Oregon Scraps Several Trump Backed Tax Breaks and Approves New Credits for More Than 200,000 Low Income Households
Tax exemptions contained in the One Big Beautiful Bill Act (OBBBA) signed into law by President Donald Trump on July 4, 2025, have been eliminated by Oregon lawmakers who yesterday (Monday) passed Senate Bill 1507, which will instead funnel more than $300 million in tax revenue into the state’s coffers.
The OBBBA was criticized by many for favoring the wealthy, while middle and lower-income households were mostly overlooked.
Oregon Excludes Concessions to Venture Capitalists and Private Equity Firms
Oregon’s stance excludes Trump’s concessions to venture capitalists and private equity firms for expanded, tax-advantaged investment opportunities.
The other two federal provisions excluded in SB 1507 are the accelerated depreciation for business equipment and deductions for new car loan interest rates on vehicles assembled in the U.S.
Oregon lawmakers agreed to eliminate the permanent reinstatement of a 100% bonus depreciation for qualified business equipment and machinery.
This would have allowed qualifying businesses to deduct the full cost of eligible assets for the first year they are placed in service, covering both new and used equipment.
| Provision in SB 1507 | Impact / 2025 to 2027 ($M) | What it does |
|---|---|---|
| Bonus depreciation disconnect | 267.0 | Adds back federal bonus depreciation / then spreads deductions over remaining asset life |
| Qualified vehicle loan interest disconnect | 36.4 | Requires adding back the federal auto loan interest deduction on Oregon returns |
| Qualified small business stock disconnect | 38.9 | Requires adding back federally excluded gains from qualifying stock sales |
| Oregon EITC expansion | -26.2 | Raises Oregon EITC percent of the federal credit |
| Job creation credit | -4.6 | Up to $1,000 per net new job / up to 10 jobs / statewide cap per tax year |
| Total estimated General Fund impact | 311.6 | Net change across listed items |
Tax Relief on Car Interest Loans is Scrapped
Oregon has also eliminated tax relief on interest loans for new cars. This OBBBA clause allows taxpayers to write offup to $10,000 for cars purchased in 2025 and assembled in the U.S.
Lower-Income Households Receive Significant Increase in Tax Credits
Lawmakers have granted significant tax credits to more than 200,000 lower-income households. Earned Income Tax Credit (EITC) will be increased from 9% to 12% for individual filers, and from 14% to 17% for taxpayers with children under three years of age.
Source: Oregon Legislative Revenue Office / Revenue Impact of Proposed Legislation / SB 1507 A / dated Feb 9 2026
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Tips and Overtime Will Not be Taxed
People employed in the food and beverage industry will no longer have to pay tax on tips earned. This OBBBA exemption was given the green light by Oregon lawmakers.
Also included in the bill is the retention of federal law to exempt overtime from taxation, a major break for thousands of Oregon employees.
Lawmakers also had to wrangle with other economic pressures, such as last year’s loss of employment in the private sector. This is coupled to a climbing unemployment rate that now stands at 5.2 percent, and is among the highest in the U.S., where Oregon is ranked 46th out of 50 states.
If the state had accepted the OBBBA in its entirety, it would have impacted Oregon by a potential $900 million, according to the Oregon Center for Public Policy.