Saving For A Home in Oregon Can Also Lower Your State Tax Bill – Here's How

June is National Homeownership Month and if you're dreaming of purchasing a single-family home in Oregon, this one's for you.

There's a particular kind of excitement that comes with deciding you're ready to buy. The late-night Zillow scrolling. The mental math about down payments. The slow realization that saving for a home isn’t just about putting money aside — it's about having a plan, and for Oregon homebuyers, it’s about having the right account.

That's exactly what the Oregon First-Time Home Buyer Savings Account (FTHBSA) is designed for and despite the name, you don't technically need to be a first-time buyer. In our experience, it's a valuable savings option for eligible Oregon taxpayers looking to purchase a single-family home in Oregon.

Why The FTHBSA Is Worth A Closer Look

Most folks saving for a home are doing it in a regular savings account, but those accounts don't automatically come with a state tax benefit tied to your goal.

The FTHBSA changes that. It's designed to support eligible homebuyers, and it allows you to save the same money you would have anyway — but now that savings is working on two fronts: building your home purchase fund and reducing your Oregon state tax bill. Think of it as the state saying: we want to help you get there.

Establishing an FTHBSA allows you to subtract your contributions and earnings, up to a designated amount, from your Oregon taxable income. For example, someone in an 8.75% Oregon tax bracket contributing the maximum allowable subtraction amount in 2026 could see up to $550 in state tax savings.

Are You Eligible?

To determine if opening a FTHBSA is the right move for your financial plan, consider the following eligibility requirements:

• The allowable subtraction begins to reduce once your gross income less pre-tax deductions (commonly called adjusted gross income, or “AGI”) exceeds $104,000 (single) or $149,000 (married filing jointly) and disappears entirely with AGI above $131,000 or $187,000 respectively.

• The funds must be used within 10 years of account opening, so having a realistic home purchase goal within that timeline is important.

• The taxpayer recognizing the benefit cannot have owned or purchased a residence in the past three years prior to the date of their planned purchase.

If it sounds like you or someone you know might qualify, keep reading and we’ll walk you through the steps to recognizing this benefit.

How Does The Tax Benefit Work In 2026?

For 2026, you can subtract up to $6,285 in annual FTHBSA contributions and earnings from your Oregon taxable income, sheltering up to $50,000 per taxpayer from Oregon taxes over the life of the account.

If you're married, you can each open individual accounts or share a joint account, doubling the benefit up to $12,570 annually and $100,000 over the life of the account.

It’s important to note that the annual subtraction limit has increased year over year, rising $160 per taxpayer (or $325 for joint filers) from 2025 to 2026. The $50,000 lifetime cap and income thresholds, however, do not appear to have historically increased.

A Few More Important Details Worth Knowing

The FTHBSA is more flexible than most people expect — from the types of accounts that qualify to what you can spend the money on. Here's what you need to know before you get started.

The window is open, but not forever. Under current Oregon law, the account must be opened before January 1, 2032 to qualify. That's not immediate urgency, but it's a real deadline.

The funds can cover more than just the down payment. Eligible expenses include down payments, closing costs, appraisal and inspection fees, title insurance, realtor commissions, loan origination fees, and more. Essentially the real costs of getting into a home.

You have flexibility in how you save. Oregon allows a wide range of account types to qualify, including savings accounts, money market accounts, and brokerage accounts. That last one is worth noting. Depending on your timeline and risk tolerance, your home savings can be invested and grow while still qualifying for the subtraction.

Setup is simple, but don’t forget to designate the account with the proper form. The account must be opened at a financial institution authorized to do business in Oregon and designated as an FTHBSA by completing Form OR-HOME. Once complete, keep the form with your account statements and tax documents, as the Oregon Department of Revenue may later ask for it.

That All Sounds Great – What’s The Catch?

There are a few important guardrails worth knowing about before you open an account.

You have 10 years to use the funds. Once the account is open, the savings need to be applied toward qualified Oregon home-buying expenses within a decade. For most home buyers with a plan, that's plenty of runway.

Nonqualified withdrawals come with real consequences. If you pull the money out for anything other than a qualified home purchase within that 10 year window, you’re looking at two consequences: a 5% penalty on the total amount withdrawn, and any subtractions you previously claimed will need to be added back to your Oregon taxable income in the year of withdrawal.

There are a few exceptions to the penalty within 10 years. The 5% penalty is waived if the account holder passes away, files for bankruptcy, or becomes permanently incapacitated from working.

After 10 years, the penalty goes away but the add back doesn’t. If funds are withdrawn after the 10 year window without being used for a qualified home purchase, the penalty is waived. However, you’ll still need to add back any previously claimed subtractions on your current year Oregon state taxable income.

How We Can Help

At Infinite Heights, we can help you establish and designate a qualifying FTHBSA through our LPL Financial platform and walk you through completing Form OR-HOME. More importantly, we can help you think through where this account fits within your broader financial picture — whether that's alongside a retirement strategy or a plan you're building with a new partner.

Buying a home isn't just a financial transaction. It's one of the biggest decisions of your life. And the quiet, intentional work you do before you sign anything matters just as much as the purchase itself.

We're here for all of it.

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The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.