Oregon — Personal Income Tax

Oregon imposes a personal income tax on three categories of individuals: full-year residents, part-year residents, and nonresidents with Oregon-source income.

Full-year residents are taxed on their entire taxable income from all sources, regardless of where earned. Part-year residents are taxed on all income earned while a resident, plus any Oregon-source income earned while a nonresident; the tax is calculated as if they were full-year residents and then prorated. Nonresidents are taxed only on taxable income derived from Oregon sources.

The tax applies for each taxable year and is computed using graduated rates set forth in statute, with brackets adjusted annually for cost-of-living increases.

Source: ORS 316.037

Oregon imposes a graduated personal income tax with four statutory rates: 4.75 percent, 6.75 percent, 8.75 percent, and 9.9 percent. The top rate of 9.9 percent applies to taxable income above $125,000 for single filers and $250,000 for married couples filing jointly. These top-bracket thresholds are set in statute and have not changed since their adoption; Oregon law does not index the top brackets for inflation, so they remain fixed at these dollar amounts for future tax years unless amended by the Legislature.

For the lower income tax brackets, Oregon law (ORS 316.037(1)(b)) requires the Department of Revenue to adjust the minimum and maximum dollar amounts for those brackets annually for cost-of-living increases. These cost-of-living adjustments do not apply to the top-bracket threshold. Thus, practitioners should always consult the latest Oregon Department of Revenue instructions or Publication OR-17 for the current-year tax bracket schedule applicable below the $125,000/$250,000 level, but the thresholds for the top 9.9% rate remain at $125,000 (single) and $250,000 (joint).

For tax year 2025, the 9.9% top rate applies to taxable income in excess of $125,000 (single) or $250,000 (joint), per statute and DOR publication. The tax is imposed on the entire taxable income of residents and on Oregon-source income of nonresidents and part-year residents, with the graduated rates applied to each bracketed portion of income.

Where to find current-year brackets:

• The complete, updated bracket dollar thresholds (including annual inflation adjustments for the lower brackets) are published in the Department of Revenue's annual rate charts and in Publication OR-17 (see current Publication OR-17).
• Statutory language (ORS 316.037) and DOR instructions both confirm the top-bracket thresholds are not indexed and remain unchanged each year.

Source: ORS 316.037; Oregon Publication OR-17 (2025)

Not yet human confirmed by SALT editor as of 2026‑06‑16.

Oregon personal income tax returns must be filed on or before the due date of the corresponding federal return for the tax year. For calendar-year filers, this means April 15 (or the next business day if April 15 falls on a weekend or legal holiday). Oregon automatically grants filing extensions equal in length to federal extensions; if a valid federal extension is obtained, the Oregon filing deadline extends to October 15.

Source: ORS 314.385

Oregon defines "resident" under two statutory tests in ORS 316.027(1)(a). First, an individual domiciled in Oregon is a resident unless they maintain no permanent place of abode in Oregon, do maintain a permanent place of abode elsewhere, and spend not more than 30 days in aggregate in Oregon during the taxable year. Second, an individual not domiciled in Oregon is a resident if they maintain a permanent place of abode in Oregon and spend in the aggregate more than 200 days of the taxable year in the state, unless the individual proves they are in Oregon only for a temporary or transitory purpose.

Source: ORS 316.027

For tax year 2026, Oregon's standard deduction amounts are:

• Single or married/RDP filing separately: $2,910
• Married/RDP filing jointly or qualifying surviving spouse: $5,820
• Head of household: $4,685

These figures represent the official annual adjustment pursuant to ORS 316.695(1)(c) and are published for tax year 2026 in the Oregon Department of Revenue's official payroll instructions, which act as the controlling administrative authority until the publication of the 2026 Form OR-40 Instructions. The exact standard deduction amounts are set annually by the Department of Revenue based on changes in the cost of living.

Additional deduction for age or blindness Eligibility and thresholds for the additional standard deduction for taxpayers age 65+ or blind continue to follow the framework of ORS 316.695(7). The precise 2026 amounts for these additional deductions should be confirmed with the forthcoming OR-40 instructions or official DOR tables when published.

Oregon's independent election Oregon continues to allow taxpayers to claim either the standard deduction or itemize for state purposes independently of their federal filing status. Taxpayers should use whichever method yields a larger deduction for Oregon purposes. (ORS 316.695(1)(c)(A)).

Special rules The deduction is zero if married persons file separately and their spouse itemizes, if the return is for less than 12 months due to a change in accounting period, or if the filer is a partnership. Additional limitations for dependents and other categories remain under OAR 150-316-0555, but 2026 values must be confirmed with the state when definitive tables are released.

Authority The 2026 amounts above are taken from the official Oregon Department of Revenue 2026 Combined Payroll Tax Report Instructions (Table 2), pending release of the 2026 Form OR-40 Instructions. Previous 2025 values have been superseded. Annual inflation adjustment is prescribed by ORS 316.695.

Source: Oregon DOR 2026 Combined Payroll Tax Report Instructions, Table 2 Source: ORS 316.695 Source: OAR 150-316-0555

Not yet human confirmed by SALT editor as of 2026-06-27.

