Oregon Credits & Subtractions

For a state that has no sales tax and hence relies heavily on income tax collections, Oregon has a surprising number of tax credits and subtractions from income available to taxpayers. Many are somewhat obscure and only apply to a limited number of people, but the following items are more or less available to everyone.

Oregon Tax Credits

Political Contribution Credit

Although political contributions have not been tax-deductible for Federal purposes for many years, contributions made to a political party, to a candidate that appears on a ballot anywhere in Oregon, or to a Political Action Committee registered in Oregon, are eligible for a state income tax credit. The maximum is $50 for an individual, or $100 on a joint return.

What this means is that if during the year you gave $100 to a candidate running for office, or if you gave $100 to the Republican Party or the Democratic Party, you’ve got a tax credit coming. If you have payroll deductions that include both union dues and PAC contributions (very common for nurses and teachers), the PAC portion is eligible for this credit. Again, on the Federal side of things, you’d get nothing. Please note that is is a dollar-for-dollar reduction in the tax owed to Oregon, and that it phases out when taxable income reaches $75,000 (single filers) or $150,000 (joint filers).

Oregon Cultural Trust

The Oregon Cultural Trust (http://www.culturaltrust.org/) offers another unique state benefit. The OCT supports more than 1,400 non-profits statewide in the development of arts, heritage and humanities programs. You can search at their website to see if an organization you make a donation to is on their list. If so, and if you make a matching contribution directly to the OCT, you will get a tax credit of up to $500 for an individual or up to $1,000 on a jointly file return.

For example, let’s say earlier in the year you gave $100 to Oregon Public Broadcasting, or to OMSI, or the Portland Art Museum. As these non-profits are part of the Oregon Cultural Trust network, you could now make a matching $100 contribution to the OCT. This would give you an additional $100 charitable contribution to deduct on your Federal tax return, and it would give you a $100 Oregon tax credit. If you take the state tax credit here, you must back out any amount taken as an itemized deduction on your federal tax return from your state itemized deductions.

The bottom line on both the Political Contribution and the Oregon Cultural Trust tax credits is that, if you expect to have any state tax liability, you can in effect pay off some of what you owe simply by giving a bit of money to someone or something you like as opposed to letting the Oregon Department of Revenue have it.

Oregon 529 College Savings Plan

Here is another tax benefit the the Feds have done away with but Oregon continues to offer. However, contributions made to the Oregon College Savings Plan after 12/31/2019 are no longer eligible subtractions from your state taxable income.

The former subtraction has been changed to a state tax credit beginning with the 2020 tax year, with the credit amount based upon the Taxpayers’ Adjusted Gross Income (AGI) and amount contributed to the Oregon 529 plan. The following chart outlines the new 2023 provisions:

Adjusted Gross Income (AGI) % of Contributions eligible for tax credit Amount needed to maximize the $170 tax credit for single filer Amount needed to maximize the $340 tax credit for joint filers
Less than $30K 100% $170 contribution $340 contribution
$30,001-$70K 50% $340 contribution $680 contribution
$70,001-$100K 25% $680 contribution $1,360 contribution
$100,001-$250K 10% $1,700 contribution $3,400 contribution
More than $250K 5% $3,400 contribution $6,800 contribution

Excess contributions made through the 2019 tax year remain eligible for the four year carry forward provision, in addition to any credit earned for new 2020 and later tax year contributions.

Please note that only contributions made to the Oregon 529 plan are eligible.

 Oregon Subtractions

 Oregon Special Medical Subtraction

 If you or a family member is age 66 or older as of December 31, 2023, a portion of that individual’s medical expenses can be subtracted from Oregon taxable income. If this applies to you, you’ll want to keep separate records of each individual’s paid expenses and have them ready at tax time.

Oregon 1st Time Home Buyers Savings Program

The state established a new program in 2019 that allows residents who haven’t owned a single-family home within the preceding three years to set up a tax-advantaged savings account to assist in a future purchase. Annual contributions of up to $10.000 (jointly-filed returns) or $5,000 (all other returns) can be subtracted from state taxable income, and account funds must be used to purchase a home within ten years of the date the savings account is opened.  Additional details can be found at: https://www.oregon.gov/dor/programs/individuals/pages/first-homebuyers.aspx

Revised December 2023