Roseburg and Bend.
Surviving Spouse Benefits
Surviving spouses of disabled veterans may be eligible for the property tax credit under specific circumstances. DIC payments are fully exempt from Oregon income tax. Contact ODVA and your county assessor for surviving spouse eligibility in specific programs.
How to Access Oregon Veteran Benefits
- Oregon Department of Veterans’ Affairs: oregon.gov/odva | 1-800-692-9666
- Property tax credit: File Form 303-086 with your county assessor by April 1
- ODVA home loan: Apply directly through ODVA at oregon.gov/odva
- Veterans Educational Bridge Grant: Oregon Student Aid Commission at oregonstudentaid.gov
- Property tax deferral: Oregon Department of Revenue at oregon.gov/dor
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Oregon Department of Veterans’ Affairs, the VA, or any government agency. Benefits are subject to change — verify current program details at oregon.gov/odva.
Frequently Asked Questions
Generally yes, for post-1991 service. Military retirement income attributable to service after September 30, 1991 is taxed as regular Oregon income at rates of 4.75%–9.9%. Retirement pay for service before October 1, 1991 may be fully deductible. Legislation to fully exempt military retirement pay has been proposed but not enacted as of mid-2026.
Beginning July 1, 2026, Oregon provides a flat $575 annual property tax credit for veterans with 40%+ service-connected disability who own their primary home in Oregon. This replaces the prior assessed value reduction and is a direct dollar credit on the property tax bill. Apply with Form 303-086 at your county assessor by April 1.
Yes — the ODVA has provided below-market mortgage loans to Oregon veterans since 1945, with over $8 billion in loans issued. The program offers below-market fixed interest rates to eligible Oregon veterans for home purchases and construction. Contact ODVA at oregon.gov/odva for current rates and eligibility.
Yes. All honorably discharged veterans living in Oregon receive in-state tuition at Oregon public colleges and universities regardless of how long they’ve been Oregon residents. The Veterans Educational Bridge Grant provides up to $5,000 for veterans who have exhausted other education benefits and need additional funding to finish a program.