Oregon taxes nonresidents only on income derived from Oregon sources. ORS 316.127 defines Oregon-source income as the net amount of items of income, gain, loss, and deduction entering into federal adjusted gross income that are derived from or connected with sources in this state, plus applicable Oregon modifications to federal taxable income.

Three categories of Oregon-source income

Under ORS 316.127(2), items of income, gain, loss, and deduction are derived from Oregon sources if attributable to:

• Real or tangible personal property in Oregon — Income from the ownership or disposition of any interest in real property or tangible personal property located in Oregon is taxable to a nonresident, even if the property is not connected with a business carried on in the state. Gain from the sale of Oregon real estate or tangible personal property is Oregon-source income; loss is deductible if it is a business loss or a transaction entered into for profit.

• Business, trade, profession, or occupation carried on in Oregon — Income from a business, trade, profession, or occupation carried on in Oregon is Oregon-source income. If the business is conducted partly within and partly outside Oregon, the portion attributable to Oregon is determined by apportionment and allocation under ORS 314.605 to 314.675.

• Oregon Lottery prizes — Taxable lottery prizes awarded by the Oregon State Lottery (including prizes from multistate lottery associations if the ticket was sold in Oregon) constitute Oregon-source income.

Compensation for personal services

Oregon follows a physical-presence rule for employee compensation. Wages, salaries, and other compensation for personal services are Oregon-source income to the extent the services are performed in Oregon. OAR 150-316-0165 provides allocation methods for employees who work partly in Oregon and partly in other states. Taxable fringe benefits, stock option income, and accrued vacation payouts are allocated using the same ratio applied to the employee's other compensation for the relevant tax year.

Special rule for military compensation and vessel operators

Compensation paid by the United States for Armed Forces service performed by a nonresident does not constitute Oregon-source income under ORS 316.127(7). Similarly, under ORS 316.127(10), compensation paid to licensed vessel pilots or crew members who perform duties in multiple states on vessels operating in navigable waters of more than one state is not Oregon-source income.

Intangible property income — business situs test

Income from intangible personal property (interest, dividends, royalties, gains from disposition of stocks, bonds, and other securities) constitutes Oregon-source income only if the intangible property is employed in a business, trade, profession, or occupation carried on in Oregon, as stated in ORS 316.127(3). OAR 150-316-0171 implements this "business situs" rule: intangible property has an Oregon business situs when used as a capital or current asset in the conduct of the taxpayer's Oregon business and held in that capacity at the time the income arises.

For example, a nonresident's gain from the sale of S corporation stock is generally not Oregon-source income unless the stock has acquired a business situs in Oregon. Interest income received by a nonresident from an installment sale of Oregon property is not Oregon-source income, because the source of the interest is the use of money, not the sale of the property.

Partnership and S corporation income

ORS 316.127(4) provides that a nonresident shareholder's distributive share of S corporation income (or net operating loss) derived from or connected with Oregon sources is Oregon-source income. Partnership income follows the same rule: a nonresident partner's distributive share of partnership income and deductions derived from Oregon sources enters into the partner's Oregon adjusted gross income under ORS 316.127(1)(a)(A).

OAR 150-316-0171(2)(d) clarifies that a nonresident's gain or loss from the sale of a general partnership interest in an Oregon partnership is Oregon-source income. By contrast, gain or loss from the sale of a limited partnership interest or S corporation stock is generally not Oregon-source income unless the interest has acquired a business situs in Oregon.

Source: ORS 316.127; OAR 150-316-0171; OAR 150-316-0165

Oregon allows taxpayers to subtract part of their federal income tax liability from Oregon taxable income, subject to strict statutory maximums and phase-outs based on federal adjusted gross income (AGI). This subtraction, codified at ORS 316.680(1)(b), is a longstanding feature of the Oregon personal income tax return, with statutory dollar limits and AGI brackets that are annually adjusted for inflation.

Statutory framework and annual adjustment

• Under ORS 316.680(1)(b), an individual may subtract federal income tax attributable to the current tax year (not including self-employment tax, penalty taxes, or taxes for other years). The subtraction is limited by statutory maximums set in ORS 316.800: for married individuals filing jointly, the original maximum is $6,000, and for all others, $3,000 (subject to legislative change).
• Each year, these thresholds are increased for inflation per ORS 316.680(2) and published in the Department of Revenue instructions and worksheets.

Current-year statutory maximums and AGI phase-outs (2025 values)

• For tax year 2025 (per Oregon Form OR-40 Instructions, Table 3):
• Joint filers: Maximum subtraction is $10,000 if federal AGI is $149,000 or less. For AGI over $149,000, the amount is reduced by $2,000 for every $9,000 (or fraction thereof) of AGI above $149,000. The subtraction phases out completely at $187,000.
• All others: Maximum subtraction is $5,000 if AGI is $74,500 or less. For AGI over $74,500, the subtraction is reduced by $1,000 for every $4,500 (or fraction thereof) above that threshold, with complete phase-out at $93,500 AGI.
• "Or fraction thereof" means any part of the next increment results in a full reduction—for example, even $1 over the threshold triggers the full decrement.
• These bracket mechanics and current amounts are published in the official OR-40 Instructions each year, and the taxpayer must confirm the figures annually.

