For decades, the Portland-Vancouver corridor ran on a simple tax asymmetry: Oregon has income tax, Washington doesn’t. Thousands of high earners structured their lives around this gap—living in Vancouver or Camas while working in Portland. Others left Oregon entirely to escape its 9.9% top rate. However, SB 6346 changes the equation. Starting January 1, 2028, Washington’s own 9.9% millionaires tax means the Oregon cross-border advantage no longer offers a clean escape for high-income households.
Consequently, for cross-border workers, business owners, and property holders on both sides of the Columbia River, the Washington millionaires tax planning implications are significant—and, in some cases, urgent. This is the third article in our series. The first, Washington’s Millionaires Tax: What High Earners, Business Owners & Families Need to Know (Post 2955), covers SB 6346’s full provisions, exemptions, credits, and seven planning strategies. Meanwhile, the second, Washington’s Millionaires Tax & Trusts (Post 2966), covers how SB 6346 affects grantor trusts, non-grantor trusts, ING trusts, and beneficiaries.
To understand what changes for Oregon cross-border families, you first need to understand what existed before.
Before SB 6346 (current through 2027):
Washington has no state income tax. In contrast, Oregon’s top personal income tax rate is 9.9% on taxable income above $125,000 (single) or $250,000 (joint). Portland-area workers also face local taxes. Specifically, the Metro Supportive Housing Services tax is 1% on income above $125,000/$200,000. In addition, the Multnomah County Preschool for All tax is 1.5% on income above $125,000/$200,000, plus an additional 1.5% above $250,000/$400,000. The PFA also includes a 0.8% rate increase effective January 1, 2026.
In practice, a Vancouver WA resident working in Portland pays Oregon state income tax on Oregon-source wages. However, they pay zero Washington state tax on investment income, retirement distributions, rental income, or any other non-Oregon income. As a result, cross-border households benefited from a significant tax advantage on non-wage income.
After SB 6346 (starting January 1, 2028):
Washington’s millionaires tax imposes a 9.9% rate on all income above $1 million per household. Consequently, Washington residents are taxed on worldwide income, while nonresidents are taxed on Washington-source income. Although Washington offers a credit for income taxes paid to other states—including Oregon—the zero-tax advantage for Washington residents with high non-Oregon income disappears.
Before 2028, a Vancouver WA resident earning $2 million—with $1.5 million from an Oregon employer and $500,000 in investment income—paid Oregon tax on the $1.5 million but nothing on the $500,000. After 2028, Washington taxes the entire $2 million (minus the $1 million deduction). You receive a credit for Oregon taxes already paid. However, the $500,000 that was previously tax-free is now taxed at 9.9%.
This is the most common cross-border arrangement in the corridor. Tens of thousands of Washington residents commute to Portland for work.
How Oregon taxes you today:
Oregon taxes nonresidents on income earned while physically working in Oregon. Therefore, if you commute to Portland five days a week, all of your wages are Oregon-source income. Oregon’s nonresident return (Form OR-40-N) then calculates tax based on Oregon-source income as a proportion of your total income.
Oregon’s top rate is 9.9% on taxable income above $125,000 (single) or $250,000 (joint). The brackets above $125,000 are not indexed for inflation.
If you work in Multnomah County (Portland), you also owe Metro SHS tax (1%) and potentially Multnomah County PFA tax (up to 3.8% effective 2026) on Oregon-source income above the applicable thresholds. These are local taxes administered by Portland’s Revenue Division. You file them separately from your Oregon state return.
What SB 6346 adds starting 2028:
Under Washington’s millionaires tax, you owe on your entire worldwide income above $1 million per household. In other words, all wages, investment income, retirement distributions, business income, and rental income are included. Your Portland wages are part of this cross-border calculation as well.
SB 6346 Section 203 provides a credit for “income tax paid to another state, or political subdivision of the state.” This means Oregon state income tax paid on your Portland wages generates a credit against your Washington millionaires tax. The credit equals the lesser of: (a) the Oregon tax actually paid, or (b) the proportional Washington tax attributable to the Oregon-taxed income. Since both states’ top rates are 9.9%, the credit should roughly offset the Washington tax on Oregon-source income. In other words, you don’t pay 9.9% twice on the same wages.
Where you DO pay more:
The income that hits you is everything Oregon doesn’t touch. For a Vancouver resident working in Portland, this includes:
Previously, this income was completely free of state income tax. After 2028, however, it’s taxed at 9.9% under the Washington millionaires tax to the extent your total household income exceeds $1 million.
SB 6346’s credit covers income tax paid to another state “or political subdivision of the state.” This language appears to cover Portland’s Metro SHS tax and Multnomah County’s PFA tax. Both are income taxes imposed by political subdivisions of Oregon.
Nevertheless, no Washington Department of Revenue guidance exists on this question. If the credit does cover these local taxes, it would reduce the double-taxation burden by an additional 2–4.8% on Portland-source income. On the other hand, if it doesn’t, Portland-area workers face a meaningful incremental tax.
Accordingly, this is an open question that will require DOR guidance or potentially litigation to resolve. Plan conservatively until clarity arrives.
