Oregon Taxpayers Face Smaller Kicker Rebates as State Revenue Forecasts Drop by Nearly $900 Million

Declining state revenues, projected in Oregon’s latest revenue forecasts published last week, may result in reduced kicker rebates for personal taxpayers and no kicker refund to corporations.

Lower Oregon Revenue Forecasts Will Affect Kicker Rebate

Last week, state economists presenting a new Oregon revenue forecast warned of a nearly $900 million revenue drop as the Trump tax law takes effect on state finances. The significant budget shortfall is also predicted to shrink kickers, while future rebates are now uncertain.

According to the projections, President Donald Trump’s HR1 will reduce Oregon’s personal income tax collections by an estimated $586 million and corporate tax collections by $300 million.

Oregon’s “rolling conformity” with the federal tax system means that most federal tax changes are automatically incorporated into state law, and this also applies to HR1, which will contribute to the lower revenue expectations.

The reality for Oregonians remains unclear. Oregon Gov. Tina Kotek stated that trade policies and federal tax cuts will exacerbate financial pressures on Oregon families.

In contrast, the state’s economist, Carl Riccadonna, noted that the revenue the state is losing is being returned to the pocketbooks of Oregonians in lower tax brackets.

The existing kicker rebates, unique to Oregon, are refunds to Oregonians when personal income tax collections exceed forecast levels by at least 2%. In June, the state’s kicker was projected to be about $1.6 billion for the 2023-25 biennium.

After state economists informed lawmakers that tax collections came in $225 million lower than forecast in June, the kicker projection was reduced to approximately $1.41 billion.

The surplus will appear as a credit on 2026 personal tax returns, proportional to the amount they paid in income taxes.

The corporate kicker, currently valued at approximately $921.6 million, is dedicated to K-12 education and will not be returned to businesses.

The future outlook for the kicker also looks bleak. The 2025-27 budget cycle indicates that the state’s general fund is hundreds of millions of dollars below earlier projections, primarily due to the HR1 federal tax changes and slow economic growth. Forecasts include:

• 2026: Oregonians can still expect a kicker, albeit reduced.
• 2027-29 biennium: No “kicker” tax rebate will be available on Oregonians’ 2028 tax returns.
• 2029-31 biennium or future bienniums: The state’s revenue forecast did not include a kicker projection.

Oregon’s economy is slowing, but it is not in a recession. While tariffs are affecting economic growth, lower taxes and interest rates could improve growth in future years. But the Legislature will either have to make cuts to future legislative budgets or change the state’s tax laws.