Revenue
Legislative Report - Week of January 26
Revenue Team
Coordinator: Peggy Lynch
Please see Governance Overview here.
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REVENUE
Josie Keohne, Patricia Garner, Peggy Lynch
Everyone waits anxiously for the Feb. 4th Revenue Forecast so the legislature will know the expected revenue for the rest of this biennium to be able to rebalance the state budget. The budget was balanced when the legislature adjourned last June. Then in early July Congress passed H.R.1 (see Summary), a collection of tax cuts and program cuts. Oregon’s income tax system automatically “connects” to the federal income tax system. Between the two actions, Oregon is expected to see a reduction in revenue. The League has joined with others in a reconstituted Oregon Revenue Coalition, a stakeholder group that consists of nonprofits, service providers, labor unions and advocacy groups working to protect Medicaid, SNAP, early learning programs, higher education, federal rental assistance, homeless service dollars, and other critical programs.
To address both potential cuts and loss of revenue, LWVOR signed on to this letter. For more information see the For Our Future Oregon website and the Jan. 13th press release. KOIN reported on tax issues. As did KPTV. LWVOR sent an Action Alert to members to share your concerns about these cuts and to attend a rally in Salem on Feb. 5th from noon-2p.
In other reports, you can read about some of the possible cuts or cost replacements in services Oregonians need. State agencies provided the Ways and Means Subcommittees during the November Interim Days with up to 5% in proposed cuts to their currently approved budgets. Here are the costs to OHA & DHS related to H.R. 1 recently calculated. In addition, funding the Oregon Dept. of Transportation will need to be addressed.
Although we are beginning to see some positive changes in our economy, an Oregonlive report from Dec. 14 mentions factory jobs lost. We are still suffering from income inequality as shared in this Oregon Center for Public Policy Podcast/You Tube.
Among the discussions in the 2026 session: Here are the Legislative Concepts to be considered in the House and Senate Revenue Committees.
LC 153 / SB 1511 requires the Legislative Revenue Office study estate taxes which will apparently focus on estate tax exclusions. At the present time $1 million (2002) are excluded from computing estate taxes. A simple example – an estate is equal to $1.5 million, after the exclusion $500,000 is taxable with tax in the amount of $50,000. While only rather indirectly stated in a question posed by Senator Taylor, it appears that the Committee is considering whether raising the exclusion would encourage people to move to Oregon. The exclusion amount itself or the “subject threshold” could be raised. In the latter situation taxable estates of, for example, $2.5 million would not owe tax, but over that amount, the $1 million exclusion would apply.
LC 302 / SB 1507 would reduce income taxes if the state were to collect a retail sales tax. If passed, the Department of Revenue is directed to use an equal amount of revenue for specified purposes, such as to the Oregon Criminal Justice Commission, for wildfire suppression, increasing the earned income tax credit, funding the Employment Related Day Care subsidy program and more. The actual limits are not specified.
IDA’s Individual Development Accounts – This program seeks to help individuals with modest income save money to invest in important financial goals such as purchasing a home or vehicle, paying for education, or starting a business. For every $1 saved, the program will match it with $5. IDA’s are administered by various community organizations such as schools and colleges in Oregon, Habitat for Humanity of Oregon and the Northeast Oregon Economic Development. In order to qualify for an IDA, individuals must meet specified income and net worth eligibility requirements. As of 2026 the maximum funding level is $8 million which is scheduled to sunset January 1, 2030. Proponents of the IDA plan, including Neighborhood Partnerships of OR, are seeking to raise the cap on these tax credits in order to keep up with inflation.
Tribal Fuel Tax – The Committee considered the fact that Oregon currently limits how tribes can spend fuel tax rebates.
LC 254 / SB 1520 makes technical fixes and slight policy updates to some tax statutes.
Oregon’s Full Ways and Means Co-Chairs have written an opinion piece about the challenges facing Oregon. The Republican Leadership provided an alternative opinion piece. The League will need to be actively engaged in helping solve these problems. See other sections of the Legislative Report about the cuts in each area and what’s being considered to address the revenue shortfall.
Yes, in spite of the revenue shortfall, Oregon still has the “kicker”. Here’s what you can expect. Remember that you can donate the kicker on your 2024 Oregon tax return.