If you work from home in Vancouver part of the week and commute to Portland the rest, both states apportion based on days worked in each location. Specifically, Oregon taxes only the days you’re physically in Oregon, while Washington taxes all your income above $1 million but gives a credit for Oregon tax paid.
The planning implication is clear. Maximizing work-from-home days in Washington reduces your Oregon cross-border exposure. Because the Washington millionaires tax credit offsets Oregon tax anyway, the primary benefit is avoiding Portland Metro local taxes on days worked from Washington.
Importantly, keep a contemporaneous log of work days by location. Both states require reasonable documentation.
Many high earners moved from Portland to Vancouver, Camas, or Ridgefield specifically to escape Oregon’s 9.9% income tax. Although this strategy has been effective for years—and remains partially effective—the Washington millionaires tax materially reduces the Oregon cross-border benefit.
What changes:
If your income exceeds $1 million, you now owe Washington’s 9.9% tax on the excess. Consequently, the zero-tax advantage is gone for that income tier. However, for earners between $250,000 and $1 million, the move to Washington still eliminates Oregon income tax entirely, because the millionaires tax doesn’t touch them.
The tax arbitrage narrows but doesn’t disappear:
Moving to Washington still eliminates Oregon’s tax on ALL income below $1 million. Furthermore, it eliminates Portland Metro SHS and PFA taxes entirely, because you’re no longer a Metro resident or worker if you don’t commute to Portland. Washington’s $1 million standard deduction is also far more generous than Oregon’s thresholds—Oregon’s 9.9% rate kicks in at just $125,000.
For example, consider a household earning $1.5 million. They pay approximately $49,500 in Washington millionaires tax (9.9% x $500,000). Had they stayed in Oregon, they’d owe approximately $203,000 in combined Oregon state and Portland Metro taxes on the same income. Therefore, the cross-border savings remain substantial.
Oregon aggressively audits former residents who claim to have moved to Washington. If you maintain an Oregon home, spend more than 200 days in Oregon, or keep your financial, social, and family connections centered in Oregon, the Oregon Department of Revenue may challenge your residency change. The fact that Washington now has an income tax on high earners may reduce Oregon’s audit motivation for millionaire-tier earners. However, for earners between $250K and $1M, the incentive to move remains strong and Oregon’s audit posture remains aggressive. Document your move thoroughly: change your driver’s license, voter registration, bank accounts, doctor, and vehicle registration. Keep a day count.
Historically, this scenario was simple. Oregon residents pay Oregon income tax on all income regardless of where it’s earned. Because Washington had no income tax, working across the border generated no additional state tax.
What SB 6346 changes:
Starting 2028, Oregon residents working in Washington are nonresidents of Washington. Under SB 6346 Section 401, nonresidents are taxed on Washington-source income—including wages from employment within Washington.
If an Oregon resident’s Washington-source income contributes to total income exceeding $1 million, the excess is subject to the 9.9% Washington millionaires tax. Moreover, the standard deduction is prorated for nonresidents under Section 310.
Oregon generally gives its residents a credit for income taxes paid to other states on mutually taxed income (ORS 316.082). However, there’s an open question. Oregon previously ruled that Washington’s B&O tax does not qualify as an “income tax” for credit purposes. Because SB 6346 frames the millionaires tax as an “excise tax on the receipt of income,” whether Oregon will classify this as an income tax eligible for credit is unknown. If Oregon does not grant the credit, Oregon residents working in Washington could consequently face genuine double taxation on the same cross-border income.
Oregon and Washington have no tax reciprocity agreement. Oregon has reciprocal agreements with Arizona, California, Indiana, and Virginia—but not Washington. This means cross-border workers must file in both states and rely on credits to prevent double taxation. There is no automatic exemption from one state’s withholding based on residence in the other.
For business owners operating on both sides of the Columbia River, the Washington millionaires tax introduces Oregon cross-border complexity that varies significantly by entity type.
C corporations are separate taxpayers. The corporation pays its own taxes—Oregon corporate excise tax (6.6% on income up to $1 million, 7.6% above) and Oregon’s Corporate Activity Tax (CAT: $250 plus 0.57% on Oregon commercial activity above $1 million). Washington has no corporate income tax, only the B&O tax on gross receipts.
Importantly, SB 6346 does not tax C corporations—it taxes individuals. A C corporation owner’s salary and dividends are personal income, and that personal income is what pushes the owner above the $1 million threshold.
The planning implication: C corporation structure provides a natural buffer. Income retained inside the corporation is not included in the owner’s Washington taxable income. Instead, only salary, bonuses, and dividends that the owner actually receives are subject to the millionaires tax. As a result, this creates an incentive to manage the timing and amount of distributions—something that was irrelevant when Washington had no income tax.
S corporations are pass-through entities. Consequently, all income flows to the shareholders’ personal returns, whether or not it’s distributed. For a Washington resident who owns an S corporation with Oregon operations:
Oregon’s Pass-Through Entity Elective Tax (PTE-E), which allowed entity-level payment of Oregon income tax to bypass the federal SALT cap, is scheduled to sunset after December 31, 2025. As of March 2026, no extension has been enacted. Therefore, starting in 2026, S corporation owners resume individual-level Oregon tax payments.