Calculation method and treatment of refunds

• Only federal income tax for the current year, as defined in ORS 316.680(1)(b) (excluding self-employment tax, IRA penalties, etc.), is eligible for subtraction. Taxes paid for other years or credits like the Earned Income Tax Credit are ineligible.
• If a refund or credit of previously subtracted federal tax is received in a later year, it must be added to Oregon income under ORS 316.685.

Authority and practice tips

• The subtraction worksheet in the OR-40 instructions steps practitioners through the annual limits and the phase-out calculation. Practitioners should cite both the relevant statutes and the current-year Form OR-40 Instructions.

Source: ORS 316.680; ORS 316.685; ORS 316.800; 2025 Oregon Form OR-40 Instructions, Table 3; 2024 Oregon Form OR-40-N and OR-40-P Instructions

Oregon allows a personal exemption credit under ORS 316.085 for each eligible taxpayer, spouse, and qualifying dependent. For tax year 2025, the credit is $256 per exemption, as published in the Department of Revenue’s 2025 Publication OR-17 (see Table 1, p. 16). This credit amount is adjusted annually for inflation by multiplying the $90 statutory baseline (set by ORS 316.085(3)) by a consumer price index factor and rounding to the nearest dollar.

Phase-out thresholds: The credit is subject to a complete (hard) phase-out at federal adjusted gross income (AGI) levels of $100,000 for single filers or married individuals filing separately, and $200,000 for all other filing statuses (married filing jointly, head of household, surviving spouse). No partial credit is available above these thresholds, regardless of number of exemptions. [ORS 316.085(5); Publication OR-17 (2025), Table 1]

Credit, not deduction: This is a nonrefundable credit (direct reduction of tax liability), not a deduction. It does not reduce taxable income. Oregon has not had a separate personal exemption deduction for state purposes during the relevant years.

Federal contrast: The federal personal exemption (deduction) was reduced to $0 by the Tax Cuts and Jobs Act of 2017 for tax years 2018–2025. The IRS continues to publish official guidance confirming that personal exemptions remain suspended for these tax years. Federal returns no longer include a personal exemption, while Oregon continues to offer a state-level credit for each qualifying individual.

Source: ORS 316.085 Source: 2025 Oregon Publication OR-17, Table 1 Source: IRS, Exemptions for Dependents

Oregon personal income tax payment deadline: Payment of Oregon personal income tax is due by the original return due date, which for most individual filers is the same as the federal due date—generally April 15 for calendar-year taxpayers, or the next business day if April 15 falls on a weekend or holiday. Oregon statute (ORS 314.385) aligns the return due date with the federal deadline, and ORS 314.395 requires that payment be made at the time the return is required to be filed. Obtaining an extension of time to file the return does not extend the time to pay; payment must be made by this date to avoid penalties and interest. Neither statute specifies the exact amount or escalation structure of late payment penalties—these are set forth in Department of Revenue administrative guidance and not directly in the cited code sections.

Estimated tax payment requirements and safe harbors: Oregon requires individuals to make estimated tax payments if the total tax due (after income tax withholding and credits) is expected to be $1,000 or more for the tax year. This threshold and the duty to file an estimated declaration are set forth in ORS 316.563. Estimated payments are ordinarily due in four equal installments (on or before April 15, June 15, September 15, and January 15 of the following year) pursuant to ORS 316.579. If the declaration is filed after April 15 but before June 15, only three installments are required; the number of installments corresponds to the filing date as described in ORS 316.579(2).

The required annual payment is generally defined as the lesser of (a) 90% of the tax due for the current tax year, or (b) 100% of the tax shown on the prior year's return. Special rules for taxpayers with high incomes or for those who had no tax liability the prior year are specified in OAR 150-316-0493, and Oregon adopts some references to federal safe harbor rules (including limits for high-income taxpayers).

Exceptions for farmers, fishermen, and short tax years: An Oregon taxpayer whose gross income for the year is at least two-thirds from farming or fishing (defined by reference to the Internal Revenue Code and Oregon administrative regulations) is not required to make regular quarterly estimated payments if they file and pay their total tax by March 1 following the tax year. This exception is addressed in OAR 150-314-0300. Taxpayers with a short tax year (less than 12 months) have their installment schedule adjusted in accordance with the same rule, based on the number of full months in their tax year.

Sources: ORS 314.385 ORS 314.395 ORS 316.563 ORS 316.579 OAR 150-316-0493 OAR 150-314-0300

Not yet human confirmed by SALT editor as of 2026‑06‑16.

Oregon requires part-year residents to compute personal income tax using a statutory proration method. A part-year resident is taxed on all income received while an Oregon resident, plus only Oregon-source income earned while a nonresident. To ensure tax reflects income tied to Oregon, the state uses a specific "Oregon percentage" formula.

