2026 Oregon Combined Payroll Tax Report Instructions for Oregon employers For faster processing: ✓ File electronically. ✓ Pay on Revenue Online. ✓ Use this booklet. ✓ Check your math. ✓ No payroll? Enter 0 on lines 1a, 1b, 5a, 5b, 13a, 13b, and 27 of Form OQ. 150-211-155-2 (Rev 12-16-25)

1 Contact Information Oregon Department of Revenue (DOR) State withholding and transit taxes 503-945-8100 or 1-800-356-4222 Fax: 503-945-8772 Email: payroll.help.dor@dor.oregon.gov Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Go to www.oregon.gov/dor for: • Payroll tax basics • Sign up for Payroll Tax News • Transit rates and taxes for employers • Withholding tables and formulas • Register for a payroll tax account Transit Boundaries Lane Transit District (LTD) 541-682-6100 www.ltd.org/business-center TriMet Transit District (TM) 503-962-6466 ­www.trimet.org/taxinfo Oregon Department of Consumer & Business Services (DCBS) State Workers Benefit Fund (WBF) assessment Subjectivity questions 503-947-7815 or 1-888-877-5670 Email: ­wcd.employerinfo@dcbs.oregon.gov Assessment questions 503-378-2372 or Fax: 503-378-3134 Email: ­wbf.assessments@dcbs.oregon.gov Assessments Unit DCBS/CSD/Financial Services PO Box 14480 Salem OR 97309-0405 Go to www.oregon.gov/dcbs/wbf for: • What is the Workers’ Benefit Fund? • Determining WBF hours worked • Calculating the WBF assessment • Corrections and changes notification form Oregon Workers' Compensation Division Go to www.wcd.oregon.gov for: • Workers’ Compensation (WC) insurance • Employer incentives to hire an injured worker • Insurers authorized to write WC policies • Do I need WC insurance? Oregon Employment Department (OED) State Unemployment Insurance tax (UI) and Paid Leave Oregon (Paid Leave) contributions 503-947-1488 Fax: 503-947-1700 Email: oed.contributions.and.recovery.division@ employ.oregon.gov Contributions and Recovery Oregon Employment Department 875 Union St NE Salem OR 97311-0030 Go to frances.oregon.gov/employer for: • Electronic reporting • UI and Paid Leave account information Paid Leave Oregon Benefits, Self-Employed, & Equivalent Plans 833-854-0166 Paid Leave Employer Services Oregon Employment Department 875 Union St NE Salem OR 97311-0030 Go to paidleave.oregon.gov for: • Equivalent Plan information • Small employer assistance grants • Paid Leave benefit questions

2 Additional Resources Bureau of Labor and Industries (BOLI) For employers: www.oregon.gov/boli/employers For everything else: www.oregon.gov/boli Oregon Secretary of State (SOS) Go to sos.oregon.gov/business for: • Employer’s Guide for Doing Business in Oregon • Electronic Business Registration forms Internal Revenue Service (IRS) Go to www.irs.gov/businesses for: • Contracting payroll service • Acquiring a Federal Employer Identification Number (FEIN) • Federal payroll tax forms Oregon Department of Justice (DOJ) Employers must report all new and rehired employees within 20 days of their hire date. 503-378-2868 or 1-866-907-2857 Email: emplnewhire.help@doj.oregon.gov Division of Child Support Employer Services PO Box 14680 Salem OR 97309 For the Oregon Employer Services Portal: employerportal.oregonchildsupport.gov For everything else: www.oregonchildsupport.gov Table of Contents Contact Information .......................................................................................................................................1 Additional Resources ......................................................................................................................................2 Where to Pay; Where to File; Filing Due Dates for Quarterly Reports ...................................................3 Tips for Successful Reporting ........................................................................................................................4 New Information .............................................................................................................................................4 Important Information ...................................................................................................................................4 Required Forms ...............................................................................................................................................7 Filing the Combined Quarterly Tax Report ................................................................................................8 Payment Instructions......................................................................................................................................9 Guidelines for Oregon Withholding Payment Due Dates; Penalties .....................................................10 Interest ............................................................................................................................................................11 Credits; Oregon Quarterly Tax Report (Form OQ) Instructions ...........................................................12 Employee Detail Report (Form 132) Instructions ....................................................................................15 Oregon Schedule B State Withholding Instructions ................................................................................16 Unemployment Insurance Tax Information ..............................................................................................16 Paid Leave Oregon Contribution Information .........................................................................................18 Withholding Tax Information .....................................................................................................................19 Form OR-W-4 Frequently Asked Questions .............................................................................................20 Transit District Excise Tax Information .....................................................................................................22 Workers’ Benefit Fund Assessment Information ......................................................................................24 Additional Forms Request ...........................................................................................................................25 Business Change in Status Form .................................................................................................................27 Business Contact Change Form ..................................................................................................................29 You can find this booklet at www.oregon.gov/dor/bus

3 Filing Due Dates for Quarterly Reports

Quarter Quarter Ending Date Report Due Date

1st — Jan–Feb–Mar March 31, 2026 April 30, 2026

2nd — Apr–May–Jun June 30, 2026 July 31, 2026

3rd — Jul–Aug–Sep September 30, 2026 November 2, 2026

4th — Oct–Nov–Dec December 31, 2026 February 1, 2027 If the due date is on a weekend or holiday, the report is due the next business day. Where to File Form OQ, Schedule B, and Form 132 (see page 7) File electronically using Frances Online: frances.oregon.gov/employer All reports printed on paper (see pages 7) Mail to: Oregon Department of Revenue PO Box 14800 Salem OR 97309-0920 Form OR-WR and Form W-2s (see page 7-8) File electronically on Revenue Online: www.oregon.gov/dor Where to find forms You will no longer receive personalized forms in the mail. Blank forms are available online or by order. Download blank forms: www.oregon.gov/employ/businesses or www.oregon.gov/dor/forms Order blank forms: 503-947-1488 or submit form on page 25 Where to Pay To pay electronically, use Revenue Online at www.oregon.gov/dor Log in, select "Withholding Payroll," and click on "Make an OTC payment." Find more instructions at www.oregon.gov/dor/business To pay by mail, use paper Form OR-OTC-V. You must include one form with each payment. To order, go to www.oregon.gov/dor/business. Form OR-OTC-V is mailed separately to employers.

4 New Information Tax rates and wage bases • The Workers’ Benefit Fund (WBF) assessment rate is 0.018. • The taxable wage base for Unemployment Insurance (UI) is $56,700. • The Paid Leave contribution rate is 0.01, and the wage base is $184,500. • TriMet Transit District (TM) tax rate is 0.008237. • Lane Transit District (LTD) tax rate is 0.0080. • Statewide Transit tax (STT) rate is 0.001. Employers of Oregon nonresidents You must withhold Oregon income tax from all wages earned by nonresident employees for their services performed in Oregon, unless their Oregon earnings for the year will be less than the standard deduction amount for their filing status. The Oregon standard deduction amounts for tax year 2026 are: Single, married or RDP* filing separately.....$2,910 Head of household...........................................$4,685 Married/RDP filing jointly...............................$5,820 Qualifying surviving spouse...........................$5,820 *Registered Domestic Partner Nonresident employees with wages more than their standard deduction amount must file an Oregon nonresident income tax return. Nonresident employees with Oregon wages less than their standard deduction still may ask you to withhold tax. Usually, this is because they have additional Oregon income from other sources. WBF Assessment For updated guidance on calculating and reporting assessment, see the Workers' Benefit Fund (WBF) Assessment booklet on the website (see page 1) (OAR 436-070). Form requirements Form OR-WR (which includes state withholding and the STT) is required to be filed electronically with Revenue Online. See “Revenue Online”. DOR requires all submitted forms to be complete, legible, and on approved agency forms. Non-agency forms and forms that are incomplete or illegible won't be processed and will be returned to you. Agency forms are located on agency websites (see page 1). Important Information Oregon Department of Revenue (DOR), Oregon Employment Department (OED), and Department of Consumer and Business Services (DCBS) rules may be different from each other. Read all instruc- tions carefully. If you have questions, contact the appropriate agency (see page 1). What is a filed return? Only columns on Form OQ that are filled in with numerical information are considered a filed return (for example, using a 0 rather than a blank space). You don’t need to file Form 132 or Schedule B if you file a non-payroll report. Tips for Successful Reporting When you report all required information correctly, you can avoid delays in the processing of your forms. Delays may result in penalties, interest charges, and other fees you may be required to pay if you don’t report accurately and on time. If you use a payroll service, remember you are ultimately responsible for providing reports and payments accurately and timely. How to avoid common problems • File and pay electronically to reduce calculation errors and other mistakes. See Filing Option on page 8. • Use the correct Oregon Business Identification Number (BIN). • Put the BIN and quarter/year on each report form in the appropriate box. • Use the correct tax and assessment rates. • Make sure to include your name and address. • Keep copies of your completed forms for your records. • Report whole hours on Form OQ (WBF assessment) and on Form 132.

5 Required reporting If you're an employer who's subject to UI or Paid Leave, report required information on Form 132 as appropriate for each program. Mailing of this booklet and forms To reduce costs, we no longer mail this booklet with personalized forms. This change will reduce paper waste, returned mail, and processing times. You can download blank forms. We encourage you to electronically file all payroll forms (see page 3). Paid Leave Oregon (Paid Leave) Paid Leave allows individuals to take paid time off for family, medical, and safe leave. The program is funded through a combination of employer and employee contributions. For more information, go to Paid Leave's website (page 1). Frances Online Frances Online is a free online portal that supports State withholding, both UI and Paid Leave, as well as, the STT for combined payroll reporting purposes. Frances Online allows you to manage your Paid Leave and UI contribution accounts securely and easily. With Frances Online, you can: • File, view, and amend your combined quarterly reports. • View your account status. • Check for balances or credits. • Make past due UI and Paid Leave payments. • View and print letters from OED. • Respond to questionnaires. • Send secure messages. For more information or to sign up for an account, go to frances.oregon.gov. Revenue Online Revenue Online, DOR's self-service site, is avail- able for combined payroll taxpayers. Revenue Online provides convenient, secure access to tools for managing your tax account—and it’s free! With Revenue Online, you can: • View your tax account. • Make certain payments by selecting "Make a Payment." • View and print letters from DOR. • Send DOR secure messages. • File certain returns. • Check your DOR account balance and more! For more information or to sign up for an account, go to ­www.oregon.gov/dor. Note: The W-2 filing date has changed to January 31 of each year. 1099s with information in box 7 will be due January 31. Sole corporate officer UI exclusion If you’re a sole corporate officer who is also a cor- porate director and owns a substantial part of your corporation, you may elect out of UI coverage for yourself. You must apply to OED in writing and OED must approve the exclusion prior to it going into effect [ORS 657.044 (1)(b)]. Sole corporate officer for Paid Leave If you're a sole corporate officer, you can't elect out of Paid Leave. You're considered an employee and you must report subject wages and pay Paid Leave contributions. UI and Paid Leave—Alternate base year Individuals that file a claim for UI or Paid Leave benefits might qualify using an Alter- nate Base Year. You need to include the wages and hours for all subject employees, whether using a Regular or Alternate Base Year on your Forms OQ and 132. Contact OED for more informa- tion (see page 1). Statewide transit tax (STT) A 0.001 STT is imposed on the wages of every Oregon resident and nonresident for services per- formed in Oregon. If you file quarterly, you will file STT on Form OQ. If you file annually, you will file Form OR-STT-A. The employer is considered the taxpayer for the STT and is required to withhold the STT, file returns and remit tax payments quarterly or annually. However, if a nonresident employer, who doesn’t conduct business in Oregon, doesn’t withhold the transit tax from wages of an Oregon resident employee, the employee is responsible for reporting and paying the tax. For more informa- tion, go to DOR's website (see page 1). Oregon identification numbers Your Oregon Business Identification Number (BIN) is not the same as the Revenue Identification Number (RIN) or your registry number issued by the Oregon Secretary of State’s Corporation Division. If you don’t know your BIN, contact DOR (see page 1).

6 The correct format for a BIN is NNNNNNNN-N (for example, 01234567-8). You must include your BIN at the top of all cor‑ respondence, returns, and payments that you file with DOR, OED, and DCBS. Important: If the structure of your business has changed, contact DOR (see page 1). Withholding tax tables and formulas The Oregon withholding tax tables and formulas will be updated each year with an effective date of January 1. DOR will send information through the Payroll Tax News. Contact DOR for more informa- tion (see page 1). Small employers and withholding Small employers must file quarterly using Form OQ, unless they qualify for annual reporting as a domestic household employer under Oregon law. Agricultural employers must file quarterly for Paid Leave and UI if subject. Contact DOR for more information (see page 1). W-2 informational returns All businesses and payroll service providers must report W-2 information electronically to DOR using iWire (see page 8). The filing due date is January 31 of each year. (ORS 316.202) 1099 electronic filing requirements If your business reports the following 1099 forms, you must submit them electronically each year by: • March 31 for Forms 1099-MISC, 1099‑G, 1099-R, 1099-K, or W-2G. • January 31 for Form 1099-NEC. You’re required to file electronically if you have one or more information returns. An information return is a tax document you must file to report certain business transactions to DOR and the IRS, such as 1099s (ORS 314.360). Penalties assessed DOR may assess penalties for employers who don't file a timely information return (Form W-2 or 1099) or file an incorrect or incomplete information return (ORS 314.360 and 316.202). DOR may assess $50 per information return, up to an annual maxi- mum amount of $2,500. DOR may raise the penalty to $250 per information return, up to an annual maximum amount of $25,000, for employers who knowingly fail to file a timely information return or knowingly file an incomplete, false or misleading information return. Oregon retirement savings program OregonSaves, the Oregon retirement savings pro- gram, is an easy way for Oregonians to save for retirement through payroll deductions. Oregon employers that don't currently offer an employer- sponsored retirement plan will facilitate Oregon- Saves for its employees. For more information, go to ­www.oregonsaves.com. Independent contractors To be considered an independent contractor, work- ers must meet the statutory definition in ORS 670.600. This law covers DOR, DCBS including WC, OED for both UI and Paid Leave programs, Construction Contractors Board, and Landscape Contractors Board. The laws covering the Bureau of Labor and Indus- tries (BOLI) differ from ORS 670.600. Misclassifying employees as independent con- tractors can be costly to an employer. For more information about independent contractors, visit ­www.oregon.gov/ic. Bankruptcy If you file for bankruptcy, you need to separately notify each state agency that administers the payroll taxes or assessments to which you are subject. Be pre- pared to supply the case number, the BIN and FEIN of all accounts associated with the bankruptcy. Common pay agent Oregon law doesn’t allow Oregon combined pay- roll taxes to be reported by a “common pay agent” as defined in IRS Section 3504. Keep your records You must keep WBF assessment-related payroll records for at least four years. You must keep all other payroll records for at least six years after filing the required reports.

7 Required Forms We process paper forms electronically. It’s critical for successful reporting to use the correct format and color of ink. To avoid problems when filling out reports: • Use only blue or black ink. • Only file with official forms. • Use CAPITAL LETTERS ONLY. If you use a tax preparer, check that they have this booklet and the correct forms. Forms needed for reporting Form OQ—File this form each quarter to docu- ment how you calculate the amounts of With- holding tax, UI tax, TriMet Transit District tax, Lane Transit District tax, STT, Paid Leave contri- butions, and WBF assessment you owe. Also use it to report withholding on pension or annuity payments. Schedule B—For withholding tax only. Use this form only if you must make semi-weekly or daily state income tax withholding deposits. File Sched- ule B with Form OQ to document withholding tax deposit amounts by payroll date. Form 132—Use to report UI subject wages and hours, State income tax withholding, STT, or Paid Leave subject wages. Form 132 is filed with Form OQ on a quarterly basis. For each employee, you must include the following detailed information: 1. Social Security number 2. First initial 3. Last name 4. Whole hours worked 5. State income tax withholding 6. STT subject wages 7. STT withholding 8. UI subject wages 9. Paid Leave subject wages Form OR‑OTC-V—File with each payroll tax pay- ment to show how the amount paid is to be distrib- uted among Withholding tax, STT, TM, LTD, UI, Paid Leave, and WBF assessment. Amended forms Use fillable amended report forms available at OED's website (see page 1): • Form OQ/OA–AMENDED • Schedule B–AMENDED • Form 132–AMENDED Note: OED processes Form OQ, Schedule B, and Form 132. DOR processes payments and Form OR-STT-A. Your check payment needs to include Form OTC-V, to ensure payment is applied correctly or, you can pay on Revenue Online. Include any payments you made to DOR on Form OQ. DOR: You may make changes as far back as nec- essary to make corrections and report the proper amount of withholding and transit taxes. However, if that correction results in a refund, you have three years from the due date of the return, or two years from the date the tax was paid, whichever is later, to request that refund. OED: You may make changes to the UI tax or the Paid Leave contribution portions of the reports for any quarter between the first quarter three years back up through the current quarter. DCBS: You may make changes to the WBF assessment portion of the reports for any quarter between the first quarter three years back and the current quarter. Other forms Since we process reports and payments elec- tronically, our systems won’t pick up special instructions or notations you write on Form OQ or Form OR‑OTC-V. Use the following forms, located in the back of this booklet, to make updates: Business Change in Status Form—Use this form to update your business information, such as: chang- ing a business name, correcting an FEIN, selling or closing a business, no longer working in a transit district, and starting a business in a transit district. If the structure of your business changes, you may need to complete a Combined Employers Registration found on DOR's website (see page 1). Business Contact Change Form—Use this form to update your contact information, such as: physical, mailing, or email address; phone or fax number; and off site payroll service, accountant, or bookkeeper. Form OR‑WR—If you're an employer, you are required to file this form annually even if you are reporting 0. If you're an employer, you are required to file electronically through Revenue Online by January 31 of the following year.

8 Filing the Combined Quarterly Tax Report Who must file You must file a Form OQ each quarter if you: • Are registered as an active employer with DOR or OED, even if you had no payroll during the quarter. Reimbursing employers are required to report and pay Paid Leave subject wages and contributions. • Have an approved Equivalent Plan for Paid Leave. • Have paid workers subject to Oregon’s WC law, or any paid individuals covered by WC insurance, whether or not required by law. • Withhold on a distribution of pensions or annuities. You must file Schedule B if you are: • Required to deposit withholding taxes on a semi- weekly or a one-banking-day basis. You must file Form 132 if you are: • An employer subject to UI law, • An employer subject to STT, • An employer subject to state withholding, • An employer subject to Paid Leave, • An employer with an approved Equivalent Plan, • A domestic employer, • A reimbursing employer, or • A Local Government Employers Benefit Trust Fund employer. When to file See page 3 for due dates. Failure to file If you don’t file a correct, complete report, you may receive an assessment from each agency based on available information. Each agency may charge penalties and interest on the amount assessed (see pages 10-11). Filing options Instead of filing by paper, consider filing electroni- cally. Electronic filing is more efficient, accurate and takes less time than paper. File online at frances. oregon.gov/employer. • Telephone (IVR). If you are an employer who has no payroll or subject hours to report for all pro- grams for a particular quarter, you can file a “no- payroll/no-hours worked” report by telephone. IVR is available 24 hours a day, seven days a week. Call 503-378-3981. Confirmation numbers aren’t issued. Stay on the line until you’re notified at the end of the call that your report was accepted. Oregon annual filing • iWire—Income and Wage Information Return E-services. File Form W-2s by using DOR's iWire website. You can file several W-2s with the EFW2 format provided by the Social Security Adminis- tration or by using DOR's spreadsheet template or manual entry format. In addition, file Forms 1099-MISC, 1099-G, 1099-R, 1099-K, 1099-NEC, and W-2G electronically for Oregon purposes. You can file several by using the format provided by the IRS (Publication 1220) or by using DOR's spreadsheet template or manual entry format (see page 1). • If you file federal Form 943, you may file your Oregon withholding reports once a year using Form OR-WA. Agricultural employers subject to UI tax, WBF assessment, TriMet Transit District tax, Lane Transit District tax, STT must file Form OQ in addition to Form OR-WA. For Paid Leave, agricultural employers must file quarterly reports. Contact DOR for more information (see page 1). • Domestic household employers with employees doing only in-home services may file the com- bined payroll tax reports annually using Form OA Domestic. Contact OED for more information (see page 1).

9 Payment Instructions To pay electronically go to Revenue Online ­at ­www.oregon.gov/dor and select "Make a Pay- ment.", or login to your revenue online account, then click "Make OTC payment". This will ensure your payment is allocated properly. To pay by mail, follow these instructions to make sure your payment is correctly applied: • Complete and send in Form OR‑OTC-V with every payment when due, including payments made with your Form OQ. • Show the amount paid to each tax program in the appropriate boxes on Form OR‑OTC-V. Don’t include credits (see page 11). • Enter the quarter for which you are making a payment. • If amending your reports, include Form OR‑OTC‑V with your payment. • If you're paying more than one quarter, use a separate voucher for each quarter. • Use a current-year Form OR-OTC-V. Changes to the voucher or using the wrong voucher could result in misapplied payments. • Payments for UI tax, WBF assessment, TriMet Transit District tax, Lane Transit District tax, STT, and Paid Leave contributions are due when reports are due. • Payments for withholding tax are based on federal deposit schedule (see page 10). • Don’t staple or tape checks to Form OR‑OTC-V. • Make checks payable to Oregon Department of Revenue. Send Form OR‑OTC-V and your check to:

Oregon Department of Revenue

PO Box 14800

Salem OR 97309-0920 • Keep all payment records (see page 6). Alternate withholding method Multi-state employers with small payrolls in Oregon must deposit following the same sched- ule as the federal deposit schedule. Multi-state employers who find that following the federal tax deposit schedule will cause a burden may request a different method of withholding tax payments. To do this, send a letter that includes your business name, BIN, nature of the burden, your proposed withholding method, and proposed effective date of modified withholding method. Send this information to: Withholding Manager Department of Revenue 955 Center Street NE Salem OR 97301-2555 Continue using the federal requirements until DOR approves your request and designates the change date (ORS 316.191). Federal Form 944 filers As an employer, Oregon law requires you to file tax returns quarterly with DOR. You’re also required to pay withholding taxes using federal deposit schedules. If you’re an employer instructed by the IRS to file Form 944 and deposit annually, please continue to deposit your Oregon withholding tax payment quarterly. You will receive a penalty if you file your Oregon return quarterly and deposit your withholding tax payment annually, unless you notify DOR that you pay the IRS annually. To avoid penalty, send DOR a copy of your IRS notification before your first DOR payment is due. Contact DOR for more information on small employers (see page 1). Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC- V . S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V. Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. S amp le image of Form OTC-V.Sample image of Form OTC-V .Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V. Sample image of Form OTC-V.

10 Guidelines for Oregon Withholding Payment Due Dates Oregon withholding tax due dates are the same as the dates for depositing federal tax liability. New employers must deposit monthly until they have a lookback period* established. If your total FEDERAL tax liability is: Oregon withholding tax payments are due: Payrolls paid in: • Less than $2,500 for the quarter By the quarterly report due date Quarter 1 January February March Quarter 2 April May June Quarter 3 July August September Quarter 4 October November December Example: If your federal tax liability is $2,300 and your state income tax liability is $1,500, you deposit quarterly. • $50,000 or less in the lookback period* By the 15th of the month following payroll Example: If your federal tax liability is $5,000 and your state income tax liability is $2,500, you deposit monthly. • More than $50,000 in the lookback period* Semi-weekly deposit schedule If the day falls on a: Wednesday, Thursday, or Friday Saturday, Sunday, Monday, or Tuesday Then pay taxes by: The next Wednesday The next Friday Example: If your federal tax liability is $60,000 and your state income tax liability is $25,000, you deposit semi-weekly. * The lookback period is the 12-month period that ended the previous June 30. The lookback period for agricul- tural employers is the calen- dar year before the calendar year that just ended. • $100,000 in a single pay period Within one banking day Example: If your federal tax liability is $120,000 and your state income tax liability is $75,000, you deposit the next business day. Penalties State withholding and transit taxes DOR charges: • A 5 percent late-payment penalty on any unpaid tax after the due date for Forms OQ, WA, or OA. • An additional 20 percent late filing penalty on any tax due, as of the due date, if you file more than one month late for Forms OQ, WA, or OA. • An additional 25 percent penalty if DOR deter- mines and assesses the tax that should have been reported by the due date. • A possible 100 percent penalty on any tax due if you don’t file Form OQ for 12 quarters, Form WA for 3 years, or Form OA for 3 years in a row. Unemployment Insurance (UI) tax A late-filing penalty may be assessed if you file Form OQ or Form 132 more than 10 calendar days after the due date and received a warning or had a penalty assessed within the past 3 years. Incomplete or incorrectly formatted forms may be returned to you. You must resubmit these forms by the 10th day after the due date to avoid a penalty. The UI tax late-filing penalty is $11 for each employee reported, with a $100 minimum and $2,800 maximum penalty. If no subject wages are reportable, but you file the report late, you may be assessed a penalty up to $100. OED may assess a penalty if you fail to pay a tax assessment. The penalty will be 10 percent of the unpaid tax for that assessment. OED may assess a 50 percent penalty of the unpaid tax balance if the agency finds out that an employer is intentionally avoiding paying UI tax. [ORS 657.515(5)]

11 OED may charge an employer an additional 1 percent penalty if, as of September 1, the employer hasn’t: • Filed all UI tax reports:

—Form OQ, or

—Form 132, or • Paid all UI taxes due. The penalty is 1 percent of the employer’s previous year’s taxable payroll. Note: These penalties are in addition to interest. Under OED law, an employer may not engage in or advise another employer to engage in activity to transfer or acquire, or attempt to transfer or acquire, a trade or business or any part of a trade or busi- ness solely or primarily for the purpose of getting a lower UI tax rate. If an employer knowingly engages in such activity, the highest UI tax rate (currently 5.4 percent) will be assigned to that trade or business for the tax year in which the activity occurred and for the next three years. However, if the employer is already subject to the highest tax rate for the year, or if the amount of increase in the tax rate is less than 2 percent, an additional penalty tax rate of 2 percent will be added to the calculated tax rate. Also, if any person advises an employer to engage in this activity, the adviser may be charged a civil penalty of up to $10,000. Criminal penalties for engaging in tax avoidance schemes also may be imposed. Paid Leave A late-filing penalty may be assessed if you file Form OQ or Form 132 more than 10 calendar days after the due date and received a warning or had a penalty assessed within the past 3 years. Incomplete or incorrectly formatted forms may be returned to you. You must resubmit these forms by the 10th day after the due date to avoid a penalty. The Paid Leave late-filing penalty is 2 percent of the employer's employee wages rounded to the nearest $100. If an employer has no subject wages, the late-filing penalty is $10 for the first report filed late up to $100 for the third or subsequent report filed late. (ORS 657B.920) Paid Leave may assess an additional penalty if you fail to pay the assessment within 10 days after receiving the written demand. The penalty is 10 percent of the unpaid contribution amount. [(ORS 657B.320(6)] Paid Leave may assess a 50 percent penalty for the unpaid contribution balance if any part of a defi- ciency is due to fraud with intent to avoid payment of contributions to the fund. [(ORS 657B.320(7)] Paid Leave may assess the employer an additional 1 percent penalty of the employer’s previous year’s subject wages if, as of September 1, the employer hasn’t: • Filed all Paid Leave reports:

—Form OQ, or

—Form 132, or • Paid all Paid Leave contributions due (ORS 657B.910). Note: These penalties are in addition to interest. Workers' Benefit Fund (WBF) assessment DCBS may charge a penalty if you file or your pay- ment is received more than 10 days after the due date. The penalty will be a minimum of $50 for each violation, up to $2,000. Penalties are in addition to tax assessed and interest. If your account is audited for failure to report or for inaccurate reporting, you may be charged additional penalties for failure to comply (OAR 436-70-0050). Interest State withholding and transit taxes DOR charges interest on any remaining tax left unpaid after the due date. DOR will bill for this interest, so you don’t need to calculate interest due. (ORS 305.220) Unemployment Insurance (UI) tax General employers. OED assesses interest on unpaid or late UI tax. The rate is 1.5 percent per month or fraction of a month after the payment is due. Payments are due by the last day of the month after the quarter ends. Interest is assessed if the payment is one day late. Interest is calculated on unpaid tax only. Previously assessed interest or penalties are not included in the calculation. Local Government Employers Benefit Trust Fund participants. Use the “General employers” calculation above. Reimbursing employers. OED will bill these accounts for interest due on unpaid balances.

12 Paid Leave OED assesses interest on unpaid or late Paid Leave contributions at 1.5 percent per month (any portion of a month will be considered a full month) [ORS 657B.320(3)]. Paid Leave contribution payments are due by the last day of the month after the quarter ends. Inter- est is assessed for a full month if the payment is one day late. Interest is calculated on unpaid contribu- tions only. Workers’ Benefit Fund (WBF) assessment If you fail to pay, DCBS will exercise legal rights to collect the delinquent debt. This may result in war- rants, garnishments, offsetting your tax refund, or assigning the debt to DOR or a collection agency. If your debt is assigned to collection, you will be charged 9 percent interest on overdue balances. You may also be charged a fee totaling 28 percent of your debt (ORS 293.231). Credits To apply a credit to a quarter in the same tax program: You may use Form OQ to apply an amount that you overpaid in a previous quarter if you haven’t already requested or been issued a refund. Add the credit to any prepaid amount in the correct box on Form OQ (box 3a, 3b, 8a, 8b, 20a 20b, or 30) to reduce the balance owing. To apply a credit to another tax program: Send a written request to the agency with a credit. Include your account name, address, BIN, tax program, quarter, year, and amount of the credit. Write the tax program, quarter and year to which you want the credit applied. Include any notices or memos you received about the credit. Don’t use Form OQ to transfer credits between programs. To request a refund: Send a written request to the agency with a credit. Include your account name, address, BIN, the word “Refund,” and the amount to refund. Include any notices or memos you received about the credit. Don’t use Form OQ, amended Form OQ, or Form OA to request a refund. Paid Leave overpayments of $10 or less will not be refunded, unless requested in writing within three years of the payment date. Oregon Quarterly Tax Report (Form OQ) Instructions Employer information section Before you submit Form OQ, review the business name, BIN, and FEIN to make sure they are cor- rect. If any of these have changed, update your information in Frances Online or complete the Business Change in Status Form included at the end of this booklet. Only numerical information entered in numbered boxes will be considered a filed return for that program. State income tax withholding Box 1a. Subject wages. Enter total wages subject to state income tax withholding Box 2a. Total tax amount. Enter the total Oregon income tax withheld this quarter. Enter 0 if you had subject payroll but no withholding to pay this quarter. If you deposit: • Quarterly—complete only box 4a. • Monthly—complete boxes 11a, 11b, and 11c. Total the amounts and enter in box 11d. Note: Box 4a and 11d must be the same amount. • Semi-weekly or one-banking-day deposi‑ tors— complete and file Schedule B. Enter the total in box 4a. Note: Box 4a and the total box on Schedule B must be the same amounts. Box 3a. Tax pre-paid this quarter. Enter the amount of withholding tax prepaid this quarter. Include any withholding credits used Box 4a. Total due. Enter box 2a minus box 3a. If the amount is zero or less, enter 0. Statewide Transit Tax withholding (STT) Box 1b. Subject wages. Enter total wages subject to STT withholding Box 2b. Total tax amount. Enter the total STT with- held this quarter. Enter 0 if you had subject payroll but no STT to pay this quarter.

13 Box 3b. Tax pre-paid this quarter. Enter the amount of STT prepaid this quarter. Include any credits used. Box 4b. Total due. Enter box 2b minus box 3b. If the amount is zero or less, enter 0. TriMet Transit District (TM) Box 5a. Subject wages. Enter wages paid for work done in TM. Enter 0 if there was no subject payroll in the district this quarter Box 6a. Tax rate. TM yearly tax rates are: 2026 and beyond = 0.008237 Box 7a. Total tax amount. Multiply box 5a by box 6a. Round down to the nearest cent and enter the tax amount. If you are subject to TM tax but had no tax this quarter, enter 0. Box 8a. Tax pre-paid this quarter. Enter the amount of TM tax prepaid this quarter. Include any TM credits used. Box 9a. Total due. Enter box 7a minus box 8a. If the amount is zero or less, enter 0. Lane Transit District (LTD) Box 5b. Subject wages. Enter wages paid for work done in LTD. Enter 0 if there was no subject payroll in the district this quarter Box 6b. Tax rate. LTD yearly tax rates are: 2026 and beyond = 0.0080 Box 7b. Total tax amount. Multiply box 5b by box 6b. Round down to the nearest cent and enter the tax amount. If you are subject to LTD tax but had no tax this quarter, enter 0. Box 8b. Tax prepaid this quarter. Enter the amount of LTD tax prepaid this quarter. Include any LTD credits used Box 9b. Total due. Enter box 7b minus box 8b. If the amount is zero or less, enter 0. Box 10. Subtotal Total boxes 4a, 4b, 9a, and 9b. State Withholding Tax Liability Boxes 11a-11d. See Box 2a instructions under Monthly. Unemployment Insurance (UI) Box 12. Number of covered workers for UI. Com- plete this section if you’re subject to UI law. If you have questions about how to count covered work- ers, call 503-947-1488. Monthly number of covered workers. Include all full-time and part-time workers who worked or received pay subject to UI law during the payroll period that includes the 12th of the month. Use the following guidance for your specific pay period: • Daily pay period. Enter the number of workers on the daily payroll for the workday on or nearest the 12th of the month. • Weekly, biweekly, or semi‑monthly pay period. Enter the number of workers on the payroll for the period that includes the 12th of the month. • Monthly pay period. Enter the number of workers on your monthly payroll. If there were no covered workers during any pay period, enter 0 in the appropriate box(es). Don’t leave these boxes blank. Total boxes 12a, 12b, 12c in box 12d. Box 13a. UI Subject wages. This amount must be the same as box G (Total UI Subject wages) on Form 132. Excess wages should be included in the total UI subject wages (see box 14a). Enter 0 if you had no UI subject wages this quarter. Box 14a. Excess wages. Excess wages are wages above the taxable wage base for the year, per employee. Yearly taxable wage bases are: 2026 = $56,700 2025 = $54,300 2024 = $52,800 2023 = $50,900 Reimbursing employers and Local Government Employers Benefit Trust Fund participants, leave this box blank. Box 15a. Taxable wages. Enter box 13a minus box 14a. Reimbursing employers, leave this box blank. Box 16a. UI tax rate. Use your current year’s UI tax rate. For the current rate, go to OED's website (see page 1). Reimbursing employers, leave this box blank. Box 19a. Total tax. Multiply box 15a by box 16a. Round to the nearest cent and enter the tax amount. Enter 0 if you had no UI tax this quarter. Box 20a. UI tax prepaid this quarter. Enter the amount of UI tax prepaid or credits used for this quarter. Include any credit amount that may have been overpaid in previous quarters where no refund was requested or issued (see page 12).

