SB 1507 – Oregon’s tax code automatically tracks the federal tax code. When Congress passed Trump’s tax cuts in the “One Big Beautiful Bill Act (BBB),” Oregon faced losing nearly $900 million in state revenue during the current two-year budget cycle. SB 1507 attempts to recapture much of that by “disconnecting” Oregon from certain federal tax provisions. This also takes away some of the tax breaks the BBB gave us.
Key Tax Changes (in amended bill):
Federal Tax Code Connection (“Tie Date”)
- Updates Oregon’s connection to the federal Internal Revenue Code from December 31, 2023 to December 31, 2025
Earned Income Tax Credit (EITC) Increase
- General credit: increased from 9% to 14% of the federal EITC
- For taxpayers with a dependent under age 3: increased from 12% to 17% of the federal EITC
- Applies to tax years beginning on or after January 1, 2026
Federal Disconnections (Oregon adds these back to taxable income)
- Personal auto loan interest deductions allowed under federal law (IRC §163(h)(4))
- Small business stock gain exclusions (IRC §1202)
- Bonus depreciation — Oregon disconnects from the enhanced federal bonus depreciation, reverting to pre-December 1, 2017 IRC §168(k) rules. This will hurt farmers the most.
New Jobs Tax Credit
- $1,000 credit per net new job created in Oregon (max 10 jobs = $10,000/year)
- Jobs must pay at least 150% of applicable minimum wage
- Total statewide credits capped at $12.5 million per tax year
- Requires certification from the Oregon Business Development Department
- Applies to tax years 2026–2031 only
The bill is designed to shield approximately $311 million to $888 million in state revenue that would otherwise be lost due to federal tax cuts
Democrats say this revenue is needed for:
- Health care
- Education (K-12)
- Public safety
Administrative Complexity: The bill requires businesses to maintain two separate sets of books for every asset they own, leading to increased administrative costs and complexity. This could affect the ability of businesses to comply with state regulations and tax obligations.
Impact on Small Businesses: Small businesses, which are a significant part of Oregon’s economy, may find it difficult to adapt to the changes brought by the bill, potentially leading to job losses and economic instability.
These concerns highlight the potential negative impact of SB 1507B on Oregonians, particularly on small businesses and the overall economy. The bill’s passage has been met with opposition from various groups, including business leaders and the general public, who argue that it could create a less competitive environment for Oregon’s businesses.