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), you’re eligible for this credit. Again, on the Federal side of things, you’d get nothing. Please note that it is a dollar-for-dollar reduction in the tax owed to Oregon, and that it phases out when taxable income reaches $100,000 (single filers) or $200,000 (joint filers).

Oregon Cultural Trust

The Oregon Cultural Trust (http://www.culturaltrust.org/) offers another unique state benefit. The OCT supports more than 1,300 nonprofits nationwide 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 nonprofits 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 A 2019 Subtraction is now a 2020 Tax Credit

Here is another tax benefit the Feds have done away with but Oregon continues to offer. Contributions made to the Oregon College Savings Plan https://www.oregoncollegesavings.com/ through 12/31/2019 are subtractions from your state taxable income, up to the limits of $2,435 for single filers, $4,865 on a jointly-filed return. Any prior contributions made in excess of the annual maximum are carried forward for up to four years following the contribution year and deducted later on.

The subtraction described above will change 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 law’s provisions:

Adjusted Gross Income (AGI) % of Contributions eligible for tax credit Amount needed to maximize the $150 tax credit for single filer Amount needed to maximize the $300 tax credit for joint filers
Less than $30K 100% $150 contribution $300 contribution
$30,001-$70K 50% $300 contribution $600 contribution
$70,001-$100K 25% $600 contribution $1,200 contribution
$100,001-$250K 10% $1,500 contribution $3,000 contribution
More than $250K 5% $3,000 contribution $6,000 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 tax year contributions.

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

Oregon Special Medical Subtraction

If you or a family member is age 65 or older as of December 31, 2019, a portion of that individual’s medical expenses (up to a maximum of $1,800, depending on income) 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.