14 Box 21a. UI penalty and interest owed. Enter the amount of penalty and interest owed if Form OQ is submitted more than 10 days after the due date. To calculate the penalty, multiply the number of employees by $11. The minimum penalty is $100. The maximum penalty is $2,800. If there were no employees, the penalty is up to $100. To calculate interest owed, multiply the unpaid tax owed by 0.015 for each month or fraction of a month after the date the payment is due. Interest is assessed even if the payment is one day late. When calculating interest, use only the amount of unpaid tax. Don’t calculate interest on previously assessed interest or penalties. Box 22a. Total due. Enter box 19a minus box 20a plus box 21a. If the amount is less than zero, enter 0. Paid Leave Oregon (Paid Leave) Box 13b. Subject wages. Enter total wages subject to Paid Leave. This amount must be the same as box H (Total Paid Leave subject wages) on Form 132. Include excess wages (See box 14b). Enter 0 if you had no Paid Leave subject wages this quarter. Box 14b. Excess wages. Enter total excess wages subject to Paid Leave. Excess wages are wages above the Paid Leave contribution wage base for the year, per employee. Yearly contribution wage base is: 2026 = $184,500 2025 = $176,100 2024 = $168,600 2023 = $132,900 Box 15b. Taxable wages. Enter box 13b minus box 14b. If the amount is zero or less, enter 0. Box 16b. Paid Leave contribution rate. Enter the current contribution rate of 1 percent (0.01). Box 17. Paid Leave employer contributions. If you are a large employer (whether you are on the statewide plan or have an equivalent plan), or if you are a small employer who received an assis- tance grant, multiply box 15b by box 16b by .40 (15b x 0.01 x 0.40). Round to the nearest cent. If you are a small employer who has not received an assistance grant, leave this box blank. For infor- mation on determining if you are a large or small employer, visit the Paid Leave website (page 1). Box 18. Paid Leave employee contributions. All employers must multiply box 15b by box 16b by .60 (15b x 0.01 x 0.60). Round to the nearest cent. Note: Employee contributions must be held in trust until paid to DOR quarterly on Form OR-OTC-V. An employer may choose to pay all or part of the employee's contribution. If an employer doesn't withhold the employee con- tributions from the employee within the quarter, the employer is considered to have elected to pay the employee contributions they failed to withhold for that quarter. Box 19b. Total Paid Leave contributions. Add boxes 17 and 18. Box 20b. Paid Leave contributions pre‑paid this quarter. Enter the amount of pre-paid contributions for this quarter. Include any credit amount that may have been overpaid in previous quarters where no refund was requested or issued. Box 21b. Penalty and interest owed. Enter the amount of penalty and interest owed if Form OQ is submitted more than 10 calendar days after the due date. To see how to calculate the penalty, see Penalties. To calculate interest owed, multiply the unpaid con- tribution amount owed by 0.015 for each month or a fraction of a month after the date the payment is due. Interest is assessed even if the payment is one day late. When calculating interest, use only the amount of unpaid tax. Don’t calculate interest on previously assessed interest or penalties. Box 22b. Total due. Enter box 19b minus box 20b plus box 21b. If the amount is zero or less, enter 0. Box 23. Out‑of‑state employees. Enter the number of employees who worked exclusively outside of Oregon during the quarter. Box 24. Paid Leave Replacement Workers. Enter the total number of temporary employees hired as replacements for employees off from work for Paid Leave benefits during the quarter. Special payroll tax offset Box 25. Special payroll tax offset. Multiply box 15a by the following quarterly rate. Don’t add or sub- tract this amount from boxes 19a or 32 (see page 17). Quarterly rates are:

1st 2nd 3rd 4th

Quarter Quarter Quarter Quarter 2026 0.00135 0.00135 0.00135 0.00135 2025 0.00139 0.00135 0.00135 0.00135 2024 0.00109 0.00109 0.00109 0.00109 2023 0.0012 0.0009 0.0009 0.0009 Don’t complete this section if you’re a reimbursing employer, a Local Government Employers Benefit Trust Fund (LGEBTF) employer, or an employer

15 not required to pay Federal Unemployment Tax Act (FUTA). Workers’ Benefit Fund (WBF) assessment Box 27. Hours worked by paid workers subject to Oregon Workers’ Compensation law. Like wages, report hours in the quarter that they are paid. Total all full and partial hours worked by all paid indi- viduals subject to Oregon’s WC law or covered by WC insurance through personal election. You must include hours worked by individuals paid by sal- ary or on a basis other than by the hour. Enter the total hours rounded down to the nearest whole (no fractions or decimals). If you have no hours to report for the quarter, enter 0. Note: The hours you report for the WBF assess- ment won’t necessarily equal the hours you report for UI tax purposes on Form 132. In part, this is because there may be differences in who is subject to which tax. Contact DCBS for more information (see page 1). Box 28. WBF assessment rate. WBF assessment rates are:

2026 = 0.018 2025 = 0.020

2024 = 0.020 2023 = 0.022 Employers contribute one-half of the hourly assess- ment amount and deduct one-half from workers’ wages. Box 29. Total assessment. Multiply box 27 times box 28. Round down to the nearest cent. This is the total WBF assessment due for the quarter. If no assessment is due for the quarter, enter 0. Box 30. Assessment prepaid. Enter the amount of prepaid WBF assessment or WBF assessment credits used this quarter (see page 12). Box 31. Total WBF assessment due. Subtract box 30 from box 29. This is the net WBF assessment amount due for the quarter. It should match the amount you enter in the “Workers’ Benefit Fund Assessment” box on Form OR‑OTC-V. If the amount is zero or less, enter 0. Box 32. Total payment Total the amounts in boxes 10, 22a, 22b, and 31 and enter in box 32. If you have credits, see page 12. You can make your payment for quarterly taxes reported on FORM OQ to DOR by mailing in Form OR-OTC-V with your check or money order, or you can pay on Revenue Online. Employee Detail Report (Form 132) Instructions Employers are required to complete Form 132 if there are hours or wages to report. Form 132 must be complete and legible to be processed. Incom- plete or illegible forms will be returned to you. If they are returned to you, you will need to correct and resubmit your forms within 14 days of the date of notice for them to be processed on time. Form 132 is double sided, make sure to complete both sides including the bottom of page 2. Both sides are required to be completed, even if you only have employees listed on one side. Use additional pages if needed. Complete the totals for every two pages. Enter the Business name, FEIN, BIN, Quarter and Year. Enter the total UI subject wages paid to employees during the quarter. If you use more than one page of Form 132, enter the total from all pages on the top of page 1 only. This figure must equal the amount in box 13a, Form OQ. Box 1a. Social Security number (SSN). Enter the SSN for each employee reported. Box 1b. Employee name. Enter the first initial and last name of each employee reported. Box 1c. Hours worked during this quarter. Enter the number of hours each employee worked in the quarter. If you don’t track hours for a full- time employee, use 520 hours for the report. For fractions or portions of an hour worked by an employee, round up any portion of an hour to the nearest whole hour. Report the actual number of hours worked, both straight time and overtime. Don’t report hours paid for sick leave, vacation leave, or any other hours paid where no work was performed. Even though these hours aren’t reported in box 1c, wages paid are still included in the subject wages in box 1g. Although you report wages in the quarter they are paid, report hours in the quarter they are worked. Note: The hours you report for UI tax purposes on Form 132 won’t necessarily equal the hours you report for the WBF assessment on Form OQ, box 27. In part, this is because there may be differences

16 in who is subject to which tax. Also, hours for the WBF assessment should be reported, like wages, in the quarter they are paid. The hours for UI tax purposes should be reported in the quarter they are worked. Enter 0 for an employee who didn’t work during the quarter but received wages. Don’t leave blank. Box 1d. State income tax withholding. Enter the amount of withholding tax for employees who are subject to UI law. Round to the nearest dollar. Report whole dollars only. Box 1e. STT subject wages. Enter the total STT subject wages paid to each employee during the quarter regardless of whether the employee’s wages were more than the UI taxable wage base. Wages are reported in the quarter paid to the employee regardless of when earned. Enter 0 for an employee who didn’t work during the quarter. Don’t leave blank. Box 1f. STT withholding. Enter the STT withheld for the quarter. Round to the nearest cent. Enter 0 for an employee who didn’t work during the quar- ter but received wages. Don’t leave blank. Box 1g. UI subject wages. Enter the total UI subject wages paid to each employee during the quar- ter regardless of whether the employee’s wages were more than the UI taxable wage base. Wages are reported in the quarter paid to the employee regardless of when earned. Box 1h. Paid Leave subject wages. Enter the total Paid Leave subject wages paid to each employee during the quarter regardless of whether the employee’s wages were more than the Paid Leave contribution wage base. Wages are reported in the quarter paid to the employee regardless of when earned. Column totals. Boxes C, D, E, F, G, and H. Enter the column totals for all employees reported on the page. Totals for each two pages should be calcu- lated separately. Don’t include the totals from other pages of this form. Oregon Schedule B State Withholding Instructions Line instructions—Schedule B Complete Schedule B if you are required to deposit on a semi-weekly or one-banking-day basis. This form includes a box for every day of the quarter. Find the boxes that match your payroll dates. Enter the amount of Oregon tax withheld from your employees during each payroll period. Enter the total tax withheld for each month in boxes A, B, and C. Enter the total of all the amounts in box D. The total should equal the total withholding tax reported in box 11d on Form OQ. Don’t enter credits (see page 11). Unemployment Insurance Tax Information Subject wages Generally, wages reportable for FUTA purposes are reportable for UI tax. All wages, including draws, are reportable when paid to the employee. For example, wages paid April 1 for work performed in March are reportable in the second quarter (April–June). An employee is any person (including nonresi- dent aliens and minors) employed for pay by any employer subject to OED law (ORS 657.015). This includes contract, casual, or temporary labor. “Wages” means all compensation for service, unless specifically excluded by law. Payments other than cash are reportable at cash value in the quarter in which they are available to the employee. Examples of subject wages include: • Payments for services to officers and employees of any type of corporation, except those officers electing to be excluded under the corporation provision (see Excluded Wages, this page). • Payments for agricultural and domestic (in-home services) labor by qualified employers. • Payments for services to employees of nonprofit organizations or political subdivisions. • Payments for services to clergy and employees of churches or other religious organizations. • Special payments for services, such as commis- sions, fees, gifts, bonuses, prizes, separation allowances, guaranteed wage payments, vacation pay, holiday pay, and sick pay.

17 • Employee tips reported by the employer as directed by Internal Revenue Code Section 3306. • Board provided to employees as part of their pay has a minimum value of 30 percent of the standard per diem meal rate within the continental United States. Round the per-diem rate to the nearest dollar. The rate per month will be 30 times the rounded daily rate. If room is also furnished, no additional value will be placed upon it. If room and board are furnished at hotels, resorts, or lodges, or if a room only, an apartment, a house, or any other consideration is provided, the value for tax purposes will be the fair market value. Excluded wages Examples of payments that aren’t subject to UI tax under UI law are: • Payments to a sole proprietor or the sole propri- etor’s child under 18, spouse, or parent. • Payments to legally responsible and registered general partner(s) of a Limited Liability Partner- ship (LLP) or to members of a Limited Liability Company (LLC). • Payments by nonprofits or public educational institutions to full-time students attending said institution. • Non-cash payments to workers in agricultural or domestic (in-home services) employment. • Sick pay under WC law. • Certain sole corporate officers and closely held family corporations that elect in writing to exclude payments for services to corporate offices who: — Are directors; — Have a substantial ownership interest in the corporation; and — Are members of the same family, as parents, stepparents, grandparents, spouses, sons- in-law, daughters-in-law, brothers, sisters, children, stepchildren, adopted children, or grandchildren. An election to exclude corporate officers must be in writing and will be effective the first day of the current or preceding calendar quarter in which the request was submitted. To download the form visit OED’s website (see page 1). The exclusion doesn’t go into effect until you receive written approval. Note: Those excluded from state UI tax may be subject to higher FUTA tax. UI tax payments UI tax payments are due quarterly when reports are due (see page 4). When there is more owed than taxes due for the quarter, payments are applied first to legal fees, penalties, and interest. The remainder is applied to tax owed. Special payroll tax The UI tax program is authorized to collect a spe- cial payroll tax that is calculated every quarter. This isn’t an additional tax. Employers subject to FUTA must deduct the special payroll tax from the total state unemployment tax to determine the amount reported as “contributions paid to the state unemployment fund” on FUTA Form 940. The special payroll tax funds the Wage Security Fund (BOLI) and the Supplemental Employment Department Administration Fund (SEDAF). The BOLI fund pays final wages when a business closes and doesn’t have enough money to make final payroll. The SEDAF fund provides OED's services. Don’t include the special payroll tax to calculate a credit when reporting on federal Form 940. To calculate “contributions paid to the state,” use two lines in item 3 on Form 940 (computation of tenta- tive credit)—see the table on page 14 for the correct amounts. Example 1: An employer has a tax rate of 3 percent (0.03). In the second quarter, the experience rate will be 2.91 percent (0.0291), which is the tax rate less the 0.09 percent (0.0009) special payroll tax offset. Example 2: Employers with the highest state unemployment tax rate, 5.4 percent (0.054), should not calculate the amount of the special payroll tax offset. The employer should use the unadjusted amount of taxes paid to the state as “contributions paid to your state unemployment fund.” “Contributions actually paid to the state” should equal the amounts on line 17, Form OQ for each quarter. If the amounts paid were less than owed, report the amount actually paid. To download Form 940 visit the IRS website (see page 2). Exemption from UI tax An employer who doesn’t have enough employ- ment or payroll may qualify for exemption from UI tax (ORS 657.415). To apply for the exemption, file a written request with the director of OED. If

18 approved, the exemption will continue until the employer again qualifies as an employer (ORS 657). Election of coverage An employer who has employees not subject to UI tax may file a written election to cover such employees (ORS 657.425). You may choose to: 1. File reports and pay associated taxes, or 2. Apply for the election by filing a Notice of Election to Cover Employees form with the director of OED. You will need to receive written notification of approval to begin coverage. To download the form visit OED's website (see page 1). Paid Leave Oregon Contribution Information Subject wages Generally, wages reportable for FUTA purposes and UI purposes are reportable for Paid Leave. All wages, including draws, are reportable when paid to the employee. For example, wages paid April 1 for work performed in March are reportable in the second quarter (April to June). Paid Leave covers more employees and employ- ment than UI – employers may be required to report wages for more employees for Paid Leave than UI, but what is included in wages is the same for both programs. Therefore, Paid Leave subject wages should be equal to or greater than UI subject wages reported for the employees. An employee is any person (including nonresident aliens and minors) employed for pay by any employer sub- ject to Paid Leave (ORS 657B.010). This includes contract, casual, temporary, seasonal, part-time, or full-time labor employees. Paid Leave subject wages are payments made to an individual for personal services and the cash value of all compensation to that individual in any method other than cash. Unless specifically excluded, gross subject wages include, but are not limited to, the following: • Salary and hourly pay. • Piece rate and by-the-job pay. • Vacation, sick pay, holiday pay, and paid time off (PTO). • Bonuses, fees, and prizes from an employer. • Compensatory time and standby pay. • Commission or guaranteed wage payments. • Sickness and accident disability payments. • Dividends and distributions for services . • Tips and gratuities. • Dismissal and separation allowance. • Compensation other than cash, such as room and board (except for agricultural and domestic employees). • Fringe benefits, such as company vehicles, com- pany paid parking, sick pay by third parties (e.g. insurance companies), and dependent care assistance. • Examples of payments that should not be reported as gross subject wages for Paid Leave: • Payments to flexible spending accounts and health saving accounts that meet the requirements of the Internal Revenue Code (IRC) section 125 plan paid by the employer or employee. • Health, dental, and other insurance paid by the employer. • Health, dental, and other insurance paid by the employee under the IRC Section 125 Plan. • Meal and travel expenses and per diems paid by the employer under an account- able plan. • Retirement or pension income. • Sickness or accident disability under work- er’s compensation. • Examples are not all inclusive and do not cover all wages. See ORS 657B.010(27) and applicable administrative rules in OAR 471-070 chapter for additional information. Paid Leave for workers who work or reside in another state Generally, where wages are performed is treated the same for Paid Leave as UI and other states with Paid Leave. Paid Leave contributions are due for all employees that work in Oregon, even if they live in another state. Employers should withhold and pay contributions on wages that are earned for services performed entirely in Oregon and for work that is performed both within and outside of Oregon when the work outside of Oregon is incidental to work inside of Oregon. This includes wages for the following employees: • Oregon residents whose work is entirely in Oregon.

19 • Residents of other states who work entirely in Oregon. • Employees who work remotely in Oregon for employers in other states. • Employees who work in Oregon and out-of-state when the work in other states is temporary or transitory. • Employees who work in Oregon and out-of-state and when the base of operations or location that directs the work is in Oregon. • Employees, who are residents of Oregon, who complete some work in Oregon when there is no base of operations or location that directs the work. This doesn't include wages for the following employees: • Oregon residents that work in other states. • Employees who work remotely full-time in other states for Oregon employers. • Employees that complete some work in Oregon, including remote work, if the base of operations or location that directs the work is out-of-state and some work is done in that state. Paid Leave contribution payments Paid Leave contribution payments are due quar- terly when reports are due (see page 10). When there is more owed than contributions, payments are applied first to legal fees, penalties, and interest. The remainder is applied to Paid Leave contribu- tions owed. Credit balances are treated as payments (OAR 471-070-5210). Exemption from Paid Leave Paid Leave covers almost every Oregon employer, and almost all employees in Oregon. This includes small and large employers, non-profits, chari- ties, and faith-based organizations. The following employers are exempt from Paid Leave: • Federal employers and their employees • Tribal governments and their employees (tribal governments may choose coverage) • Self-employed individuals (may choose coverage) Choose coverage for Paid Leave Tribal governments and self-employed individuals are exempt from requirements to participate in Paid Leave; however, you can choose to participate. If you choose to participate, you will report wages from the Tribal government or net income from self-employment and pay contributions. Contact OED for more information (see page 1). Employer responsibilities Employers with employees working in Oregon are required to: • Report employee wages for those working in Oregon and employee counts for both Oregon employees and those that work in other state(s). • Withhold and submit the employee portion of contributions quarterly (or cover some or all those contributions for their employees as an employer- offered benefit) and submit the contributions. • Pay the employer portion of contributions quar- terly (unless exempt from paying employer con- tributions as a small employer). Withholding Tax Information Subject wages Examples of taxable wages include: • Salaries, commissions, bonuses, wages, tips, fees, prizes, separation allowances, guaranteed wage payments, and vacation and holiday pay. • Payments by a corporation, including S corpora- tions and professional corporations, to a corporate officer for services, including guaranteed wage payments for services. • Wages paid when an employer-employee relation- ship exists between spouses, domestic partners, or a parent and child. Exempt wages Oregon withholding law exempts wages paid for certain kinds of services, labor, employee allow- ances for the benefit of employer, and reimbursed employee business expenses. A list of exempt wages is in the Employer’s Guide For Doing Business in Oregon (see page 2). However, if any of the following apply, use the "single/head of household" filing status and zero allowances: • Your employee claims exempt status for Oregon only. • DOR or the IRS tell you not to permit allowances. • The employee claims more than 10 allowances.

20 • The employee’s wages are exempt from federal or state taxation, and the employee’s income is expected to be more than $200 per week. Employees who owe tax when they file their Oregon personal income tax return may not have had enough state tax withheld during the year. To prevent this in the future, they may choose to claim a lower number of Oregon allowances or to have an additional amount withheld per paycheck. Withholding on IRAs, annuities, and compensation plans A payer of commercial annuities, employer- deferred compensation plans, and retirement plans must withhold tax from the distributions on behalf of the individual payee unless the individual payee chooses to have no withholding. The payee must give federal Form W-4P to the payer to show the number of exemptions the payer should use to calculate state withholding. A payee may also use Form W-4P if they choose to have no withholding. The payer must withhold as if the payments were wages, using the tax tables furnished by DOR. The amount of withholding per payee must be $10 or more. For Oregon withholding purposes, (or choosing exemption from withholding), the payee must provide the payer with a completed OR-W-4 if the payee is changing their withholding or newly establishing withholding (or exemption) for distri- butions from IRAs, annuities, and compensation plans. The W-4P is for federal income tax withhold- ing purposes. If nothing has changed, the payer can continue using the previously filed W-4P for federal and state withholding of these distributions. Withholding on pension and annuities requires a different BIN than your payroll account BIN because these are not payroll wages. State withholding requirements on IRAs, annui- ties, and deferred compensation plans are similar to federal withholding requirements (IRC Section 3405). The difference is that state withholding isn’t required for a rollover from one qualifying plan to another. Oregon doesn’t follow the federal backup withholding rules for pension and annui- ties distributions. The payer issues 1099s to the individual payees at the end of the year, and files Form OR‑WR with DOR. Contact DOR for more information (see page 1). Figuring withholding tax All Oregon employers must withhold tax from employee wages (including draws) at the time employees are paid. Taxes are withheld and reported in the quarter the employee is paid. To figure the amount of tax to withhold from an employee’s wages: • Use the Oregon withholding tax tables on DOR's website (see page 1). • For computer payroll systems, use the percent- age formula in the Oregon withholding formula publication on DOR's website (see page 1). Form OR-W-4, Oregon Withholding Certificate, Frequently Asked Questions Changes to federal tax laws mean that federal Form W-4 may not provide the correct withholding for Oregon taxes. DOR has created Form OR-W-4, Ore- gon Withholding Statement and Exemption Certificate, to help employees determine correct allowances for Oregon withholding (see DOR on page 1). What wages are subject to Oregon withholding? • Salaries, commissions, bonuses, wages, tips, fees, prizes, separation allowances, guaranteed wages payments, and vacation and holiday pay. • Payments by a corporation to a corporate officer for services. • Remuneration paid in an employer-employee relationship with spouses, domestic partners, or a parent and child A list of exempt wages can be found in the Oregon Employer’s Guide. What form do my employees use to claim allowances for Oregon? Employees will use Form OR-W-4 if they are claim- ing or changing their withholding after January 1, 2020 or if they revise their federal Form W-4 after January 1, 2019. If they’ve filed an “Oregon-only” federal Form W-4 or Form OR-W-4 before January 1, 2019 they don’t

21 need to use Form OR-W-4 until they need to change their allowances for Oregon. Who needs to file Form OR-W-4? Employees who: • Were hired on or after January 1, 2020. • Have had a financial situation change. • Want to change their withholding amounts. • Have relocated from another state. How do I withhold taxes for an employee who refuses to complete Form OR-W-4 or federal Form W-4? Withhold using Single with zero allowances. Can an employee have different withholding amounts for state tax than for federal tax? Yes, Form OR-W-4 is for Oregon withholding only. Federal Form W-4 is for federal withholding. How do I calculate withholding tax? To calculate the amount of tax to withhold from an employee’s wages: • Use the Oregon Withholding Tax Tables if: • The employee’s wages are less than $50,000 annually, • The employee’s federal withholding is determined using a 2019 or earlier federal Form W-4, and • The employee is claiming the same marital status and number of allowances for both federal and state withholding. • Use the Oregon Withholding Tax Formulas in all other situations, including computer payroll systems. If any of the following apply, withhold at 8 percent, instead of using Form OR-W-4 or federal Form W-4: • Your employee claims exempt status for Oregon only. • DOR or IRS tells you not to permit allowances. • The employee’s exemption status expired, and they did not submit a new Form OR-W-4. You must withhold tax from employee wages (including draws) at the time employees are paid. Taxes are withheld and reported in the quarter the employee is paid. Does Oregon require withholding on household employees? No, you’re not required to withhold for household employees. However, you can if the household employee asks you to withhold and you agree. You must fill out the Combined Employer's Registra- tion form and the employee must complete Form OR-W-4. When can an employee claim exempt? An employee can claim exempt from Oregon with- holding if: • Their compensation is exempt under a provision of federal or state law. • They had a refund of all state income tax withheld from the previous tax year and expect to have a refund of all state income tax withheld for the current year. Does DOR require copies of Form OR-W-4 and federal Form W-4? Yes, in the following instances (OAR 150-316-0290). Send DOR a copy of the form being used to with- hold for Oregon within 20 days of the date filed, if the employee claims any of the following: • An exemption from withholding and their income is expected to exceed $200 per week for state purposes. • Exempt for Oregon withholding, but not exempt for Federal withholding. What if I don’t have copies of the employee’s W-4 forms? If you have a fax from an electronic payroll system, you’ll need to recreate the form. If you don’t have a copy or fax of the form, a report will substitute if it contains the employee’s: • Name. • Social Security Number (SSN). • Date of birth. • Date of withholding statement or exemption certificate submission. • Election of married or single status. • Number of withholding allowances claimed by the employee, if applicable. • Election of exemption status. • Reason for claiming the exemption status. Send copies or reports to:

W-4 Project Manager

Oregon Department of Revenue

PO Box 14560

Salem, OR 97309

22 What if I receive a determination letter for an employee? A determination letter requires you to withhold based upon marital status and number of allow- ances for an employee. You will need to change the employee’s withholding accordingly. The employee will also receive a copy of the letter. The determination stays in effect until you receive a new determination letter or the employee files a new Form OR-W-4 increasing their withholding. If the employee wants to lower their withholding, they need to follow the instructions and refile Form OR-W-4. Do I withhold differently for employees who are nonresident aliens? Generally, no. However, if the IRS grants the employee an exemption, DOR will honor the exemption. To receive an exemption, the employee must file federal Form 8233 with you. If any por- tion of the employee’s wages are not exempt, use the employee’s Form OR-W-4 elections to withhold on those non-exempt wages. Advise employees to follow the instructions on Form OR-W-4. Do I withhold differently on IRA’s, annuities, and compensation plans? If you pay for commercial annuities, employer- deferred compensation plans, or retirement plans you must withhold tax, unless the employee or payee chooses to have no withholding. The employee or payee must provide a filed federal Form W-4P or Form OR-W-4 for you to determine the withholding amount, even if they choose no withholding. Withhold as if the payments were wages. You must withhold $10 or more per employee or payee. Oregon withholding isn’t required for a rollover from one qualifying plan to another. Oregon doesn’t follow the federal backup withholding rules for pension and annuities distributions. You are required to use a different BIN than your payroll account BIN because these are not payroll wages. You will need to issue 1099s to employees and payees at the end of the year and file 1099s electronically through iWire. Where do I get Form OR-W-4? Download Form OR-W-4 from DOR's website (see page 1). Use what the employee claims for federal purposes for Oregon only if the employee doesn't submit Form OR-W-4 or a separate federal Form W-4 with "Oregon Only" written on it. Where do I get federal Forms W-2 and W-4? You can get these forms from the IRS (see page 2). Transit District Excise Tax Information These tax programs are administered by DOR for the Tri-Met Tranist District (TM) and Lane Transit District (LTD). They provide revenue for mass transit (ORS chapter 267). Transit payroll (excise) tax is imposed on most employers who pay wages for services performed in the TM or LTD districts. If you use a payroll service, you may need to inform them of this tax. Who must file a report? Unless exempt (see next column), employers who have resident or nonresident employees working in the TM or LTD districts must register and file with DOR. If an employer doesn’t have employees working within the transit district boundaries, the payroll isn’t subject to the transit tax. Wages subject to transit districts Wages means all salaries, commissions, bonuses, fees, or other items of value paid to a person for services performed within a transit district (ORS 267.380). Transit district wages also include: • Contributions to a Simplified Employee Pension (SEP) made at the election of the employee. • Payments for the purchase of IRC Section 403(b) annuities under salary-reduction agreements. • Contributions to 401(k) retirement plans chosen by the employee, including employer-matched contributions. • Pick-up payments to governmental retirement plans under salary-reduction agreements. • Amount deferred under governmental deferred compensation plans. • Any amount deferred under a non-qualified deferred compensation plan. • Payment to an IRC Section 408 Individual Retire- ment Account under salary-reduction agreement.

23 Exempt payroll The following are exempt from TM and LTD excise taxes: • Federal government units • Federal credit unions • Public school districts • Organizations, except hospitals, that qualify for exemption [ORS 267.380(1)(b)]. • All foreign insurers • 501(c)(3) nonprofit institutions (except hospitals) • Insurance adjusters, agents, and agencies and their office support staff, are exempt from transit tax if the business income is from insurance- related activity. Non-insurance income is taxable (ORS 731.840). • Domestic service in a private home • Cafeteria plans • Casual labor • Services performed outside the district • Seamen who are exempt from garnishment • Employee trusts that are exempt from taxation • Wages paid to employees whose labor is solely connected to planting, cultivating, or harvesting seasonal agricultural crops These apply only to the TM District: • Public education districts • Public special service and utility districts • Port authorities • Fire districts • City, county, and other local government units How to figure the transit tax The transit tax is an employer-paid tax. It’s based on the amount of gross payroll paid for services their employees perform within the TM or LTD district. Use the current TriMet or LTD tax rates. If you are subject to TM or LTD transit tax and no tax rate is printed on the Form OQ, visit DOR's website (see page 1). TriMet Transit District (TM) service area TM serves the Portland metropolitan area, which includes parts of Multnomah, Washington, and Clackamas counties. For information see page 1. Lane Transit District (LTD) service area LTD serves the entire Eugene-Springfield urban area and several rural areas. Some ZIP codes may not line up with district bound- aries. For information see page 1. ZIP codes in LTD 97003 97005 97006 97008 97024 97027 97030 97034 ZIP codes partially in TM 97035 97036 97062 97068 97077 97201 97202 97203 97204 97205 97206 97209 97210 97211 97212 97213 97214 97215 97216 97217 97218 97219 97220 97221 97222 97223 97225 97227 97229 97230 97232 97233 97007 97009 97015 97019 97022 97023 97045 97060 97070 97078 97080 97086 97089 97113 97116 97123 97124 97140 97224 97231 97401 97402 97403 97404 97405 97406 97407 97408 97424 97426 97437 97438 97440 97448 97452 97455 97477 97478 97482 97487 97488 97489 97236 97239 97256 97258 97266 97267 ZIP codes completely in TM

24 Workers’ Benefit Fund Assessment Information Workers’ Benefit Fund The Workers’ Benefit Fund (WBF) supports pro- grams that benefit injured workers and the employ- ers who help them return to the work force. Visit DCBS' website for more information about pro- grams supported by the fund (see page 1). Note: The WBF assessment is separate from WC insurance premium and does not provide insurance coverage. Workers subject to WBF assessment Individuals subject to the WBF assessment are: • All paid workers for who the employer is required by Oregon law to provide WC insurance cover- age; and • All paid individuals (workers, owners, offi- cers) who may otherwise be non-subject, but the employer chooses to cover under WC insurance; and • All paid individuals performing personal support work who are eligible for WC insurance coverage [HB 3618 (2010)]. Refer to ORS 410.600-410.625 for definition of home care workers. For questions regarding subjectivity, contact DCBS (see page 1 under Subjectivity questions). WBF assessment reporting exemptions As a business, you may qualify for exemption from reporting the WBF assessment if you don’t have any paid individuals (including yourself) covered by your WC insurance policy. To request an exemption from WBF assessment reporting, complete and mail to DCBS a Corrections and Changes Notification form. To download the form, visit DCBS' website (see page 1). Hourly assessment This assessment is based on hours worked by all paid individuals subject to the assessment. If you don’t track hours, use the flat rate calculation or calculate reasonable hours worked. For details, visit DCBS' website (see page 1). Hours are reportable in the quarter they are paid. For example, report hours worked in March, but not paid until April 1, in the second quarter. How to update or close your WBF assessment account If your business changes ownership, discontinues business, or no longer employs workers, complete a Business Change in Status Form, located in the back of this booklet. In addition, contact your WC insurer with the corrected information.

You can download forms at: ­www.oregon.gov/employ/businesses or ­www.oregon.gov/dor/forms If you are unable to download forms, you can order forms by calling 503-947-1488, or by submitting this request. Oregon Combined Payroll Tax Additional Forms Request Business name BIN (Oregon business identification number) FEIN (Federal employer identification number) Address City State Zip Contact phone Blank Oregon Combined Payroll Tax forms Form OQ ______________ (specify quantity) Schedule B ______________ (specify quantity) Form 132 ______________ (specify quantity) Fax to: 503-947-1487, or Mail to: Oregon Employment Department

Contributions and Recovery

875 Union St NE

Salem OR 97311-0030 Oregon Employment Department

150-211-156 (Rev. 12-12-2023) Oregon Combined Payroll Tax Business Change in Status Form To Update Business Status and Employment Information Attach additional sheets if needed. Business name Other names (ABN/DBA) BIN (Oregon business identification number) FEIN (Federal employer identification number) General updates (check all that apply) Owner/Officer updates: To update owner/officer informa- tion, attach a complete list of current owners/officers including position, social security number (SSN), home address, and phone. Update/Change FEIN to: Update/Change business name to: Now doing business in TriMet/Lane Transit District as of: Closing account (check all that apply) Closed pension/annuity account as of: No longer doing business in TriMet/Lane Transit District as of: All or Closed No longer doing business in Oregon Sold Leased Transferred Was business operating at the time it was sold, leased or transferred? Yes No How many employees were transferred? Effective date: Date of final payroll: Describe what was transferred New business name New owner’s name New owner’s address Where are the records of the terminated business? (Include contact name, phone, address, city, state, ZIP code) New owner’s phone Changing entity (check all that apply) Effective date: Note: A new Combined Employer’s Registration form, 150-211-055, is required when there is an entity change. Change from: Change to: Corporation —“C” Corporation—Subchapter “S” Individual (Sole Proprietor) Partnership —General Partnership—Limited LLP (Limited Liability Partnership) Corporation Sole Proprietor/Single Member Partnership LLC (Limited Liability Company) Recognized by IRS as: Employment status updates (check all that apply) Still in business, but have no paid employees (corporate officers are still subject to payroll taxes). Effective date: Only have workers’ compensation insurance to cover owners, officers or members. Only LLC members or officers Courtesy withholding Only using independent contractors Employing Oregon residents in another state. State: Now working in Oregon. Effective date: Using leased employees Authorization Name of leasing company Leasing company contact name Address City City State State ZIP code ZIP code Phone Date employees leased Number of leased employees: Worker leasing company license number Number of non-leased employees: Leasing corporate officers/owners? Yes No Fax to: 503-947-1700 or mail to: Employment Department, 875 Union St NE Rm 107, Salem OR 97311-0030 Signature Print name Title Date Phone Corporation —“C” Corporation—Subchapter “S” Individual (Sole Proprietor) Partnership —General Partnership—Limited LLP (Limited Liability Partnership) Corporation Sole Proprietor/Single Member Partnership LLC (Limited Liability Company) Recognized by IRS as: Part of the business was Under penalties of false swearing, I declare that the information on this form, including accompanying documents, is true, correct, and complete to the best of my knowledge and belief. (ORS 305.810)

150-211-156-1 (Rev. 10-23-2024) Oregon Combined Payroll Tax Business Change in Status Form Instructions Use the Business Change in Status form to notify the Employment Department (OED), Department of Revenue (DOR), and Department of Consumer and Business Services (DCBS) of changes to your business or employment status. General updates NOTE: Some federal employer identification number (FEIN) and name changes may require a new Combined Employer’s Registration, 150-211-055, form to be completed. • Provide the correct FEIN for your business. • Correct the business name and spelling errors as needed. • Check the “Now doing business in TriMet/Lane Transit District” box and include the effective date if you’re an employer paying wages earned in the TriMet or Lane Transit District. You must register and file with the Oregon Department of Revenue. Wages include salaries, commis- sions, bonuses, fees, payments to a deferred compensation plan, or other items of value. • For boundary questions, see the Oregon Combined Payroll Tax booklet, 150-211-155, for the list of cities and ZIP codes.