Proration fraction and authority: The principal rule is set by ORS 316.117 and implemented through OAR 150-316-0135. Tax is first computed on total Oregon-modified federal adjusted gross income (AGI) as if the taxpayer were a full-year Oregon resident. This preliminary tax is then multiplied by a fraction:

• Numerator: Oregon-modified federal AGI from all sources during the resident period, plus Oregon-source modified federal AGI for the nonresident period. Oregon modifications (additions and subtractions) are allocated between resident and nonresident periods as detailed in OAR 150-316-0135(3)–(5), with certain modifications split pro rata and others sourced based on period or type.
• Denominator: Federal AGI for the entire year, with Oregon additions and subtractions applied as if the taxpayer were a full-year resident, before proration.

The formula (Oregon percentage) is:

(Oregon-source modified AGI [resident + nonresident periods]) ÷ (Total Oregon-modified AGI for the year)

The resulting percentage is applied to the computed tax and to certain credits/deductions. This ensures only the Oregon-connected share of income is taxed.

Summary of step process (per OAR 150-316-0135):

1. Calculate total Oregon-modified federal AGI for the entire tax year (as if a full-year resident).
2. Allocate Oregon modifications (additions/subtractions) to the appropriate period or source according to the rule—some are pro rata, others specific.
3. Determine the Oregon numerator: all Oregon-modified federal AGI while resident, plus Oregon-source AGI while nonresident.
4. Divide the Oregon numerator by the total Oregon-modified AGI (denominator) to determine the Oregon percentage.
5. Multiply state tax and select credits by this percentage to compute the tax due as a part-year resident.

Example: If a taxpayer's total Oregon-modified AGI for the year is $100,000, and $25,000 is assigned to Oregon periods and Oregon sources, the Oregon percentage is 25%. Oregon tax is first computed on $100,000, and the final liability is 25% of that result.

Cautions:

• The proration rules for credits, deductions, and modifications can be complex; some items follow different allocation methods as detailed in OAR 150-316-0135.
• This section summarizes the general rule; special treatment for net operating loss carryforwards, certain credits, and multi-year modifications are subject to additional rules and not addressed here.
• For nonresident individuals, a similar apportionment mechanism (not identical) applies under ORS 316.127.

Source: ORS 316.117 Source: OAR 150-316-0135

Not yet human confirmed. The exact allocation for specific modifications (and select credits) should be checked against the latest DOR instructions for the relevant tax year.

Oregon allows a subtraction for federal income tax paid, but imposes statutory maximums and phases the benefit out at higher federal adjusted gross income (AGI) levels. The framework for the federal tax subtraction—including the calculation, eligible amounts, and phase-out thresholds—is set out in Oregon Revised Statutes (ORS) §§ 316.680, 316.685, and 316.800.

Maximum subtraction amounts and phase-out thresholds:

• For joint filers, the statutory maximum for the subtraction is $10,000, provided federal AGI does not exceed $149,000. The subtraction is reduced by $2,000 incrementally for every $9,000 of AGI (or fraction thereof) above $149,000, phasing out completely at $187,000 AGI.
• For all other filers, the maximum is $5,000 up to $74,500 AGI, and the amount is reduced by $1,000 for every $4,500 (or fraction thereof) of AGI above $74,500, fully phasing out at $93,500 AGI.
• Both the maximum subtraction and the AGI thresholds may be adjusted annually for inflation as provided by ORS 316.800(3)(f) and announced each year by the Department of Revenue in official instructions and publications.

Mechanics:

• Only federal income tax accrued for the tax year (not for other years) is subtractible. Refunds or credits attributable to previously claimed years reduce the allowable subtraction in the year received (ORS 316.685). The subtraction calculation is taken before any phase-out.
• The phase-out calculation applies after determining the allowed subtraction. If federal AGI exceeds the relevant threshold, the subtraction is reduced according to the statutory increments, and is reduced to zero when the upper AGI threshold is reached.

Authority:

• The right to claim the subtraction, base amounts, and limits are established under ORS 316.680 (subtraction), ORS 316.685 (effect of refunds/credits), and ORS 316.800 (maximums, phase-out schedule, annual inflation adjustment mechanism). Official annual DOR instructions announce the exact indexed amounts.

Summary Table:

• Joint filers: Max $10,000 if AGI ≤ $149,000; reduced by $2,000 per $9,000 (or fraction) to zero at $187,000
• All others: Max $5,000 if AGI ≤ $74,500; reduced by $1,000 per $4,500 (or fraction) to zero at $93,500

Always check the current year’s official DOR instructions and publications for current figures.

Source: ORS 316.680; ORS 316.685; ORS 316.800

Oregon requires individuals—including residents, part-year residents, and nonresidents with Oregon-source income—to make estimated tax payments when their anticipated income tax after withholding and credits will be $1,000 or more for the tax year. This threshold and obligation are set by ORS 316.563.

Threshold and payment schedule:

• You must make estimated tax payments if you expect to owe $1,000 or more, after subtracting estimated withholdings and allowable credits (ORS 316.563).
• Installments are due in four roughly equal parts: April 15, June 15, September 15 of the tax year, and January 15 of the following year. If a due date falls on a weekend or holiday, payment is due the next business day (ORS 316.579(3)). If you become subject to estimated payment requirements after April, only later installments apply.

Required annual payment and safe harbor rules: To avoid an underpayment penalty, you must pay the lesser of:

• 90% of your tax liability for the current year, or
• 100% of the prior year’s Oregon tax (if that year covered all 12 months and resulted in a liability), as established by OAR 150-316-0493(2).

