Oregon Democrats propose partial split from federal tax code and preserve $291 million

Oregon Democrats introduced Senate Bill 1507 to disconnect the state from three recent federal tax provisions, preserving about $291 million in revenue over 18 months and directing some of that money to job-creation credits and an Earned Income Tax Credit boost.

Oregon Democrats have introduced Senate Bill 1507 to selectively disconnect parts of the state's tax code from recent federal tax changes. Lawmakers say the move responds to federal changes that would cut Oregon's revenue and that it aims to protect funding for state services. The proposal targets three specific federal provisions while keeping other federal changes in place. It also proposes new state tax credits for businesses that hire in Oregon and a boost to the Earned Income Tax Credit for lower- and moderate-income households. Key provisions: - The bill would disconnect Oregon from three federal tax provisions enacted last summer rather than adopting all federal changes automatically. - State economists estimate the federal changes would reduce Oregon revenue by about $888 million over the next 18 months; Democrats say the proposal preserves about $291 million during that period. - The plan would disallow the premium first-year deduction for new equipment (preserving about $267 million), the federal deduction for auto loan interest (about $36 million), and the Qualified Small Business Stock exemption (about $39 million). - The bill would direct $25 million of preserved revenue to a new state tax credit for businesses that create jobs in Oregon and pay above minimum wage, with larger credits for demonstrated employee retention. - Another $26 million would boost Oregon's Earned Income Tax Credit by 5 percentage points, raising the credit to up to 17% for eligible households under the stated income threshold. - Democratic revenue committee chairs said the plan is intended to protect public services and target benefits to lower- and moderate-income residents; state Republicans have said they prefer keeping the federal changes and reducing spending. Summary: The proposal would restore portions of state revenue by disconnecting from three federal provisions, resulting in roughly $342 million reclaimed from those items and a net $291 million preserved to fund credits and services, according to lawmakers. The measure faces partisan disagreement and will continue through the legislative process; outcome is undetermined at this time.