— The TriMet district includes parts of Multnomah, Wash- ington, and Clackamas counties. For TriMet boundary questions call 503-962-6466.

— Lane Transit District serves the Eugene-Springfield area. For Lane Transit District boundary questions call 541-682-6100. Re-opened business To re-open your business that you’ve closed for: • Less than one year, file a:

— Business Change in Status Form, 150-211-156. • One year or more, file a:

— Combined Employer’s Registration, 150-211-055. For more questions contact DOR at 503-945-8091. Owner/officer updates Attach a separate sheet to update or change corporate officer or owner information. Compensation for services performed by corporate officers and shareholders is subject to payroll taxes (withholding, transit, unemployment, and paid leave). If owners and officers are covered by Workers’ Compensation insurance, the hours worked are also subject to Workers’ Benefit Fund (WBF) assessment. Employment status updates • Check each box that applies to your business and include the effective date of change. • If Oregon residents are working out of Oregon, indicate which state. • Check box and indicate effective date of employees now working in Oregon that previously worked in another state. Using leased employees If you lease your employees from a Professional Employer Organization (PEO)/Worker Leasing Company, fill in the information requested. Changing entity Include the effective date of change, check the box of the entity you’re changing from and the box of the entity chang- ing to. NOTE: Entity changes require the completion of a new Com- bined Employer’s Registration form. Examples include, but aren’t limited to: • Changing from a sole proprietorship to a partnership or corporation. • Changing from a partnership to a sole proprietorship or corporation. • Changing from a corporation to a sole proprietorship or partnership. • Changing of members in a partnership of five or fewer partners. • Adding or removing a spouse as a liable owner. • Changing from a sole proprietorship, corporation, or part- nership to a limited liability company. Closing account • Check the box if you closed a pension and annuity account. Include the effective date of change. • Check the “No longer doing business in TriMet/Lane Tran- sit District” box and include the effective date if you moved your business from the TriMet or Lane transit district and are no longer subject to this tax. • Check the box if you closed the business or dissolved a sole proprietorship, partnership, corporation, or limited liability company, and no longer have payroll to report. Fill in the date of final payroll. • If you sold your business, leased your employees, or trans- ferred your business assets, indicate whether the transac- tion applied to all or part of the business. • If you leased all or part of the business, fill out the section “Using Leased Employees.” NOTE: New or reorganized businesses must complete a Combined Employer’s Registration, 150-211-055, which can be found in pdf format at: www.oregon.gov/dor. Fax to: 503-947-1700 or Mail to: Employment Department 875 Union St NE Rm 107 Salem OR 97311-0030

Form OR-BCC Combined Payroll Tax Business Contact Change Submit original form—do not submit photocopy Page 1 of 1, 150-211-159 (Rev. 10-23-24, ver. 01) 17040001010000 Check here to revoke all prior email addresses Office use only Updating contact and address information ensures you’ll receive tax forms and other important documents. Updates to contacts and address can also be submitted through your Revenue Online account at revenueonline.dor.oregon.gov. Federal employer identification number (FEIN) Business name Other names (ABN/DBA) Part A—Business information Part B—Update mailing address Part C—Update physical locations Email Check here to authorize us to initiate email exchange of tax information Check box if this is an employee home address Check box if this is an employee home address List all physical locations and attach additional sheet if necessary. Reason for location change Reason for location change City City State State ZIP code ZIP code Street address Street address 1. 2. Add location Add location Delete location Delete location Phone Business ID number (BIN) City State ZIP code Business mailing address Part D—Update business contact person Part E—Authorization Under penalties of false swearing, I declare that the information on this form, including accompanying documents, is true, correct, and complete to the best of my knowledge and belief. (ORS 305.810) I authorize the Employment Department, the Department of Revenue, and the Department of Consumer & Business Services to verify any of the above information with regard to this business. I will notify each agency if there is a change or cancellation of the above authorized representative. Business contact name Title Email Phone

Authorized signature X Name (print or type) Date Title Phone Attach power of attorney form for authorized representative. To add or remove additional business contacts, please attach an additional sheet and clearly state contact is being added or removed. Email Mail your completed form to: Oregon Employment Department

875 Union Street NE - Room 107

Salem OR 97311-0030 Fax to: 503-947-1700 Email to: oed.contributions.and.recovery.division@employ.oregon.gov Retain a copy for your records – – – – / / – – – –

150-211-159-1 (Rev. 11-19-2025) Form OR-BCC, Oregon Combined Payroll Tax Business Contact Change Form Instructions Use the Business Change in Status form to notify the Employment Department (OED), Department of Revenue (DOR), and Department of Consumer and Business Services (DCBS) of changes to your business or employment address and/or contact information. Part A • General business information, including name and FEIN or BIN. Part B • Changes to mailing address and email (if applicable). • Use check boxes to change or revoke email addresses. Part C • Any physical location address updates. • Add or delete locations using check boxes. • Provide a reason for the change. Part D • Changes to business contact name. • Include a Form OR-AUTH-REP or Form OR-AUTH-INFO, if the Authorized representative will be changing. Part E • Authorized signature of business representative. Fax to: 503-947-1700 or Mail to: Employment Department 875 Union St NE Rm 107 Salem OR 97311-0030

00462101010000 / / / / / / 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 1 of 8 • Use UPPERCASE letters. • Use blue or black ink. • Print actual size (100%). • Don’t submit photocopies or use staples. 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue

Fiscal year ending date (MM/DD/YYYY) Amended return. If amending for an NOL, tax year the NOL was generated: NOL tax year (YYYY) Calculated with “as if” federal return Short-year tax election First name Space for 2-D barcode—do not write in box below Extension filed Form OR-24 Federal Form 8379 Federal Form 8886 Disaster relief Initial Date of birth (MM/DD/YYYY) Last name Social Security number (SSN) Deceased First time using this SSN (see instructions) Applied for ITIN Spouse’s first name Initial Spouse’s date of birth (MM/DD/YYYY) Spouse’s last name Spouse’s Social Security number (SSN) First time using this SSN (see instructions) Applied for ITIN Deceased Current address City State ZIP code Country Phone Filing Status (check only one box) 1. Single 2. Married filing jointly Married filing separately (enter spouse’s information above) 3. 4. Head of household (with qualifying dependent) Qualifying widow(er) with dependent child 5. Clear form

00462101020000 / / / / / / 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 2 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue 6b. Credits for your spouse Check boxes that apply: 6a. Credits for yourself .

Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Exemptions .................................................................................................................................................................................6a. Check boxes that apply: Severely disabled Someone else can claim you as a dependent. ..........................................................................................................................................................................6b. Regular Severely disabled Someone else can claim you as a dependent. Regular Dependents. List your dependents in order from youngest to oldest. If more than three, check this box and include Schedule OR-ADD-DEP. Dependent 1: First name Initial Dependent 1: Last name Dependent 1: Date of birth (MM/DD/YYYY) Dependent 1: Social Security number (SSN) Code * Dependent 1: Check if child has a qualifying disability Dependent 2: First name Initial Dependent 2: Last name Dependent 2: Date of birth (MM/DD/YYYY) Dependent 2: Social Security number (SSN) Code * Dependent 2: Check if child has a qualifying disability Dependent 3: First name Initial Dependent 3: Last name Dependent 3: Date of birth (MM/DD/YYYY) Dependent 3: Social Security number (SSN) Code * Dependent 3: Check if child has a qualifying disability *Dependent relationship code (see instructions). 6c. Total number of dependents .................................................................................................................................................................. 6c. 6d.

Total number of dependent children with a qualifying disability (see instructions) ................................................................................6d. 6e. Total exemptions. Add 6a through 6d.......................................................................................................................................... Total 6e.

00462101030000 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 3 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue

.............................................. 7. ................................................... 8. .................................................................. 9.

10. 2021 federal tax liability (see instructions) ............................................................. 10. ......................... 11. ............................................. 12. ............................................ 13. ............................................................. 14. ....................................................... 15. 11. Social Security amount on federal Form 1040 or 1040-SR, line 6b 12. Oregon income tax refund included in federal income 13. Total subtractions from Schedule OR-ASC, Section B 14. Total subtractions. Add lines 10 through 13 15. Income after subtractions. Line 9 minus line 14

17. Standard deduction. Enter your standard deduction (see instructions) ................. 17.

18. Enter the larger of line 16 or 17 ................................................................................. 18. .......................................................................................................... 19. 19. Oregon taxable income. Line 15 minus line 18. If line 18 is more than line 15, enter 0 Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Taxable income 7. Federal adjusted gross income from federal Form 1040, 1040-SR, and 1040-NR, line 11; or 1040-X, line 1C (see instructions) 8. Total additions from Schedule OR-ASC, Section A 9. Income after additions. Add lines 7 and 8 Subtractions Deductions 16. Oregon itemized deductions. Enter your Oregon itemized deductions from Schedule OR-A, line 23. If you are not itemizing your deductions, enter 0 .............. 16. You were: 17a.

65 or older 17b. Blind Your spouse was: 17c. 65 or older 17d. Blind

00462101040000 , , , , 0 0 0 0 , , , , 0 0 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 4 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue 20. Tax (see instructions) ................................................................................................ 20.

21. Interest on certain installment sales ......................................................................... 21. ........................................................... 22. 22. Total tax before credits. Add lines 20 and 21

24. Political contribution credit. See limits in instructions ........................................... 24. ...................................... 25. ....................................................... 26. .......................................................................................................... 27. ................ 28. ......................... 29. ................................... 23. 25. Total standard credits from Schedule OR-ASC, Section C 26. Total standard credits. Add lines 23 through 25 27. Tax minus standard credits. Line 22 minus line 26. If line 26 is more than line 22, enter 0 28. Total carryforward credits claimed this year from Schedule OR-ASC, Section D. Line 28 can’t be more than line 27 (see Schedule OR-ASC instructions) 29. Tax after standard and carryforward credits. Line 27 minus line 28 30. Total credit recaptures claimed this year from Schedule OR-ASC, Section E .......... 30. ...................................................... 31. 31. Tax after credit recaptures. Line 29 plus line 30 Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Oregon tax Check the appropriate box if you’re using an alternative method to calculate your tax: 20a. Schedule OR-FIA-40 20b. Worksheet FCG 20c. Schedule OR-PTE-FY Standard and carryforward credits 23. Exemption credit. If the amount on line 7 is $100,000 or less, multiply your total exemptions on line 6e by $213. Otherwise, see instructions

00462101050000 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 5 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue

........ 32. .................................................... 33. ................ 34. .................................................................... 35.

.......................................................... 36. ................................... 37. ............................ 38.

................................................................................................ 39. ................................................................................................ 40. ................................. 41. ......................... 42.

................................................ 43. Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Payments and refundable credits 32. Oregon income tax withheld. Include a copy of your Forms W-2 and 1099 33. Amount applied from your prior year’s tax refund 34. Estimated tax payments for 2021. Include all payments you made before filing this return (see instructions). Do not include the amount on line 33 35. Earned income credit (see instructions) 36. Kicker (Oregon surplus credit). Enter your kicker credit amount (see instructions). If you elect to donate your kicker to the State School Fund, enter 0 and see line 53 37. Total refundable credits from Schedule OR-ASC, Section F 38. Total payments and refundable credits. Add lines 32 through 37 Tax to pay or refund 39. Overpayment of tax. If line 31 is less than line 38, you overpaid. Line 38 minus line 31 40. Net tax. If line 31 is more than line 38, you have tax to pay. Line 31 minus line 38 41. Penalty and interest for filing or paying late (see instructions) 42. Interest on underpayment of estimated tax. Include Form OR-10 Exception number from Form OR-10, line 1 42a. Check box if you annualized: 42b. 43. Total penalty and interest due. Add lines 41 and 42

00462101060000 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 , , 0 0 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 6 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue

44. Net tax including penalty and interest. Line 40 plus line 43 .................................................. This is the amount you owe. 44. 45. Overpayment less penalty and interest. Line 39 minus line 43 ...............................................................This is your refund. 45. 46. Estimated tax. Fill in the portion of line 45 you want applied to your open

estimated tax account .............................................................................................. 46. ....................... 47. ........................................................................................ 48. 47. Charitable checkoff donations from Schedule OR-DONATE, line 30 48. Political party $3 checkoff

Party code:

49. Oregon 529 college savings plan deposits from Schedule OR-529 (see instructions) ....................................................................................................... 49. ....................................................................................................... 50. 50. Total. Add lines 46 through 49. Line 50 can’t be more than your refund on line 45 51. Net refund. Line 45 minus line 50 .................................... This is your net refund. 51.

Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Tax to pay or refund (continued) 48a. You 48b. Spouse Direct deposit 52. For direct deposit of your refund, see instructions. Check the box if the final deposit destination is outside the United States: Type of account: Account information: Checking or Routing number Account number Savings Kicker donation 53. If you elect to donate your kicker to the State School Fund, check this box.......... 53a. Complete the kicker worksheet, located in the instructions, and enter the amount here............................................................This election is irrevocable. 53b.

00462101070000 / / / / / / 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 7 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue

Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Sign here. Under penalty of false swearing, I declare that the information in this return is true, correct, and complete. Your signature X X Date (MM/DD/YYYY) Spouse’s signature Date (MM/DD/YYYY) Signature of preparer other than taxpayer X Date (MM/DD/YYYY) Phone Preparer license number Preparer first name Initial Preparer last name Preparer address City State ZIP code Signing this return does not grant your preparer the right to represent you or make decisions on your behalf. For more information, see the instructions for the Tax Information Authorization and Power of Attorney for Representation form on our website. Important: Include a copy of your federal Form 1040, 1040-SR, 1040-X, or 1040-NR. We may adjust your return without it. Pay the amount due (shown on line 44) • Online: www.oregon.gov/dor. • By mail: Payable to the Oregon Department of Revenue. Write “2021 Oregon Form OR-40” and the last four digits of your SSN or ITIN on your check or money order. Include your payment with this return. Don’t use Form OR-40-V payment voucher if you’re mailing payment with your return. Mail your return • Non-2-D barcode. If the large 2-D barcode box on the first page of this form is blank: — Mail tax-due returns to: Oregon Department of Revenue, PO Box 14555, Salem OR 97309-0940. — Mail refund and no-tax-due returns to: Oregon Department of Revenue, PO Box 14700, Salem OR 97309-0930. • 2-D barcode. If the large 2-D barcode box on the first page of this form is filled in: — Mail tax-due returns to: Oregon Department of Revenue, PO Box 14720, Salem OR 97309-0463. — Mail refund and no-tax-due returns to: Oregon Department of Revenue, PO Box 14710, Salem OR 97309-0460.

00462101080000 2021 Form OR-40 Or Oregon Individual Income T egon Individual Income Tax Retur ax Return for Full-year Residents n for Full-year Residents Page 8 of 8 150-101-040 (Rev. 08-23-21, ver. 01) Oregon Department of Revenue Last name Social Security number (SSN) Note: Reprint page 1 if you make changes to this page. Amended statement. Complete this Section only if you’re amending your 2021 return or filing with a new SSN. If filing an amended return, use this space to explain what you’re changing. Include the return line numbers and the reason for each change. If your filing status has changed, explain why. Include all supporting forms and schedules when you file your amended return, even if you haven’t changed anything on them. If filing with a new SSN, enter your former identification number.

150-101-040-1 (Rev. 04-21-22) www.oregon.gov/dor • April 18, 2022 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Find out if you qualify for the earned income credit. See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. Full-year Resident 2021 Oregon Income Tax Form OR-40 Instructions Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Check the status of your refund. • View and print letters from us. • Make payments or schedule future payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up. These instructions were updated on April 20, 2022 to reflect corrections made to the Federal tax worksheet on pages 13 and 14 and to the extension date listed on page 21.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Contents Electronic filing ................................................................. 3 Federal tax law .................................................................. 3 New information ............................................................... 4 Important reminders ........................................................ 4 General information ......................................................... 5

Do I need to file an Oregon return? .......................... 5

Residency ....................................................................... 5

What form do I use? ..................................................... 6

Military personnel ....................................................... 6

What if I need more time to file?................................ 6

Penalties ......................................................................... 7

2022 estimated tax ........................................................ 7

What if I need to change my return after filing? .... 7 General instructions for Form OR-40 ............................. 9

Check the boxes ............................................................ 9

Name and address ....................................................... 9

Filing status ..................................................................10

Exemptions ...................................................................10 Form OR-40 line instructions ........................................ 13

Additions ..................................................................... 13

Subtractions ................................................................. 13

Deductions .................................................................. 15

Oregon tax ....................................................................16

Credits—nonrefundable ........................................... 17

Tax payments and refundable credits ..................... 17

Penalties and interest ................................................. 21

Amount due and payment options.......................... 22

Refund.......................................................................... 23

Direct deposit .............................................................. 24

Before you file ............................................................. 25

Avoid processing delays ............................................ 26

Tax return mailing addresses ................................... 26 Tax tables ......................................................................... 27 Tax rate charts ................................................................. 29 Photo on cover: Looking out to the Pacific Ocean from the Devil's Punchbowl near Newport, Oregon. Do you have questions or need help? Internet www.oregon.gov/dor • Download forms, instructions, and publications. • Access additional information not included in these instructions. Revenue Online www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. • Check your refund status. • Make or schedule payments. • View your account history. • Find out how much you owe. • File an appeal. • View letters and your Form 1099-G, if applicable. Phone 503-378-4988 or 800-356-4222 Monday–Friday, 7:30 a.m.– 5 p.m. Closed Thursdays from 9–11 a.m. Closed holidays. Wait times may vary. Contact us for ADA accommodations or assistance in other languages. In person Offices are located in Salem, Portland, Eugene, Bend, Gresham, and Medford. Find hours and directions to our offices on our website. Our main office is located at: 955 Center St NE Salem, OR 97301-2555 Email or write questions.dor@dor.oregon.gov preguntas.dor@dor.oregon.gov Oregon Department of Revenue 955 Center St NE Salem OR 97301-2555 • Include your name and daytime phone number. • Include the last four digits of your SSN or ITIN. To request printed forms or publications: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Electronic filing E-filing is the fastest way to file your return and receive your refund. The speed and accuracy of computers allow electronic returns to be received and processed faster than paper returns, greatly reducing errors and delays. E-filing uses secure technology to ensure the safety of your personal information when it’s sent to the IRS and the Department of Revenue. Oregon participates in the IRS Federal/State E-file pro- gram. This program allows you to electronically file both your federal and Oregon returns at the same time. If you’ve already filed your federal return, you can still electronically file your Oregon return. If you haven’t tried e-file yet, why not this year? Join more than 1.8 million other Oregon taxpayers who electronically file their Oregon returns. You can take advantage of e-file in one of two ways: 1. Ask your tax preparer.

If your tax preparer is an authorized IRS e-file pro- vider, your preparer can electronically file your fed- eral and Oregon returns. Many Tax-Aide and Tax Counseling for the Elderly (TCE) sites set up by the IRS are authorized IRS e-file providers. 2. Use online tax preparation software.

You can file your federal and state returns from your home, work, or library computer using Oregon- approved online tax preparation products. Go to our website at www.oregon.gov/dor/e-filing for a list of tax preparation products to use in preparing your federal and Oregon returns.

You may be eligible for free e-file. Several tax preparation software providers offer free online electronic tax filing. For free online tax preparation programs, go to www.oregon.gov/dor/e-filing. Federal tax law No extension to pay. Oregon doesn’t allow an exten- sion of time to pay your tax, even if the IRS allows an extension. Your 2021 Oregon tax is due April 18, 2022. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on April 1, 2021. Oregon exceptions to federal law. Oregon is discon- nected from the business income deduction allowed by Section 199A of the Internal Revenue Code (IRC). Due to the way Oregon’s returns are designed, no addition is required. Oregon is also disconnected from IRC Sec- tion 139A , the tax exemption for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. Oregon is disconnected from IRC Section 529 tax exemption for earnings on college savings plan funds used for K-12 tuition. Oregon College and MFS 529 Sav- ings Plans may be used for higher education expenses only. If you based a previous subtraction or credit on contributions that are withdrawn and used for K-12 tuition, you'll have an addition or credit recapture on your Oregon return.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions New information Redesigned Oregon tax returns. Oregon’s individual income tax returns and some supporting schedules and forms have been redesigned for tax year 2021. We have changed the layout of our forms to make them easier to be read by our scanning equipment. Our remaining forms and schedules will be redesigned within the next few years. Federal tax liability subtraction. The 2021 federal tax subtraction limit is $7,050 ($3,525 for married filing separately). Your federal income tax subtraction may be reduced by any 2021 federal economic stimulus pay- ments you received in 2021. It may be limited further based on your AGI. See instructions for line 10. Kicker credit. Oregon’s surplus credit, known as the “kicker,” will be claimed as a credit on your 2021 tax return. See the instructions for line 36. AmeriCorps educational award subtraction. A new subtraction is available for AmeriCorps volunteers who receive educational awards after completing a term of national service. For more information, see Publication OR-17. Recapture credits for Oregon 529 College Savings Net- work and ABLE account contributions. If you claim a credit based on your contributions to an Oregon Col- lege or MFS 529 Savings Plan account or an ABLE account and later use the funds for a non-qualified purpose, your credit(s) may have to be recaptured. For more information, see Publication OR-17. Changes to qualified withdrawals from Oregon 529 College Savings Network accounts. Qualified with- drawals now include expenses related to apprentice- ship programs and certain student loan payments. For more information, see Publication OR-17. Data security breaches. Tax professionals suffering a data breach associated with tax return preparation must report the breach promptly to us. See our website for additional information. Important reminders Revenue Online. Revenue Online provides convenient, secure access to tools for managing your Oregon tax account. To set up your Revenue Online account, go to www.oregon.gov/dor and click on “Revenue Online.” Federal return. You must include a copy of your fed- eral Form 1040 or 1040-SR and Schedules 1 through 3 (if applicable), 1040-X, or 1040-NR with your Oregon return. Without this information, we may disallow or adjust items claimed on your Oregon return. Reminder: If you received unemployment benefits during the year, any benefits that aren't excluded are taxable income. If you owe tax on your 2021 benefits, consider having tax withheld from any future benefit payments to avoid owing tax for 2022. Schedule OR-ASC. If you’re claiming an addition, sub- traction, credit, or credit recapture using a code listed in Publication OR-CODES, you must include Sched- ule OR-ASC with your return. Without this informa- tion, we may disallow or adjust your claim. Schedule OR-ASC and Publication OR-CODES are available at www.oregon.gov/dor/forms or you can contact us to order them. Publication OR-17. See Publication OR-17 for more information about filing and personal income tax laws. It is available at www.oregon.gov/dor/forms.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions General information Do I need to file an Oregon return? You need to file if your gross income is more than the amount shown below for your filing status. Table 1. Filing thresholds Amounts apply to full-year residents only. Your filing status is: Number of boxes checked on line 17 of return: And your gross income is more than: Dependent Any $1,100* Single 0 $6,590 1 $7,790 2 $8,990 Married filing jointly 0 $13,175 1 $14,175 2 $15,175 3 $16,175 4 $17,175 Married filing separately 0 $6,590 1 $7,590 2 $8,590 Head of household 0 $8,265 1 $9,465 2 $10,665 Qualifying widow(er) 0 $9,185 1 $10,185 2 $11,185 *The larger of $1,100, or your earned income plus $350, up to the standard deduction amount for your filing status. In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages and you want to claim a refund. How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of your return. Electronically filed returns are generally received and processed faster. Paper returns must have all required Oregon sched- ules, proof of tax withheld, and a copy of your federal return included to ensure smooth processing. If you don’t have a federal filing requirement, create a substi- tute return and check the “calculated using ‘as-if’ fed- eral return” box on your return. Returns mailed closer to April 18, when we receive the most returns, can take longer to process. Also, returns that require additional review can take more time to process. Typical reasons for additional review include: incomplete documentation, iden- tity verification needed, claiming the working fam- ily household and dependent care credit, proof of tax withheld needed, etc. To check the status of your refund, click on “Where’s my refund?” at www.oregon.gov/dor/personal. What income does Oregon tax? An Oregon resident is taxed on all income, including income from outside the state. A nonresident of Oregon is taxed only on income from Oregon sources. Residency Am I a resident, a nonresident, or a part-year resident? • You're a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: — You think of Oregon as your permanent home. — Oregon is the center of your financial, social, and family life. — Oregon is the place you intend to return. • You're still a full-year resident if: — You temporarily moved out of Oregon or — You moved back to Oregon after a temporary absence. You may also be considered a full-year resident if you spent more than 200 days in Oregon during 2021 or you’re a nonresident alien, as defined by federal law. • You’re a nonresident if your permanent home was outside Oregon all year. • You’re a part-year resident if you moved into or out of Oregon during 2021. You're not considered a part- year resident if: — You temporarily moved out of Oregon, or — You moved back to Oregon after a temporary absence. Special-case Oregon residents. If you’re an Oregon resident and you meet all of the following conditions, you’re considered a nonresident for tax purposes:

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions • You maintained a permanent home outside Oregon for the entire year. • You didn't keep a home in Oregon during any part of the year. • You spent less than 31 days in Oregon during the year. Important. A recreational vehicle (RV) isn’t considered a permanent home outside of Oregon. Oregon residents living abroad. You’re considered a nonresident if you’re a qualified individual for pur- poses of the federal foreign earned income or housing exclusion for U.S. residents living abroad. What form do I use? Use Form OR-40 if you’re a full-year Oregon resident. Use Form OR-40-P if any ONE of the following is true: • You’re a part-year resident. • You’re filing jointly and one of you is a full-year Ore- gon resident and the other is a part-year resident. • You’re filing jointly and both of you are part-year Oregon residents. • You qualified as an Oregon resident living abroad for part of the year. Use Form OR-40-N if any ONE of the following is true: • You’re a nonresident. • You’re a special-case Oregon resident. • You’re filing jointly and one, or both, of you is a nonresident. • You meet the military personnel nonresident requirements. • You qualified as an Oregon resident living abroad for the entire year. Forms OR-40, OR-40-P and OR-40-N can be found at www.oregon.gov/dor/forms or you can contact us to order it. Military personnel Nonresidents stationed in Oregon. Oregon doesn’t tax your military pay while you’re stationed in Oregon. File Form OR-40-N if you had other income from Oregon sources or to claim a refund of Oregon tax withheld from your military pay. Military spouses. Federal law does not allow Oregon to tax your wages if you’re in Oregon only to be with your spouse who is stationed in Oregon. If you’re domiciled in Oregon and your spouse is a resident of another state, federal law allows you to choose to be treated for tax purposes as a resident of your spouse’s state. File Form OR-40-N if you had other income from Oregon sources or are claiming a refund of Oregon tax withheld. Residents (or Oregon-domiciled service members) sta- tioned outside of Oregon. If you meet the requirements for special-case Oregon residents or Oregon residents living abroad, file Form OR-40-N. File Form OR-40 if you don’t meet those requirements. Residents (or Oregon-domiciled service members) sta- tioned in Oregon. Your pay is subject to tax, although the pay could qualify for certain subtractions. For more information on subtractions available to military per- sonnel, see Publication OR-17. Military personnel on active service in Oregon are treated as nonresidents for tax purposes if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, regard- less of where they are domiciled (ORS 316.027). Filing for a deceased person A personal income tax return must be filed for a per- son who died if the person would have been required to file. See “Do I need to file?” on the previous page. Check the “Deceased” box next to the person’s name on the return. If you have been appointed personal repre- sentative or you have filed a small estate affidavit, sign the return as ”personal representative.” A surviving spouse must sign if it’s a joint return. If there’s no per- sonal representative, only the surviving spouse needs to sign a joint return. Note: Oregon has an estate transfer tax on estates val- ued at $1 million or more. The tax is paid by the estate using Form OR-706, not by the individuals receiving the inheritance. For more information, see the instruc- tions for Form OR-706. When should I file my return? The filing deadline for calendar year 2021 is April 18, 2022. If you can’t pay your tax by the due date, it’s important to file your return anyway to avoid a late- filing penalty. Returns for fiscal filers are due by the 15th day of the fourth month after the close of their tax year. What if I need more time to file? If you requested a federal extension to file, Oregon will allow the same extension. Don’t include a copy of your federal extension with your Oregon return; keep it with your records. If you need an extension of time to file only your Oregon return, see Publication OR-40-EXT. An extension doesn’t mean more time to pay. To avoid interest charges, you must pay all of the tax you expect to owe by April 18, 2022. If you can’t pay all of the tax you expect to owe, pay what you

