Oregon provides an additional severe disability exemption for eligible taxpayers and spouses. For the 2025 tax year, the exemption is claimed through the personal exemption section of the applicable Oregon individual income tax return. The severe disability exemption is separate from Oregon's exception to estimated-tax underpayment interest for taxpayers who became disabled.
Severe Disability Exemption
You or your spouse may qualify for the additional severe disability exemption if, at the end of the tax year, the individual meets one of Oregon's qualifying severe disability conditions. These include:
- Permanently losing the use of one or both legs or feet.
- Permanently losing the use of both hands.
- Being permanently blind.
- Having a permanent condition that, without special equipment or outside help, limits the individual's ability to earn a living, maintain a household, or transport themselves.
- Being unable to earn a living because of a permanent condition or an impairment of indefinite duration.
A licensed physician must provide a letter describing the nature and extent of the disability. The taxpayer should retain the letter with their tax records in case the Oregon Department of Revenue requests documentation.
Claiming the Exemption
For 2025, the severe disability exemption is available through the personal exemption section of Oregon's individual income tax returns.
- On Form OR-40, check the “Severe disability” box for yourself or your spouse, as applicable.
- The 2025 Form OR-40-P and Form OR-40-N also provide a “Severe disability” checkbox for the taxpayer and spouse.
- Oregon's 2025 personal exemption credit is $256 for each qualifying personal exemption. An additional exemption credit is available for a taxpayer or spouse with a severe disability, subject to the applicable AGI requirements.
Separate Estimated-Tax Underpayment Exception
The severe disability exemption should not be confused with Exception 3 on Form OR-10.
Under 2025 Form OR-10 instructions, underpayment interest generally will not be charged under Exception 3 if, during 2024 or 2025:
- The taxpayer retired at age 62 or older or became disabled, and
- There was reasonable cause for the underpayment.
Taxpayers claiming this exception enter Exception 3 on Form OR-10 and report the exception number on the applicable Oregon income tax return. This is an exception from estimated-tax underpayment interest, not an additional severe disability exemption.
Source:
Form OR-10 Instructions (2025)
Oregon Department of Revenue – 2025 Form OR-40 Instructions
Disclaimer: Always verify with the official Oregon Department of Revenue (DOR) forms and instructions, as tax rules may change. For complex situations, consult a CPA or tax attorney.