Washington’s SB 6346 offers its own PTE election (Section 502) starting 2028. Electing entities pay 9.9% at the entity level, and owners receive a credit on their personal Washington returns. This bypasses the federal SALT deduction cap ($40,000 in 2025, $40,400 in 2026, phasing down after 2029). For S corporation owners with income above $1 million, the Washington PTE election could be a significant planning tool—particularly as Oregon’s PTE-E expires.
Similarly, LLCs taxed as partnerships or disregarded entities follow the same pass-through logic as S corporations. Income flows to the members’ personal returns and is then subject to the Washington millionaires tax at the individual level.
A key consideration: multi-member LLCs with both Washington and Oregon members face different cross-border tax profiles for each member. Specifically, a Washington-resident member is subject to both states’ taxes (with credits), while an Oregon-resident member is subject to Oregon tax on all income and potentially Washington’s millionaires tax on Washington-source income.
The LLC operating agreement should address tax distribution provisions. Specifically, it should ensure members receive enough cash to cover their respective state tax obligations, which now vary by member residency.
Oregon’s CAT applies to all business entity types—C corporations, S corporations, partnerships, LLCs, and sole proprietors—with more than $1 million in Oregon commercial activity. The rate is $250 plus 0.57% on taxable Oregon commercial activity above $1 million (after a 35% subtraction for labor costs or cost of goods sold).
The CAT is a gross receipts tax, not an income tax. It does not qualify for credit under SB 6346’s Section 203 (which covers “income tax” paid to another state). Similarly, Oregon does not allow a credit against Oregon income tax for Washington’s B&O tax. These are business-level taxes that layer on top of personal income tax obligations. They don’t offset each other.
| Entity Type | Oregon Tax on Entity | WA Tax on Entity | Owner Personal Tax (OR) | Owner Personal Tax (WA—SB 6346) | Key Planning Note |
|---|---|---|---|---|---|
| C Corporation | 6.6%/7.6% excise + CAT | B&O (gross receipts) | Salary + dividends taxed at up to 9.9% | Salary + dividends counted toward $1M threshold | Retained earnings not taxed to owner personally |
| S Corporation | CAT only (income passes through) | B&O on entity + PTE election available | Pass-through income at up to 9.9% | Pass-through income counted toward $1M threshold; credit for OR tax paid | WA PTE election (Section 502) can bypass federal SALT cap |
| LLC (partnership) | CAT only (income passes through) | B&O on entity + PTE election available | Pass-through income at up to 9.9% | Pass-through income counted toward $1M threshold; credit for OR tax paid | Operating agreement should address varying member tax burdens |
| LLC (sole proprietor / disregarded) | CAT + personal income tax | B&O on entity | Schedule C income at up to 9.9% | Schedule C income counted toward $1M threshold | Simplest structure but no entity-level planning levers |
| LLC (C corp election) | 6.6%/7.6% excise + CAT | B&O | Same as C corp | Same as C corp | May be advantageous for income retention strategy |
For highly compensated executives and founders in the Portland-Vancouver corridor, equity compensation creates the most punishing multi-state tax scenarios under the Washington millionaires tax. RSUs, stock options, and other equity awards interact with Oregon income tax, the millionaires tax, Washington’s capital gains tax, Portland Metro local taxes, and federal taxes in ways that can push effective rates above 50%.
Understanding these cross-border mechanics is therefore essential. The tax hits come at different times, on different amounts, and from different jurisdictions.
Note: All scenarios below use 2026 federal tax rates and brackets (per IRS Rev. Proc. 2025-32). The Washington millionaires tax takes effect January 1, 2028. We illustrate it alongside current taxes to show the combined planning impact. PFA rates reflect the 0.8% increase effective January 1, 2026. Exact application of PFA rates to each income tier should be confirmed with the Portland Revenue Division.
RSUs are taxed as ordinary income at their fair market value on the vesting date. For multi-state workers, the vesting income is apportioned between states based on where you physically worked during the grant-to-vest period.
The formula: Oregon taxable RSU income = Total RSU vesting income x (Oregon workdays during grant-to-vest period / Total workdays during grant-to-vest period).
For example, consider a Vancouver WA resident who received an RSU grant while working 100% in Portland. You owe Oregon income tax on the full vesting amount because all workdays during the grant-to-vest period were in Oregon. If you later switch to a hybrid schedule (3 days Portland, 2 days Vancouver), only the proportionate Oregon days are taxable to Oregon.
After vesting, any subsequent gain or loss on the shares is a capital gain or loss. Long-term capital gains (shares held more than one year after vesting) are sourced to the taxpayer’s state of residence at the time of sale—not where the work was performed. As a result, for a Washington resident, post-vesting gains are Washington-source and subject to the 7%/9.9% tiered capital gains tax and potentially the 9.9% millionaires tax.
This creates a two-hit cross-border scenario. First, Oregon taxes the vesting (ordinary income). Then Washington taxes the subsequent sale (capital gains + potential millionaires tax).