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions can. You’ll owe interest on any unpaid tax starting April 19, 2022 until the date of your payment. You may also be charged a penalty for failing to pay your tax on time. See “Penalties” and the instructions for line 41. Don’t forget to check the “Extension filed” box on your return when you file. Penalties If you don’t pay all of your tax by April 18, 2022, you may be charged a 5 percent penalty on the unpaid amount, even if you requested an extension to file your return. Oregon doesn’t allow an extension of time to pay tax, even if the IRS does. You’ll be charged a 20 percent penalty for failing to file your return if you file it more than three months after the due date, including extensions. If both penalties apply, the total penalty will be 25 percent of the unpaid tax. Note: If you fail to file returns for three consecutive years by the due date for the third year’s return, includ- ing extensions, you’ll be charged a penalty of 100 per- cent of each year’s unpaid tax. For more information about these and other penalties, see the instructions for line 41 and “Interest and Penal- ties” in Publication OR-17. 2022 estimated tax Estimated tax is the amount of tax (after credits and Oregon tax withheld) you expect will be shown on your return when you file. Oregon estimated tax laws are not the same as fed- eral estimated tax laws. For more information on how to calculate your estimated payments for Oregon, see Publication OR-ESTIMATE. Vouchers for estimated payments are available at www.oregon.gov/dor/forms. Do I need to make estimated payments? In most cases, if you expect your return to show that you will owe $1,000 or more in tax after credits and withholding you must make estimated payments. You may need to make estimated payments if: • You're self-employed and don’t have Oregon tax withheld from your income. • You have Oregon Lottery single-ticket winnings of less than $1,500. • Oregon tax isn’t withheld from other types of income (such as pensions, interest, or dividends) and you expect to owe tax of $1,000 or more. • You’re a wage earner but after withholding you still expect to owe tax of $1,000 or more on your 2022 return. You may want to increase the amount your employer withholds from your Oregon wages. For withholding information, go to www.oregon.gov/dor/personal. See Publication OR-ESTIMATE for more information, including: • Detailed instructions for calculating installment payments. • Tax rate charts for 2022. • Installment periods and due dates. • Helpful worksheets and examples. • Payment instructions. Download Publication OR-ESTIMATE from our web- site or you can contact us to order it. Interest on underpayment of estimated tax You may owe interest for underpaying your estimated tax if: • The tax on your return after credits and withholding is $1,000 or more; or • You underpaid one or more of your required esti- mated tax installments. See the instructions for line 42 and Form OR-10 Instruc- tions for more information. What if I’m self-employed? If you’re self-employed and do business in Mult- nomah, Clackamas, or Washington counties, you may need to file Form OR-TM. If you’re self- employed and do business in Lane County, you may need to file Form OR-LTD. Go to our website to download the forms, contact us to order either form, or file electronically through Revenue Online at www.oregon.gov/dor. What if I need to change my Oregon return after filing? It depends on what you need to change. Follow these instructions for amending (changing) your return if: • You discover that your income, deductions, or other item(s) were wrong. • You used a form that didn’t match your residency status. • Your filing status wasn’t correct. • The IRS or another state adjusted or audited your return and it affects your Oregon tax. • You have a net operating loss (NOL) carryback. • Changes in federal or state income tax laws affect a return you’ve already filed.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Don’t amend your Oregon return if: • We made changes to your return and you object to those changes. You must follow the appeal process in the notice we sent you. • You’re filing a protective claim for a refund. Use Form OR-PCR, which is available on our website or you can contact us to order it. There’s a time limit for filing an amended return. See the instructions for lines 45 through 49, and for more infor- mation, see “Amended returns” in Publication OR-17. How do I amend my 2021 return? General instructions • Complete the return as it should’ve been filed, includ- ing adjustments we made. • Check the “Amended return” box on the first page. • In the “Amended statement” space, provide the return line number and reason for each change. • Use the Amended worksheet, below, to figure your amended tax due or refund. • If you’re amending your federal return or a return you filed with another state, include a copy of those amended returns with your amended Oregon return. If you’re only amending your Oregon return, include a copy of your original federal return. Don’t include a copy of your original Oregon return. Residency. Use the form that matches your residency status for the year you’re amending, even if your origi- nal return was filed on a different form. Adjustment made by the IRS or another state. Include a copy of the corrected federal or other state return or audit report. Electronically file your amended return. You can now electronically file your Oregon amended return, if your chosen software supports filing a federal amended return. You will need to contact your software provider to find out if they support filing a federal amended return. NOL carryback. Enter the loss year in the NOL-year box on the first page of the return. If you’re carrying back an NOL from more than one year, file a separate amended return for each NOL year. In the “Amended statement” space, tell us the section number of the Internal Rev- enue Code that allows you to carry back the NOL(s) to the 2021 tax year. See “Net operating losses for Oregon” in Publication OR-17 for more information. What if I need to change a return I filed for an earlier year? Refer to the instructions for the tax year you need to amend. Visit our website or you can contact us if you need the form and instructions for a different year. How long will it take to process my amended return? It may take six months or longer to process your amended return. Amended worksheet Use this worksheet to figure your amended refund or tax to pay. Keep the completed worksheet with your records. Note: If we adjusted any of the amounts on your original 2021 return, use the adjusted amounts. 1. Amended tax after standard, carryforward credits, and credit recapture (amended Form OR-40, line 31). 1. 2. Amended total payments and refundable credits (amended Form OR-40, line 38). 2. 3. Line 1 minus line 2. If less than 0, use a minus sign. 3. 4. Refund you already had for 2021 (original Form OR-40, line 45; Form OR-40-N, line 71; or Form OR-40-P, line 70). If you didn’t have a refund, enter 0. 4. 5. Amended tax to pay or refund. Line 3 plus line 4. If less than 0, you have a refund; go to line 6. If more than 0, you owe tax; skip to line 8. 5. 6. Refund applications that weren’t on your original return (amended Form OR-40, lines 46 through 49), up to the refund amount on line 5. Don’t use a minus sign. Example: If line 5 is –$500, you may apply up to $500 on your amended Form OR-40, lines 46 through 49. 6. 7. Net amended refund. Line 5 plus line 6. This can’t be more than 0. 7. 8. Penalty and interest on amended tax to pay (amended Form OR-40, line 43). 8. 9. Total amount to pay with your amended return. Line 5 plus line 8. 9.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions General instructions for Form OR-40 Step 1: Complete your federal return Complete your federal return first. Do this even if you aren’t required to file a federal return. You must use the information from your federal return to com- plete your Oregon return. You must include a copy (front and back) of your federal Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR with your Oregon return. If you're amending your Oregon return and your federal return, include a copy of Form 1040-X and an amended Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable). If you don’t provide a copy of your federal return, we may adjust or deny your Oregon subtractions, deductions, and credits. Include federal Schedules 1 through 3 (if applicable); don’t include any other fed- eral schedules unless otherwise instructed. We may ask you for copies of other schedules or additional information later. Oregon same-sex registered domestic partners (RDPs): To correctly determine your Oregon tax liabil- ity, you must complete a federal income tax return as if you were filing as married filing jointly or married filing separately. Check the “Calculated using ‘as if’ federal return” box on your Oregon return. For more information on how to file as an RDP, go to www.oregon.gov/dor and search for “RDP.” Step 2: Select the appropriate Oregon form To decide which form to use, see “What form do I use?” in the “General information” section. Step 3: Fill out the Oregon return Use blue or black ink only for easier reading and faster processing. The equipment used to scan documents and checks can’t read gel ink or certain colors, and using them will delay the processing of your return. Fiscal-year filers Write the ending date of your fiscal year in the “Fiscal year ending” box on the return. Check the boxes Amended return If you’re amending your 2021 return, check this box. See “What if I need to change my return after filing?” in the “General information” section for instructions. Calculated using “as if” federal return Check this box if: • You’re filing as an Oregon RDP. • Your filing status is married filing separately for Ore- gon only because you and your spouse don’t have the same residency status. • You didn’t file a federal return. Short-year tax election If you’re filing a short-year return due to a bankruptcy, check this box and write the ending date in the “Fiscal year ending” box. Extension filed Check this box if you requested an extension to file your return. See “What if I need more time to file?” in the “General information” section and Publication OR-40-EXT for more information. Form OR-24—Like-kind property exchange or conversions Check this box if you’re deferring gain on like-kind prop- erty that was exchanged or converted. You will report the gain to Oregon when it’s reported on your federal return (federal Form 8824). You must include Form OR-24 with your Oregon return or provide it electronically through your Revenue Online account at www.oregon.gov/dor. Federal Form 8379 Check this box if you’re requesting your joint refund be apportioned and you are attaching federal Form 8379. For additional information, see “Injured spouse refund claims” in Publication OR-17. Federal Form 8886 Check this box if you filed federal Form 8886, Reportable Transaction Disclosure Statement. Disaster relief If you were affected by a presidentially-declared natu- ral disaster in 2021, check this box. Name and address Type or clearly print names, Social Security numbers (SSN), and dates of birth for you and your spouse. Enter your spouse’s information even if you’re filing as married filing separately. If you’re filing for some- one who died in 2021 or 2022, check the “Deceased” box next to their name. Enter your current mailing address. This is where we’ll send any refund or correspondence, if needed. Enter your current daytime phone number.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Date of birth. Enter the month, day, and year that you and your spouse were born. For example, “11/01/1978.” SSN. You must provide your SSN per Section 405, Title 42, of the United States Code. We will only use it to establish your identity for tax purposes. Follow these instructions if you’ve filed previous tax returns using an individual taxpayer identification number (ITIN) and this is your first year filing using your new SSN: • Check the “First time using this SSN” box. • Write your previous identification number on the first line of the “Amended statement” space on page 8 of your return. ITIN. If the IRS assigned you an ITIN because you don’t qualify for an SSN, enter your ITIN wherever an SSN is requested. Refunds will not be issued without a valid SSN or ITIN. If you don’t have an ITIN, you must request one from the IRS. To get an ITIN application (federal Form W-7), go to www.irs.gov or call 800-829-1040. If you’ve applied for an ITIN but you haven’t received it yet: • Check the “Applied for ITIN” box. • File your return by April 18, 2022. • Don’t include Form W-7 with your return. Keep it with your records. • Once the IRS issues your ITIN, mail a copy of your ITIN letter to us at PO Box 14999, Salem OR 97309-0990. Filing status 1 5 –

Check the box next to your filing status. Generally, you must use the same fil- ing status for your Oregon and federal returns. Choose only one filing status. Exception for Oregon RDPs. As an Oregon RDP, you’re not eligible to use the single filing status on your Ore- gon return. For Oregon, you’re generally required to use married filing jointly or married filing separately. For more information, go to our website, see “Filing an Oregon return” in Publication OR-17, or contact us. Exceptions for married persons who filed a joint fed- eral return when each person had a different residency status. Use this table to determine which return form to use if you file a joint return or separate returns for Oregon. Table 2. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full- year resident OR-40-P How to file separate returns for Oregon If you’re filing a joint federal return but separate Oregon returns, enter your spouse’s name, SSN, and date of birth on your return. Report your own share of federal AGI and deductions. Also, report your share of any Oregon additions or subtractions using this for- mula to determine your percentage: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI Check the “Calculated using ‘as if’ federal return” box on your return. You must include the following forms with both Oregon returns: • A federal Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR prepared as if you had filed as married filing separately. • A copy of the joint Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR that you actually filed with the IRS. If the federal form you filed is an amendment, include Form 1040-X and federal returns as amended for your actual and “as if” returns. If possible, mail both spouses’ Oregon returns in the same envelope. Don’t staple the returns together. For more information, see “Filing status” in Publication OR-17. Exemptions 6a 6b &

Yourself and spouse. If you can’t be claimed as a dependent on someone else’s return, check the “Regular” exemption box below line 6a; otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actually claim you as a dependent. Check the “Regular” exemption box below line 6b if no one else can claim your spouse as a dependent and you’re filing as: • Married filing jointly. • Married filing separately and your spouse has no income.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actu- ally claim your spouse as a dependent. Severely disabled. Did you or your spouse have a severe disability at the end of 2021? If so, you can claim an additional exemption. This is different from the dis- abled child exemption. You may qualify for and claim the severely disabled exemption even if someone else can claim you as a dependent. You're considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet. • You permanently lost the use of both hands. • You’re permanently blind. • You have a permanent condition that, without special equipment or outside help, limits your ability to earn a living, maintain a household, or transport yourself. • You're unable to earn a living due to a permanent condition or an impairment of indefinite duration. If you have a severe disability, your physician must write a letter describing it. Keep the letter with your records in case we request a copy. If you qualify, check the “Severely disabled” exemption box below line 6a. If your spouse qualifies, check the “Severely disabled” exemption box below line 6b. Total exemptions for you and spouse. Enter the total number of exemptions claimed for yourself on line 6a and for your spouse on line 6b. 6c All dependents. Enter your dependents’ infor- mation in order from youngest to oldest. For each dependent, list their first name, last name, rela- tionship code (see Table 3), SSN, and date of birth. In most cases, you will list the same dependents you claimed on your federal return. If you have more than three dependents, check the box and fill out Schedule OR-ADD-DEP with your remain- ing dependents. Don’t list the same dependents on your return and Schedule OR-ADD-DEP. Include Schedule OR-ADD-DEP with your return. You can download Schedule OR-ADD-DEP from our website or you can contact us to order it. If you have more than eight dependents, fill out and include an additional Schedule OR-ADD-DEP. On line 6c, enter the total number of your depen- dents, including the number from line 1 of Schedule OR-ADD-DEP. Table 3. Relationship codes Title Code Relationships included Son/Daughter SD Son, daughter, adopted child. Stepchild SC Stepson, stepdaughter. Foster child FC Foster child. Sibling SB Brother, sister, half-brother, half-sister, stepbrother, stepsister, brother-in-law, sister-in-law. Parent PT Father, mother, stepfather, stepmother, father-in-law, mother-in-law. Spouse SP Husband, wife. Grandparent GP Grandmother, grandfather. Grandchild GC Grandson, granddaughter. Aunt/Uncle AU Aunt, uncle. Niece/Nephew NN Niece, nephew. Other relative OR Son-in-law, daughter-in-law, cousin, and other related individuals not listed above. No relation NR Any other qualifying individual. 6d Children with a disability. You may be entitled to an additional personal exemption for your dependent child who has a qualifying disability. To qualify, all of the following must be true: • Your child (age 21 or younger) qualified as your dependent for 2021. • Your child was eligible for early intervention services or special education as defined by the State Board of Education of the state where the child attends school. • Your child had an eligible disability as of Decem- ber 31, 2021 under the federal Individuals with Dis- abilities Education Act. Eligible disabilities include: — Autism spectrum disorder. — Communication disorder. — Deafblindness. — Developmental delay. — Emotional disturbance. — Hearing impairment. — Intellectual disability. — Orthopedic impairment. — Other health impairment. — Specific learning disability. — Traumatic brain injury. — Visual impairment.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Each year, you must be able to provide an eligibility statement confirming that your child has been diag- nosed with one of the disabilities listed above and a cover sheet from one of the following: • The child’s Individualized Education Program (IEP). • The child’s Individualized Family Service Plan (IFSP). Keep the statement and cover sheet with your records. Check the “Check if child has a qualifying disability“ box next to the name of each child with a qualifying disability. Enter the total number of children with a qualifying disability, including the number of children on line 2 of Schedule OR-ADD-DEP, on line 6d. 6e Total exemptions. Add lines 6a through 6d and enter the total on line 6e. This is your total num- ber of exemptions.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Form OR-40 line instructions Don’t enter cents. You must round off cents to the near- est dollar. For example, $99.49 becomes $99, and $99.50 becomes $100. If you don’t round entries to the nearest dollar, there may be small variations in the totals we use. 7 Federal adjusted gross income (AGI). Enter your federal AGI from Form 1040, 1040-SR or 1040-NR, line 11; or Form 1040-X, line 1C. You must include a copy (front and back) of your fed- eral return, including Schedules 1 through 3 (if applicable), with your Oregon return. This helps us verify your income and process your return faster. If you don’t include your federal return with your Oregon Form OR-40, items claimed on your return may be adjusted or denied. Additions 8 Total additions from Schedule OR-ASC. Enter the total from Schedule OR-ASC, Section A. Include the schedule with your return. For more information about additions, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Additions” in Publication OR-17. Subtractions 10 2021 federal tax liability subtraction. Complete the following worksheet to determine your fed- eral tax liability subtraction for 2021. Carefully follow the instructions. Don’t confuse your federal tax liabil- ity on your federal return with the federal tax with- held on a Form W-2. They aren’t the same. RDPs and those filing as “married filing separately for Oregon only,” use amounts from your actual federal return(s), not your “as if” return. The federal tax liability subtraction limit for 2021 is $7,050 ($3,525 if married filing separately). The subtraction is further limited by the AGI phase-outs shown in Table 5. Note: Use the worksheet(s) in the “Federal income tax liability” section of Publication OR-17 if any of these situations apply: • You’re amending your 2021 federal return or we cor- rected the federal tax liability subtraction on your original 2021 Oregon return. • A prior year’s federal return was audited or amended, resulting in additional federal tax paid or refunded in 2021. • You paid income tax to a foreign country. • You filed your federal return on Form 1040-NR. • You reported recapture taxes or credits on your fed- eral return. Caution: Don’t include any of the following in your calculation: • Self-employment tax. • Social Security and Medicare tax on tips. • Household employment taxes. • Penalties or interest. Federal tax worksheet Note: All references to federal Form 1040 in this work- sheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. This also includes the Spanish versions of these forms. Part A: Instructions for Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonrefund- able credits but before other taxes. This is found on Form 1040, line 22. Line 2: Do you qualify for the refundable child tax credit (CTC)?* If so, enter the amount of your nonre- fundable CTC, if any, from Form 1040, line 19. Other- wise, enter $0. Line 3: Add lines 1 and 2. Line 4: Do you have to repay some of the advance pre- mium tax credit that you received during the year? If so, enter your excess advance premium tax credit repayment. This is found on Form 1040, Schedule 2, line 2. Otherwise, enter $0. Line 5: Line 3 minus line 4. If the result is less than zero, enter $0. Line 6: Enter the total of any other taxes, plus any additions to tax that include only income tax, such as tax credit recaptures, from Form 1040, Schedule 2, lines 8, 10**, 16, and 17. Include any tax on non-effec- tively connected income from Form 1040-NR, line 23a. Don’t include any additions to tax from Schedule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter $0. Line 7: Add lines 5 and 6. Line 8: If you qualify for the refundable CTC*, enter the amount from Schedule 8812, line 14e. Otherwise, enter 0. This is your allowable CTC, including any nonrefundable amount for other dependents, regardless of any advance amount that must be paid back or the amount of refund- able credit you’re claiming on your federal return. Line 9: Enter your American opportunity credit from Form 1040 or 1040-SR, line 29.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Line 10: Enter any 2021 federal economic stimulus pay- ments you received in 2021 plus your recovery rebate credit, if any, from Form 1040 or 1040-SR, line 30. Refer to your IRS Notice 1444-C for the amount of stimulus payments you received in 2021. Line 11: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allowable premium credit regardless of any excess advance pay- ments you received or credit you’re claiming on your federal return. Line 12: Enter your credit for child and dependent care expenses from Form 1040, Schedule 3, line 13g. Line 13: Add lines 8 through 12. Line 14: Line 7 minus line 13. If less than zero, enter $0. This is your federal income tax liability after refund- able credits (other than the EITC). Line 15: Enter your maximum allowable federal tax liability subtraction amount from Table 5. Don’t enter more than your limit or less than zero. Line 16: Enter the smaller of line 14 or line 15. This is your federal tax liability subtraction. 1. Federal tax liability (Form 1040 line 22). 1. 2. Nonrefundable CTC* (Form 1040, line 19) 2. 3. Line 1 plus line 2. 3. 4. Excess advance premium tax credit from Form 1040, Schedule 2, line 2. 4. 5. Line 3 minus line 4. (If less than $0, enter 0). 5. 6. Other taxes** (see instructions). 6. 7. Line 5 plus line 6. 7. 8. Child tax credit* (Schedule 8812, line 14e). 8. 9. American Opportunity credit (Form 1040, line 29). 9. 10. Economic stimulus payments and recovery rebate credit (see instructions). 10. 11. Premium tax credit (Form 8962, line 24.) 11. 12. Credit for child and dependent care expenses (Form 1040, Sched- ule 3, line 13g). 12. 13. Add lines 8 through 12. 13. 14. Line 7 minus line 13. (If less than $0, enter 0). 14. 15. Maximum subtraction amount from Table 5. 15. 16. Smaller of line 14 or line 15. This is your federal tax liability subtraction. 12. * The refundable CTC is not the same as the additional child tax credit (ACTC) for tax year 2021. You're claim- ing the refundable CTC only if you checked one of the boxes on Schedule 8812, line 13, and if the amount on Schedule 8812, line 14e is more than the amount on Schedule 8812, line 14h. **Did you file federal Form 5405? If you are required to repay your 2008, 2009, or 2010 first-time homebuyer credit because you disposed of your home or stopped using it as your main home, include the amount reported on your federal Form 1040, Schedule 2, line 10 on line 6 of the worksheet above. Don't add this amount if you are repaying your 2008 credit and still live in your qualify- ing home as your main residence. Are you amending your 2021 return? Usually you can't change your federal tax subtraction on your amended return. See the “Federal income tax liability” section in Publication OR-17 for more information before making changes to this subtraction. Table 5. Federal tax liability subtraction AGI phaseout If your filing status is: And your federal adjusted gross income is: Then your maximum allowable tax liability subtraction is: At least— But less than— Single 0 $125,000 $7,050 $125,000 $130,000 $5,650 $130,000 $135,000 $4,200 $135,000 $140,000 $2,800 $140,000 $145,000 $1,400 $145,000 or more 0 Married filing separately 0 $125,000 $3,525 $125,000 $130,000 $2,825 $130,000 $135,000 $2,100 $135,000 $140,000 $1,400 $140,000 $145,000 $700 $145,000 or more 0 Married filing jointly; or Head of household; or Qualifying widow(er) 0 $250,000 $7,050 $250,000 $260,000 $5,650 $260,000 $270,000 $4,200 $270,000 $280,000 $2,800 $280,000 $290,000 $1,400 $290,000 or more 0

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 11 Social Security and tier 1 Railroad Retirement Board benefits income. Enter the amount from federal Form 1040 or 1040-SR, line 6b. If you have tier 2, windfall/vested dual, or supplemental Railroad Retirement Board benefits, these are subtracted in Sec- tion B of the Schedule OR-ASC, using code 330. For more information, see this topic under “Income” in Publication OR-17. 12 Oregon income tax refund included in federal income. Enter your Oregon state income tax refund from federal Form 1040 or 1040-SR, Schedule 1, line 1. Don’t include local, county, or other states’ tax refunds. 13 Total subtractions from Schedule OR-ASC. Other subtractions not explained here are claimed on Schedule OR-ASC. Enter the total from Schedule OR- ASC, Section B. Include the schedule with your return. For more information about subtractions, see the Sched- ule OR-ASC and OR-ASC-NP Instructions or “Subtrac- tions” in Publication OR-17. Deductions In general, you can claim Oregon itemized deductions or the standard deduction, whichever is larger, but not both. See the exceptions below for: • Dependents who can be claimed on another taxpay- er’s return. • Nonresident aliens. • Spouses filing separate returns. 16 Itemized deductions. If you’re itemizing your deductions for Oregon, enter the amount from Schedule OR-A, line 23. Note: Don’t enter your federal itemized deductions; the amount allowed for Oregon may be different. You can download Schedule OR-A and instructions from our website or you can contact us to order it. If you’re not itemizing, enter 0. 17 Standard deduction. Generally, your standard deduction is based on your filing status, as shown in Table 6: Table 6. Standard deduction Single $2,350 Married filing jointly $4,700 Married filing separately • If spouse claims standard deduction $2,350 • If spouse claims itemized deductions 0 Head of household $3,780 Qualifying widow(er) $4,700 Standard deduction—Age 65 or older, or blind. If you or your spouse turned age 65 by January 1, 2022 or were blind at the end of the tax year, you're entitled to a larger standard deduction. If you or your spouse are permanently blind, you may also qualify for the severely disabled exemption credit; see the instructions for lines 6a and 6b. Check the applicable boxes below line 17, then multiply the number of boxes checked by: • $1,200 if single or head of household filing status; or • $1,000 for all other filers. Add this amount to the standard deduction for your fil- ing status from Table 6. Enter the total on line 17. Example: Joni and Mike are married. By January 1, 2022, Joni had turned 61 and Mike had turned 67. Joni files the return as the primary taxpayer. She checks the box for spouse age 65 or older and adds $1,000 to their standard deduction. Joni enters $5,700 ($4,700 + $1,000) on line 17. Standard deduction—Dependents who can be claimed on another taxpayer’s return. If someone else can claim you as a dependent, your standard deduction is limited to the larger of: • Your earned income plus $350, up to the maximum allowed for your filing status (see Table 6); or • $1,100. This limit applies even if the other person doesn't actu- ally claim you as a dependent on their return. If you’re a dependent and not married, use the follow- ing worksheet to figure your standard deduction. If you’re a dependent and married, see “Deductions and modifications” in Publication OR-17. Standard deduction worksheet for single dependents 1. Enter your earned income (see definition below). 1. 2. Additional $350. 2. $350 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $1,100 5. Enter the larger of line 3 or line 4. 5. 6. Basic standard deduction for single. 6. $2,350 7. Enter the smaller of line 5 or line 6. 7. 8. If you turned age 65 by 1/1/2022, enter $1,200. Otherwise, enter 0. 8.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 9. If you’re blind, enter $1,200. Otherwise, enter 0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Earned income includes salaries, wages, tips, profes- sional fees, or other amounts received as pay for work you actually performed, and any part of a scholarship or fellowship grant you received that is included in your gross income. Standard deduction —Nonresident aliens. The stan- dard deduction for nonresident aliens (as defined by federal law) is 0. Standard deduction—Married filing separately. The standard deduction for married individuals filing sep- arately is 0 if one spouse itemizes. This applies even if the standard deduction is more than your itemized deductions. Oregon tax 20 Tax tables. Use the tax tables to find your tax if your taxable income on line 19 is less than $50,000. Find the range for your taxable income, then locate your tax in Column S or Column J: • Use Column S if your filing status is single or mar- ried filing separately. • Use Column J if your filing status is married filing jointly, head of household, or qualifying widow(er) with dependent child. Tax rate charts. If your taxable income on line 19 is $50,000 or more, calculate your tax using the formula in the tax rate chart for your filing status. • Use Chart S if your filing status is single or married filing separately. • Use Chart J if your filing status is married filing jointly, head of household, or qualifying widow(er) with dependent child. Example 1: Emily, a single taxpayer, has taxable income of $19,525. She uses Column S in the tax tables to find the tax on income that is at least $19,500 but less than $19,600. Emily enters $1,454 on line 20. Example 2: Daniel and Madison are filing a joint return. Their Oregon taxable income is $75,500. They use the formula in Chart J to calculate their tax as follows: Tax on the first $50,000 (from the chart) $3,861 Oregon taxable income $75,500 Minus the first $50,000 – 50,000 Excess over $50,000 $25,500 Multiply excess by 8.75% x 0.0875 Tax on excess over $50,000 + $2,231 Total Oregon tax $6,092 Other tax methods. If you qualify, you can compute your Oregon tax using any of the following methods: Farm income averaging method. Did you have income from a farm? You may use the federal farm income averaging method to compute your Oregon tax even if you didn’t use farm income averaging on your federal return. Download Schedule OR-FIA-40 from our web- site or you can contact us to order it. If you use Schedule OR-FIA-40 to calculate your tax, enter the tax amount from Schedule OR-FIA-40, line 24 and check box 20a. Don’t include Schedule OR-FIA-40 with your return. Keep it with your records. Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming business in which you held at least a 10 percent ownership interest? If so, you may be eligible for a reduced tax rate on the net capital gain from the proceeds. Download Publica- tion OR-FCG from our website or you can contact us to order it. Enter the tax amount from Publication OR-FCG, line 9 and check box 20b. Don’t include Publication OR-FCG with your return. Keep it with your records. Oregon qualified business income reduced tax rate. Did you have business income from a sole proprietor- ship, partnership, or S corporation in which you mate- rially participated? If so, you may qualify to use this reduced tax rate. For details, see Schedule OR-PTE-FY on our website or you can contact us to order it. Note: If you elect to use this reduced tax rate for quali- fying income, the election is irrevocable and must be made on your original return. An original return includes an amended return filed on or before the due date, including extensions. You can’t change the elec- tion after your original return has been filed. If you use Schedule OR-PTE-FY to calculate your tax, enter the tax amount from Schedule OR-PTE-FY, line 14a and check box 20c. Include the schedule with your Oregon return or submit it at www.oregon.gov/dor; click the link for Revenue Online and log in or create an account.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 21 Interest on certain installment sales. Did you have installment sales that required you to pay interest on the deferred tax liability for federal pur- poses? If so, you must also compute interest for Oregon using the same method as for federal. The annual inter- est rate is 4 percent for 2021 and 2022. Credits—Nonrefundable Nonrefundable credits can’t be more than your Ore- gon tax liability. Carryforward credits allow you to claim unused amounts in a later year. Standard cred- its can’t be used in any other year. For more informa- tion about these and other nonrefundable credits, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17. 23 Exemption credit. If your federal AGI is more than $200,000 ($100,000 if your filing status is single or married filing separately), enter 0; otherwise, use this worksheet to figure your exemption credit. Exemption credit worksheet 1. If your federal AGI is more than $100,000 and your filing status is single or married filing separately, or more than $200,000 for all others, enter 0; otherwise, enter the number of “regular” exemptions from lines 6a and 6b plus the number of dependents from line 6c. 1. 2. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of “Severely disabled” exemptions from line 6a and 6b. 2. 3. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of exemptions for children with a qualifying disability from line 6d. 3. 4. Add lines 1, 2, and 3. 4. 5. Line 4 times $213. This is your exemption credit. 5. 24 Political contribution credit. If your federal AGI isn’t more than $75,000 ($150,000 if you’re filing a joint return), you may claim a standard credit of up to $50 ($100 if you’re filing a joint return) for cash contri- butions you made during 2021 to any: • Qualified political party. • Qualified candidate for federal, state, or local elective office, or the candidate’s campaign, for an election in Oregon. • Political action committee certified in Oregon. 25 Total standard credits from Schedule OR-ASC. All other standard credits are claimed on Sched- ule OR-ASC. Enter the total of your standard credits from Section C of the schedule. Include Schedule OR- ASC with your return. 28 Total carryforward credits from Schedule OR- ASC. All carryforward credits are claimed on Schedule OR-ASC. Enter your total carryforward cred- its from Section D of the schedule. Include Schedule OR-ASC with your return. 30 Total credit recaptures from Schedule OR-ASC. All credit recaptures are claimed on Schedule OR-ASC. Enter your total credit recaptures from Sec- tion E of the schedule. Include Schedule OR-ASC with your return. Tax payments and refundable credits 32 Oregon income tax withheld. Enter the total Oregon tax withheld from your wages and other income. State tax withheld from wages is shown in box 17 of Form W-2 and in the State area of various 1099 forms. Don’t include FICA (Social Security) tax with- held or tax withheld from your wages by other states. You must include a legible, unaltered copy of your Form W-2 from each job and any Form 1099 showing Oregon income tax withheld with your Oregon return. If you don’t have a Form W-2 or 1099, you must provide other proof of Oregon tax withheld. Proof may include a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2022, we can only accept a Form W-2 or 1099 as proof. If you have tax to pay, you may want to increase the amount your employer or other payer withholds from your wages. For withholding information, go to www.oregon.gov/dor/personal. 33 Amount applied from your prior year’s tax refund. Enter the amount of any prior-year refund you applied as a payment of 2021 estimated tax. If we adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your applied refund amount, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. 34 Estimated tax payments for 2021. Enter the total estimated tax payments you made before filing your 2021 Oregon return. For calendar-year filers, these

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions payments were due April 15, 2021; June 15, 2021; Sep- tember 15, 2021; and January 18, 2022. Include all pay- ments you made up to the date you filed your original or amended return. Don’t include the amount reported on line 33. If you need to verify your estimated pay- ments, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. Refundable credits Refundable credits reduce the amount of tax that you owe. Any amount that is more than your tax liability is treated the same way as an overpayment. Refund- able credits not explained here are claimed on Schedule OR-ASC. For more information about refundable credits, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17. 35 Earned income credit. Oregon’s earned income credit is a percentage of the earned income tax credit (EITC) claimed on your federal return. The per- centage is based on the age of your youngest dependent at the end of the tax year. You may claim the Oregon earned income credit only if you qualify for the federal EITC. Note to RDPs: You may claim this credit if you would otherwise qualify for the EITC using your “as if” federal return. Use Table 7 and the following worksheet to figure your credit. Table 7. EIC percentage Age of youngest dependent at end of tax year Percentage of federal EITC At least 3 years old, or no dependents 9 percent (0.09) Younger than 3 12 percent (0.12) Earned income credit worksheet 1. Enter your federal EITC from Form 1040 or 1040-SR, line 27a. 1. 2. Enter the percentage from the table as a decimal. 2. 3. Line 1 times line 2. This is your Oregon earned income credit. 3. 36 Kicker (Oregon surplus) credit. The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. The Oregon Department of Administrative Services deter- mines whether there is a surplus and the amount to be returned to taxpayers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refund- able tax credit. If there’s no surplus, there’s no kicker. Eligibility. To be eligible for a kicker, you must: 1. File your 2020 Oregon return before you file your 2021 return. 2. Have an Oregon tax liability for 2020. 3. File a 2021 Oregon return, even if you don’t otherwise have a filing requirement. Kicker amount. In general, your kicker is a percentage of your total Oregon personal income tax liability for the prior year, as adjusted or amended. Your total per- sonal income tax liability is your Oregon income tax before all payments or credits other than the credit for taxes paid to another state. For 2021, your kicker is 17.341 percent of your 2020 total Oregon personal income tax liability. Amended 2020 returns. If your 2020 return is amended or adjusted after you file your 2021 return, we will auto- matically adjust your kicker amount. If the changes to your 2020 return reduce your tax liability, your kicker amount may be reduced as well. If so, we may send you a bill for the amount of the reduction along with any interest or penalty. Kicker donation. Personal income taxpayers may elect to donate their kicker to the Oregon State School Fund for public K-12 education. This election is irrevocable after the due date of the original return. When you file your return, you must choose to do one of the following: • Claim all of your kicker credit; or • Donate all of your kicker to the State School Fund. If you want to donate only a part of your kicker, you first have to claim all of your kicker credit on your return. Then, once you receive it, use it to make your donation. The Oregon State School Fund’s address is: Oregon Department of Education Attn: OFA Cashier 255 Capitol St NE Salem OR 97301 How to calculate your kicker amount. Online assistance. Revenue Online can calculate your kicker amount if: • Your filing status was the same for 2020 and 2021, and • You filed with the same spouse (if married) for both years. Look for “What’s my Kicker” on Revenue Online at www.oregon.gov/dor. Kicker worksheet. This worksheet can help you calcu- late your kicker amount. It’s divided into three parts:

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Part A— Calculate your 2020 total personal income tax liability and kicker amount. Part B— Prorate your total personal income tax liabil- ity, if necessary. Part C— Add individual kicker amounts together for joint 2021 returns, if necessary. If you’re completing Part B or Part C, you may need to use Part A or Part B more than once. Same filing and marital status. For most taxpayers, all you need to do is multiply your 2020 total Oregon per- sonal income tax liability times 17.341 percent. You can also use Part A of the worksheet. Change in filing or marital status. Some taxpayers who filed a joint return for 2020 must prorate their kicker based on their share of 2020 federal AGI. Some taxpayers whose filing or marital status was different in 2020 may need to combine their kickers on a joint 2021 return. Use Table 8 to see if you need to prorate your kicker using Part B and/or combine your kickers using Part C. Table 8. Prorated and/or combined kickers Complete Parts A, B, and C if: Your filing status in And: 2020 was: 2021 is: Joint Joint You were married in 2021 and you (or your spouse, or both) had a different spouse in 2020. Non-joint Joint You were married in 2021 and your spouse had a different spouse in 2020. Non-joint Joint You were married in 2021 and neither of you were married in 2020. (You may skip Part B) Complete Parts A and B if: Your filing status in And: 2020 was: 2021 is: Joint Non-joint You were divorced in 2020 or you’re married but filing separate returns. Joint Non-joint Your spouse died in 2020 and their personal representative or estate is filing a separate 2021 return on their behalf. Optional: Complete Part A if: Your filing status in And: 2020 was: 2021 is: Joint Joint You had the same spouse in both 2020 and 2021. Non-joint Non-joint Joint Joint or non-joint Your spouse died in 2020 and no separate 2021 return is being filed on their behalf, or your spouse died in 2021. Deceased taxpayer. The surviving spouse of a deceased taxpayer may claim the full amount of the kicker if a joint return was filed for 2020. A deceased taxpayer’s personal representative may file a 2021 return on the taxpayer’s behalf to claim their kicker. How do I find my 2020 total Oregon personal income tax liability? Use Table 9 and your 2020 Oregon return to locate your tax before credits and any credit(s) you claimed for income taxes you paid to another state (using code 802 or 815) on Schedule OR-ASC or OR-ASC-NP. Table 9. Where to find tax liability If you filed: Tax before credits: Credits using code 802 or 815 from: Form OR-40 Line 22 Schedule OR-ASC, Section 3 Form OR-40-N Line 48 Schedule OR-ASC-NP, Section 5 Form OR-40-P Line 47 Kicker worksheet Part A—Total personal income tax liability and kicker. 1. Tax before credits (see Table 9). 1. 2. Credit for income taxes paid to another state using code 802 or 815 (see Table 9). 2. 3. Line 1 minus line 2. This is your total personal income tax liabil- ity for 2020. 3. 4. Line 3 times 0.17341. Round to the nearest dollar. This is your kicker. 4. Part B – Prorated kicker. See Table 8. Complete lines 5 through 8 only if you filed a joint return in 2020 and your 2021 filing status is non- joint or joint but with a different spouse. Before you start, determine your share of 2020 federal AGI.* 5. Federal AGI for 2020. Form OR-40, line 7; Form OR-40-N or OR-40-P line 29F. 5. 6. Your share of federal AGI for 2020. 6.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 7. Line 6 divided by line 5. Round to two decimal places. 7. 8. Line 4 times line 7. This is your prorated kicker. 8. Part C – Combined kicker. Complete Part C only if you’re filing a joint return for 2021 and you and your spouse didn’t file a joint return together for 2020. 9. Kicker amount from your worksheet, line 4 (or line 8 if you completed Part B). 9. 10. Your spouse’s kicker from their worksheet, line 4 (or line 8, if they completed Part B). 10. 11. Line 9 plus line 10. This is your combined kicker. 11. *Consider each spouse's individual income (such as wages, pensions, or self-employment) and adjustments. Use a reasonable method to divide joint income (such as capital gains from the sale of jointly-owned property or interest on joint bank accounts) and adjustments. If the 2020 federal AGI on a joint return was zero or less, but the Oregon tax liability was more than zero, contact us for help. Example 1: Hudson and Olivia each filed their 2020 Oregon return using the single filing status. Hudson’s tax liability was $8,000 and he claimed a $500 credit for income taxes paid to another state on Schedule OR- ASC. Olivia’s tax liability was $3,000, and she paid state income tax only to Oregon. Hudson and Olivia were married in 2021 and are filing a joint Oregon return. They each complete Part A of the worksheet as follows: Hudson’s worksheet: Part A: 1. Tax before credits $ 8,000 2. Credit for tax paid – 500 3. Total personal tax liability $ 7,500 4. Line 3 times 0.17341 $ 1,301 Olivia’s worksheet: Part A: 1. Tax before credits

