A proposal moving through the Oregon Legislature aims to lower taxes for more than 200,000 low-to-moderate income households while reshaping parts of the state’s tax code to close what lawmakers describe as loopholes benefiting the wealthy and large corporations.
Senate Bill 1507 advanced this week from the Senate Committee on Finance and Revenue to the full Senate for consideration. Supporters say the measure is designed to improve affordability for working families, encourage job creation among Oregon businesses, and protect nearly $291 million in funding for core public services, including education, health care, and public safety.
At the heart of the proposal is a significant expansion of Oregon’s Earned Income Tax Credit. If approved, the legislation would increase the credit from 9 percent to 14 percent for individual filers. For households with a child under the age of three, the credit would rise from 12 percent to 17 percent. Lawmakers describe the change as the largest expansion of the Earned Income Tax Credit in Oregon history.
According to the bill’s sponsors, the expanded credit would lower taxes for more than 200,000 households across the state. The Earned Income Tax Credit is structured to benefit working individuals and families with lower incomes by reducing the amount of tax owed and, in some cases, increasing refunds. For many Oregon residents, that could translate into additional take-home income at a time when housing, food, and energy costs remain elevated.
Senator Anthony Broadman, a Democrat from Bend, said in a statement, “Democrats are laser-focused on putting more money in the pockets of everyday Oregonians. At a time when the cost of living is too high and rising, we need to take urgent action this legislative session to invest in affordability and support local businesses.”
In addition to expanding the Earned Income Tax Credit, Senate Bill 1507 would establish a new $25 million Jobs Tax Credit. The credit would be available to Oregon businesses that demonstrate net job growth within the state. Lawmakers say the incentive is designed to reward companies that create good-paying jobs, regardless of industry, as long as employment levels increase in Oregon.
The measure also reaffirms that tips and overtime pay will not be taxed under the proposal. Supporters argue that maintaining those exemptions provides clarity and stability for workers in service industries and other sectors where overtime compensation is common.
To finance the tax relief and maintain funding for essential services, the proposal would remove three provisions from Oregon’s tax code. Lawmakers describe those provisions as tax benefits that would have primarily aided high-income individuals and corporations without directly contributing to job growth in Oregon.
The eliminated provisions include deductions on auto loan interest for new vehicles, deductions on profits from corporate equity sales, and bonus depreciation allowances for machinery and equipment. By removing these deductions, supporters of the bill say the state can preserve $291 million for health care, education, and public safety while redirecting tax benefits toward working households and businesses that expand employment.
The proposal also responds to changes at the federal level. Lawmakers note that a federal tax package adopted last summer automatically altered Oregon’s tax code, creating what they describe as a $900 million budget shortfall. Senate Bill 1507 seeks to make targeted adjustments to “re-align Oregon’s tax code to benefit working Oregonians,” according to the press release announcing the bill’s advancement.
If enacted, the legislation would affect residents across Oregon, from urban centers to rural communities. For qualifying households, the expanded tax credit could provide additional financial breathing room. For businesses considering expansion, the new jobs credit could reduce tax liability if they add positions within the state.
The bill now heads to the Senate floor, where lawmakers will debate its provisions and potential impact on Oregon’s economy and budget priorities. As discussions continue, the proposal highlights an ongoing legislative effort to balance tax policy, public services, and affordability concerns facing households and employers statewide.