For high-income taxpayers, the federal rules referenced by Oregon require payment of 110% of the prior year’s tax, rather than 100%, to satisfy the safe harbor. The Oregon regulation (OAR 150-316-0493(6)) adopts these federal high-income definitions and safe harbor thresholds by reference to IRC § 6654(d)(1), so the income threshold triggering the 110% rule (generally federal AGI above $150,000 for joint filers or $75,000 separate) is set by federal law, not specifically in Oregon statute or rule.

Farmers, fishers, and special annual payment rules: Taxpayers who earn at least two-thirds of their gross income from farming or fishing may pay all estimated tax by a single annual installment due January 15 of the following year or in full with the return by March 1, without penalty (OAR 150-314-0300; ORS 316.579(4)).

Penalty exceptions and waivers: No penalty applies if:

• The amount due after withholdings and credits is less than $1,000;
• You paid required estimated amounts under the 90%, 100%, or federal 110% safe harbors;
• You had no tax liability for the prior year (OAR 150-316-0493).

The Department of Revenue may waive underpayment penalties for reasonable cause or if the underpayment arises from casualty, disaster, unusual circumstances, or changes in tax law, as outlined in OAR 150-316-0493(7) and ORS 316.587. Examples of reasonable cause include serious illness, death, or events beyond the taxpayer’s control.

Summary: Oregon’s estimated tax regime closely follows federal safe harbor conventions, with liability thresholds, installment timing, and penalty waivers specifically referenced in state statutes and regulations. High-income safe harbors, including the 110% threshold, follow federal definitions by cross-reference.

Source: ORS 316.563 Source: ORS 316.579 Source: OAR 150-316-0493 Source: OAR 150-314-0300 Source: ORS 316.587

Not yet human confirmed by SALT editor as of 2026-06-16.

Oregon’s “kicker” credit triggers when actual General Fund revenues collected during a two-year biennium exceed the close-of-session revenue forecast by at least 2%. When this threshold is met, the entire surplus over the forecast is returned to personal income taxpayers as a refundable credit against the tax due for the odd-numbered year following the close of that biennium.

Surplus condition and calculation:

• The threshold for the kicker is set by ORS 291.349: if actual General Fund revenues exceed the forecast—certified by the Oregon Department of Administrative Services—by 2% or more, the entire surplus above the forecast is distributed as a kicker credit.
• The credit amount is calculated as a percentage; each taxpayer’s kicker credit equals the percentage of their prior-year (even-numbered tax year) Oregon personal income tax liability published by the Department of Revenue for the relevant year. (E.g., For the 2023 tax return filed in 2024: kicker applies if the biennium surplus in 2021–2023 triggers the credit; the 2023 return will include a kicker credit based on 2022 tax liability, using DOR’s published "kicker percentage.")

Which year’s liability is used and when is the credit claimed?

• The kicker is claimed on the personal income tax return for the odd-numbered year following the biennium (e.g., if the surplus is in the 2021–23 biennium, the kicker credit is claimed on the 2023 tax return filed in 2024).
• The calculation is always tied to the prior, even-numbered year's Oregon personal income tax liability.

Statutory and constitutional authority:

• The kicker was authorized by statute in 1979 and added to the Oregon Constitution in 2000 (Measure 86, now Article IX, section 14), preventing the legislature from retaining or redirecting surplus funds that meet the kicker trigger. The operative statute for the calculation and administration is ORS 291.349. The detailed calculation is implemented by OAR 150-291-0300.

Cautions:

• The kicker does not apply in all years; the Department of Administrative Services makes an official certification following the close of a biennium.
• The percentage and procedures for each credit are published annually by the Department of Revenue; taxpayers must check current DOR instructions for the exact percentage and procedures for the year in question.

Source: ORS 291.349 Source: Oregon Constitution, Article IX, § 14 Source: OAR 150-291-0300 Source: Oregon DOR — Kicker Summary

Not yet human confirmed as of 2026-06-16.

Oregon modifies federal adjusted gross income (AGI) for individuals by requiring a series of state-specific additions and subtractions before arriving at Oregon taxable income. These Oregon-unique adjustments—distinct from credits or standard deductions—regularly affect return preparation and diverge from federal law in several key areas. The following table summarizes the most significant Oregon additions and subtractions, with pinpoint statutory citations, applicable annual limits (if set), and brief practitioner context.