Married filing jointly. Lives in Vancouver WA, commutes to Portland 5 days/week. Base salary: $400,000. Annual RSU vesting: $800,000 (granted while working full-time in Portland). Total W-2 income: $1,200,000. Additional investment income: $150,000 (dividends + interest). Total household income: $1,350,000. Spouse does not work.
| Tax Layer | Taxable Base | Rate | Estimated Tax | Notes |
|---|---|---|---|---|
| Federal income tax | $1,350,000 AGI minus $32,200 standard deduction = $1,317,800 taxable | Marginal brackets up to 37% | $410,401 | Bracket-by-bracket calculation on $1,317,800 taxable income |
| Additional Medicare tax | Wages above $250,000 = $950,000 | 0.9% | $8,550 | On W-2 wages only ($1,200,000 – $250,000) |
| NIIT | $150,000 investment income (MAGI exceeds $250,000) | 3.8% | $5,700 | Applies to lesser of investment income or MAGI above $250,000 |
| Oregon income tax | Oregon-source wages: $1,200,000 (all work performed in OR). OR calculates tax on full income, applies OR percentage. | Up to 9.9% | $115,709 | OR nonresident return OR-40-N. Investment income is NOT Oregon-sourced. |
| Metro SHS tax | Oregon-source income above $200,000 (joint) = $1,000,000 | 1% | $10,000 | Applies to nonresidents working in Metro |
| Multnomah County PFA tax | Oregon-source income: tiers above $200,000 and $400,000 | 2.3% / 3.8% (2026 rates) | $35,000 | Reflects 0.8% rate increase effective January 1, 2026* |
| WA millionaires tax | $1,350,000 – $1,000,000 = $350,000 WA taxable income. Credit for OR tax on OR-source income offsets most liability. | 9.9% | $3,850 (net after $30,800 OR credit) | WA credit mechanism significantly reduces double taxation. Net WA tax is only $3,850—the 9.9% on the portion of above-$1M income Oregon doesn’t reach. |
| WA capital gains tax | No long-term capital gains in this scenario | 7% above ~$270,000 (indexed) | $0 | Investment income is dividends and interest, not LTCG |
| TOTAL | $589,210 | Effective combined rate: 43.6% |
Before SB 6346, the same executive would have owed approximately $585,360 (no WA millionaires tax). In other words, the incremental cost of the Washington millionaires tax in this cross-border scenario is approximately $3,850. The WA credit mechanism prevents most double taxation, so the net WA millionaires tax is only $3,850—covering the small portion of above-$1M income that Oregon doesn’t reach.
Married filing jointly. Lives in Camas WA. Works 100% at Portland HQ. Base salary: $250,000. RSU vesting this year: $2,000,000 (4-year cliff vest, all service in Portland). Also sells $1,000,000 of previously vested shares (held more than 1 year, cost basis $200,000 = $800,000 long-term capital gain). Total income: $3,050,000 ($250,000 salary + $2,000,000 RSU vest + $800,000 LTCG).
This is where the cross-border tax stack becomes devastating.
| Tax Layer | Taxable Base | Rate | Estimated Tax | Notes |
|---|---|---|---|---|
| Federal income tax (ordinary) | $2,250,000 W-2 income ($250K salary + $2M RSU) minus $32,200 standard deduction | Brackets up to 37% | $743,401 | On ordinary income portion only |
| Federal LTCG tax | $800,000 long-term capital gain | 20% | $160,000 | 20% rate applies (income well above threshold) |
| Additional Medicare tax | Wages above $250,000 = $2,000,000 | 0.9% | $18,000 | On W-2 wages only |
| NIIT | $800,000 investment income (MAGI far exceeds $250K) | 3.8% | $30,400 | On the LTCG |
| Oregon income tax | $2,250,000 OR-source (all work in Portland). LTCG on stock sale is NOT OR-source (intangible property, taxpayer is WA resident). | Up to 9.9% | $220,185 | OR taxes only OR-source ordinary income. LTCG from stock sale by nonresident is not Oregon-source. |
| Metro SHS tax | OR-source above $200,000 = $2,050,000 | 1% | $20,500 | Applies to nonresidents working in Metro |
| Multnomah County PFA tax | OR-source income: tiers above $200,000 and $400,000 | 2.3% / 3.8% (2026 rates) | $74,900 | High income drives deep into top PFA tier. Reflects 0.8% rate increase effective January 1, 2026.* |
| WA millionaires tax | WA base income is all OR-source. Credit for OR state tax fully offsets WA liability. | 9.9% | $0 (OR credit fully offsets) | WA millionaires tax is $0 because OR credit covers it entirely when all base income is OR-source. |
| WA capital gains tax | $800,000 LTCG minus $270,000 deduction = $530,000 | 7% | $37,100 | WA capital gains tax is separate. Taxable gains are under $1M, so the 7% tier applies (9.9% applies above $1M). |
| TOTAL | $1,304,486 | Effective combined rate: 42.8% |
In Scenario B, the Portland Metro local taxes alone (SHS + PFA) total approximately $95,400—over 3% of total income. These local taxes apply to nonresidents working in the Metro area. They are not capped at the $1 million threshold like the Washington millionaires tax. For high-earning Portland workers living in Washington, the Portland Metro taxes are often MORE expensive than the Washington millionaires tax. Whether the WA millionaires tax credit covers these local taxes remains an open question.