$ 3,000 2. Credit for tax paid 0 3. Total personal tax liability $ 3,000 4. Line 3 times 0.17341 $ 520 They skip Part B because neither one filed a joint return for 2020. They complete Part C to find their combined kicker: 9. Hudson’s kicker from

line 4 of his worksheet $ 1,301 10. Olivia’s kicker from line 4 of her worksheet $ 520 11. Line 9 plus line 10 $ 1,821 Hudson and Olivia’s combined kicker is $1,821. Example 2: Ella and Emerson filed a joint 2020 Oregon return. They were divorced in 2021 and are filing sepa- rate returns. On their 2020 return, their tax before cred- its was $6,500, and they had a $300 credit for income tax they paid to another state. Their 2020 federal AGI was $90,000; Ella’s share was $40,000 and Emerson’s share was $50,000. Each completes Parts A and B of the work- sheet to find their prorated kicker. Ella’s worksheet: Part A: 1. Tax before credits $ 6,500 2. Credit for tax paid – 300 3. Total personal tax liability $ 6,200 4. Line 3 times 0.17341 $ 1,075 Part B: 5. Federal AGI

$ 90,000 6. Ella’s share of AGI $ 40,000 7. Line 6 divided by line 5 0.44 8. Line 4 times line 7 $ 473 Emerson’s worksheet: Part A: 1. Tax before credits

$ 6,500 2. Credit for tax paid – 300 3. Total personal tax liability $ 6,200 4 Line 3 times 0.17341 $ 1,075 Part B: 5. Federal AGI

$ 90,000 6. Emerson’s share of AGI $ 50,000 7. Line 6 divided by line 5 0.56 8. Line 4 times line 7 $ 602 Ella’s prorated kicker is $473 and Emerson’s prorated kicker is $602. Example 3: Orlando and Cortney filed a joint Oregon return in 2020. Their Oregon tax before credits was $7,500, and they didn’t claim a credit for income taxes paid to any other state. Their federal AGI was $80,000; Cortney’s share was $48,000 and Orlando’s share was $32,000. They were divorced in early 2021, and Cortney married Justin later that year. Justin had filed a non- joint Oregon return for 2020. His Oregon tax before credits was $2,000 and he claimed a $200 credit for taxes paid to another state. Orlando didn’t remarry in

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 2021. Orlando, Cortney, and Justin figure their kickers as follows: Orlando’s worksheet: Part A: 1. Tax before credits $ 7,500 2. Credit for tax paid 0 3. Total personal tax liability $ 7,500 4. Line 3 times 0.17341 $ 1,301 Part B: 5. Federal AGI

$ 80,000 6. Orlando’s share of AGI $ 32,000 7. Line 6 divided by line 5 0.40 8. Line 4 times line 7 $ 520 Cortney’s worksheet: Part A: 1. Tax before credits

$ 7,500 2. Credit for tax paid 0 3. Total personal tax liability $ 7,500 4. Line 3 times 0.17341 $ 1,301 Part B: 5. Federal AGI

$ 80,000 6. Cortney’s share of AGI $ 48,000 7. Line 6 divided by line 5 0.60 8. Line 4 times line 7 $ 781 Justin’s worksheet: Part A: 1. Tax before credits

$ 2,000 2. Credit for tax paid – 200 3. Total personal tax liability $ 1,800 4. Line 3 times 0.17341 $ 312 Justin skips Part B because he filed a non-joint return for 2020. He and Cortney complete Part C: 9. Cortney’s kicker from line 8 of her worksheet $ 781 10. Justin’s kicker from line 4 of his worksheet $ 312 11. Line 9 plus line 10 $ 1,093 Cortney and Justin’s combined kicker is $1,093. Orlan- do’s kicker is $520. Claim your kicker credit. If you’re claiming your kicker credit, enter the amount from line 4, line 8, or line 11 of the worksheet, as applicable, on line 36. Donate your kicker. If you elect to donate your kicker to the Oregon State School Fund, enter 0 on line 36 and see the instructions for line 53. Reminder: This elec- tion is irrevocable after the due date of the original return. Note about offsets: If you claim the kicker credit and it reduces your 2021 tax liability to zero, any excess will be treated like a refund of overpaid tax. This means that it may be offset (applied as a payment) against any tax or other liabilities you owe before the balance is refunded to you or applied (see Refund applications, below). If you donate your kicker, it may be used first to offset tax or other liabilities you owe, with any remain- ing amount donated to the Oregon State School Fund. If this happens, we’ll send you a notice to let you know. 37 Total refundable credits from Schedule OR-ASC. Enter your total refundable credits from Sched- ule OR-ASC, Section F. Include Schedule OR-ASC with your return. Penalties and interest 41 Your 2021 tax must be paid by April 18, 2022, even if you requested an extension of time to file your return. Your 2021 return must be filed by April 18, 2022. If you requested an extension, your return must be filed by October 17, 2022. Round the total of penalties and interest to the near- est whole dollar. For more information and examples showing how penalties and interest are calculated, see “Interest and penalties” in Publication OR-17. Penalties Penalty amounts are based on the tax after all credits shown on your return minus payments that you made by the due date of the return. To find your tax after all credits, start with your tax after standard, carryforward credits, and credit recaptures on line 31, then subtract the refundable credit amounts on lines 35, 36, and 37. • Failure-to-file penalty. Include a penalty for failure to file a return if:

— Your return is filed more than three months after the due date (or extension due date); and

— You didn’t pay all of your tax by April 18, 2022. The penalty for failure to file is 20 percent of your tax after all credits that wasn’t paid by April 18, 2022. • Failure-to-pay penalty. Include a penalty for failure to pay if:

— Less than 90 percent of your tax after all credits (including credit recaptures) was paid by April 18, 2022, or

— You paid at least 90 percent of your tax after cred- its (including credit recaptures) by April 18, 2022 but you aren’t paying the balance of unpaid tax in full when you file. The penalty for failure to pay is 5 percent of your tax after all credits (including credit recaptures) that wasn’t paid by April 18, 2022.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax after all credits that wasn’t paid by April 18, 2022. First-time home buyer savings account (FTHBSA) pen- alty for nonqualified withdrawal. Include penalty of 5 percent of the funds withdrawn from your FTHBSA if you withdrew funds from your account for a purpose other than pur chasing a home. No penalty will be imposed if: • The account holder:

— Dies.

— Files bankruptcy.

— Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties pro- vided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions” in Publication OR-17. Interest on unpaid tax You’ll owe interest on the amount of tax that wasn’t paid by April 18, 2022. Interest starts accruing on April 19 and continues to accrue every day, including the date of your payment. Interest is figured daily, based on a 365-day year. The annual interest rate for 2022 is 4 percent, or 0.0110 per- cent per day. To figure your interest, count the number of days start- ing with April 19, 2022 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply that amount by 0.000110 (the daily rate converted to a decimal). Interest rate increase. If we bill you for unpaid tax, and the tax isn’t paid in full within 60 days from the date of our billing notice, the annual interest rate increases by 4 percentage points, to 8 percent. Amended return. If you’re amending your return, cal- culate the interest based on the additional amount of tax you must pay (line 5 of the Amended worksheet). 42 Interest on underpayment of estimated tax. Underpayment interest is charged if: • Your tax after all credits and withholding is $1,000 or more; • You were required to make estimated tax payments; • One or more of your required installments was underpaid; and • You don’t qualify for an exception. Note: You could be charged interest on underpayment of estimated tax even if line 39 shows a refund. See Form OR-10 to determine if you owe underpayment interest or qualify for an exception. Download the publi- cation from our website or you can contact us to order it. If you owe underpayment interest, enter the amount from line 33 of Form OR-10. If you qualify for an excep- tion, enter the exception number from line 1 of the form inside box 42a. If you used the Annualized Income Worksheet (located in the Form OR-10 Instructions) to figure your interest, check box 42b. Include Form OR-10 with your return (along with any required state- ments if you’re claiming an exception). Keep the Annu- alized Income Worksheet with your records. Amount due 44 Amount you owe. Enter your total unpaid tax plus penalties and interest. Note: If you have an overpayment on line 39 and the overpayment is less than the total penalties and interest you entered on line 43, enter the amount from line 43 minus the amount on line 39. Payment options You may pay electronically from your checking or sav- ings account, by credit card, or with a check, cashier’s check, or money order. Cash payments can be made only at our main office in Salem. If the amount due is less than $2, no payment is required. Electronic payment from your checking or savings account You can pay your current year income taxes, 2022 esti- mated income taxes, any prior year taxes due, and amended return taxes directly from your checking or savings account. There is no fee to use this service. This option is available only through our website. Go to www.oregon.gov/dor and click the link for Revenue Online. Direct debit may be available with e-filed returns at the time of filing. Credit card payments You can pay with your Discover, MasterCard, or Visa credit card. The service provider will charge you a con- venience fee. The service provider will tell you what the fee is during the transaction; you will have the option

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions to continue or cancel the transaction before entering your credit card information. If you complete the credit card transaction, you will receive a confirmation num- ber. Keep this confirmation number as proof of pay- ment—don’t send it with your return. To pay by credit card, go to www.oregon.gov/dor and click the link for Revenue Online. Check or money order • Make your check or money order payable to “Oregon Department of Revenue.” • Write all of the following on your payment:

— The tax year (2021).

— The form you’re filing (Oregon Form OR-40).

— The last four digits of your SSN or ITIN. • Use blue or black ballpoint ink. Don’t use red or pur- ple ink or gel pens. • Don’t send cash or a postdated check. Form OR-40-V. Use the voucher only if you’re mak- ing a separate payment by check, cashier’s check, or money order. Don’t use the voucher if you’re including a payment with your return or making an electronic payment. You can download Form OR-40-V from our website or you can contact us to order it. Payment plan. If you can’t pay in full now, pay what you can. Contact us and we will help you set up a pay- ment plan for the amount you don’t pay with your return. Refund 45 Refund. Enter your overpayment from line 39 minus any penalty or interest from line 43. Note: If the amount on line 43 is more than the over- payment on line 39, see the instructions for line 44. You have three years from the due date of the return to file a claim for your refund. By law, we can’t issue a refund if you file your return more than three years after the return’s due date (without extensions) or if the refund is less than $1. For more information about the time limit for claiming a refund, see “Payments and refunds” in Publication OR-17. Interest on refunds. See “Payments and refunds” in Publication OR-17 for information about interest paid on refunds. Refund applications If line 45 shows a refund, you may use some or all of it to: • Make an estimated tax payment for a later year. • Donate to one or more of the charitable organizations listed on Schedule OR-DONATE. • Contribute to the political party of your choice. • Make a deposit to an Oregon college or MFS 529 sav- ings plan account. Each of these applications will reduce your refund. The combined total of all applications can’t be more than the amount of your refund. Note: A refund of overpaid tax will be offset against outstanding debt before any amount is applied or refunded to you. Instructions for amended returns. If line 5 of the Amended worksheet shows a refund, you can use some or all of it for the refund applications listed above. However, you can’t reduce any amounts you’ve already applied from a refund on your original return. See the instructions for each application for details. 46 Open estimated tax account. Enter the amount of your refund you want to apply as a tax pay- ment for a later year. This amount will be applied to your open estimated tax account (to a year where you will be filing a tax return). Generally, unless you’re fil- ing a delinquent or amended return, the payment will be applied to the 2022 tax year. For more information, see “Payments and refunds” in Publication OR-17. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you’ve already applied as an estimated tax payment for a later year. If line 5 of the Amended worksheet shows a refund and you want to apply some or all of it as an estimated tax payment, include the amount you want to apply. 47 Charitable checkoff. Enter the amount from line 30 of Schedule OR-DONATE. For more informa- tion, see the schedule instructions. You can download Schedule OR-DONATE and instructions from our web- site or you can contact us to order it. Note: If your refund—after any application to an open estimated tax account—is less than your total donation amount, your donations will be prorated. To make direct donations instead, you can find each charity’s address listed on our website. Don’t mail your donations to us. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as charitable donations using Schedule OR- DONATE. If line 5 of the Amended worksheet shows a refund, you can donate some or all of it to one or more of the listed charities. Include this amount and an amended Schedule OR-DONATE with your amended return. Note: The refund from your amended return will be applied as a donation for the calendar year in which you’re filing it.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 48 Political party checkoff. You may use your refund to contribute $3 to the Oregon political party of your choice. If you’re filing a joint return, you and your spouse may each contribute $3. Note: Your contribution will reduce your refund and does not qualify for the political contribution credit. To make a contribution: 1. Designate the political party of your choice using the party’s code from the alphabetized list below.

— If you contribute, enter one code in box 48a.

— If your spouse contributes on a joint return, enter one code in box 48b. Enter only one code per taxpayer. Spouses filing a joint return don’t have to enter the same code. • Constitution Party of Oregon [code 500]. • Democratic Party of Oregon [code 501]. • Independent Party of Oregon [code 502]. • Libertarian Party of Oregon [code 503]. • Oregon Republican Party [code 504]. • Pacific Green Party of Oregon [code 505]. • Progressive Party [code 506]. • Working Families Party of Oregon [code 507]. 2. Enter your total contribution amount.

— If you or your spouse contribute, enter $3.

— If both you and your spouse contribute on a joint return, enter $6. Note: Your political party contribution won’t be made if: • Your refund—after any application to an open esti- mated tax account or charitable checkoff donation— is less than your total contribution amount. • You enter an amount but don’t designate a party (or parties). • You designate a party (or parties) but don’t enter an amount. • You enter more than one party code per taxpayer. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as a political party contribution. If line 5 of the Amended worksheet shows a refund and you didn’t make the maximum political party contribution on your original return, you may use the refund to make a contribution on your amended return. 49 Oregon college or MFS 529 savings plan. Enter the total from Schedule OR-529. For minimum deposit amounts and other information, see the sched- ule instructions. You can download Schedule OR-529 from our website or you can contact us to order it. Note: If the amount of your refund—after any applica- tion to an open estimated tax account, charitable check- off donation, or political party contribution—is less than the total amount you want to deposit, no deposit will be made. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as an Oregon college or MFS 529 savings plan deposit. If line 5 of the Amended worksheet shows a refund, add the amount you want to apply as a deposit and include an amended Schedule OR-529 with your amended return. The refund will be applied for the year in which you’re filing the amended return. 51 Net refund. You must reduce your refund by any amounts applied to your open estimated tax account, charitable checkoff donations, political party contributions, and Oregon college or MFS 529 savings plan accounts. By law, we can’t issue or apply a refund if you file your return more than three years after the return’s due date (excluding extensions). Direct deposit 52 Direct deposit. In most cases, we can deposit your refund directly into your checking or sav- ings account instead of mailing you a check. However, federal banking regulations prevent us from making a refund by direct deposit if the final destination is an account outside the U.S. In that case, we must issue a paper check instead. Before you enter your information, verify that your deposit will be accepted and confirm your routing and account numbers. You can find a diagram of a personal check showing where these numbers are located in the “Payments and refunds” section of Publication OR-17. Follow these steps to make sure your refund will be deposited into the correct account: 1. Check the box if the final destination for your refund would be an account outside the U.S. Note: If you check this box, you will be issued a paper check. 2. Check the appropriate box, either checking or sav- ings, but not both. 3. Enter your nine-digit routing number. Routing numbers begin with the digits 01 through 12, 21 through 32, or 61 through 72. 4. Enter your account number. Account numbers can be up to 17 characters (both numbers and letters). Don’t include hyphens, spaces, or special symbols. 5. Double-check the account and routing numbers. These numbers can’t be changed after the return is filed.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions Kicker donation 53 Kicker donation. You may choose to donate all of your kicker to the Oregon State School Fund. The election to donate your kicker cannot be changed after the due date of the original return. No partial donations are allowed. If any amount other than 0 is entered on line 36, your donation won’t be made. To make the donation: 1. See the instructions for line 36 to calculate your kicker amount. 2. Make sure that you’ve entered 0 on line 36. 3. Check box 53a. 4. Enter your entire kicker amount on line 53b. Reminder: This election is irrevocable. The election to donate your kicker can not be changed or revoked after the due date of the original return. To make a change or correction to your election, your amended return must be received by the due date of the original return. See the instructions for calculating your kicker for more information. Signature block Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both taxpayers must sign. By signing the return, you acknowledge, under penalty of false swearing, that the information on the return is true, correct, and complete. Minor child’s return. If your child can’t sign their tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By [your signature], parent (or other legal guardian) of minor child.” Preparer signature. Anyone who prepares, advises, or assists in preparing personal income tax returns in exchange for compensation of any kind must be licensed to prepare Oregon returns and must sign the return. Signing the return doesn't grant your preparer the right to represent you or make decisions on your behalf. See the Tax Information Authorization and Power of Attorney for Representation form and instructions on our website for more information. Contact the following agencies to check the status of your Oregon tax practitioner: • State Board of Tax Practitioners at 503-378-4034 (Salem) for licensed tax consultants or preparers, or go to www.oregon.gov/obtp. • State Board of Accountancy at 503-378-4181 (Salem) for public accountants and certified public accoun- tants, or go to www.oregon.gov/boa. Preparer license number. Licensed tax consultants and tax preparers: enter your license number. CPAs: enter your certificate number. Tax-Aide volunteers: enter your TCE site number. All others: leave blank. Don’t enter your driver license number. Before you file Copy of federal return. Before you assemble your Ore- gon return, make a copy of both sides of your federal Form 1040 or 1040-SR along with Schedules 1 through 3 (as applicable), 1040-X, or 1040-NR. Don’t include any other federal schedules or an exten- sion request unless instructed otherwise. Keep these with your records; we may ask for them later. If you created an “as if” federal return, use blue or black ink to label it “as if” on the top left corner. Include it along with the copy of your actual federal return (and any amendments). Failure to include your federal return will delay pro- cessing, and items claimed on your Oregon return may be adjusted or denied. Amended Oregon return. If you’re amending your Ore- gon return due to changes to your federal return or a return you filed with another state, include a copy of your amended or corrected federal or other state return or audit report. If you’re amending only your Oregon return, include a copy of your original federal or other state return. Assemble your Oregon return. Assemble your return in the order shown below. If a form has more than one page, be sure that you’ve included all pages and that they’re all from the same 2021 form. For example, if you’re filing Schedule OR-WFHDC, Schedule OR-A, or Schedule OR-ASC, be sure that “2021 Schedule OR-WFHDC”, "2021 Schedule OR-A", or "2021 Sched- ule OR-ASC" is printed at the top of each page and that you’ve included all pages associated with each schedule. Important: Don’t use staples, paperclips, tape, or other fasteners. Doing so will delay processing. 1. Payment by check or money order, if any. Don’t use a voucher. 2. Form(s) W-2 and 1099 showing Oregon tax withheld. 3. Form OR-40. 4. Schedule OR-A. 5. Schedule OR-ASC. 6. Schedule OR-ADD-DEP. 7. Schedule OR-DONATE. 8. Schedule OR-529.

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 9. Schedule OR-PTE-FY. 10. Form OR-10. 11. Schedule OR-WFHDC. 12. Other Oregon schedules required to be included with your return. 13. If you’re an RDP filing separately for Oregon, your RDP’s Oregon return. 14. Your federal return(s) and schedules. Note: If you’re making an estimated tax payment for 2022 by check or money order, send the payment in a separate envelope with a completed Form OR-40-V. Don’t include your 2022 payment or voucher with your 2021 return. Avoid processing delays Type or clearly print your name, SSN, date of birth, complete mailing address, and daytime phone number on your return. Include all pages of your Oregon return. Double-check your figures and other numbers, includ- ing your SSN. Errors will delay processing. Common mistakes are: • Math errors. • A wrong amount claimed for the federal tax liability subtraction. • Using the wrong line or column on the tax tables. • Using the wrong tax chart. If you have tax to pay, review the instructions for line 44. Verify your account information if you’re requesting a refund by direct deposit. Sign your return. Both spouses must sign a joint return. Include legible copies of all W-2 and 1099 forms show- ing Oregon income tax withheld. Place them on top of your return along with any payment by check, cashier’s check, or money order. Include a copy of your federal return (front and back) with your Oregon return. Include federal Schedules 1 through 3 (if applicable), but don’t include other fed- eral schedules unless otherwise instructed. Place it behind all Oregon forms and schedules. Payment by check, cashier’s check, or money order should be placed on top of your return. Don’t mail cash. Don’t use a voucher. Don’t use staples, paper clips, tape, or other fasteners. Mail your return in a stamped envelope. Use a busi- ness-size (4 × 9½ inches) or larger envelope with ade- quate postage. Don’t use a smaller envelope—it delays processing. Tax return mailing addresses Mail refund returns or no-tax-due returns to: REFUND PO Box 14700 Salem OR 97309-0930 Mail tax-to-pay returns to: Oregon Department of Revenue PO Box 14555 Salem OR 97309-0940

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 2021 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. J Use column J if you are: • Married filing jointly. • Head of household. • Widow(er) with dependent child. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: 0 – 20 0 0 20 – 50 2 2 50 – 100 4 4 100 – 200 7 7 200 – 300 12 12 300 – 400 17 17 400 – 500 21 21 500 – 600 26 26 600 – 700 31 31 700 – 800 36 36 800 – 900 40 40 900 – 1,000 45 45 1,000 – 1,100 50 50 1,100 – 1,200 55 55 1,200 – 1,300 59 59 1,300 – 1,400 64 64 1,400 – 1,500 69 69 1,500 – 1,600 74 74 1,600 – 1,700 78 78 1,700 – 1,800 83 83 1,800 – 1,900 88 88 1,900 – 2,000 93 93 2,000 – 2,100 97 97 2,100 – 2,200 102 102 2,200 – 2,300 107 107 2,300 – 2,400 112 112 2,400 – 2,500 116 116 2,500 – 2,600 121 121 2,600 – 2,700 126 126 2,700 – 2,800 131 131 2,800 – 2,900 135 135 2,900 – 3,000 140 140 3,000 – 3,100 145 145 3,100 – 3,200 150 150 3,200 – 3,300 154 154 3,300 – 3,400 159 159 3,400 – 3,500 164 164 3,500 – 3,600 169 169 3,600 – 3,700 173 173 3,700 – 3,800 180 178 3,800 – 3,900 187 183 3,900 – 4,000 193 188 $ 0 $ 4,000 $ 9,000 $ 14,000 $ 50 $ 1,000 $ 2,000 $ 3,000 $ 5,000 $ 6,000 $ 7,000 $ 8,000 $ 10,000 $ 11,000 $ 12,000 $ 13,000 $ 15,000 $ 16,000 $ 17,000 $ 18,000 4,000 – 4,100 200 192 4,100 – 4,200 207 197 4,200 – 4,300 214 202 4,300 – 4,400 220 207 4,400 – 4,500 227 211 4,500 – 4,600 234 216 4,600 – 4,700 241 221 4,700 – 4,800 247 226 4,800 – 4,900 254 230 4,900 – 5,000 261 235 5,000 – 5,100 268 240 5,100 – 5,200 274 245 5,200 – 5,300 281 249 5,300 – 5,400 288 254 5,400 – 5,500 295 259 5,500 – 5,600 301 264 5,600 – 5,700 308 268 5,700 – 5,800 315 273 5,800 – 5,900 322 278 5,900 – 6,000 328 283 6,000 – 6,100 335 287 6,100 – 6,200 342 292 6,200 – 6,300 349 297 6,300 – 6,400 355 302 6,400 – 6,500 362 306 6,500 – 6,600 369 311 6,600 – 6,700 376 316 6,700 – 6,800 382 321 6,800 – 6,900 389 325 6,900 – 7,000 396 330 7,000 – 7,100 403 335 7,100 – 7,200 409 340 7,200 – 7,300 416 344 7,300 – 7,400 423 350 7,400 – 7,500 430 357 7,500 – 7,600 436 364 7,600 – 7,700 443 371 7,700 – 7,800 450 377 7,800 – 7,900 457 384 7,900 – 8,000 463 391 8,000 – 8,100 470 398 8,100 – 8,200 477 404 8,200 – 8,300 484 411 8,300 – 8,400 490 418 8,400 – 8,500 497 425 8,500 – 8,600 504 431 8,600 – 8,700 511 438 8,700 – 8,800 517 445 8,800 – 8,900 524 452 8,900 – 9,000 531 458 9,000 – 9,100 538 465 9,100 – 9,200 544 472 9,200 – 9,300 552 479 9,300 – 9,400 561 485 9,400 – 9,500 570 492 9,500 – 9,600 579 499 9,600 – 9,700 587 506 9,700 – 9,800 596 512 9,800 – 9,900 605 519 9,900 – 10,000 614 526 10,000 – 10,100 622 533 10,100 – 10,200 631 539 10,200 – 10,300 640 546 10,300 – 10,400 649 553 10,400 – 10,500 657 560 10,500 – 10,600 666 566 10,600 – 10,700 675 573 10,700 – 10,800 684 580 10,800 – 10,900 692 587 10,900 – 11,000 701 593 11,000 – 11,100 710 600 11,100 – 11,200 719 607 11,200 – 11,300 727 614 11,300 – 11,400 736 620 11,400 – 11,500 745 627 11,500 – 11,600 754 634 11,600 – 11,700 762 641 11,700 – 11,800 771 647 11,800 – 11,900 780 654 11,900 – 12,000 789 661 12,000 – 12,100 797 668 12,100 – 12,200 806 674 12,200 – 12,300 815 681 12,300 – 12,400 824 688 12,400 – 12,500 832 695 12,500 – 12,600 841 701 12,600 – 12,700 850 708 12,700 – 12,800 859 715 12,800 – 12,900 867 722 12,900 – 13,000 876 728 13,000 – 13,100 885 735 13,100 – 13,200 894 742 13,200 – 13,300 902 749 13,300 – 13,400 911 755 13,400 – 13,500 920 762 13,500 – 13,600 929 769 13,600 – 13,700 937 776 13,700 – 13,800 946 782 13,800 – 13,900 955 789 13,900 – 14,000 964 796 14,000 – 14,100 972 803 14,100 – 14,200 981 809 14,200 – 14,300 990 816 14,300 – 14,400 999 823 14,400 – 14,500 1,007 830 14,500 – 14,600 1,016 836 14,600 – 14,700 1,025 843 14,700 – 14,800 1,034 850 14,800 – 14,900 1,042 857 14,900 – 15,000 1,051 863 15,000 – 15,100 1,060 870 15,100 – 15,200 1,069 877 15,200 – 15,300 1,077 884 15,300 – 15,400 1,086 890 15,400 – 15,500 1,095 897 15,500 – 15,600 1,104 904 15,600 – 15,700 1,112 911 15,700 – 15,800 1,121 917 15,800 – 15,900 1,130 924 15,900 – 16,000 1,139 931 16,000 – 16,100 1,147 938 16,100 – 16,200 1,156 944 16,200 – 16,300 1,165 951 16,300 – 16,400 1,174 958 16,400 – 16,500 1,182 965 16,500 – 16,600 1,191 971 16,600 – 16,700 1,200 978 16,700 – 16,800 1,209 985 16,800 – 16,900 1,217 992 16,900 – 17,000 1,226 998 17,000 – 17,100 1,235 1,005 17,100 – 17,200 1,244 1,012 17,200 – 17,300 1,252 1,019 17,300 – 17,400 1,261 1,025 17,400 – 17,500 1,270 1,032 17,500 – 17,600 1,279 1,039 17,600 – 17,700 1,287 1,046 17,700 – 17,800 1,296 1,052 17,800 – 17,900 1,305 1,059 17,900 – 18,000 1,314 1,066 18,000 – 18,100 1,322 1,073 18,100 – 18,200 1,331 1,079 18,200 – 18,300 1,340 1,086 18,300 – 18,400 1,349 1,093 18,400 – 18,500 1,357 1,100 18,500 – 18,600 1,366 1,109 18,600 – 18,700 1,375 1,118 18,700 – 18,800 1,384 1,127 18,800 – 18,900 1,392 1,135 18,900 – 19,000 1,401 1,144

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 2021 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. J Use column J if you are: • Married filing jointly. • Head of household. • Widow(er) with dependent child. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: 19,000 – 19,100 1,410 1,153 19,100 – 19,200 1,419 1,162 19,200 – 19,300 1,427 1,170 19,300 – 19,400 1,436 1,179 19,400 – 19,500 1,445 1,188 19,500 – 19,600 1,454 1,197 19,600 – 19,700 1,462 1,205 19,700 – 19,800 1,471 1,214 19,800 – 19,900 1,480 1,223 19,900 – 20,000 1,489 1,232 20,000 – 20,100 1,497 1,240 20,100 – 20,200 1,506 1,249 20,200 – 20,300 1,515 1,258 20,300 – 20,400 1,524 1,267 20,400 – 20,500 1,532 1,275 20,500 – 20,600 1,541 1,284 20,600 – 20,700 1,550 1,293 20,700 – 20,800 1,559 1,302 20,800 – 20,900 1,567 1,310 20,900 – 21,000 1,576 1,319 21,000 – 21,100 1,585 1,328 21,100 – 21,200 1,594 1,337 21,200 – 21,300 1,602 1,345 21,300 – 21,400 1,611 1,354 21,400 – 21,500 1,620 1,363 21,500 – 21,600 1,629 1,372 21,600 – 21,700 1,637 1,380 21,700 – 21,800 1,646 1,389 21,800 – 21,900 1,655 1,398 21,900 – 22,000 1,664 1,407 22,000 – 22,100 1,672 1,415 22,100 – 22,200 1,681 1,424 22,200 – 22,300 1,690 1,433 22,300 – 22,400 1,699 1,442 22,400 – 22,500 1,707 1,450 22,500 – 22,600 1,716 1,459 22,600 – 22,700 1,725 1,468 22,700 – 22,800 1,734 1,477 22,800 – 22,900 1,742 1,485 22,900 – 23,000 1,751 1,494 23,000 – 23,100 1,760 1,503 23,100 – 23,200 1,769 1,512 23,200 – 23,300 1,777 1,520 23,300 – 23,400 1,786 1,529 23,400 – 23,500 1,795 1,538 23,500 – 23,600 1,804 1,547 23,600 – 23,700 1,812 1,555 23,700 – 23,800 1,821 1,564 23,800 – 23,900 1,830 1,573 23,900 – 24,000 1,839 1,582 $ 19,000 $ 24,000 $ 29,000 $ 34,000 $ 20,000 $ 21,000 $ 22,000 $ 23,000 $ 25,000 $ 26,000 $ 27,000 $ 28,000 $ 30,000 $ 31,000 $ 32,000 $ 33,000 $ 35,000 $ 36,000 $ 37,000 $ 38,000 24,000 – 24,100 1,847 1,590 24,100 – 24,200 1,856 1,599 24,200 – 24,300 1,865 1,608 24,300 – 24,400 1,874 1,617 24,400 – 24,500 1,882 1,625 24,500 – 24,600 1,891 1,634 24,600 – 24,700 1,900 1,643 24,700 – 24,800 1,909 1,652 24,800 – 24,900 1,917 1,660 24,900 – 25,000 1,926 1,669 25,000 – 25,100 1,935 1,678 25,100 – 25,200 1,944 1,687 25,200 – 25,300 1,952 1,695 25,300 – 25,400 1,961 1,704 25,400 – 25,500 1,970 1,713 25,500 – 25,600 1,979 1,722 25,600 – 25,700 1,987 1,730 25,700 – 25,800 1,996 1,739 25,800 – 25,900 2,005 1,748 25,900 – 26,000 2,014 1,757 26,000 – 26,100 2,022 1,765 26,100 – 26,200 2,031 1,774 26,200 – 26,300 2,040 1,783 26,300 – 26,400 2,049 1,792 26,400 – 26,500 2,057 1,800 26,500 – 26,600 2,066 1,809 26,600 – 26,700 2,075 1,818 26,700 – 26,800 2,084 1,827 26,800 – 26,900 2,092 1,835 26,900 – 27,000 2,101 1,844 27,000 – 27,100 2,110 1,853 27,100 – 27,200 2,119 1,862 27,200 – 27,300 2,127 1,870 27,300 – 27,400 2,136 1,879 27,400 – 27,500 2,145 1,888 27,500 – 27,600 2,154 1,897 27,600 – 27,700 2,162 1,905 27,700 – 27,800 2,171 1,914 27,800 – 27,900 2,180 1,923 27,900 – 28,000 2,189 1,932 28,000 – 28,100 2,197 1,940 28,100 – 28,200 2,206 1,949 28,200 – 28,300 2,215 1,958 28,300 – 28,400 2,224 1,967 28,400 – 28,500 2,232 1,975 28,500 – 28,600 2,241 1,984 28,600 – 28,700 2,250 1,993 28,700 – 28,800 2,259 2,002 28,800 – 28,900 2,267 2,010 28,900 – 29,000 2,276 2,019 29,000 – 29,100 2,285 2,028 29,100 – 29,200 2,294 2,037 29,200 – 29,300 2,302 2,045 29,300 – 29,400 2,311 2,054 29,400 – 29,500 2,320 2,063 29,500 – 29,600 2,329 2,072 29,600 – 29,700 2,337 2,080 29,700 – 29,800 2,346 2,089 29,800 – 29,900 2,355 2,098 29,900 – 30,000 2,364 2,107 30,000 – 30,100 2,372 2,115 30,100 – 30,200 2,381 2,124 30,200 – 30,300 2,390 2,133 30,300 – 30,400 2,399 2,142 30,400 – 30,500 2,407 2,150 30,500 – 30,600 2,416 2,159 30,600 – 30,700 2,425 2,168 30,700 – 30,800 2,434 2,177 30,800 – 30,900 2,442 2,185 30,900 – 31,000 2,451 2,194 31,000 – 31,100 2,460 2,203 31,100 – 31,200 2,469 2,212 31,200 – 31,300 2,477 2,220 31,300 – 31,400 2,486 2,229 31,400 – 31,500 2,495 2,238 31,500 – 31,600 2,504 2,247 31,600 – 31,700 2,512 2,255 31,700 – 31,800 2,521 2,264 31,800 – 31,900 2,530 2,273 31,900 – 32,000 2,539 2,282 32,000 – 32,100 2,547 2,290 32,100 – 32,200 2,556 2,299 32,200 – 32,300 2,565 2,308 32,300 – 32,400 2,574 2,317 32,400 – 32,500 2,582 2,325 32,500 – 32,600 2,591 2,334 32,600 – 32,700 2,600 2,343 32,700 – 32,800 2,609 2,352 32,800 – 32,900 2,617 2,360 32,900 – 33,000 2,626 2,369 33,000 – 33,100 2,635 2,378 33,100 – 33,200 2,644 2,387 33,200 – 33,300 2,652 2,395 33,300 – 33,400 2,661 2,404 33,400 – 33,500 2,670 2,413 33,500 – 33,600 2,679 2,422 33,600 – 33,700 2,687 2,430 33,700 – 33,800 2,696 2,439 33,800 – 33,900 2,705 2,448 33,900 – 34,000 2,714 2,457 34,000 – 34,100 2,722 2,465 34,100 – 34,200 2,731 2,474 34,200 – 34,300 2,740 2,483 34,300 – 34,400 2,749 2,492 34,400 – 34,500 2,757 2,500 34,500 – 34,600 2,766 2,509 34,600 – 34,700 2,775 2,518 34,700 – 34,800 2,784 2,527 34,800 – 34,900 2,792 2,535 34,900 – 35,000 2,801 2,544 35,000 – 35,100 2,810 2,553 35,100 – 35,200 2,819 2,562 35,200 – 35,300 2,827 2,570 35,300 – 35,400 2,836 2,579 35,400 – 35,500 2,845 2,588 35,500 – 35,600 2,854 2,597 35,600 – 35,700 2,862 2,605 35,700 – 35,800 2,871 2,614 35,800 – 35,900 2,880 2,623 35,900 – 36,000 2,889 2,632 36,000 – 36,100 2,897 2,640 36,100 – 36,200 2,906 2,649 36,200 – 36,300 2,915 2,658 36,300 – 36,400 2,924 2,667 36,400 – 36,500 2,932 2,675 36,500 – 36,600 2,941 2,684 36,600 – 36,700 2,950 2,693 36,700 – 36,800 2,959 2,702 36,800 – 36,900 2,967 2,710 36,900 – 37,000 2,976 2,719 37,000 – 37,100 2,985 2,728 37,100 – 37,200 2,994 2,737 37,200 – 37,300 3,002 2,745 37,300 – 37,400 3,011 2,754 37,400 – 37,500 3,020 2,763 37,500 – 37,600 3,029 2,772 37,600 – 37,700 3,037 2,780 37,700 – 37,800 3,046 2,789 37,800 – 37,900 3,055 2,798 37,900 – 38,000 3,064 2,807 38,000 – 38,100 3,072 2,815 38,100 – 38,200 3,081 2,824 38,200 – 38,300 3,090 2,833 38,300 – 38,400 3,099 2,842 38,400 – 38,500 3,107 2,850 38,500 – 38,600 3,116 2,859 38,600 – 38,700 3,125 2,868 38,700 – 38,800 3,134 2,877 38,800 – 38,900 3,142 2,885 38,900 – 39,000 3,151 2,894