| Category | Add/Subtract | Statutory cite | Highlights/Context | |---|---|---|---| | 529 Plan/ABLE Contributions | Subtract | ORS 316.699 | Subtraction for qualified contributions to Oregon 529 College or ABLE accounts. 2026 annual cap: $2,865 single/$5,730 joint (indexed; see OR-17 Ch. 5). Only Oregon-sponsored accounts; no carryforward or rollover eligibility. | | Federal Income Tax Paid | Subtract | ORS 316.680(1)(b), 316.685, 316.800 | Subtracts federal tax accrued (not withheld), minus refunds/credits, subject to strict AGI-based phaseout. 2026 caps: $10,000 joint/$5,000 single; phased out per ORS 316.800(3)-(4); actual annual thresholds in OR-17 Table 3. | | Social Security Benefits | Subtract | ORS 316.680(1)(c) | Any benefits subject to federal tax are subtracted; only applies to the amount included in federal AGI. | | Interest on U.S. Obligations | Subtract | ORS 316.680(1)(f) | Excludes interest on certain U.S. government bonds to the extent included in federal AGI. Not all federal instrument interest qualifies. | | Depreciation/Section 179 Conformity | Add & Subtract | ORS 316.737, ORS 316.680(1)(n) | Oregon does not conform to all federal bonus depreciation or §179 expensing: excess federal deduction must be added back, and then subtracted over asset’s life per Oregon schedule. As of 2026: IRC tied to Dec. 31, 2021. Check DOR guidance for each year. | | Medical Expenses—Pre-1991 Plan | Subtract | ORS 316.693 | Niche subtraction: out-of-pocket medical premiums for elderly under pre-1991 employer plans. Applies to a vanishingly small population. | | Catastrophe Savings Account | Subtract | ORS 316.746 | Subtracts certain contributions to qualified Oregon disaster savings accounts, subject to annual statutory/DOR limits. | | Other State/Foreign Income | Add | ORS 316.127(1), 316.703 | Some non-Oregon income (e.g. municipal bond interest, certain refunds, or foreign items) must be added back; consult statutes and OR-17 for details. | | State Income Tax Refund | Add | ORS 316.680(1)(h) | Refunds of state/local taxes previously deducted from Oregon income must be added back, if they reduced Oregon taxable income in a prior year. | | HSA/IRA Deductions | Usually Subtract | ORS 316.048 | Oregon ties to the federal deduction for HSA/IRA contributions but often lags the latest federal changes (IRC tie-in is Dec. 31, 2021 for 2026). Confirm with DOR for update status in years after major IRC amendments. |

Practitioner points:

• 529/ABLE: Statutory caps indexed for inflation. Only Oregon plans qualify for the subtraction (ORS 316.699; check OR-17 for annual cap).
• Federal tax paid: AGI-based phaseout is mechanical by statute; see ORS 316.800(3)-(4) and OR-17 Table 3 for current brackets.
• Depreciation/179 recapture: If federal bonus depreciation or additional §179 expense is claimed, the taxpayer adds back the federal excess for Oregon and subtracts it out over the remaining asset life, deferring the Oregon deduction (ORS 316.737). Can produce taxable income differences for years.
• HSA/IRA: Conformity can lag federal law; verify with OR-17 for the given year. Oregon uses Dec. 31, 2021 IRC for tax year 2026 (ORS 316.048).

Further detail, limits, and late-breaking updates (especially conformity lags after federal changes) are always published in Oregon Department of Revenue Publication OR-17 (see 2025 OR-17, Chapter 5).

The most significant credits and subtractions (not limited to AGI modifications) continue below:

Oregon personal income tax law provides several major credits and subtractions to reduce tax liability. Significant updates for tax year 2026 and onward include the following (reflecting 2026 legislation and Department of Revenue guidance):

1. Credit for Taxes Paid to Another State Oregon allows a nonrefundable credit for income taxes paid to another U.S. state or the District of Columbia on income taxed by both Oregon and the other jurisdiction. The credit equals the lesser of (a) the tax paid to the other state, or (b) the effective Oregon tax on that income. Apportionment rules apply for part-year residents or income taxed across different periods. No credit is allowed for taxes paid to cities, counties, or foreign countries. The calculation and restrictions are in ORS 316.082 and each year’s Form OR-40 instructions, with step-by-step worksheets included in Publication OR-17, Chapter 4. Source: ORS 316.082

2. Personal Exemption Credit Oregon provides a nonrefundable personal exemption credit for each taxpayer, spouse, and qualifying dependent. For 2025, the credit amount is $256 per exemption, phased out completely for federal adjusted gross income (AGI) above $100,000 (single, married filing separately) or $200,000 (other statuses). See Publication OR-17, Table 1. No partial credit is allowed above these thresholds. Source: ORS 316.085; Publication OR-17, Table 1

3. The “Kicker” (Surplus) Credit If Oregon’s General Fund revenue for a biennium exceeds the forecast by at least 2% (certified under ORS 291.349(5)), the entire surplus is distributed as a refundable “kicker” credit. The credit for each taxpayer is calculated as a specific percentage of their prior even-year Oregon personal income tax liability, with the official “kicker percentage” published annually by the DOR. See Oregon Constitution Art. IX, § 14; details of certification and calculation: ORS 291.349(1)-(6); procedures: OAR 150-291-0300. The credit is claimed on the return for the odd-numbered year following the close of the qualifying biennium. Source: ORS 291.349; Oregon Constitution Art. IX, § 14

4. Oregon Earned Income Credit (EIC) — Increased Amounts for 2026+ Effective for tax years beginning on or after January 1, 2026, Oregon increases the Earned Income Credit from 9% to 14% of the federal EIC, and to 17% for households with at least one dependent under age three on the last day of the tax year. These rates were amended by 2026 legislation (SB 1507) and reflected in the Oregon Department of Revenue's official 2026 Summary of Legislation. The credit remains refundable and subject to federal EIC eligibility rules. Source: 2026 Oregon DOR Summary of Legislation, SB 1507