Married filing jointly. Was a Portland OR resident for 2 of 4 years during the RSU grant-to-vest period. Moved to Vancouver WA for the final 2 years. RSU vesting this year: $1,500,000. Worked approximately 500 days total during grant-to-vest period: 250 days in Oregon, 250 days in Washington (remote after move). Base salary: $350,000 (now 100% WA-source, working remotely from Vancouver). No capital gains this year. Total income: $1,850,000.
The multi-state RSU allocation creates a complex three-way split:
Oregon’s claim on the RSU vest: 250 OR days / 500 total days = 50%. Oregon taxes $750,000 of the $1,500,000 RSU vest as Oregon-source income.
Washington’s claim: WA taxes your entire worldwide income above $1 million. The full $1,850,000 is included. After the $1,000,000 deduction, $850,000 is subject to 9.9%. However, WA gives a credit for Oregon taxes paid on mutually taxed income. Only 40.5% of total income is OR-source, so the proportional credit is limited.
| Tax Layer | Amount | Rate | Estimated Tax |
|---|---|---|---|
| Federal income tax | $1,850,000 – $32,200 = $1,817,800 taxable | Brackets to 37% | $595,401 |
| Additional Medicare | $1,850,000 – $250,000 = $1,600,000 | 0.9% | $14,400 |
| Oregon income tax | $750,000 RSU (50% allocation). Salary is 100% WA-source (remote). OR total: ~$750,000 | Up to 9.9% | $72,840 |
| Metro SHS tax | OR-source income above $200,000 = $550,000 | 1% | $5,500 |
| Multnomah County PFA tax | OR-source income tiers above $200,000 and $400,000 | 2.3% / 3.8% (2026 rates) | $17,900 |
| WA millionaires tax | $850,000 WA taxable x 9.9% = $84,150 gross. Proportional OR credit of $34,115. Net: $50,035. | 9.9% net after credit | $50,035 |
| TOTAL | $756,076 |
Effective combined rate: 40.9%
Key insight: This is where the WA millionaires tax actually bites. Only 40.5% of income is OR-source, so the proportional credit is limited. The net WA tax is $50,035. Before 2028, this executive would have paid Oregon tax on the Oregon-allocated RSU portion and nothing else at the state level. The move to Washington still saves significant money compared to remaining in Oregon—where the ENTIRE $1,850,000 would be subject to up to 9.9% plus Portland Metro taxes.
Married filing jointly. Lives in Vancouver WA, works in Portland. Base salary: $500,000. Exercises ISOs this year—disqualifying disposition—recognized ordinary income: $3,000,000 (bargain element). Also sells shares from prior RSU vests: $2,000,000 LTCG (held more than 1 year, basis $500,000). Total income: $5,500,000. All ordinary income is OR-source (worked 100% in Portland during grant-to-exercise period).
| Tax Layer | Taxable Base | Rate | Estimated Tax |
|---|---|---|---|
| Federal income tax (ordinary) | $3,500,000 ordinary income minus $32,200 = $3,467,800 | Brackets to 37% | $1,205,901 |
| Federal LTCG | $2,000,000 | 20% | $400,000 |
| NIIT | $2,000,000 LTCG (MAGI far exceeds $250K) | 3.8% | $76,000 |
| Additional Medicare | $3,500,000 wages – $250,000 = $3,250,000 | 0.9% | $29,250 |
| Oregon income tax | $3,500,000 OR-source ordinary income | Up to 9.9% | $344,299 |
| Metro SHS tax | $3,500,000 – $200,000 = $3,300,000 | 1% | $33,000 |
| Multnomah County PFA tax | Deep into top tier | 3.8% on most | $122,400 |
| WA millionaires tax | All base income is OR-source. OR credit fully offsets. | 9.9% net after credits | $0 (OR credit fully offsets) |
| WA capital gains tax | $2,000,000 – $270,000 = $1,730,000. First $1M at 7% = $70,000. Remaining $730,000 at 9.9% = $72,270. | 7% / 9.9% (tiered) | $142,270 |
| TOTAL | $2,353,120 |
Effective combined rate: 42.8%
On ordinary income alone ($3,500,000): The marginal rate on the highest dollar is 52.6%. That breaks down as federal 37% + Oregon 9.9% + Metro SHS 1% + PFA 3.8% + Medicare 0.9%. The WA credit offsets the millionaires tax overlap on OR-source income.
On the LTCG alone ($2,000,000): The marginal rate on gains above $1 million is 33.7%. That breaks down as federal 20% + NIIT 3.8% + WA capital gains 9.9% (the tiered rate above $1M). On gains up to $1 million, the rate is 30.8% (federal 20% + NIIT 3.8% + WA capital gains 7%). The WA capital gains tax adds $142,270 to the bill.
* PFA rates reflect the 0.8% increase effective January 1, 2026. Exact application to each tier should be confirmed with the Portland Revenue Division.
Several patterns emerge from these four scenarios.
The Oregon credit mechanism works—for Oregon state tax. SB 6346’s credit for taxes paid to other states effectively prevents double-taxation of Oregon-source income at the state level. The net incremental Washington millionaires tax is primarily on income Oregon doesn’t touch: investment income, retirement distributions, capital gains from non-Oregon intangible assets, and rental income from non-Oregon properties.