150-101-040-1 (Rev. 04-21-22) 2021 Form OR-40 Instructions 2021 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. J Use column J if you are: • Married filing jointly. • Head of household. • Widow(er) with dependent child. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: 39,000 – 39,100 3,160 2,903 39,100 – 39,200 3,169 2,912 39,200 – 39,300 3,177 2,920 39,300 – 39,400 3,186 2,929 39,400 – 39,500 3,195 2,938 39,500 – 39,600 3,204 2,947 39,600 – 39,700 3,212 2,955 39,700 – 39,800 3,221 2,964 39,800 – 39,900 3,230 2,973 39,900 – 40,000 3,239 2,982 40,000 – 40,100 3,247 2,990 40,100 – 40,200 3,256 2,999 40,200 – 40,300 3,265 3,008 40,300 – 40,400 3,274 3,017 40,400 – 40,500 3,282 3,025 40,500 – 40,600 3,291 3,034 40,600 – 40,700 3,300 3,043 40,700 – 40,800 3,309 3,052 40,800 – 40,900 3,317 3,060 40,900 – 41,000 3,326 3,069 41,000 – 41,100 3,335 3,078 41,100 – 41,200 3,344 3,087 41,200 – 41,300 3,352 3,095 41,300 – 41,400 3,361 3,104 41,400 – 41,500 3,370 3,113 41,500 – 41,600 3,379 3,122 41,600 – 41,700 3,387 3,130 41,700 – 41,800 3,396 3,139 41,800 – 41,900 3,405 3,148 41,900 – 42,000 3,414 3,157 $ 39,000 $ 42,000 $ 45,000 $ 48,000 $ 40,000 $ 41,000 $ 43,000 $ 44,000 $ 46,000 $ 47,000 $ 49,000 42,000 – 42,100 3,422 3,165 42,100 – 42,200 3,431 3,174 42,200 – 42,300 3,440 3,183 42,300 – 42,400 3,449 3,192 42,400 – 42,500 3,457 3,200 42,500 – 42,600 3,466 3,209 42,600 – 42,700 3,475 3,218 42,700 – 42,800 3,484 3,227 42,800 – 42,900 3,492 3,235 42,900 – 43,000 3,501 3,244 43,000 – 43,100 3,510 3,253 43,100 – 43,200 3,519 3,262 43,200 – 43,300 3,527 3,270 43,300 – 43,400 3,536 3,279 43,400 – 43,500 3,545 3,288 43,500 – 43,600 3,554 3,297 43,600 – 43,700 3,562 3,305 43,700 – 43,800 3,571 3,314 43,800 – 43,900 3,580 3,323 43,900 – 44,000 3,589 3,332 44,000 – 44,100 3,597 3,340 44,100 – 44,200 3,606 3,349 44,200 – 44,300 3,615 3,358 44,300 – 44,400 3,624 3,367 44,400 – 44,500 3,632 3,375 44,500 – 44,600 3,641 3,384 44,600 – 44,700 3,650 3,393 44,700 – 44,800 3,659 3,402 44,800 – 44,900 3,667 3,410 44,900 – 45,000 3,676 3,419 45,000 – 45,100 3,685 3,428 45,100 – 45,200 3,694 3,437 45,200 – 45,300 3,702 3,445 45,300 – 45,400 3,711 3,454 45,400 – 45,500 3,720 3,463 45,500 – 45,600 3,729 3,472 45,600 – 45,700 3,737 3,480 45,700 – 45,800 3,746 3,489 45,800 – 45,900 3,755 3,498 45,900 – 46,000 3,764 3,507 46,000 – 46,100 3,772 3,515 46,100 – 46,200 3,781 3,524 46,200 – 46,300 3,790 3,533 46,300 – 46,400 3,799 3,542 46,400 – 46,500 3,807 3,550 46,500 – 46,600 3,816 3,559 46,600 – 46,700 3,825 3,568 46,700 – 46,800 3,834 3,577 46,800 – 46,900 3,842 3,585 46,900 – 47,000 3,851 3,594 47,000 – 47,100 3,860 3,603 47,100 – 47,200 3,869 3,612 47,200 – 47,300 3,877 3,620 47,300 – 47,400 3,886 3,629 47,400 – 47,500 3,895 3,638 47,500 – 47,600 3,904 3,647 47,600 – 47,700 3,912 3,655 47,700 – 47,800 3,921 3,664 47,800 – 47,900 3,930 3,673 47,900 – 48,000 3,939 3,682 48,000 – 48,100 3,947 3,690 48,100 – 48,200 3,956 3,699 48,200 – 48,300 3,965 3,708 48,300 – 48,400 3,974 3,717 48,400 – 48,500 3,982 3,725 48,500 – 48,600 3,991 3,734 48,600 – 48,700 4,000 3,743 48,700 – 48,800 4,009 3,752 48,800 – 48,900 4,017 3,760 48,900 – 49,000 4,026 3,769 49,000 – 49,100 4,035 3,778 49,100 – 49,200 4,044 3,787 49,200 – 49,300 4,052 3,795 49,300 – 49,400 4,061 3,804 49,400 – 49,500 4,070 3,813 49,500 – 49,600 4,079 3,822 49,600 – 49,700 4,087 3,830 49,700 – 49,800 4,096 3,839 49,800 – 49,900 4,105 3,848 49,900 – 50,000 4,114 3,857 2021 Tax rate charts Chart S: For persons filing single or married/RDP filing separately— If your taxable income is $50,000 or more but not over $125,000 ......your tax is $4,118 plus 8.75% of excess over $50,000 If your taxable income is over $125,000 .....................................................your tax is $10,681 plus 9.9% of excess over $125,000 Chart J: For persons filing jointly, head of household, or qualifying widow(er) with dependent child— If your taxable income is $50,000 or more but not over $250,000 .....your tax is $3,861 plus 8.75% of excess over $50,000 If your taxable income is over $250,000.....................................................your tax is $21,361 plus 9.9% of excess over $250,000

2022 Oregon Income Tax Form OR-40 Instructions Full-year Resident Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Check the status of your refund. • View and print letters from us. • Make payments or schedule future payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up. • April 18, 2023 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Find out if you qualify for the earned income credit. See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC Instructions for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. www.oregon.gov/dor 150-101-040-1 (Rev. 10-04-22)

150-101-040-1 (Rev. 10-04-22) 2 2022 Form OR-40 Instructions

Contents Electronic filing ................................................................. 3 Federal tax law .................................................................. 3 New information ............................................................... 4 Important reminders........................................................ 4 General information......................................................... 5 Do I need to file an Oregon return? .......................... 5 Residency....................................................................... 5 What form do I use?..................................................... 6 Military personnel ....................................................... 6 What if I need more time to file?................................ 6 Penalties......................................................................... 7 2023 estimated tax........................................................ 7 What if I need to change my return after filing?.... 7 General instructions for Form OR-40............................. 9 Check the boxes............................................................ 9 Name and address ....................................................... 9 Filing status..................................................................10 Exemptions...................................................................10 Form OR-40 line instructions ........................................ 13 Additions..................................................................... 13 Subtractions................................................................. 13 Deductions .................................................................. 15 Oregon tax....................................................................16 Credits—nonrefundable ............................................16 Tax payments and refundable credits..................... 17 Penalties and interest..................................................18 Amount due and payment options...........................19 Refund.......................................................................... 20 Direct deposit.............................................................. 21 Before you file ............................................................. 22 Avoid processing delays............................................ 22 Tax return mailing addresses................................... 22 Tax tables ......................................................................... 23 Tax rate charts ................................................................. 25 Do you have questions or need help? Internet Phone www.oregon.gov/dor • Download forms, instructions, and publications. • Access additional information not included in these instructions. Revenue Online www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. • Check your refund status. • Make or schedule payments. • View your account history. • Find out how much you owe. • File an appeal. • View letters and your Form 1099-G, if applicable. Email or write questions.dor@dor.oregon.gov preguntas.dor@dor.oregon.gov Oregon Department of Revenue 955 Center St NE Salem OR 97301-2555 • Include your name and daytime phone number. • Include the last four digits of your SSN or ITIN. To request printed forms or publications: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 503-378-4988 or 800-356-4222 Monday–Friday, 7:30 a.m.– 5 p.m. Closed Thursdays from 9–11 a.m. Closed holidays. Wait times may vary. Contact us for ADA accommodations or assistance in other languages. In person Offices are located in Salem, Portland, Eugene, Bend, Gresham, and Medford. Find hours and directions to our offices on our website. Our main office is located at: 955 Center St NE Salem, OR 97301-2555 Taxpayer Advocacy If you think you are not being treated fairly, or if you have a problem or complaint, please contact the Office of the Taxpayer Advocate for assistance. 503-945-8700 TTY: We accept all relay calls. taxpayer.advocate@DOR.oregon.gov Photo on cover: Sunset at the Oregon coast

150-101-040-1 (Rev. 10-04-22) 3 2022 Form OR-40 Instructions

Electronic filing E-filing is the fastest way to file your return and receive your refund. The speed and accuracy of computers allow electronic returns to be received and processed faster than paper returns, greatly reducing errors and delays. E-filing uses secure technology to ensure the safety of your personal information when it’s sent to the IRS and the Department of Revenue. Oregon participates in the IRS Federal/State E-file pro­ gram. This program allows you to electronically file both your federal and Oregon returns at the same time. If you’ve already filed your federal return, you can still electronically file your Oregon return. If you haven’t tried e-file yet, why not this year? Join more than 1.8 million other Oregon taxpayers who electronically file their Oregon returns. You can take advantage of e-file in one of two ways: 1. Ask your tax preparer. If your tax preparer is an authorized IRS e-file pro- vider, your preparer can electronically file your fed- eral and Oregon returns. Many Tax-Aide and Tax Counseling for the Elderly (TCE) sites set up by the IRS are authorized IRS e-file providers. 2. Use online tax preparation software. You can file your federal and state returns from your home, work, or library computer using Oregon- approved online tax preparation products. Go to our website at www.oregon.gov/dor/e-filing for a list of tax preparation products to use in preparing your federal and Oregon returns. You may be eligible for free e-file. Several tax preparation software providers offer free online electronic tax filing. For free online tax preparation programs, go to www.oregon.gov/dor/e-filing. Federal tax law No extension to pay. Oregon doesn’t allow an exten­ sion of time to pay your tax, even if the IRS allows an extension. Your 2022 Oregon tax is due April 18, 2023. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2021. Oregon exceptions to federal law. Oregon is discon­ nected from the business income deduction allowed by Section 199A of the Internal Revenue Code (IRC). Due to the way Oregon’s returns are designed, no addi­ tion is required. Oregon is also disconnected from IRC Section 139A, the tax exemption for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. Oregon is disconnected from IRC Section 529 tax exemption for earnings on college savings plan funds used for K-12 tuition. Oregon College and MFS 529 Sav­ ings Plans may be used for higher education expenses only. If you based a previous subtraction or credit on contributions that are withdrawn and used for K-12 tuition, you'll have an addition or credit recapture on your Oregon return.

150-101-040-1 (Rev. 10-04-22) 4 2022 Form OR-40 Instructions

New information Pass-through Entity Elective (PTE-E) tax • PTE-E tax deducted on entity-level federal return addition. If you were a member of a PTE who elected to pay Oregon’s PTE-E tax and the PTE claimed a deduction for PTE-E tax on their federal return, you must report an addition on Schedule OR-ASC or OR­ ASC-NP. See Form OR-21 Instructions or Publication OR-17 for additional information. • PTE-E tax credit. If you were a member of a PTE who elected to pay Oregon’s PTE-E tax, you may be enti­ tled to a refundable credit. You will claim this credit on Schedule OR-ASC or OR-ASC-NP. See Form OR-21 instructions or Publication OR-17 for additional information. Federal tax liability subtraction. The 2022 federal tax subtraction limit is $7,250 ($3,625 for married filing sepa­ rately). It may be limited further based on your adjusted gross income (AGI). See instructions for line 10. Oregon earned income credit for ITIN filers. If you can’t claim the federal earned income credit (EITC) or you can only claim a portion of the federal EITC because you, your spouse, or your child(ren) do not have a Social Security number (SSN) that is valid for work or are using an individual taxpayer identification num­ ber (ITIN), you may qualify for the Oregon earned income credit for ITIN filers. See Schedule OR-EIC­ ITIN Instructions or Publication OR-17 for additional information. Working family household and dependent care credit (WFHDC) for students. The WFHDC credit is a refund­ able credit available to low and middle-income work­ ing families with qualifying expenses for household services or dependent care. If you (or your spouse, if married filing jointly) were a student during the tax year, you may be eligible to claim the WFHDC credit. Use Schedule OR-WFHDC-ST in addition to Schedule OR-WFHDC to figure your WFHDC credit. Begin by reading the instructions for Schedule OR-WFHDC to see if you qualify. Important reminders Revenue Online. Revenue Online provides convenient, secure access to tools for managing your Oregon tax account. To set up your Revenue Online account, go to www.oregon.gov/dor and click on “Revenue Online.” Federal return. You must include a copy of your fed­ eral Form 1040 or 1040-SR and Schedules 1 through 3 (if applicable), 1040-X, or 1040-NR with your Oregon return. Without this information, we may disallow or adjust items claimed on your Oregon return. Reminder: If you received unemployment benefits during the year, any benefits that aren't excluded are taxable income. If you owe tax on your 2022 benefits, consider having tax withheld from any future benefit payments to avoid owing tax for 2023. Schedule OR-ASC. If you’re claiming an adjustment, addition, subtraction, modification, credit, or tax recap­ ture using a code listed in Publication OR-CODES, you must include Schedule OR-ASC. Without this informa­ tion, we may disallow or adjust your claim. Schedule OR-ASC and Publication OR-CODES are available at www.oregon.gov/dor/forms or you can contact us to order them. Publication OR-17. See Publication OR-17 for more information about filing and personal income tax laws. It is available at www.oregon.gov/dor/forms. Data security breaches. Tax professionals suffering a data breach associated with tax return preparation must report the breach promptly to us. See our website for additional information.

150-101-040-1 (Rev. 10-04-22) 5 2022 Form OR-40 Instructions

General information Do I need to file an Oregon return? You need to file if your gross income is more than the amount shown below for your filing status. Table 1. Filing thresholds Amounts apply to full-year residents only. Your filing status is: Number of boxes checked on line 17 of return: And your gross income is more than: Dependent Any $1,150* 0 $6,780 Single 1 $7,980 2 $9,180 Married filing jointly 0 $13,555 1 $14,555 2 $15,555 3 $16,555 4 $17,555 0 $6,780 Married filing 1 $7,780 separately 2 $8,780 Head of household 0 $8,510 1 $9,710 2 $10,910 0 $9,455 Qualifying 1 $10,455 surviving spouse 2 $11,455 *The larger of $1,150, or your earned income plus $400, up to the standard deduction amount for your filing status. In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages and you want to claim a refund. How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of your return. Electronically filed returns are generally received and processed faster. Paper returns must have all required Oregon sched­ ules, proof of tax withheld, and a copy of your federal return included to ensure smooth processing. If you don’t have a federal filing requirement, create a substi­ tute return and check the “calculated using ‘as-if’ fed­ eral return” box on your return. Returns mailed closer to April 18, when we receive the most returns, can take longer to process. Also, returns that require additional review can take more time to process. Typical reasons for additional review include: incomplete documentation, iden­ tity verification needed, claiming the working fam­ ily household and dependent care credit, proof of tax withheld needed, etc. To check the status of your refund, click on “Where’s my refund?” at www.oregon.gov/dor/personal. What income does Oregon tax? An Oregon resident is taxed on all income, including income from outside the state. A nonresident of Oregon is taxed only on income from Oregon sources. Residency Am I a resident, a nonresident, or a part-year resident? • You're a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: — You think of Oregon as your permanent home. — Oregon is the center of your financial, social, and family life. — Oregon is the place you intend to return. • You're still a full-year resident if: — You temporarily moved out of Oregon or — You moved back to Oregon after a temporary absence. You may also be considered a full-year resident if you spent more than 200 days in Oregon during 2022 or you’re a nonresident alien, as defined by federal law. • You’re a nonresident if your permanent home was outside Oregon all year. • You’re a part-year resident if you moved into or out of Oregon during 2022. You're not considered a part- year resident if: — You temporarily moved out of Oregon, or — You moved back to Oregon after a temporary absence. Special-case Oregon residents. If you’re an Oregon resident and you meet all of the following conditions, you’re considered a nonresident for tax purposes:

150-101-040-1 (Rev. 10-04-22) 6 2022 Form OR-40 Instructions

• You maintained a permanent home outside Oregon for the entire year. • You didn't keep a home in Oregon during any part of the year. • You spent less than 31 days in Oregon during the year. Important. A recreational vehicle (RV) isn’t considered a permanent home outside of Oregon. Oregon residents living abroad. You’re considered a nonresident if you’re a qualified individual for pur­ poses of the federal foreign earned income or housing exclusion for U.S. residents living abroad. What form do I use? Use Form OR-40 if you’re a full-year Oregon resident. Use Form OR-40-P if any ONE of the following is true: • You’re a part-year resident. • You’re filing jointly and one of you is a full-year Ore­ gon resident and the other is a part-year resident. • You’re filing jointly and both of you are part-year Oregon residents. • You qualified as an Oregon resident living abroad for part of the year. Use Form OR-40-N if any ONE of the following is true: • You’re a nonresident. • You’re a special-case Oregon resident. • You’re filing jointly and one, or both, of you is a nonresident. • You meet the military personnel nonresident requirements. • You qualified as an Oregon resident living abroad for the entire year. Forms OR-40, OR-40-P, and OR-40-N can be found at www.oregon.gov/dor/forms or you can contact us to order it. Military personnel Nonresidents stationed in Oregon. Oregon doesn’t tax your military pay while you’re stationed in Oregon. File Form OR-40-N if you had other income from Oregon sources or to claim a refund of Oregon tax withheld from your military pay. Military spouses. Federal law does not allow Oregon to tax your wages if you’re in Oregon only to be with your spouse who is stationed in Oregon. If you’re domiciled in Oregon and your spouse is a resident of another state, federal law allows you to choose to be treated for tax purposes as a resident of your spouse’s state. File Form OR-40-N if you had other income from Oregon sources or are claiming a refund of Oregon tax withheld. Residents (or Oregon-domiciled service members) sta­ tioned outside of Oregon. If you meet the requirements for special-case Oregon residents or Oregon residents living abroad, file Form OR-40-N. File Form OR-40 if you don’t meet those requirements. Residents (or Oregon-domiciled service members) sta­ tioned in Oregon. Your pay is subject to tax, although the pay could qualify for certain subtractions. For more information on subtractions available to military per­ sonnel, see Publication OR-17. Military personnel on active service in Oregon are treated as nonresidents for tax purposes if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, regard­ less of where they are domiciled (ORS 316.027). Filing for a deceased person A personal income tax return must be filed for a per­ son who died if the person would have been required to file. See “Do I need to file?” on the previous page. Check the “Deceased” box next to the person’s name on the return. If you have been appointed personal repre­ sentative or you have filed a small estate affidavit, sign the return as ”personal representative.” A surviving spouse must sign if it’s a joint return. If there’s no per­ sonal representative, only the surviving spouse needs to sign a joint return. Note: Oregon has an estate transfer tax on estates val­ ued at $1 million or more. The tax is paid by the estate using Form OR-706, not by the individuals receiving the inheritance. For more information, see the instruc­ tions for Form OR-706. When should I file my return? The filing deadline for calendar year 2022 is April 18, 2023. If you can’t pay your tax by the due date, it’s important to file your return anyway to avoid a late- filing penalty. Returns for fiscal filers are due by the 15th day of the fourth month after the close of their tax year. What if I need more time to file? If you requested a federal extension to file, Oregon will allow the same extension. Don’t include a copy of your federal extension with your Oregon return; keep it with your records. If you need an extension of time to file only your Oregon return, see Publication OR-40-EXT. An extension doesn’t mean more time to pay. To avoid interest charges, you must pay all of the tax you expect to owe by April 18, 2023. If you can’t pay all of the tax you expect to owe, pay what you

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can. You’ll owe interest on any unpaid tax starting April 19, 2023, until the date of your payment. You may also be charged a penalty for failing to pay your tax on time. See “Penalties” and the instructions for line 42. Don’t forget to check the “Extension filed” box on your return when you file. Penalties If you don’t pay all of your tax by April 18, 2023, you may be charged a 5 percent penalty on the unpaid amount, even if you requested an extension to file your return. Oregon doesn’t allow an extension of time to pay tax, even if the IRS does. You’ll be charged a 20 percent penalty for failing to file your return if you file it more than three months after the due date, including extensions. If both penalties apply, the total penalty will be 25 percent of the unpaid tax. Note: If you fail to file returns for three consecutive years by the due date for the third year’s return, includ­ ing extensions, you’ll be charged a penalty of 100 per­ cent of each year’s unpaid tax. For more information about these and other penalties, see the instructions for line 42 and “Interest and Penal­ ties” in Publication OR-17. 2023 estimated tax Estimated tax is the amount of tax (after credits and Oregon tax withheld) you expect will be shown on your return when you file. Oregon estimated tax laws are not the same as fed­ eral estimated tax laws. For more information on how to calculate your estimated payments for Oregon, see Publication OR-ESTIMATE. Vouchers for estimated payments are available at www.oregon.gov/dor/forms. Do I need to make estimated payments? In most cases, if you expect your return to show that you will owe $1,000 or more in tax after credits and withholding you must make estimated payments. You may need to make estimated payments if: • You're self-employed and don’t have Oregon tax withheld from your income. • You have Oregon Lottery single-ticket winnings of less than $1,500. • Oregon tax isn’t withheld from other types of income (such as pensions, interest, or dividends) and you expect to owe tax of $1,000 or more. • You’re a wage earner but after withholding you still expect to owe tax of $1,000 or more on your 2023 return. You may want to increase the amount your employer withholds from your Oregon wages. For withholding information, go to www.oregon.gov/dor/personal. See Publication OR-ESTIMATE for more information, including: • Detailed instructions for calculating installment payments. • Tax rate charts for 2023. • Installment periods and due dates. • Helpful worksheets and examples. • Payment instructions. Download Publication OR-ESTIMATE from our web­ site or you can contact us to order it. Interest on underpayment of estimated tax You may owe interest for underpaying your estimated tax if: • The tax on your return after credits and withholding is $1,000 or more; or • You underpaid one or more of your required esti­ mated tax installments. See the instructions for line 43 and Form OR-10 Instruc­ tions for more information. What if I’m self-employed? If you’re self-employed and do business in Mult­ nomah, Clackamas, or Washington counties, you may need to file Form OR-TM. If you’re self- employed and do business in Lane County, you may need to file Form OR-LTD. Go to our website to download the forms, contact us to order either form, or file electronically through Revenue Online at www.oregon.gov/dor. What if I need to change my Oregon return after filing? It depends on what you need to change. Follow these instructions for amending (changing) your return if: • You discover that your income, deductions, or other item(s) were wrong. • You used a form that didn’t match your residency status. • Your filing status wasn’t correct. • The IRS or another state adjusted or audited your return and it affects your Oregon tax. • You have a net operating loss (NOL) carryback. • Changes in federal or state income tax laws affect a return you’ve already filed.

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Don’t amend your Oregon return if: • We made changes to your return and you object to those changes. You must follow the appeal process in the notice we sent you. • You’re filing a protective claim for a refund. Use Form OR-PCR, which is available on our website or you can contact us to order it. There’s a time limit for filing an amended return. See the instructions for lines 46 through 50, and for more infor­ mation, see “Amended returns” in Publication OR-17. How do I amend my 2022 return? General instructions • Complete the return as it should’ve been filed, includ­ ing adjustments we made. • Check the “Amended return” box on the first page. • In the “Amended statement” space, provide the return line number and reason for each change. • Use the Amended worksheet, below, to figure your amended tax due or refund. • If you’re amending your federal return or a return you filed with another state, include a copy of those amended returns with your amended Oregon return. If you’re only amending your Oregon return, include a copy of your original federal return. Don’t include a copy of your original Oregon return. Residency. Use the form that matches your residency status for the year you’re amending, even if your origi­ nal return was filed on a different form. Adjustment made by the IRS or another state. Include a copy of the corrected federal or other state return or audit report. Electronically file your amended return. You can now electronically file your Oregon amended return, if your chosen software supports filing a federal amended return. You will need to contact your software provider to find out if they support filing a federal amended return. NOL carryback. Enter the loss year in the NOL-year box on the first page of the return. If you’re carrying back an NOL from more than one year, file a separate amended return for each NOL year. In the “Amended statement” space, tell us the section number of the Internal Rev­ enue Code that allows you to carry back the NOL(s) to the 2022 tax year. See “Net operating losses for Oregon” in Publication OR-17 for more information. What if I need to change a return I filed for an earlier year? Refer to the instructions for the tax year you need to amend. Visit our website or you can contact us if you need the form and instructions for a different year. How long will it take to process my amended return? It may take six months or longer to process your amended return. Amended worksheet Use this worksheet to figure your amended refund or tax to pay. Keep the completed worksheet with your records. Note: If we adjusted any of the amounts on your original 2022 return, use the adjusted amounts. 1. Amended tax after standard, carryforward credits, and tax recaptures (amended Form OR-40, line 31). 1. 2. Amended total payments and refundable credits (amended Form OR-40, line 39). 2. 3. Line 1 minus line 2. If less than 0, use a minus sign. 3. 4. Refund you already had for 2022 (original Form OR-40, line 46; Form OR-40-N, line 71; or Form OR-40-P, line 70). If you didn’t have a refund, enter 0. 4. 5. Amended tax to pay or refund. Line 3 plus line 4. If less than 0, you have a refund; go to line 6. If more than 0, you owe tax; skip to line 8. 5. 6. Refund applications that weren’t on your original return (amended Form OR-40, lines 47 through 50), up to the refund amount on line 5. Don’t use a minus sign. Example: If line 5 is –$500, you may apply up to $500 on your amended Form OR-40, lines 47 through 50. 6. 7. Net amended refund. Line 5 plus line 6. This can’t be more than 0. 7. 8. Penalty and interest on amended tax to pay (amended Form OR-40, line 44). 8. 9. Total amount to pay with your amended return. Line 5 plus line 8. 9.

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General instructions for Form OR-40 Step 1: Complete your federal return Complete your federal return first. Do this even if you aren’t required to file a federal return. You must use the information from your federal return to com­ plete your Oregon return. You must include a copy (front and back) of your federal Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR with your Oregon return. If you're amending your Oregon return and your federal return, include a copy of Form 1040-X and an amended Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable). If you don’t provide a copy of your federal return, we may adjust or deny your Oregon subtractions, deductions, and credits. Include federal Schedules 1 through 3 (if applicable); don’t include any other fed­ eral schedules unless otherwise instructed. We may ask you for copies of other schedules or additional information later. Oregon same-sex registered domestic partners (RDPs): To correctly determine your Oregon tax liabil­ ity, you must complete a federal income tax return as if you were filing as married filing jointly or married filing separately. Check the “Calculated using ‘as if’ federal return” box on your Oregon return. For more information on how to file as an RDP, go to www.oregon.gov/dor and search for “RDP.” Step 2: Select the appropriate Oregon form To decide which form to use, see “What form do I use?” in the “General information” section. Step 3: Fill out the Oregon return Use blue or black ink only for easier reading and faster processing. The equipment used to scan documents and checks can’t read gel ink or certain colors, and using them will delay the processing of your return. Fiscal-year filers Write the ending date of your fiscal year in the “Fiscal year ending” box on the return. Check the boxes Amended return If you’re amending your 2022 return, check this box. See “What if I need to change my return after filing?” in the “General information” section for instructions. Calculated using “as if” federal return Check this box if: • You’re filing as an Oregon RDP. • Your filing status is married filing separately for Ore­ gon only because you and your spouse don’t have the same residency status. • You didn’t file a federal return. Short-year tax election If you’re filing a short-year return due to a bankruptcy, check this box and write the ending date in the “Fiscal year ending” box. Extension filed Check this box if you requested an extension to file your return. See “What if I need more time to file?” in the “General information” section and Publication OR-40-EXT for more information. Form OR-24 Check this box if you’re deferring gain on like-kind prop­ erty that was exchanged or converted. You will report the gain to Oregon when it’s reported on your federal return (federal Form 8824). You must include Form OR-24 with your Oregon return or provide it electronically through your Revenue Online account at www.oregon.gov/dor. Form OR-243 Check this box if you are attaching Form OR-243, Claim to Refund Due a Deceased Person. Federal Form 8379 Check this box if you’re requesting your joint refund be apportioned and you are attaching federal Form 8379. For additional information, see “Injured spouse refund claims” in Publication OR-17. Federal Form 8886 Check this box if you filed federal Form 8886, Reportable Transaction Disclosure Statement. Disaster relief If you were affected by a presidentially-declared natu­ ral disaster in 2022, check this box. Name and address Type or clearly print names, Social Security numbers (SSN), and dates of birth for you and your spouse. Enter your spouse’s information even if you’re filing as married filing separately. If you’re filing for some­ one who died in 2022 or 2023, check the “Deceased” box next to their name.

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Enter your current mailing address. This is where we’ll send any refund or correspondence, if needed. Enter your current daytime phone number. Date of birth. Enter the month, day, and year that you and your spouse were born. For example, “11/01/1978.” SSN. You must provide your SSN per Section 405, Title 42, of the United States Code. We will only use it to establish your identity for tax purposes. Follow these instructions if you’ve filed previous tax returns using an individual taxpayer identification number (ITIN) and this is your first year filing using your new SSN: • Check the “First time using this SSN” box. • Write your previous identification number on the first line of the “Amended statement” space on page 8 of your return. ITIN. If the IRS assigned you an ITIN because you don’t qualify for an SSN, enter your ITIN wherever an SSN is requested. Refunds will not be issued without a valid SSN or ITIN. If you don’t have an ITIN, you must request one from the IRS. To get an ITIN application (federal Form W-7), go to www.irs.gov or call 800-829-1040. If you’ve applied for an ITIN but you haven’t received it yet: • Check the “Applied for ITIN” box. • File your return by April 18, 2023. • Don’t include Form W-7 with your return. Keep it with your records. • Once the IRS issues your ITIN, mail a copy of your ITIN letter to us at PO Box 14999, Salem OR 97309-0990. Filing status Check the box next to your filing status. 1 – 5 Generally, you must use the same fil­ ing status for your Oregon and federal returns. Choose only one filing status. Exception for Oregon RDPs. As an Oregon RDP, you’re not eligible to use the single filing status on your Ore­ gon return. For Oregon, you’re generally required to use married filing jointly or married filing separately. For more information, go to our website, see “Filing an Oregon return” in Publication OR-17, or contact us. Exceptions for married persons who filed a joint fed­ eral return when each person had a different residency status. Use this table to determine which return form to use if you file a joint return or separate returns for Oregon. Table 2. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full- year resident OR-40-P How to file separate returns for Oregon If you’re filing a joint federal return but separate Oregon returns, enter your spouse’s name, SSN, and date of birth on your return. Report your own share of federal AGI and deductions. Also, report your share of any Oregon additions or subtractions using this for­ mula to determine your percentage: Your share of federal AGI Your percentage = Joint federal AGI (not to exceed 100%) Check the “Calculated using ‘as if’ federal return” box on your return. You must include the following forms with both Oregon returns: • A federal Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR prepared as if you had filed as married filing separately. • A copy of the joint Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR that you actually filed with the IRS. If the federal form you filed is an amendment, include Form 1040-X and federal returns as amended for your actual and “as if” returns. If possible, mail both spouses’ Oregon returns in the same envelope. Don’t staple the returns together. For more information, see “Filing status” in Publication OR-17. Exemptions Yourself and spouse. If you can’t be 6a & 6b claimed as a dependent on someone else’s return, check the “Regular” exemption box below line 6a; otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actually claim you as a dependent. Check the “Regular” exemption box below line 6b if no one else can claim your spouse as a dependent and you’re filing as: • Married filing jointly. • Married filing separately and your spouse has no income.