5. New Jobs Tax Credit (2026–2031) For tax years 2026 through 2031, Oregon creates a refundable jobs credit for individual taxpayers who create new qualifying jobs in Oregon. The credit equals $1,000 per new job created and filled by the taxpayer (up to 10 jobs per taxpayer per tax year, maximum $10,000 annually). The credit is available for jobs maintained for at least six months in the tax year. Further details, qualifying conditions, and annual procedures are set out in 2026 legislation (SB 1507) and Department of Revenue guidance. Source: 2026 Oregon DOR Summary of Legislation, SB 1507

Other Key Subtractions from Federal AGI Oregon statutes allow several important subtractions, summarized in ORS 316.680 and updated in Publication OR-17:

• Federal income tax paid: Subject to strict dollar caps and AGI-based phase-outs ($10,000 joint/$5,000 other filers at lower AGI, reducing to $0 at upper AGI limits; see Publication OR-17 Table 3); calculation specifics and formula in federal-income-tax-subtraction.
• Social Security benefits: Most Social Security included in federal AGI may be subtracted (see OR-17, Chapter 5; ORS 316.680(1)(c)).
• Certain U.S. government bond interest: Select interest is subtracted (ORS 316.680(1)(f); see OR-17 for qualifying instruments).

Source: ORS 316.680(1)(b), (c), (f), (h), (n) Source: ORS 316.693 Source: ORS 316.699 Source: ORS 316.737 Source: ORS 316.746 Source: ORS 316.048 Source: ORS 316.800 Source: 2025 Oregon Publication OR-17, Ch. 5 Source: 2026 Oregon DOR Summary of Legislation, SB 1507

Not yet human confirmed. This section was updated to reflect (1) new EIC rates, (2) the new jobs tax credit as of SB 1507 (2026), and (3) confirmation that all other listed subtractions and modifications are current as of July 2026.

Oregon requires individuals to file a personal income tax return if certain income thresholds or other statutory conditions are met. Rules differ for residents, dependents, minors, and nonresidents. The controlling authority is ORS 316.362, but the Oregon Department of Revenue (DOR) sets practical dollar figures each year in the Form OR-40 Instructions.

Full-Year Residents (Including Dependents and Minors) A resident must file if required to file a federal return (ORS 316.362(1)(a)) or if gross income from all sources equals or exceeds:

• The basic Oregon standard deduction (ORS 316.695(1)(c)(B)),
• Any additional deduction for age 65/blindness (ORS 316.695(7)), and
• The income-equivalent of personal exemption credits (ORS 316.085(3)(b)), as detailed in ORS 316.362(1)(a)(iii).

The DOR translates these into filing thresholds in the OR-40 Instructions each year. For 2025 (Form OR-40):

• Single (under 65, not blind): Gross income ≥ $7,935
• Married filing jointly (both under 65, not blind): Gross income ≥ $15,865 (+$1,000 per box if age 65/blind, per line 17 of OR-40)
• Dependent: File if gross income > $1,350, or if earned income + $450, up to the standard deduction cap

A dependent is defined based on eligibility to be claimed on another’s federal return (threshold per DOR instructions, not directly in statute). Minors with income must file unless their only income is parental-reported interest/dividends (ORS 316.372).

Federal Return Filing Oregon requires a state return for any resident who must file federally, even if their state income is below the threshold.

Meaning of "Boxes" on OR-40 Each box checked on line 17 (for age 65/blindness for taxpayer or spouse) increases the threshold by $1,000.

Nonresidents & Part-Year Residents Nonresidents must file if federal gross income from Oregon sources meets or exceeds the standard deduction for their status (ORS 316.362(1)(b)). Part-year residents apply a similar test for the portion of the year; refer to current-year instructions.

Requirement to File for Refunds You must file to claim a refund of Oregon tax withheld or estimated payments, even if income is below the threshold.

Summary Table – 2025 Full-Year Residents | Filer Type | Filing Threshold (Gross Income) | |------------------------|----------------------------------------------| | Dependent | $1,350 (or earned income + $450, up to cap) | | Single (0 boxes) | $7,935 | | Married Filing Jointly | $15,865 (0 boxes; +$1,000 per age/blind box) |

Thresholds change annually; always consult the latest OR-40 Instructions.

Source: ORS 316.362 Source: ORS 316.372 Source: 2025 Form OR‑40 Instructions Source: Oregon DOR 'Do I need to file?'

Not yet human confirmed by SALT editor as of 2026‑06‑17.

Oregon imposes penalties and interest on late filing and late payment of personal income tax under a clear statutory framework. Certain penalties may be waived by the Department of Revenue in appropriate circumstances.

Penalties

• A 5 percent late-payment penalty applies if tax is not paid by the due date (see ORS 314.400(1)).
• An additional 20 percent penalty applies if the failure to file continues for more than three months after the return due date (ORS 314.400(2)), totaling up to 25 percent.
• When a tax deficiency is due to fraud or intent to evade, a penalty of 100 percent of the deficiency applies (ORS 314.400(3)).