Portland Metro local taxes are the uncredited wildcard. Whether SB 6346’s credit covers Metro SHS and Multnomah County PFA taxes is unresolved. If it doesn’t, workers in Multnomah County face a combined Oregon state + local tax rate of approximately 14.7% (9.9% + 1% + 3.8%) on income above $400,000. They also owe the Washington millionaires tax on income above $1 million. This is the highest-cost scenario in the corridor.
Capital gains face a new state-level layer. Before WA’s capital gains tax, a Vancouver WA resident selling appreciated stock owed only federal tax (20% + 3.8% NIIT = 23.8%). Now, Washington’s tiered capital gains tax (7% on the first $1M in taxable gains, 9.9% above $1M) pushes the effective rate to 30.8–33.7%. For large liquidity events—ISOs, RSU sales, company exits—that translates to roughly $70,000–$99,000 per $1 million in gains depending on the tier.
RSU allocation follows the work, not the residence. Moving from Portland to Vancouver mid-vesting reduces Oregon’s claim on future vesting tranches—but only proportionally. Specifically, Oregon retains its claim on the workdays performed in Oregon during the grant-to-vest period, even years after the move. To put it simply, plan the move BEFORE the grant if possible, not after.
First, the marginal rate on the highest dollar of ordinary income for a Portland worker living in WA: Federal 37% + Oregon 9.9% + Metro SHS 1% + PFA 3.8% + Medicare 0.9% = 52.6%. The Washington millionaires tax is offset by the Oregon credit on this income.
Second, for non-Oregon income (investments, WA-source), the marginal rate: Federal 37% + WA millionaires tax 9.9% + Medicare 0.9% = 47.8%. This income was previously taxed at only 37.9% (federal + Medicare). The WA millionaires tax adds 9.9 percentage points.
Finally, for long-term capital gains: Federal 20% + NIIT 3.8% + WA capital gains 7% = 30.8% on gains up to $1M. On gains above $1M, the WA rate rises to 9.9%, pushing the marginal rate to 33.7%. Before WA’s capital gains tax, the combined rate was 23.8%.
For business owners planning an exit, the interaction between Oregon and Washington taxes on sale proceeds depends on the entity structure, the location of business assets, and the owner’s state of residence. For a deeper analysis of exit planning strategies—including income acceleration, installment sales, and QSBS treatment—see our companion article on business valuation, exit planning, and relocation. The following subsections outline how the Washington millionaires tax affects cross-border transactions.
In a stock sale (selling ownership interests in a corporation or LLC), the gain is generally sourced to the owner’s state of residence for intangible property purposes. Accordingly, a Washington resident selling stock in an Oregon corporation recognizes the gain as Washington-source income. It is subject to both the Washington capital gains tax and the millionaires tax—with a dollar-for-dollar credit against the millionaires tax for capital gains tax already paid—but not Oregon income tax, because it’s an intangible asset sale by a nonresident.
In contrast, in an asset sale, the gain is sourced to where the assets are located. Tangible personal property and real estate in Oregon generate Oregon-source gain. As a result, a Washington resident selling the assets of an Oregon business pays Oregon tax on Oregon-sourced gains and Washington millionaires tax on the total gain (with a credit for Oregon tax paid).
For Washington residents selling an Oregon business, structuring the transaction as a stock sale can keep the gain out of Oregon’s tax reach entirely. The gain is taxed only by Washington—at 9.9% on the amount above $1 million. Oregon has no claim because the sale of intangible property (stock or membership interests) by a nonresident is not Oregon-source income. This is a significant planning consideration that did not exist when Washington had no income tax. Previously, a stock sale by a WA resident of an OR business was completely tax-free at the state level.
Importantly, SB 6346 exempts gains from the sale of “qualified family-owned small businesses” from Washington taxable income. The bill also excludes real property gains. These exemptions can therefore be significant for cross-border business owners:
The definition of “qualified family-owned small business” and specific eligibility requirements are established in statute under RCW 82.87.070, which sets ownership, size, and operational criteria. Consequently, you should review these requirements closely with your attorney if you are planning an exit.
For Washington residents planning a business sale that will generate income above $1 million, completing the transaction before January 1, 2028 avoids the Washington millionaires tax entirely. The two-year window is particularly valuable for cross-border owners who can structure a stock sale, because before 2028, the gain escapes both Oregon and Washington taxation.
After 2028, however, the gain triggers the 9.9% Washington tax on amounts above $1 million (unless the family business exemption applies). For a $5 million gain, that translates to approximately $396,000 in Washington tax.
For a deeper analysis of exit planning strategies including income acceleration, installment sales, and QSBS treatment, see our companion article: Washington’s Millionaires Tax: What High Earners, Business Owners & Families Need to Know.
Many cross-border families own property in both Washington and Oregon—a primary residence on one side, rental properties or vacation homes on the other. Although SB 6346 treats real estate favorably, the interaction with Oregon’s taxes creates important nuances for cross-border investors.
