Oregon’s Property Tax Compression Problem Is Back in Spotlight

By David J. Petersen

Property tax compression is back in the news in Oregon because of a recent combination of a softening market, rising assessments, and local government funding stress. Understanding these shifts now is critical for property owners to forecast taxes and evaluate transactional opportunities.

As discussed in an Ear to the Ground post from October 2024, property tax “compression” happens when the total tax rate on a property exceeds Oregon’s constitutional limits of $5 per $1,000 of real market value (RMV) for education taxes and $10 per $1,000 of RMV for other taxes. When those limits are exceeded, certain levies are automatically reduced—creating unpredictable outcomes for both taxpayers and taxing districts.

Recently, many office, retail, and multifamily assets in Oregon have seen flat or declining RMV, particularly in 2024 and to a lesser but still significant extent in 2025. However, because of the historical gap between RMV and assessed value, the assessed values of the same properties continue to increase, most likely at the 3% per year cap under Measure 50. As assessed values rise and RMV stays stagnant or falls, more properties are pushed into compression. This leads to increased funding uncertainty for governments and school districts as compression reduces their revenue collections.

As a result, reform ideas for Measures 5 and 50 are popular heading into the 2026 legislative session. For taxpayers, the primary risk is a loosening of the limitations on annual tax increases, or creation of additional exceptions allowing reassessment beyond constitutional limits. 

For tax-dependent agencies, compression increases the risk that recently-enacted levies and bonds may not generate the revenue expected—creating volatility for taxing districts and making tax forecasting harder. This may spur taxing agencies to look for other ways to meet funding needs, with attendant unpredictability for property owners and other taxpayers.

Heading into 2026, I recommend that both taxpayers and tax-dependent agencies watch for:

• Legislative proposals aimed at reforming property tax limits
• Local levy renewals likely to trigger additional compression
• Major valuation appeals, especially for office and retail assets
• Increased discussion of alternative funding models for local governments

If any of these possibilities start to coalesce, property owners should consider talking with their tax advisors about some proactive tax planning. These issues are not likely to advance quickly enough to affect tax appeals for the 2025-26 tax year, which are due December 31. More likely, these issues will potentially impact the 2026-27 tax year, for which appeals must be filed between receipt of the new tax statement (typically in October) and December 31, 2026.