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Otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actu­ ally claim your spouse as a dependent. Severely disabled. Did you or your spouse have a severe disability at the end of 2022? If so, you can claim an additional exemption. This is different from the dis­ abled child exemption. You may qualify for and claim the severely disabled exemption even if someone else can claim you as a dependent. You're considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet. • You permanently lost the use of both hands. • You’re permanently blind. • You have a permanent condition that, without special equipment or outside help, limits your ability to earn a living, maintain a household, or transport yourself. • You're unable to earn a living due to a permanent condition or an impairment of indefinite duration. If you have a severe disability, your physician must write a letter describing it. Keep the letter with your records in case we request a copy. If you qualify, check the “Severely disabled” exemption box below line 6a. If your spouse qualifies, check the “Severely disabled” exemption box below line 6b. Total exemptions for you and spouse. Enter the total number of exemptions claimed for yourself on line 6a and for your spouse on line 6b. All dependents. Enter your dependents’ infor­ 6c mation in order from youngest to oldest. For each dependent, list their first name, last name, rela­ tionship code (see Table 3), SSN, and date of birth. In most cases, you will list the same dependents you claimed on your federal return. You can list up to three dependents on the return. If you have more than three dependents, fill out Sched­ ule OR-ADD-DEP with your remaining dependents. If you have more than eight dependents, fill out and include an additional Schedule OR-ADD-DEP. Do not list the same dependents on your return and on Sched­ ule OR-ADD-DEP. Include Schedule OR-ADD-DEP with your return. You can download the schedule from our website or contact us to order it. On line 6c, enter the total number of your depen­ dents, including the number from line 1 of Schedule OR-ADD-DEP. Table 3. Relationship codes Title Code Relationships included Son/Daughter SD Son, daughter, adopted child. Stepchild SC Stepson, stepdaughter. Foster child FC Foster child. Sibling SB Brother, sister, half-brother, half-sister, stepbrother, stepsister, brother-in-law, sister-in-law. Parent PT Father, mother, stepfather, stepmother, father-in-law, mother-in-law. Spouse SP Husband, wife. Grandparent GP Grandmother, grandfather. Grandchild GC Grandson, granddaughter. Aunt/Uncle AU Aunt, uncle. Niece/Nephew NN Niece, nephew. Other relative OR Son-in-law, daughter-in-law, cousin, and other related individuals not listed above. No relation NR Any other qualifying individual. Children with a disability. You may be entitled 6d to an additional personal exemption for your dependent child who has a qualifying disability. To qualify, all of the following must be true: • Your child (age 21 or younger) qualified as your dependent for 2022. • Your child was eligible for early intervention services or special education as defined by the State Board of Education of the state where the child attends school. • Your child had an eligible disability as of Decem­ ber 31, 2022 under the federal Individuals with Dis­ abilities Education Act. Eligible disabilities include: — Autism spectrum disorder. — Communication disorder. — Deafblindness. — Developmental delay. — Emotional disturbance. — Hearing impairment. — Intellectual disability. — Orthopedic impairment. — Other health impairment. — Specific learning disability. — Traumatic brain injury. — Visual impairment.

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Each year, you must be able to provide an eligibility statement confirming that your child has been diag­ nosed with one of the disabilities listed above and a cover sheet from one of the following: • The child’s Individualized Education Program (IEP). • The child’s Individualized Family Service Plan (IFSP). Keep the statement and cover sheet with your records. Check the “Check if child has a qualifying disability“ box next to the name of each child with a qualifying disability. Enter the total number of children with a qualifying disability, including the number of children on line 2 of Schedule OR-ADD-DEP, on line 6d. Total exemptions. Add lines 6a through 6d and 6e enter the total on line 6e. This is your total num­ ber of exemptions.

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7 8 Form OR-40 line instructions Don’t enter cents. You must round off cents to the near­ est dollar. For example, $99.49 becomes $99, and $99.50 becomes $100. If you don’t round entries to the nearest dollar, there may be small variations in the totals we use. Federal adjusted gross income (AGI). Enter your federal AGI from Form 1040, 1040-SR or 1040-NR, line 11; or Form 1040-X, line 1C. You must include a copy (front and back) of your fed- eral return, including Schedules 1 through 3 (if applicable), with your Oregon return. This helps us verify your income and process your return faster. If you don’t include your federal return with your Oregon Form OR-40, items claimed on your return may be adjusted or denied. Additions Total additions from Schedule OR-ASC. Enter the total from Schedule OR-ASC, line A5. Include the schedule with your return. For more information about additions, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Additions” in Publication OR-17. Subtractions 2022 federal tax liability subtraction. Complete 10 the following worksheet to determine your fed­ eral tax liability subtraction for 2022. Carefully follow the instructions. Don’t confuse your federal tax liabil­ ity on your federal return with the federal tax with­ held on a Form W-2. They aren’t the same. RDPs and those filing as “married filing separately for Oregon only,” use amounts from your actual federal return(s), not your “as if” return. The federal tax liability subtraction limit for 2022 is $7,250 ($3,625 if married filing separately). The subtraction is further limited by the AGI phase-outs shown in Table 5. Note: Use the worksheet(s) in the “Federal income tax liability” section of Publication OR-17 if any of these situations apply: • You’re amending your 2022 federal return or we cor­ rected the federal tax liability subtraction on your original 2022 Oregon return. • A prior year’s federal return was audited or amended, resulting in additional federal tax paid or refunded in 2022. • You paid income tax to a foreign country. • You filed your federal return on Form 1040-NR. • You reported recapture taxes or credits on your fed­ eral return. Caution: Don’t include any of the following in your calculation: • Self-employment tax. • Social Security and Medicare tax on tips. • Household employment taxes. • Penalties or interest. Federal tax worksheet Note: All references to federal Form 1040 in this work­ sheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. This also includes versions of these forms in other languages. Instructions for Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonrefund­ able credits but before other taxes. This is found on Form 1040, line 22. Line 2: If you need to repay any of the advance pre­ mium tax credit that you received during the year, enter the repayment amount claimed on Form 1040, Schedule 2, line 2. If not, enter 0. Line 3: Line 1 minus line 2. If the results are less than 0, enter 0. Line 4: Enter the total of any other taxes, plus any addi­ tions to tax that include only income tax, such as tax credit recaptures, from Form 1040, Schedule 2, lines 8, 16, and 17. Also include the amount reported on Schedule 2, line 10, only if you’re repaying a 2008 first- time homebuyer credit and filing federal Form 5405. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any addi­ tions to tax from Schedule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter 0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allowable premium credit regardless of any excess advance pay­ ments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund­ able credits that must be subtracted from your federal income tax liability.

150-101-040-1 (Rev. 10-04-22) 14 2022 Form OR-40 Instructions

Line 9: Line 5 minus line 8. If less than 0, enter 0. This is your federal income tax liability after refundable cred­ its (other than EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 5. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Federal tax liability subtraction worksheet 1. Federal tax liability (Form 1040 1. line 22). 2. Excess advance premium tax 2. credit (Form 1040, Schedule 2, line 2). 3. Line 1 minus line 2. (If less than 0, 3. enter 0). 4. Other taxes (see instructions). 4. 5. Line 3 plus line 4. 5. 6. American Opportunity credit 6. (form 1040, line 29). 7. Premium tax credit (Form 8962, 7. line 24). 8. Line 6 plus line 7. 8. 9. Line 5 minus line 8. (If less than 0, 9. enter 0). 10. Maximum subtraction amount 10. from Table 5. 11. Smaller of line 9 or line 10. 11. This is your federal tax liability subtraction. Are you amending your 2022 return? Usually you can't change your federal tax subtraction on your amended return. See the “Federal income tax liability” section in Publication OR-17 for more information before making changes to this subtraction. Table 5. Federal tax liability subtraction AGI phaseout And your Then your federal adjusted maximum gross income is: allowable tax liability If your filing But less subtraction status is: At least— than— is: Single 0 $125,000 $7,250 $125,000 $130,000 $5,800 $130,000 $135,000 $4,350 $135,000 $140,000 $2,900 $140,000 $145,000 $1,450 $145,000 or more 0 Married filing separately 0 $125,000 $3,625 $125,000 $130,000 $2,900 $130,000 $135,000 $2,175 $135,000 $140,000 $1,450 $140,000 $145,000 $725 $145,000 or more 0 Married filing jointly; or Head of household; or Qualifying surviving spouse 0 $250,000 $7,250 $250,000 $260,000 $5,800 $260,000 $270,000 $4,350 $270,000 $280,000 $2,900 $280,000 $290,000 $1,450 $290,000 or more 0 11 Social Security and tier 1 Railroad Retirement Board benefits income. Enter the amount from federal Form 1040 or 1040-SR, line 6b. If you have tier 2, windfall/vested dual, or supplemental Railroad Retirement Board benefits, these are subtracted in Sec­ tion B of the Schedule OR-ASC, using code 330. For more information, see this topic under “Income” in Publication OR-17. 12 Oregon income tax refund included in federal income. Enter your Oregon state income tax refund from federal Form 1040 or 1040-SR, Schedule 1, line 1. Don’t include local, county, or other states’ tax refunds. 13 Total subtractions from Schedule OR-ASC. Other subtractions not explained here are claimed on Schedule OR-ASC. Enter the total from Schedule OR­ ASC, line B7. Include the schedule with your return. For more information about subtractions, see the Sched­ ule OR-ASC and OR-ASC-NP Instructions or “Subtrac­ tions” in Publication OR-17.

150-101-040-1 (Rev. 10-04-22) 15 2022 Form OR-40 Instructions

Deductions In general, you can claim Oregon itemized deductions or the standard deduction, whichever is larger, but not both. See the exceptions below for: • Dependents who can be claimed on another taxpay­ er’s return. • Nonresident aliens. • Spouses filing separate returns. Itemized deductions. If you’re itemizing your 16 deductions for Oregon, enter the amount from Schedule OR-A, line 23. Note: Don’t enter your federal itemized deductions; the amount allowed for Oregon may be different. You can download Schedule OR-A and the instructions from our website or you can con­ tact us to order it. If you’re not itemizing, enter 0. Standard deduction. Generally, your standard 17 deduction is based on your filing status, as shown in Table 6: Table 6. Standard deduction Single $2,420 Married filing jointly $4,840 Married filing separately • If spouse claims standard deduction • If spouse claims itemized deductions $2,420 0 Head of household $3,895 Qualifying surviving spouse $4,840 Standard deduction—Age 65 or older, or blind. If you or your spouse turned age 65 by January 1, 2023, or were blind at the end of the tax year, you're entitled to a larger standard deduction. If you or your spouse are permanently blind, you may also qualify for the severely disabled exemption credit; see the instructions for lines 6a and 6b. Check the applicable boxes below line 17, then multiply the number of boxes checked by: • $1,200 if single or head of household filing status; or • $1,000 for all other filers. Add this amount to the standard deduction for your fil­ ing status from Table 6. Enter the total on line 17. Example: Joni and Mike are married. By January 1, 2023, Joni had turned 61 and Mike had turned 67. Joni files the return as the primary taxpayer. She checks the box for spouse age 65 or older and adds $1,000 to their standard deduction. Joni enters $5,840 ($4,840 + $1,000) on line 17. Standard deduction—Dependents who can be claimed on another taxpayer’s return. If someone else can claim you as a dependent, your standard deduction is limited to the larger of: • Your earned income plus $400, up to the maximum allowed for your filing status (see Table 6); or • $1,150. This limit applies even if the other person doesn't actu­ ally claim you as a dependent on their return. If you’re a dependent and not married, use the follow­ ing worksheet to figure your standard deduction. If you’re a dependent and married, see “Deductions and modifications” in Publication OR-17. Standard deduction worksheet for single dependents 1. Enter your earned income (see 1. definition below). 2. Additional $400. 2. $400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $1,150 5. Enter the larger of line 3 or line 4. 5. 6. Basic standard deduction for 6. $2,420 single. 7. Enter the smaller of line 5 or line 7. 6. 8. If you turned age 65 by 1/1/2023, 8. enter $1,200. Otherwise, enter 0. 9. If you’re blind, enter $1,200. 9. Otherwise, enter 0. 10. Add lines 7, 8, and 9. This is your 10. standard deduction. Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually performed, and any part of a scholarship or fellowship grant you received that is included in your gross income. Standard deduction—Nonresident aliens. The stan­ dard deduction for nonresident aliens (as defined by federal law) is 0. Standard deduction—Married filing separately. The standard deduction for married individuals filing sep­ arately is 0 if one spouse itemizes. This applies even if the standard deduction is more than your itemized deductions.

150-101-040-1 (Rev. 10-04-22) 16 2022 Form OR-40 Instructions

20 Oregon tax Tax tables. Use the tax tables to find your tax if your taxable income on line 19 is less than $50,000. Find the range for your taxable income, then locate your tax in Column S or Column J: • Use Column S if your filing status is single or mar- ried filing separately. • Use Column J if your filing status is married filing jointly, head of household, or qualifying surviving spouse with dependent child. Tax rate charts. If your taxable income on line 19 is $50,000 or more, calculate your tax using the formula in the tax rate chart for your filing status. • Use Chart S if your filing status is single or married filing separately. • Use Chart J if your filing status is married filing jointly, head of household, or qualifying surviving spouse with dependent child. Example 1: Emily, a single taxpayer, has taxable income of $19,525. She uses Column S in the tax tables to find the tax on income that is at least $19,500 but less than $19,600. Emily enters $1,447 on line 20. Example 2: Daniel and Madison are filing a joint return. Their Oregon taxable income is $75,500. They use the formula in Chart J to calculate their tax as follows: Tax on the first $50,000 $3,847 (from the chart) Oregon taxable income $75,500 Minus the first $50,000 – 50,000 Excess over $50,000 $25,500 Multiply excess by 8.75% x 0.0875 Tax on excess over $50,000 + $2,231 Total Oregon tax $6,078 Other tax methods. If you qualify, you can compute your Oregon tax using any of the following methods: Farm income averaging method. Did you have income from a farm? You may use the federal farm income averaging method to compute your Oregon tax even if you didn’t use farm income averaging on your federal return. Use Schedule OR-FIA-40 to compute the Ore­ gon tax using this method. You can download it from our website or contact us to order it. If you use Schedule OR-FIA-40 to calculate your tax, enter the tax amount from Schedule OR-FIA-40, line 24 and check box 20a. Don’t include Schedule OR-FIA-40 with your return. Keep it with your records. Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming business in which you held at least a 10 percent ownership interest? If so, you may be eligible for a reduced tax rate on the net capital gain from the proceeds. Use Schedule OR­ FIA-40 to compute the Oregon tax using this method. You can download it from our website or contact us to order it. Enter the tax amount from Publication OR-FCG, line 9 and check box 20b. Don’t include Publication OR-FCG with your return. Keep it with your records. Oregon qualified business income reduced tax rate. Did you have business income from a sole proprietor­ ship, partnership, or S corporation in which you mate­ rially participated? If so, you may qualify to use this reduced tax rate. For details, see Schedule OR-PTE-FY on our website or you can contact us to order it. Note: If you elect to use this reduced tax rate for quali­ fying income, the election is irrevocable and must be made on your original return. An original return includes an amended return filed on or before the due date, including extensions. You can’t change the elec­ tion after your original return has been filed. If you use Schedule OR-PTE-FY to calculate your tax, enter the tax amount from Schedule OR-PTE-FY, line 14a and check box 20c. Include the schedule with your Oregon return or submit it at www.oregon.gov/dor; click the link for Revenue Online and log in or create an account. Interest on certain installment sales. Did you 21 have installment sales that required you to pay interest on the deferred tax liability for federal pur­ poses? If so, you must also compute interest for Oregon using the same method as for federal. The annual inter­ est rate is 4 percent for 2022 and 6 percent for 2023. Credits—Nonrefundable Nonrefundable credits can’t be more than your Ore­ gon tax liability. Carryforward credits allow you to claim unused amounts in a later year. Standard cred­ its can’t be used in any other year. For more informa­ tion about these and other nonrefundable credits, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17. Exemption credit. If your federal AGI is more 23 than $200,000 ($100,000 if your filing status is single or married filing separately), enter 0; otherwise, use this worksheet to figure your exemption credit.

150-101-040-1 (Rev. 10-04-22) 17 2022 Form OR-40 Instructions

Exemption credit worksheet 1. If your federal AGI is more than $100,000 and your filing status is single or married filing separately, or more than $200,000 for all others, enter 0; otherwise, enter the number of “regular” exemptions from lines 6a and 6b plus the number of dependents from line 6c. 1. 2. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of “Severely disabled” exemptions from line 6a and 6b. 2. 3. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of exemptions for children with a qualifying disability from line 6d. 3. 4. Add lines 1, 2, and 3. 4. 5. Line 4 times $219. This is your 5. exemption credit. Political contribution credit. If your federal AGI 24 isn’t more than $75,000 ($150,000 if you’re filing a joint return), you may claim a standard credit of up to $50 ($100 if you’re filing a joint return) for cash contri­ butions you made during 2022 to any: • Qualified political party. • Qualified candidate for federal, state, or local elective office, or the candidate’s campaign, for an election in Oregon. • Political action committee certified in Oregon. Total standard credits from Schedule OR-ASC. 25 All other standard credits are claimed on Sched­ ule OR-ASC. Enter the total from Schedule OR-ASC, line C16. Include Schedule OR-ASC with your return. Total carryforward credits from Schedule OR­ 28 ASC. All carryforward credits are claimed on Schedule OR-ASC. Enter the total from Schedule OR­ ASC, line D9. Include Schedule OR-ASC with your return. Total tax recaptures from Schedule OR-ASC. 30 All tax recaptures are claimed on Schedule OR­ ASC. Enter the total from Schedule OR-ASC, line E5. Include Schedule OR-ASC with your return. Tax payments and refundable credits Oregon income tax withheld. Enter the total 32 Oregon tax withheld from your wages and other income. State tax withheld from wages is shown in box 17 of Form W-2 and in the State area of various 1099 forms. Don’t include FICA (Social Security) tax with­ held or tax withheld from your wages by other states. You must include a legible, unaltered copy of your Form W-2 from each job and any Form 1099 showing Oregon income tax withheld with your Oregon return. If you don’t have a Form W-2 or 1099, you must provide other proof of Oregon tax withheld. Proof may include a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2023, we can only accept a Form W-2 or 1099 as proof. If you have tax to pay, you may want to increase the amount your employer or other payer withholds from your wages. For withholding information, go to www.oregon.gov/dor. Amount applied from your prior year’s tax 33 refund. Enter the amount of any prior-year refund you applied as a payment of 2022 estimated tax. If we adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your applied refund amount, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. Estimated tax payments for 2022. Enter the total 34 estimated tax payments you made before filing your 2022 Oregon return. For calendar-year filers, these payments were due April 18, 2022; June 15, 2022; Sep­ tember 15, 2022; and January 17, 2023. Include all pay­ ments you made up to the date you filed your original or amended return. Don’t include the amount reported on line 33. If you need to verify your estimated pay­ ments, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. Refundable credits Refundable credits reduce the amount of tax that you owe. Any amount that is more than your tax liability is treated the same way as an overpayment. Refund­ able credits not explained here are claimed on Schedule OR-ASC. For more information about refundable credits, see the Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17.

150-101-040-1 (Rev. 10-04-22) 18 2022 Form OR-40 Instructions

Tax payments from a pass-through entity (PTE). 35 If you're an owner of a PTE that paid estimated tax for its owners, with Oregon-source income and you didn't join in the filing of a composite return to report that income, enter the amount of tax payments made by the PTE on your behalf. Earned income credit. Oregon’s earned 36 income credit is a percentage of the earned income tax credit (EITC) claimed on your fed­ eral return. The percentage is based on the age of your youngest dependent at the end of the tax year. Note to RDPs: You may claim this credit if you would otherwise qualify for the EITC using your “as if” fed­ eral return. New for 2022: If you can't claim the federal EITC or can only claim a portion of the federal EITC because you, your spouse, or your child(ren) do not have an SSN that is valid for work or are using an ITIN, you may qualify for the earned income credit for ITIN filers. See Sched­ ule OR-EIC-ITIN Instructions or Publication OR-17 for additional information. Use Table 7 and the following worksheet to figure your credit. Table 7. EIC percentage Age of youngest dependent at end of tax year Percentage of federal EITC At least 3 years old, or no dependents 9 percent (0.09) Younger than 3 12 percent (0.12) Earned income credit worksheet 1. Enter your federal EITC from Form 1040 or 1040-SR, line 27. 1. 2. Enter the percentage from the table as a decimal. 2. 3. Line 1 times line 2. This is your 3. Oregon earned income credit. Total refundable credits from Schedule OR-ASC. Enter your total refundable credits from Sched- ule OR-ASC, line F7. Include Schedule OR-ASC with your return. Penalties and interest Your 2022 tax must be paid by April 18, 2023, even if you requested an extension of time to file your return. Your 2022 return must be filed by April 18, 2023. If you requested an extension, your return must be filed by October 16, 2023. Round the total of penalties and interest to the near­ est whole dollar. For more information and examples showing how penalties and interest are calculated, see “Interest and penalties” in Publication OR-17. Penalties Penalty amounts are based on the tax after all credits shown on your return minus payments that you made by the due date of the return. To find your tax after all credits, start with your tax after standard, carryforward credits, and tax recaptures on line 31, then subtract the refundable credit amounts on lines 36, 37, and 38. • Failure-to-file penalty. Include a penalty for failure to file a return if: — Your return is filed more than three months after the due date (or extension due date); and — You didn’t pay all of your tax by April 18, 2023. The penalty for failure to file is 20 percent of your tax after all credits that wasn’t paid by April 18, 2023. • Failure-to-pay penalty. Include a penalty for failure to pay if: — Less than 90 percent of your tax after all credits (including tax recaptures) was paid by April 18, 2023, or — You paid at least 90 percent of your tax after cred­ its (including tax recaptures) by April 18, 2023, but you aren’t paying the balance of unpaid tax in full when you file. The penalty for failure to pay is 5 percent of your tax after all credits (including tax recaptures) that wasn’t paid by April 18, 2023. Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax after all credits that wasn’t paid by April 18, 2023. First-time home buyer savings account (FTHBSA) pen­ alty for nonqualified withdrawal. Include a penalty of 5 percent of the funds withdrawn from your FTHBSA if you withdrew funds from your account for a purpose other than purchasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per­ form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties pro­ vided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions” in Publication OR-17. 38 42

150-101-040-1 (Rev. 10-04-22) 19 2022 Form OR-40 Instructions

Interest on unpaid tax You’ll owe interest on the amount of tax that wasn’t paid by April 18, 2023. Interest starts accruing on April 19, 2023 and continues to accrue every day, includ­ ing the date of your payment. Interest is figured daily, based on a 365-day year. The annual interest rate for 2023 is 6 percent, or 0.0164 per­ cent per day. To figure your interest, count the number of days start­ ing with April 19, 2023, and ending with the date of your payment. Multiply your unpaid tax by the num­ ber of days, then multiply that amount by 0.000164 (the daily rate converted to a decimal). Interest rate increase. If we bill you for unpaid tax, and the tax isn’t paid in full within 60 days from the date of our billing notice, the annual interest rate increases by 4 percentage points, to 10 percent. Amended return. If you’re amending your return, cal­ culate the interest based on the additional amount of tax you must pay (line 5 of the Amended worksheet). Interest on underpayment of estimated tax. 43 Underpayment interest is charged if: • Your tax after all credits and withholding is $1,000 or more; • You were required to make estimated tax payments; • One or more of your required installments was underpaid; and • You don’t qualify for an exception. Note: You could be charged interest on underpayment of estimated tax even if line 40 shows a refund. See Form OR-10 to determine if you owe underpayment interest or qualify for an exception. Download the publi­ cation from our website or you can contact us to order it. If you owe underpayment interest, enter the amount from line 33 of Form OR-10. If you qualify for an excep­ tion, enter the exception number from line 1 of the form inside box 43a. If you used the Annualized Income Worksheet (located in the Form OR-10 Instructions) to figure your interest, check box 43b. Include Form OR-10 with your return (along with any required state­ ments if you’re claiming an exception). Keep the Annu­ alized Income Worksheet with your records. Amount due Amount you owe. Enter your total unpaid tax plus penalties and interest. Note: If you have an overpayment on line 40 and the overpayment is less than the total penalties and interest you entered on line 44, enter the amount from line 44 minus the amount on line 40. Payment options You may pay electronically from your checking or sav­ ings account, by credit card, or with a check, cashier’s check, or money order. Cash payments can be made only at our main office in Salem. If the amount due is less than $2, no payment is required. Electronic payment from your checking or savings account You can pay your current year income taxes, 2023 esti­ mated income taxes, any prior year taxes due, and amended return taxes directly from your checking or savings account. There is no fee to use this service. This option is available only through our website. Go to www.oregon.gov/dor and click the link for Revenue Online. Direct debit may be available with e-filed returns at the time of filing. Credit card payments You can pay with your Discover, MasterCard, or Visa credit card. The service provider will charge you a convenience fee. The service provider will tell you what the fee is during the transaction; you will have the option to continue or cancel the transaction before entering your credit card information. If you complete the credit card transaction, you will receive a confir­ mation number. Keep this confirmation number as proof of payment—don’t send it with your return. To pay by credit card, go to www.oregon.gov/dor and click the link for Revenue Online. Check or money order • Make your check or money order payable to “Oregon Department of Revenue.” • Write all of the following on your payment: — The tax year (2022). — The form you’re filing (Oregon Form OR-40). — The last four digits of your SSN or ITIN. • Use blue or black ballpoint ink. Don’t use red or pur­ ple ink or gel pens. • Don’t send cash or a postdated check. Form OR-40-V. Use the voucher only if you’re mak­ ing a separate payment by check, cashier’s check, or money order. Don’t use the voucher if you’re including a payment with your return or making an electronic payment. See Form OR-40-V instructions for additional information and mailing address. Payment plan. If you can’t pay in full now, pay what you can. Contact us and we will help you set up a payment plan for the amount you don’t pay with your return. 45

150-101-040-1 (Rev. 10-04-22) 20 2022 Form OR-40 Instructions

Refund Refund. Enter your overpayment from line 46 40 minus any penalty or interest from line 44. Note: If the amount on line 44 is more than the over­ payment on line 40, see the instructions for line 45. You have three years from the due date of the return to file a claim for your refund. By law, we can’t issue a refund if you file your return more than three years after the return’s due date (without extensions) or if the refund is less than $1. For more information about the time limit for claiming a refund, see “Payments and refunds” in Publication OR-17. Interest on refunds. See “Payments and refunds” in Publication OR-17 for information about interest paid on refunds. Refund applications If line 46 shows a refund, you may use some or all of it to: • Make an estimated tax payment for a later year. • Donate to one or more of the charitable organizations listed on Schedule OR-DONATE. • Contribute to the political party of your choice. • Make a deposit to an Oregon college or MFS 529 sav­ ings plan account. Each of these applications will reduce your refund. The combined total of all applications can’t be more than the amount of your refund. Note: A refund of overpaid tax will be offset against outstanding debt before any amount is applied or refunded to you. Instructions for amended returns. If line 5 of the Amended worksheet shows a refund, you can use some or all of it for the refund applications listed above. However, you can’t reduce any amounts you’ve already applied from a refund on your original return. See the instructions for each application for details. Open estimated tax account. Enter the amount 47 of your refund you want to apply as a tax pay­ ment for a later year. This amount will be applied to your open estimated tax account (to a year where you will be filing a tax return). Generally, unless you’re fil­ ing a delinquent or amended return, the payment will be applied to the 2023 tax year. For more information, see “Payments and refunds” in Publication OR-17. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you’ve already applied as an estimated tax payment for a later year. If line 5 of the Amended worksheet shows a refund and you want to apply some or all of it as an estimated tax payment, include the amount you want to apply. Charitable checkoff. Enter the amount from line 48 30 of Schedule OR-DONATE. For more informa­ tion, see the schedule instructions. You can download Schedule OR-DONATE and instructions from our web­ site or you can contact us to order it. Note: If your refund—after any application to an open estimated tax account—is less than your total donation amount, your donations will be prorated. To make direct donations instead, you can find each charity’s address listed on our website. Don’t mail your donations to us. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as charitable donations using Schedule OR­ DONATE. If line 5 of the Amended worksheet shows a refund, you can donate some or all of it to one or more of the listed charities. Include this amount and an amended Schedule OR-DONATE with your amended return. Note: The refund from your amended return will be applied as a donation for the calendar year in which you’re filing it. Political party checkoff. You may use your 49 refund to contribute $3 to the Oregon political party of your choice. If you’re filing a joint return, you and your spouse may each contribute $3. Note: Your contribution will reduce your refund and does not qualify for the political contribution credit. To make a contribution: 1. Designate the political party of your choice using the party’s code from the alphabetized list below. — If you contribute, enter one code in box 49a. — If your spouse contributes on a joint return, enter one code in box 49b. Enter only one code per taxpayer. Spouses filing a joint return don’t have to enter the same code. • Constitution Party of Oregon [code 500]. • Democratic Party of Oregon [code 501]. • Independent Party of Oregon [code 502]. • Libertarian Party of Oregon [code 503]. • Oregon Republican Party [code 504]. • Pacific Green Party of Oregon [code 505]. • Progressive Party [code 506]. • Working Families Party of Oregon [code 507]. 2. Enter your total contribution amount. — If you or your spouse contribute, enter $3. — If both you and your spouse contribute on a joint return, enter $6. Note: Your political party contribution won’t be made if: • Your refund—after any application to an open esti- mated tax account or charitable checkoff donation— is less than your total contribution amount.

