Stimulus bill will send billions to Oregon families, but they may owe millions in additional state taxes
Story by Mike Rogoway | The Oregonian/OregonLive - Story Source
But in Oregon, unlike most other states, the relief programs will also generate higher state tax bills unless the Legislature acts to exempt them. Lawmakers are working on a plan that would offset the higher taxes with direct payments to low-income Oregonians.
Here's the issue: Oregon is one of six states that allow residents to deduct part of their federal taxes from their state income taxes. That usually means a lower Oregon tax bill for most people.
Congress, though, structured the two stimulus programs it approved last year -- and these latest payments -- as tax rebates. So a $1,400 stimulus payment and a $3,600 child tax credit reduce federal tax liability.
Lower federal taxes mean there's less to deduct from your Oregon income taxes, which in turn means you owe more state taxes.