Interest

• Interest accrues on the unpaid tax balance from the original due date until payment is received, at the annual rate established by the Department of Revenue under ORS 305.220.
• Effective January 1, 2026, the statutory interest rate is 8 percent per year. If tax remains unpaid more than 60 days after assessment, an additional 4 percent annual interest applies, for a maximum effective rate of 12 percent (see Oregon DOR Penalties and Interest FAQ).
• Interest is charged only on the unpaid tax amount, not on assessed penalties.

Penalty Waivers

• Taxpayers may request a waiver for the 5 percent late-filing penalty, the 20 percent additional penalty, and the 100 percent fraud penalty in certain cases. Procedures and eligibility are detailed on the Oregon Department of Revenue’s Collections Penalty Waivers page.

Source: ORS 314.400 Source: ORS 305.220 Source: Oregon DOR Penalties and Interest Source: Oregon DOR Collections Penalty Waivers

Not yet human confirmed by SALT editor as of 2026-06-17.

Oregon allows eligible pass-through entities (PTEs)—including partnerships, S corporations, and LLCs taxed as partnerships or S corporations—to annually elect to pay a state-level Pass-Through Entity Elective (PTE-E) tax. The election is made by filing Form OR-21 by the original or extended due date of the return. In general, the PTE-E tax is imposed on distributive proceeds allocable to each member (individuals or pass-through owners), at a rate of 9% on the first $250,000 of distributive proceeds and 9.9% on the excess.

PTE-E Election Mechanics and Limitations:

• The PTE must make the PTE-E election each tax year; it cannot be made retroactively or prospectively. Only PTEs with owners who are individuals (directly or indirectly through a grantor trust or another PTE solely owned by individuals) are eligible (ORS 314.778(1), OAR 150-314-0521).
• The tax must be paid by the entity, and the filing procedures are detailed in the instructions for Form OR-21.

Sunset extension via SB 1510 (2026): Oregon’s PTE-E regime, originally scheduled to sunset after tax year 2025, was extended by Senate Bill 1510 (2026 session, Oregon Laws 2026, ch. 75; effective June 5, 2026) to remain in effect through tax year 2027. See Oregon DOR’s 2026 Summary of Legislation and official administrative updates for confirmed applicability through 2027. The current administrative rule OAR 150‑314‑0522 (as of July 2026) references only tax years beginning before January 1, 2026; practitioners should rely on the expanded statutory authority pending formal rule amendment.

Reporting the PTE-E Tax and Claiming the Credit:

• Each member’s distributive share of PTE-E tax paid is reported to them on the OR-21-K-1. An individual owner must include an addition to Oregon income for any PTE-E tax that reduced their federal taxable income, shown on their Schedule K-1 from the entity (OAR 150-314-0522).
• Owners (residents, nonresidents, part-year residents) may claim a refundable credit for their pro rata share of the PTE-E tax paid, reported as a special credit on their Oregon personal income tax return (ORS 314.778, OAR 150-314-0522). This credit is claimed using the amounts shown on the OR-21-K-1 and is not subject to further reduction or carryover.
• The system is designed such that the PTE-E credit and addition offset, resulting in a revenue-neutral Oregon outcome, but the federal benefit remains (federal deductibility of the entity tax, up to the federal SALT cap workaround). While this is the statutory and policy aim, the exact owner-level result may vary depending on individual tax circumstances and should be confirmed on a case-by-case basis.

Nonresident Withholding & Composite Filing:

• The PTE-E tax does NOT eliminate a PTE’s duty to withhold for nonresident owners or to offer composite return filing. Owners who do not participate in composite filing remain subject to regular withholding rules under ORS 314.778(8) and OAR 150-314-0521. Composite filing and PTE-E credits are distinct systems but may both apply.

Regulatory language update needed: Regulations OAR 150-314-0521 and OAR 150-314-0522 currently reference tax years only through 2025. Practitioners should rely on the expanded statutory sunset (now through tax year 2027 per Oregon Laws 2026, ch. 75) and confirm rule text with each new administrative update.

Sources:

• ORS 314.778 (PTE-E enabling statute): https://www.oregonlegislature.gov/bills_laws/ors/ors314.html
• OAR 150-314-0521 (definition & eligibility): https://secure.sos.state.or.us/oard/viewSingleRule.action?ruleVrsnRsn=293670
• OAR 150-314-0522 (member reporting & credit): https://secure.sos.state.or.us/oard/viewSingleRule.action?ruleVrsnRsn=293671
• Oregon DOR PTE-E resource page: https://www.oregon.gov/dor/programs/businesses/Pages/Pass-Through-Entity-Elective-Tax.aspx
• 2023 Form OR-21 and instructions: https://www.oregon.gov/dor/forms/FormsPubs/form-or-21-instr_107-114-1_2023.pdf
• Senate Bill 1510 / Oregon Laws 2026, ch. 75: https://www.oregon.gov/dor/Pages/2026-summary-of-legislation.aspx

Not yet human confirmed. This summary covers core mechanics current as of July 2026, including extension through tax year 2027 per SB 1510 (2026); see cited sources for late-breaking administrative updates.