SB 6346 exempts gains from the sale of residential and other real property from Washington taxable income. This is a blanket exemption that applies to your primary residence, rental properties, commercial real estate, and land. In other words, the gain is simply excluded from the calculation of Washington taxable income.
For example, a Washington resident who sells a $3 million Portland rental property at a $1.5 million gain owes zero Washington millionaires tax on that gain.
Nevertheless, the Washington exemption does not affect Oregon’s taxation. Oregon taxes nonresidents on gains from Oregon-located real property. Therefore, if you’re a Washington resident selling Oregon real estate, Oregon taxes the gain through the nonresident return.
Oregon’s top rate of 9.9% applies to the gain (as part of your total Oregon-source income calculation). Oregon also requires withholding on real estate sales by nonresidents—typically through the escrow agent.
The SB 6346 credit for Oregon taxes paid is irrelevant here. The gain is exempt from Washington tax in the first place. There is no Washington tax to credit against.
While real estate sale gains are exempt from the Washington millionaires tax, rental income is NOT exempt. Annual rental income from properties on either side of the border is included in your federal AGI. As a result, it is included in your Washington taxable income calculation.
For a Washington resident with Oregon rental properties:
For a Washington resident with Washington rental properties:
For real estate investors using Section 1031 exchanges to defer gain recognition, the SB 6346 real estate exemption changes the calculus. Because real estate gains are exempt from the Washington millionaires tax anyway, the motivation for a 1031 exchange shifts. On the Oregon side, a 1031 exchange still defers state tax. On the Washington side, however, there’s nothing to defer.
This creates an interesting dynamic for cross-border investors. Selling Oregon property without a 1031 exchange means paying Oregon tax now but no Washington tax ever (on the gain). Conversely, a 1031 exchange defers the Oregon tax but provides no Washington benefit. The right answer therefore depends on your Oregon income level, your plans for the replacement property, and your long-term residency intentions.
Washington and Oregon both impose state estate taxes—with very different thresholds and rates.
Oregon estate tax: $1 million exemption (the lowest in the nation). Rates range from 10% to 16%.
Washington estate tax: $3 million exemption (increased from ~$2.193 million effective July 1, 2025). Rates range from 10% to 35% (SB 6347, currently advancing, would reduce the top rate to 20%).
Federal estate tax: $15 million per person / $30 million per couple (permanently set under the One Big Beautiful Bill Act signed July 4, 2025, indexed for inflation starting 2027).
For cross-border families, the estate tax implications depend on the decedent’s state of domicile and the location of their property:
The $2 million gap between Oregon’s $1 million threshold and Washington’s $3 million threshold makes domicile selection critically important for cross-border estates in the $1–3 million range. For estates above $3 million, both states impose estate tax regardless of domicile. Although Washington’s higher threshold reduces the taxable estate, Washington’s top rate (35%) is significantly higher than Oregon’s (16%). Consequently, for large estates, this rate difference can outweigh the threshold advantage—making the full rate-and-threshold comparison essential, not just the exemption amount.
For a deeper analysis of trust-based estate planning strategies, see our companion article: Washington’s Millionaires Tax & Trusts.
Your state of domicile determines which state taxes your worldwide income. If you’ve moved from Oregon to Washington (or vice versa), ensure your domicile is well-documented. Oregon audits former residents aggressively, and similarly, Washington’s new Department of Revenue enforcement infrastructure for the millionaires tax will develop its own audit posture starting in 2028.
Maintain a day count. Update all legal documents and registrations. Keep records of your intent to establish a permanent home in your claimed state of domicile.
Run projections showing your total tax under three scenarios: (a) remain in Washington, (b) remain in or move to Oregon, (c) maintain your current cross-border arrangement. Include Oregon state income tax, Portland Metro local taxes, Washington millionaires tax, and all applicable credits.
For most high earners in the $1–5 million range, Washington domicile remains advantageous. That said, the margin is narrower than before.
If you own a business operating in both states, evaluate whether your current entity structure (C corp, S corp, LLC) optimizes your combined tax position under the new regime. Specifically, consider the Washington PTE election (Section 502), the expiration of Oregon’s PTE-E, and the income retention advantages of C corporation structure.
If you’re planning to sell a business, completing the transaction before January 1, 2028 avoids the Washington millionaires tax entirely. This is especially valuable for stock sales by Washington residents, because those gains escape both Oregon and Washington taxation before 2028. After 2028, however, the gain is subject to 9.9% on amounts above $1 million (unless the family business exemption applies).
Real estate gains are exempt from the Washington millionaires tax, although Oregon taxes gains from Oregon-located property regardless. Therefore, review your portfolio for opportunities to restructure or rebalance across state lines, and consider whether 1031 exchanges remain optimal given the asymmetric exemption.
With Oregon’s $1 million estate tax threshold and Washington’s $3 million threshold, domicile selection and asset titling have outsized importance for cross-border families. Review beneficiary designations, trust structures, and property ownership to minimize exposure in both states. Although the federal $15 million exemption provides a generous buffer, state-level planning is where most cross-border families will save—or lose—the most.
