May 12 2021
8:01 AM
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Previous story Stimulus bill will send billions to Oregon families, but they may owe millions in additional state taxes Next story

Story by Mike Rogoway | The Oregonian/OregonLive - Story Source
Published on Friday March 12, 2021 - 12:49 AM

Oregon families stand to receive several billion dollars under the coronavirus relief bill President Joe Biden signed Thursday, money aimed at helping households recover from one of the deepest economic downturns in American history.

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.