A significant change to Oregon’s tax system took effect June 5, bringing expanded tax relief for hundreds of thousands of residents while creating new incentives aimed at encouraging businesses to add jobs across the state.
Senate Bill 1507, approved during the 2026 legislative session, includes what lawmakers describe as the largest expansion of Oregon’s Earned Income Tax Credit in state history. The law also establishes a new jobs-based tax credit program designed to reward businesses that increase employment within Oregon.
The legislation combines tax relief for lower- and moderate-income households with economic development incentives intended to stimulate hiring and investment. State officials say the measure is structured to support working families while maintaining funding for public services such as education, healthcare, and public safety.
One of the most significant provisions expands Oregon’s Earned Income Tax Credit, a benefit available to qualifying low-income workers and families. State lawmakers estimate that more than 500,000 Oregonians will benefit from the expanded credit, including many households with children. The Earned Income Tax Credit reduces the amount of state income tax owed and can provide additional financial assistance to eligible taxpayers.
For many families facing continued pressure from housing costs, food prices, utility bills, and other household expenses, the expanded credit is expected to provide additional financial relief when tax returns are filed.
The law also creates a new $25 million Jobs Tax Credit program for businesses that demonstrate a net increase in qualifying jobs within Oregon. Supporters of the measure say the program is designed to encourage employers to expand their workforce while rewarding companies that create and retain positions that contribute to the state’s economy.
Businesses in Southern Oregon could potentially benefit from the new program if they meet eligibility requirements and increase employment levels. Communities throughout the region, including Grants Pass, Medford, Ashland, Klamath Falls, and surrounding rural areas, continue to face workforce challenges and economic development needs, making job creation incentives particularly relevant for local employers seeking growth opportunities.
According to state leaders, the legislation was also crafted to preserve funding for essential government services. Lawmakers estimate the measure will protect approximately $311 million that can continue to support public education, healthcare programs, and public safety services throughout Oregon.
Senate Majority Leader Kayse Jama described the law as “the balanced, responsible way to fund core government services today and invest in thriving families and profitable businesses for Oregon’s tomorrow.”
Senator Anthony Broadman, who chairs the Senate Committee on Finance and Revenue, said the measure is intended to create stability within Oregon’s tax system while supporting workers and employers. “Oregonians want a fair tax system that supports working families and Oregon employers,” Broadman said. “This law ensures we have a stable framework for raising state revenue while easing the tax obligations of workers and job creators.”
Representative Nancy Nathanson, chair of the House Committee on Revenue, said the legislation was designed to preserve resources for public programs while encouraging economic growth. “We’re preserving money to support working families, encourage job creation, and continue crucial services,” Nathanson said.
Another provision receiving attention from taxpayers is the law’s reaffirmation that tips and overtime earnings will not be subject to additional state taxation under the measure. For service industry workers, hospitality employees, healthcare staff, and others who frequently rely on overtime income, the clarification provides certainty regarding future tax obligations.
While the full economic impact of Senate Bill 1507 will take time to measure, the law immediately establishes new tax policies affecting households and employers across Oregon. Residents may begin seeing benefits through future tax filings, while businesses evaluating expansion plans can now consider the state’s new job creation incentives.
As Oregon continues to balance economic growth, workforce development, and public service funding, Senate Bill 1507 represents one of the state’s most consequential tax policy changes to take effect this year, with implications reaching communities from Portland to Southern Oregon.