The Metro SHS tax and Multnomah County PFA tax affect nonresidents who work in the Portland Metro area. The PFA rate increased by 0.8% in 2026. Whether the Washington millionaires tax credit covers these local taxes is an open question. Monitor Department of Revenue guidance from both states.
| Income Source | Portland OR Resident | Vancouver WA Resident |
|---|---|---|
| Wages earned in Portland | OR state: up to 9.9% + Metro SHS: 1% + PFA: up to 3.8% | OR state: up to 9.9% (nonresident) + Metro SHS: 1% + PFA: up to 3.8% + WA: 9.9% above $1M (credit for OR state tax) |
| Wages earned in WA | OR state: up to 9.9% (worldwide income) + WA: 9.9% above $1M on WA-source income (credit question open) | WA: 9.9% above $1M only |
| Investment income | OR state: up to 9.9% | WA: 9.9% above $1M only |
| Rental income—OR property | OR state: up to 9.9% | OR state: up to 9.9% (nonresident) + WA: 9.9% above $1M (credit for OR tax) |
| Rental income—WA property | OR state: up to 9.9% (worldwide) | WA: 9.9% above $1M only |
| Real estate sale gain—OR property | OR state: up to 9.9% | OR state: up to 9.9% (nonresident); WA: EXEMPT |
| Real estate sale gain—WA property | OR state: up to 9.9% (worldwide) | WA: EXEMPT |
| Business sale (stock sale) | OR state: up to 9.9% (worldwide) | WA: 9.9% above $1M (OR has no claim—intangible asset) |
| Business sale (asset sale—OR assets) | OR state: up to 9.9% | OR state: on OR-sourced portion + WA: 9.9% above $1M (credit for OR tax) |
“The Columbia River used to be a one-way tax border. You could live on the Washington side and keep everything Oregon didn’t touch. After 2028, the river is a two-way street—and every cross-border family needs a fresh look at the numbers.”
— Northern Pacific Asset Management
Several critical cross-border questions remain unanswered. They will require Department of Revenue guidance, rulemaking, or potentially litigation to resolve:
1. Will Oregon recognize Washington’s millionaires tax as an “income tax” for credit purposes? Oregon previously ruled that Washington’s B&O tax does not qualify. The millionaires tax is structured as an “excise tax on the receipt of income”—a framing designed for Washington constitutional purposes that may create classification issues in Oregon.
2. Does SB 6346’s credit cover Portland Metro local taxes? The statute references taxes paid to another state “or political subdivision of the state.” Metro SHS and Multnomah County PFA are income taxes imposed by political subdivisions of Oregon. Although the statutory language appears favorable, no guidance exists.
3. How will the Washington DOR administer nonresident day-counting for hybrid workers? SB 6346 apportions nonresident income based on days worked in Washington vs. total days worked. Oregon uses the same methodology. Nevertheless, the mechanics of employer withholding, estimated payments, and year-end reconciliation for Washington’s new tax are entirely undefined.
4. What qualifies as a “qualified family-owned small business” for the sale exemption? The definition is established in statute under RCW 82.87.070 with specific ownership, size, and operational requirements. Confirm eligibility with your attorney—this is critical for exit planning in 2028 and beyond.
5. Will Oregon increase audit activity on claimed Washington domicile changes? The narrowing tax gap may reduce Oregon’s motivation to pursue millionaire-tier former residents. However, the incentive remains strong for earners between $250,000 and $1 million who still benefit from zero Washington income tax.
Northern Pacific Asset Management serves high-earning families and business owners across Portland, Vancouver WA, Seattle, Houston, and nationwide. If you live, work, or own a business on both sides of the Washington-Oregon border, the two-year window before January 1, 2028 is the time to optimize your structure. Every engagement begins with a candid, no-obligation preliminary discovery meeting.
Serving Houston, The Woodlands & greater Houston area · Seattle, Bellevue & the Puget Sound · Portland, Vancouver WA & the Pacific Northwest.
Important Disclosures
This article is published by Northern Pacific Asset Management™ for general informational and educational purposes only. It does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security or financial product. The information presented draws from publicly available sources, including legislative text, regulatory filings, and third-party analysis, and is believed to be accurate as of the date of publication. Northern Pacific makes no warranties or representations regarding the completeness or accuracy of this information.
This article is for informational purposes only and does not constitute tax, legal, or investment advice. SB 6346 has passed both chambers of the Washington legislature but has not yet been signed into law as of the date of publication. The information presented reflects our understanding of the proposed legislation, current Oregon and Washington tax law, and Portland Metro local tax ordinances as of March 2026. Cross-border taxation is highly fact-specific and depends on individual circumstances including domicile, work location, entity structure, and the nature of income. Several provisions discussed in this article are subject to forthcoming guidance from the Washington Department of Revenue and the Oregon Department of Revenue. Consult your CPA, estate planning attorney, and wealth advisor for guidance specific to your situation.
Securities and investment advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC, and SEC Registered Investment Advisor. Northern Pacific Asset Management and Osaic Wealth are separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
Northern Pacific Asset Management and Osaic Wealth do not provide tax or legal advice.
© 2026 Northern Pacific Asset Management™. All rights reserved. Live^Exponentially® and Sustainable Advantage® are registered trademarks of Northern Pacific Asset Management.
Subscribe to receive relevant news, insights, and portfolio updates—keeping you informed and in control.