150-101-040-1 (Rev. 10-04-22) 21 2022 Form OR-40 Instructions

• You enter an amount but don’t designate a party (or parties). • You designate a party (or parties) but don’t enter an amount. • You enter more than one party code per taxpayer. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as a political party contribution. If line 5 of the Amended worksheet shows a refund and you didn’t make the maximum political party contribution on your original return, you may use the refund to make a contribution on your amended return. Oregon college or MFS 529 savings plan. Enter 50 the amount from line 5 of Schedule OR-529. For minimum deposit amounts and other informa­ tion, see the schedule instructions. You can download Schedule OR-529 from our website or you can contact us to order it. Note: If the amount of your refund—after any applica­ tion to an open estimated tax account, charitable check­ off donation, or political party contribution—is less than the total amount you want to deposit, no deposit will be made. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as an Oregon college or MFS 529 savings plan deposit. If line 5 of the Amended worksheet shows a refund, add the amount you want to apply as a deposit and include an amended Schedule OR-529 with your amended return. The refund will be applied for the year in which you’re filing the amended return. Net refund. You must reduce your refund by 52 any amounts applied to your open estimated tax account, charitable checkoff donations, political party contributions, and Oregon college or MFS 529 savings plan accounts. By law, we can’t issue or apply a refund if you file your return more than three years after the return’s due date (excluding extensions). Direct deposit Direct deposit. In most cases, we can deposit your refund directly into your checking or sav- ings account instead of mailing you a check. However, federal banking regulations prevent us from making a refund by direct deposit if the final destination is an account outside the U.S. In that case, we must issue a paper check instead. Before you enter your information, verify that your deposit will be accepted and confirm your routing and account numbers. You can find a diagram of a personal check showing where these numbers are located in the “Payments and refunds” section of Publication OR-17. Follow these steps to make sure your refund will be deposited into the correct account: 1. Check the box if the final destination for your refund would be an account outside the U.S. Note: If you check this box, you will be issued a paper check. 2. Check the appropriate box, either checking or sav­ ings, but not both. 3. Enter your nine-digit routing number. Routing numbers begin with the digits 01 through 12, 21 through 32, or 61 through 72. 4. Enter your account number. Account numbers can be up to 17 characters (both numbers and letters). Don’t include hyphens, spaces, or special symbols. 5. Double-check the account and routing numbers. These numbers can’t be changed after the return is filed. Signature block Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both taxpayers must sign. By signing the return, you acknowledge, under penalty of false swearing, that the information on the return and any attachments is true, correct, and complete. Minor child’s return. If your child can’t sign their tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By [your signature], parent (or other legal guardian) of minor child.” Preparer signature. Anyone who prepares, advises, or assists in preparing personal income tax returns in exchange for compensation of any kind must be licensed to prepare Oregon returns and must sign the return. Signing the return doesn't grant your preparer the right to represent you or make decisions on your behalf. See the Tax Information Authorization and Power of Attorney for Representation form and instructions on our website for more information. Contact the following agencies to check the status of your Oregon tax practitioner: • State Board of Tax Practitioners at 503-378-4034 (Salem) for licensed tax consultants or preparers, or go to www.oregon.gov/obtp. • State Board of Accountancy at 503-378-4181 (Salem) for public accountants and certified public accoun­ tants, or go to www.oregon.gov/boa. Preparer license number. Licensed tax consultants and tax preparers: enter your license number. CPAs: enter your certificate number. Tax-Aide volunteers: enter your TCE site number. All others: leave blank. Don’t enter your driver license number. 53

150-101-040-1 (Rev. 10-04-22) 22 2022 Form OR-40 Instructions

Before you file Copy of federal return. Before you assemble your Ore­ gon return, make a copy of both sides of your federal Form 1040 or 1040-SR along with Schedules 1 through 3 (as applicable), 1040-X, or 1040-NR. Don’t include any other federal schedules or an exten­ sion request unless instructed otherwise. Keep these with your records; we may ask for them later. If you created an “as if” federal return, use blue or black ink to label it “as if” on the top left corner. Include it along with the copy of your actual federal return (and any amendments). Failure to include your federal return will delay pro­ cessing, and items claimed on your Oregon return may be adjusted or denied. Amended Oregon return. If you’re amending your Ore­ gon return due to changes to your federal return or a return you filed with another state, include a copy of your amended or corrected federal or other state return or audit report. If you’re amending only your Oregon return, include a copy of your original federal or other state return. Assemble your Oregon return. Assemble your return in the order shown below. If a form has more than one page, be sure that you’ve included all pages and that they’re all from the same 2022 form. For example, if you’re filing Schedule OR-WFHDC, Schedule OR-A, or Schedule OR-ASC, be sure that “2022 Schedule OR­ WFHDC”, "2022 Schedule OR-A", or "2022 Schedule OR­ ASC" is printed at the top of each page and that you’ve included all pages associated with each schedule. Important: Don’t use staples, paperclips, tape, or other fasteners. Doing so will delay processing. 1. Payment by check or money order, if any. Don’t use a voucher. 2. Form(s) W-2 and 1099 showing Oregon tax withheld. 3. Form OR-40. 4. Schedule OR-A. 5. Schedule OR-ASC. 6. Schedule OR-ADD-DEP. 7. Schedule OR-DONATE. 8. Schedule OR-529. 9. Schedule OR-PTE-FY. 10. Form OR-10. 11. Schedule OR-EIC-ITIN. 12. Schedule OR-WFHDC. 13. Other Oregon schedules required to be included with your return. 14. If you’re an RDP filing separately for Oregon, your RDP’s Oregon return. 15. Your federal return(s) and schedules. Note: If you’re making an estimated tax payment for 2023 by check or money order, send the payment in a separate envelope with a completed Form OR-40-V. Don’t include your 2023 payment or voucher with your 2022 return. Avoid processing delays Type or clearly print your name, SSN, date of birth, complete mailing address, and daytime phone number on your return. Include all pages of your Oregon return. Double-check your figures and other numbers, includ­ ing your SSN. Errors will delay processing. Common mistakes are: • Math errors. • A wrong amount claimed for the federal tax liability subtraction. • Using the wrong line or column on the tax tables. • Using the wrong tax chart. If you have tax to pay, review the instructions for line 45. Verify your account information if you’re requesting a refund by direct deposit. Sign your return. Both spouses must sign a joint return. Include legible copies of all W-2 and 1099 forms show­ ing Oregon income tax withheld. Place them on top of your return along with any payment by check, cashier’s check, or money order. Include a copy of your federal return (front and back) with your Oregon return. Include federal Schedules 1 through 3 (if applicable), but don’t include other federal schedules unless otherwise instructed. Place it behind all Oregon forms and schedules. Payment by check, cashier’s check, or money order should be placed on top of your return. Don’t mail cash. Don’t use a voucher. Don’t use staples, paper clips, tape, or other fasteners. Mail your return in a stamped envelope. Use a busi­ ness-size (4 × 9½ inches) or larger envelope with ade­ quate postage. Don’t use a smaller envelope—it delays processing. Tax return mailing addresses Mail refund returns or Mail tax-to-pay no-tax-due returns to: returns to: REFUND Oregon Department of Revenue PO Box 14700 PO Box 14555 Salem OR 97309-0930 Salem OR 97309-0940

150-101-040-1 (Rev. 10-04-22) 23 2022 Form OR-40 Instructions

2022 Tax Tables for Form OR-40 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 0 0 – 20 0 0 20 – 50 2 2 $ 50 50 – 100 4 4 100 – 200 7 7 200 – 300 12 12 300 – 400 17 17 400 – 500 21 21 500 – 600 26 26 600 – 700 31 31 700 – 800 36 36 800 – 900 40 40 900 – 1,000 45 45 $ 1,000 1,000 – 1,100 50 50 1,100 – 1,200 55 55 1,200 – 1,300 59 59 1,300 – 1,400 64 64 1,400 – 1,500 69 69 1,500 – 1,600 74 74 1,600 – 1,700 78 78 1,700 – 1,800 83 83 1,800 – 1,900 88 88 1,900 – 2,000 93 93 $ 2,000 2,000 – 2,100 97 97 2,100 – 2,200 102 102 2,200 – 2,300 107 107 2,300 – 2,400 112 112 2,400 – 2,500 116 116 2,500 – 2,600 121 121 2,600 – 2,700 126 126 2,700 – 2,800 131 131 2,800 – 2,900 135 135 2,900 – 3,000 140 140 $ 3,000 3,000 – 3,100 145 145 3,100 – 3,200 150 150 3,200 – 3,300 154 154 3,300 – 3,400 159 159 3,400 – 3,500 164 164 3,500 – 3,600 169 169 3,600 – 3,700 173 173 3,700 – 3,800 178 178 3,800 – 3,900 185 183 3,900 – 4,000 192 188 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 4,000 4,000 – 4,100 198 192 4,100 – 4,200 205 197 4,200 – 4,300 212 202 4,300 – 4,400 219 207 4,400 – 4,500 225 211 4,500 – 4,600 232 216 4,600 – 4,700 239 221 4,700 – 4,800 246 226 4,800 – 4,900 252 230 4,900 – 5,000 259 235 $ 5,000 5,000 – 5,100 266 240 5,100 – 5,200 273 245 5,200 – 5,300 279 249 5,300 – 5,400 286 254 5,400 – 5,500 293 259 5,500 – 5,600 300 264 5,600 – 5,700 306 268 5,700 – 5,800 313 273 5,800 – 5,900 320 278 5,900 – 6,000 327 283 $ 6,000 6,000 – 6,100 333 287 6,100 – 6,200 340 292 6,200 – 6,300 347 297 6,300 – 6,400 354 302 6,400 – 6,500 360 306 6,500 – 6,600 367 311 6,600 – 6,700 374 316 6,700 – 6,800 381 321 6,800 – 6,900 387 325 6,900 – 7,000 394 330 $ 7,000 7,000 – 7,100 401 335 7,100 – 7,200 408 340 7,200 – 7,300 414 344 7,300 – 7,400 421 349 7,400 – 7,500 428 354 7,500 – 7,600 435 359 7,600 – 7,700 441 366 7,700 – 7,800 448 373 7,800 – 7,900 455 380 7,900 – 8,000 462 386 $ 8,000 8,000 – 8,100 468 393 8,100 – 8,200 475 400 8,200 – 8,300 482 407 8,300 – 8,400 489 413 8,400 – 8,500 495 420 8,500 – 8,600 502 427 8,600 – 8,700 509 434 8,700 – 8,800 516 440 8,800 – 8,900 522 447 8,900 – 9,000 529 454 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 9,000 9,000 – 9,100 536 461 9,100 – 9,200 543 467 9,200 – 9,300 549 474 9,300 – 9,400 556 481 9,400 – 9,500 563 488 9,500 – 9,600 572 494 9,600 – 9,700 581 501 9,700 – 9,800 589 508 9,800 – 9,900 598 515 9,900 – 10,000 607 521 $ 10,000 10,000 – 10,100 616 528 10,100 – 10,200 624 535 10,200 – 10,300 633 542 10,300 – 10,400 642 548 10,400 – 10,500 651 555 10,500 – 10,600 659 562 10,600 – 10,700 668 569 10,700 – 10,800 677 575 10,800 – 10,900 686 582 10,900 – 11,000 694 589 $ 11,000 11,000 – 11,100 703 596 11,100 – 11,200 712 602 11,200 – 11,300 721 609 11,300 – 11,400 729 616 11,400 – 11,500 738 623 11,500 – 11,600 747 629 11,600 – 11,700 756 636 11,700 – 11,800 764 643 11,800 – 11,900 773 650 11,900 – 12,000 782 656 $ 12,000 12,000 – 12,100 791 663 12,100 – 12,200 799 670 12,200 – 12,300 808 677 12,300 – 12,400 817 683 12,400 – 12,500 826 690 12,500 – 12,600 834 697 12,600 – 12,700 843 704 12,700 – 12,800 852 710 12,800 – 12,900 861 717 12,900 – 13,000 869 724 $ 13,000 13,000 – 13,100 878 731 13,100 – 13,200 887 737 13,200 – 13,300 896 744 13,300 – 13,400 904 751 13,400 – 13,500 913 758 13,500 – 13,600 922 764 13,600 – 13,700 931 771 13,700 – 13,800 939 778 13,800 – 13,900 948 785 13,900 – 14,000 957 791 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 14,000 14,000 – 14,100 966 798 14,100 – 14,200 974 805 14,200 – 14,300 983 812 14,300 – 14,400 992 818 14,400 – 14,500 1,001 825 14,500 – 14,600 1,009 832 14,600 – 14,700 1,018 839 14,700 – 14,800 1,027 845 14,800 – 14,900 1,036 852 14,900 – 15,000 1,044 859 $ 15,000 15,000 – 15,100 1,053 866 15,100 – 15,200 1,062 872 15,200 – 15,300 1,071 879 15,300 – 15,400 1,079 886 15,400 – 15,500 1,088 893 15,500 – 15,600 1,097 899 15,600 – 15,700 1,106 906 15,700 – 15,800 1,114 913 15,800 – 15,900 1,123 920 15,900 – 16,000 1,132 926 $ 16,000 16,000 – 16,100 1,141 933 16,100 – 16,200 1,149 940 16,200 – 16,300 1,158 947 16,300 – 16,400 1,167 953 16,400 – 16,500 1,176 960 16,500 – 16,600 1,184 967 16,600 – 16,700 1,193 974 16,700 – 16,800 1,202 980 16,800 – 16,900 1,211 987 16,900 – 17,000 1,219 994 $ 17,000 17,000 – 17,100 1,228 1,001 17,100 – 17,200 1,237 1,007 17,200 – 17,300 1,246 1,014 17,300 – 17,400 1,254 1,021 17,400 – 17,500 1,263 1,028 17,500 – 17,600 1,272 1,034 17,600 – 17,700 1,281 1,041 17,700 – 17,800 1,289 1,048 17,800 – 17,900 1,298 1,055 17,900 – 18,000 1,307 1,061 $ 18,000 18,000 – 18,100 1,316 1,068 18,100 – 18,200 1,324 1,075 18,200 – 18,300 1,333 1,082 18,300 – 18,400 1,342 1,088 18,400 – 18,500 1,351 1,095 18,500 – 18,600 1,359 1,102 18,600 – 18,700 1,368 1,109 18,700 – 18,800 1,377 1,115 18,800 – 18,900 1,386 1,122 18,900 – 19,000 1,394 1,130 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse.

150-101-040-1 (Rev. 10-04-22) 24 2022 Form OR-40 Instructions

2022 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: $ 19,000 $ 24,000 $ 29,000 $ 34,000 19,000 – 19,100 1,403 1,139 24,000 – 24,100 1,841 1,577 29,000 – 29,100 2,278 2,014 34,000 – 34,100 2,716 2,452 19,100 – 19,200 1,412 1,148 24,100 – 24,200 1,849 1,585 29,100 – 29,200 2,287 2,023 34,100 – 34,200 2,724 2,460 19,200 – 19,300 1,421 1,157 24,200 – 24,300 1,858 1,594 29,200 – 29,300 2,296 2,032 34,200 – 34,300 2,733 2,469 19,300 – 19,400 1,429 1,165 24,300 – 24,400 1,867 1,603 29,300 – 29,400 2,304 2,040 34,300 – 34,400 2,742 2,478 19,400 – 19,500 1,438 1,174 24,400 – 24,500 1,876 1,612 29,400 – 29,500 2,313 2,049 34,400 – 34,500 2,751 2,487 19,500 – 19,600 1,447 1,183 24,500 – 24,600 1,884 1,620 29,500 – 29,600 2,322 2,058 34,500 – 34,600 2,759 2,495 19,600 – 19,700 1,456 1,192 24,600 – 24,700 1,893 1,629 29,600 – 29,700 2,331 2,067 34,600 – 34,700 2,768 2,504 19,700 – 19,800 1,464 1,200 24,700 – 24,800 1,902 1,638 29,700 – 29,800 2,339 2,075 34,700 – 34,800 2,777 2,513 19,800 – 19,900 1,473 1,209 24,800 – 24,900 1,911 1,647 29,800 – 29,900 2,348 2,084 34,800 – 34,900 2,786 2,522 19,900 – 20,000 1,482 1,218 24,900 – 25,000 1,919 1,655 29,900 – 30,000 2,357 2,093 34,900 – 35,000 2,794 2,530 $ 20,000 20,000 – 20,100 1,491 20,100 – 20,200 1,499 20,200 – 20,300 1,508 20,300 – 20,400 1,517 20,400 – 20,500 1,526 20,500 – 20,600 1,534 20,600 – 20,700 1,543 20,700 – 20,800 1,552 20,800 – 20,900 1,561 20,900 – 21,000 1,569 $ 21,000 21,000 – 21,100 1,578 21,100 – 21,200 1,587 21,200 – 21,300 1,596 21,300 – 21,400 1,604 21,400 – 21,500 1,613 21,500 – 21,600 1,622 21,600 – 21,700 1,631 21,700 – 21,800 1,639 21,800 – 21,900 1,648 21,900 – 22,000 1,657 $ 22,000 22,000 – 22,100 1,666 22,100 – 22,200 1,674 22,200 – 22,300 1,683 22,300 – 22,400 1,692 22,400 – 22,500 1,701 22,500 – 22,600 1,709 22,600 – 22,700 1,718 22,700 – 22,800 1,727 22,800 – 22,900 1,736 22,900 – 23,000 1,744 $ 23,000 23,000 – 23,100 1,753 23,100 – 23,200 1,762 23,200 – 23,300 1,771 23,300 – 23,400 1,779 23,400 – 23,500 1,788 23,500 – 23,600 1,797 23,600 – 23,700 1,806 23,700 – 23,800 1,814 23,800 – 23,900 1,823 23,900 – 24,000 1,832 1,227 1,235 1,244 1,253 1,262 1,270 1,279 1,288 1,297 1,305 1,314 1,323 1,332 1,340 1,349 1,358 1,367 1,375 1,384 1,393 1,402 1,410 1,419 1,428 1,437 1,445 1,454 1,463 1,472 1,480 1,489 1,498 1,507 1,515 1,524 1,533 1,542 1,550 1,559 1,568 $ 25,000 $ 26,000 $ 27,000 $ 28,000 $ 30,000 $ 31,000 $ 32,000 $ 33,000 $ 35,000 $ 36,000 $ 37,000 $ 38,000 25,000 – 25,100 1,928 25,100 – 25,200 1,937 25,200 – 25,300 1,946 25,300 – 25,400 1,954 25,400 – 25,500 1,963 25,500 – 25,600 1,972 25,600 – 25,700 1,981 25,700 – 25,800 1,989 25,800 – 25,900 1,998 25,900 – 26,000 2,007 1,664 1,673 1,682 1,690 1,699 1,708 1,717 1,725 1,734 1,743 26,000 – 26,100 2,016 26,100 – 26,200 2,024 26,200 – 26,300 2,033 26,300 – 26,400 2,042 26,400 – 26,500 2,051 26,500 – 26,600 2,059 26,600 – 26,700 2,068 26,700 – 26,800 2,077 26,800 – 26,900 2,086 26,900 – 27,000 2,094 1,752 1,760 1,769 1,778 1,787 1,795 1,804 1,813 1,822 1,830 27,000 – 27,100 2,103 27,100 – 27,200 2,112 27,200 – 27,300 2,121 27,300 – 27,400 2,129 27,400 – 27,500 2,138 27,500 – 27,600 2,147 27,600 – 27,700 2,156 27,700 – 27,800 2,164 27,800 – 27,900 2,173 27,900 – 28,000 2,182 1,839 1,848 1,857 1,865 1,874 1,883 1,892 1,900 1,909 1,918 28,000 – 28,100 2,191 28,100 – 28,200 2,199 28,200 – 28,300 2,208 28,300 – 28,400 2,217 28,400 – 28,500 2,226 28,500 – 28,600 2,234 28,600 – 28,700 2,243 28,700 – 28,800 2,252 28,800 – 28,900 2,261 28,900 – 29,000 2,269 1,927 1,935 1,944 1,953 1,962 1,970 1,979 1,988 1,997 2,005 30,000 – 30,100 2,366 30,100 – 30,200 2,374 30,200 – 30,300 2,383 30,300 – 30,400 2,392 30,400 – 30,500 2,401 30,500 – 30,600 2,409 30,600 – 30,700 2,418 30,700 – 30,800 2,427 30,800 – 30,900 2,436 30,900 – 31,000 2,444 2,102 2,110 2,119 2,128 2,137 2,145 2,154 2,163 2,172 2,180 31,000 – 31,100 2,453 31,100 – 31,200 2,462 31,200 – 31,300 2,471 31,300 – 31,400 2,479 31,400 – 31,500 2,488 31,500 – 31,600 2,497 31,600 – 31,700 2,506 31,700 – 31,800 2,514 31,800 – 31,900 2,523 31,900 – 32,000 2,532 2,189 2,198 2,207 2,215 2,224 2,233 2,242 2,250 2,259 2,268 32,000 – 32,100 2,541 32,100 – 32,200 2,549 32,200 – 32,300 2,558 32,300 – 32,400 2,567 32,400 – 32,500 2,576 32,500 – 32,600 2,584 32,600 – 32,700 2,593 32,700 – 32,800 2,602 32,800 – 32,900 2,611 32,900 – 33,000 2,619 2,277 2,285 2,294 2,303 2,312 2,320 2,329 2,338 2,347 2,355 33,000 – 33,100 2,628 33,100 – 33,200 2,637 33,200 – 33,300 2,646 33,300 – 33,400 2,654 33,400 – 33,500 2,663 33,500 – 33,600 2,672 33,600 – 33,700 2,681 33,700 – 33,800 2,689 33,800 – 33,900 2,698 33,900 – 34,000 2,707 2,364 2,373 2,382 2,390 2,399 2,408 2,417 2,425 2,434 2,443 35,000 – 35,100 2,803 35,100 – 35,200 2,812 35,200 – 35,300 2,821 35,300 – 35,400 2,829 35,400 – 35,500 2,838 35,500 – 35,600 2,847 35,600 – 35,700 2,856 35,700 – 35,800 2,864 35,800 – 35,900 2,873 35,900 – 36,000 2,882 2,539 2,548 2,557 2,565 2,574 2,583 2,592 2,600 2,609 2,618 36,000 – 36,100 2,891 36,100 – 36,200 2,899 36,200 – 36,300 2,908 36,300 – 36,400 2,917 36,400 – 36,500 2,926 36,500 – 36,600 2,934 36,600 – 36,700 2,943 36,700 – 36,800 2,952 36,800 – 36,900 2,961 36,900 – 37,000 2,969 2,627 2,635 2,644 2,653 2,662 2,670 2,679 2,688 2,697 2,705 37,000 – 37,100 2,978 37,100 – 37,200 2,987 37,200 – 37,300 2,996 37,300 – 37,400 3,004 37,400 – 37,500 3,013 37,500 – 37,600 3,022 37,600 – 37,700 3,031 37,700 – 37,800 3,039 37,800 – 37,900 3,048 37,900 – 38,000 3,057 2,714 2,723 2,732 2,740 2,749 2,758 2,767 2,775 2,784 2,793 38,000 – 38,100 3,066 38,100 – 38,200 3,074 38,200 – 38,300 3,083 38,300 – 38,400 3,092 38,400 – 38,500 3,101 38,500 – 38,600 3,109 38,600 – 38,700 3,118 38,700 – 38,800 3,127 38,800 – 38,900 3,136 38,900 – 39,000 3,144 2,802 2,810 2,819 2,828 2,837 2,845 2,854 2,863 2,872 2,880

150-101-040-1 (Rev. 10-04-22) 25 2022 Form OR-40 Instructions

2022 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: But At less least: than: S J But At less least: than: S J But At less least: than: S J But At less least: than: S J Your tax is: Your tax is: Your tax is: Your tax is: $ 39,000 $ 42,000 $ 45,000 $ 48,000 39,000 – 39,100 3,153 2,889 42,000 – 42,100 3,416 3,152 45,000 – 45,100 3,678 3,414 48,000 – 48,100 3,941 3,677 39,100 – 39,200 3,162 2,898 42,100 – 42,200 3,424 3,160 45,100 – 45,200 3,687 3,423 48,100 – 48,200 3,949 3,685 39,200 – 39,300 3,171 2,907 42,200 – 42,300 3,433 3,169 45,200 – 45,300 3,696 3,432 48,200 – 48,300 3,958 3,694 39,300 – 39,400 3,179 2,915 42,300 – 42,400 3,442 3,178 45,300 – 45,400 3,704 3,440 48,300 – 48,400 3,967 3,703 39,400 – 39,500 3,188 2,924 42,400 – 42,500 3,451 3,187 45,400 – 45,500 3,713 3,449 48,400 – 48,500 3,976 3,712 39,500 – 39,600 3,197 2,933 42,500 – 42,600 3,459 3,195 45,500 – 45,600 3,722 3,458 48,500 – 48,600 3,984 3,720 39,600 – 39,700 3,206 2,942 42,600 – 42,700 3,468 3,204 45,600 – 45,700 3,731 3,467 48,600 – 48,700 3,993 3,729 39,700 – 39,800 3,214 2,950 42,700 – 42,800 3,477 3,213 45,700 – 45,800 3,739 3,475 48,700 – 48,800 4,002 3,738 39,800 – 39,900 3,223 2,959 42,800 – 42,900 3,486 3,222 45,800 – 45,900 3,748 3,484 48,800 – 48,900 4,011 3,747 39,900 – 40,000 3,232 2,968 42,900 – 43,000 3,494 3,230 45,900 – 46,000 3,757 3,493 48,900 – 49,000 4,019 3,755 $ 40,000 $ 43,000 $ 46,000 $ 49,000 40,000 – 40,100 3,241 2,977 43,000 – 43,100 3,503 3,239 46,000 – 46,100 3,766 3,502 49,000 – 49,100 4,028 3,764 40,100 – 40,200 3,249 2,985 43,100 – 43,200 3,512 3,248 46,100 – 46,200 3,774 3,510 49,100 – 49,200 4,037 3,773 40,200 – 40,300 3,258 2,994 43,200 – 43,300 3,521 3,257 46,200 – 46,300 3,783 3,519 49,200 – 49,300 4,046 3,782 40,300 – 40,400 3,267 3,003 43,300 – 43,400 3,529 3,265 46,300 – 46,400 3,792 3,528 49,300 – 49,400 4,054 3,790 40,400 – 40,500 3,276 3,012 43,400 – 43,500 3,538 3,274 46,400 – 46,500 3,801 3,537 49,400 – 49,500 4,063 3,799 40,500 – 40,600 3,284 3,020 43,500 – 43,600 3,547 3,283 46,500 – 46,600 3,809 3,545 49,500 – 49,600 4,072 3,808 40,600 – 40,700 3,293 3,029 43,600 – 43,700 3,556 3,292 46,600 – 46,700 3,818 3,554 49,600 – 49,700 4,081 3,817 40,700 – 40,800 3,302 3,038 43,700 – 43,800 3,564 3,300 46,700 – 46,800 3,827 3,563 49,700 – 49,800 4,089 3,825 40,800 – 40,900 3,311 3,047 43,800 – 43,900 3,573 3,309 46,800 – 46,900 3,836 3,572 49,800 – 49,900 4,098 3,834 40,900 – 41,000 3,319 3,055 43,900 – 44,000 3,582 3,318 46,900 – 47,000 3,844 3,580 49,900 – 50,000 4,107 3,843 $ 41,000 $ 44,000 $ 47,000 41,000 – 41,100 3,328 3,064 44,000 – 44,100 3,591 3,327 47,000 – 47,100 3,853 3,589 41,100 – 41,200 3,337 3,073 44,100 – 44,200 3,599 3,335 47,100 – 47,200 3,862 3,598 41,200 – 41,300 3,346 3,082 44,200 – 44,300 3,608 3,344 47,200 – 47,300 3,871 3,607 41,300 – 41,400 3,354 3,090 44,300 – 44,400 3,617 3,353 47,300 – 47,400 3,879 3,615 41,400 – 41,500 3,363 3,099 44,400 – 44,500 3,626 3,362 47,400 – 47,500 3,888 3,624 41,500 – 41,600 3,372 3,108 44,500 – 44,600 3,634 3,370 47,500 – 47,600 3,897 3,633 41,600 – 41,700 3,381 3,117 44,600 – 44,700 3,643 3,379 47,600 – 47,700 3,906 3,642 41,700 – 41,800 3,389 3,125 44,700 – 44,800 3,652 3,388 47,700 – 47,800 3,914 3,650 41,800 – 41,900 3,398 3,134 44,800 – 44,900 3,661 3,397 47,800 – 47,900 3,923 3,659 41,900 – 42,000 3,407 3,143 44,900 – 45,000 3,669 3,405 47,900 – 48,000 3,932 3,668 2022 Tax rate charts Chart S: For persons filing single or married/RDP filing separately— If your taxable income is $50,000 or more but not over $125,000 ......your tax is $4,111 plus 8.75% of excess over $50,000 If your taxable income is over $125,000 ......................................................your tax is $10,674 plus 9.9% of excess over $125,000 Chart J: For persons filing jointly, head of household, or qualifying surviving spouse— If your taxable income is $50,000 or more but not over $250,000 .....your tax is $3,847 plus 8.75% of excess over $50,000 If your taxable income is over $250,000.....................................................your tax is $21,347 plus 9.9% of excess over $250,000

1 2023 Form OR-40 Instructions

150-101-040-1 (Rev. 03-20-24) These instructions were updated on March 14, 2024, to correct a line reference on page 27. 2023 Oregon Income Tax Form OR-40 Instructions Full-year Resident Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Check the status of your refund. • View and print letters from us. • Make payments or schedule future payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up. • April 15, 2024 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Find out if you qualify for the new Oregon Kids Credit or the earned income credit. See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC Instructions for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. www.oregon.gov/dor 150-101-040-1 (Rev. 03-20-24)

150-101-040-1 (Rev. 03-20-24) 2 2023 Form OR-40 Instructions

Contents Electronic filing ................................................................. 3 Federal tax law .................................................................. 3 New information ............................................................... 4 Important reminders........................................................ 4 General information......................................................... 5 Do I need to file an Oregon return? .......................... 5 Residency....................................................................... 5 What form do I use?..................................................... 6 Military personnel ....................................................... 6 What if I need more time to file?................................ 6 Penalties......................................................................... 7 2024 estimated tax........................................................ 7 What if I need to change my return after filing?.... 7 General instructions for Form OR-40............................. 9 Check the boxes............................................................ 9 Name and address ....................................................... 9 Filing status..................................................................10 Exemptions...................................................................10 Form OR-40 line instructions ........................................ 13 Additions ..................................................................... 13 Subtractions................................................................. 13 Deductions .................................................................. 15 Oregon tax....................................................................16 Credits—nonrefundable ............................................16 Tax payments .............................................................. 17 Refundable credits ..................................................... 17 Penalties and interest................................................. 22 Amount due ................................................................ 23 Payment options......................................................... 24 Refund.......................................................................... 24 Direct deposit.............................................................. 25 Before you file ............................................................. 26 Avoid processing delays............................................ 27 Tax return mailing addresses................................... 27 Tax tables ......................................................................... 28 Tax rate charts ................................................................. 30 Do you have questions or need help? Internet Phone www.oregon.gov/dor • Download forms, instructions, and publications. • Access additional information not included in these instructions. Revenue Online www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. • Check your refund status. • Make or schedule payments. • View your account history. • Find out how much you owe. • File an appeal. • View letters and your Form 1099-G, if applicable. Email or write questions.dor@dor.oregon.gov preguntas.dor@dor.oregon.gov Oregon Department of Revenue 955 Center St NE Salem OR 97301-2555 • Include your name and daytime phone number. • Include the last four digits of your SSN or ITIN. To request printed forms or publications: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 503-378-4988 or 800-356-4222 Monday–Friday, 7:30 a.m.– 5 p.m. Closed Thursdays from 9–11 a.m. Closed holidays. Wait times may vary. Contact us for ADA accommodations or assistance in other languages. In person Offices are located in Salem, Portland, Eugene, Bend, Gresham, and Medford. Find hours and directions to our offices on our website. Our main office is located at: 955 Center St NE Salem, OR 97301-2555 Taxpayer Advocacy If you think you are not being treated fairly, or if you have a problem or complaint, please contact the Office of the Taxpayer Advocate for assistance. 503-945-8700 TTY: We accept all relay calls. taxpayer.advocate@dor.oregon.gov Photo on cover: Walkway under the South Falls of Silver Falls State Park near Silverton.

150-101-040-1 (Rev. 03-20-24) 3 2023 Form OR-40 Instructions

Electronic filing E-filing is the fastest way to file your return and receive your refund. The speed and accuracy of computers allow electronic returns to be received and processed faster than paper returns, greatly reducing errors and delays. E-filing uses secure technology to ensure the safety of your personal information when it’s sent to the IRS and the Department of Revenue. Oregon participates in the IRS Federal/State E-file pro­ gram. This program allows you to electronically file both your federal and Oregon returns at the same time. If you’ve already filed your federal return, you can still electronically file your Oregon return. If you haven’t tried e-file yet, why not this year? Join more than 1.8 million other Oregon taxpayers who electronically file their Oregon returns. You can take advantage of e-file in one of two ways: 1. Ask your tax preparer. If your tax preparer is an authorized IRS e-file pro- vider, your preparer can electronically file your fed- eral and Oregon returns. Many Tax-Aide and Tax Counseling for the Elderly (TCE) sites set up by the IRS are authorized IRS e-file providers. 2. Use online tax preparation software. You can file your federal and state returns from your home, work, or library computer using Oregon- approved online tax preparation products. Go to our website at www.oregon.gov/dor/e-filing for a list of tax preparation products to use in preparing your federal and Oregon returns. You may be eligible for free e-file. Several tax preparation software providers offer free online electronic tax filing. For free online tax preparation programs, go to www.oregon.gov/dor/e-filing. Federal tax law No extension to pay. Oregon doesn’t allow an exten­ sion of time to pay your tax, even if the IRS allows an extension. Your 2023 Oregon tax is due April 15, 2024. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2022. Oregon exceptions to federal law. Oregon is discon­ nected from the business income deduction allowed by Section 199A of the Internal Revenue Code (IRC). Due to the way Oregon’s returns are designed, no addi­ tion is required. Oregon is also disconnected from IRC Section 139A, the tax exemption for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. Oregon is disconnected from IRC Section 529 tax exemption for earnings on college savings plan funds used for K-12 tuition. Oregon College and MFS 529 Sav­ ings Plans may be used for higher education expenses only. If you based a previous subtraction or credit on contributions that are withdrawn and used for K-12 tuition, you'll have an addition or tax recapture on your Oregon return.

150-101-040-1 (Rev. 03-20-24) 4 2023 Form OR-40 Instructions

New information Oregon Kids Credit. A new refundable tax credit is available to certain taxpayers with a qualifying child age 5 or younger. See instructions for line 37. Paid Leave Oregon benefits. Oregon’s new program providing medical, family, and safe leave began pay­ ing benefits September 3, 2023. Changes to your return may be necessary if you received benefits under the program. See “Subtractions” in Publication OR-17 for more information. National Guard subtraction. Pay for active service in the National Guard can now generally be subtracted from taxable income if the service is authorized by the Governor. This change also applies retroactively to tax years 2021 and 2022. If you received National Guard pay during those years, you will need to amend your return to take advantage of the subtraction. See “Mili­ tary personnel filing information” in Publication OR-17 for more information Casualty loss from state-declared emergency. If you experienced a loss in Oregon due to a state-declared emergency and weren’t able to deduct it on your federal return, you may be able to take a subtraction on your Oregon return. This subtraction applies to tax years 2020, 2021, and 2022, as well as future years. If you meet the requirements for the subtraction for those years, you’ll need to amend your return to take advantage of the subtraction. See “Subtractions” in Publication OR-17 for more information. Pass-through entity elective tax. There is now a sub­ traction available for refunds of the elective tax that were passed through to you and included as income on your federal return. See “Subtractions” in Publication OR-17 for more information. Forest conservation credit. A new tax credit is avail­ able to small forestland owners that choose to create a forest conservation area. The forest conservation area requires restrictions on harvest to be followed for 50 years. See “Carryforward credits” in Publication OR-17 for additional information. Agricultural Employer Overtime Tax Credit. A refund­ able credit is available for employers who pay overtime to their agricultural workers. Employers must apply for the credit in January for overtime wages paid in the prior year, and they must receive notification of the credit amount from the Department of Revenue before the credit can be claimed. See “Refundable credits” in Publication OR-17 for more information. Federal tax liability subtraction. The 2023 federal tax subtraction limit is $7,800 ($3,900 for married filing separately). It may be limited further based on your adjusted gross income (AGI). See instructions for line 10. Important reminders Revenue Online. Revenue Online provides convenient, secure access to tools for managing your Oregon tax account. To set up your Revenue Online account, go to www.oregon.gov/dor and click on “Revenue Online.” Federal return. You must include a copy of your fed­ eral Form 1040 or 1040-SR and Schedules 1 through 3 (if applicable), 1040-X, or 1040-NR with your Oregon return. Without this information, we may disallow or adjust items claimed on your Oregon return. Schedule OR-ASC. If you’re claiming an addition, sub­ traction, tax recapture, or credit using a code listed in Publication OR-CODES, you must include Schedule OR-ASC. Without this information, we may disallow or adjust your claim. Schedule OR-ASC and Publica­ tion OR-CODES are available at www.oregon.gov/dor/ forms or you can contact us to order them. Publication OR-17. See Publication OR-17 for more information about filing and personal income tax laws. It is available at www.oregon.gov/dor/forms. Data security breaches. Tax professionals suffering a data breach associated with tax return preparation must report the breach promptly to us. See our website for additional information.

150-101-040-1 (Rev. 03-20-24) 5 2023 Form OR-40 Instructions

General information Do I need to file an Oregon return? You need to file if your gross income is more than the amount shown below for your filing status. Table 1. Filing thresholds Amounts apply to full-year residents only. Your filing status is: Number of boxes checked on line 17 of return: And your gross income is more than: Dependent Any $1,250* 0 $7,305 Single 1 $8,505 2 $9,705 Married filing jointly 0 $14,605 1 $15,605 2 $16,605 3 $17,605 4 $18,605 0 $7,305 Married filing 1 $8,305 separately 2 $9,305 Head of household 0 $9,165 1 $10,365 2 $11,565 0 $10,180 Qualifying 1 $11,180 surviving spouse 2 $12,180 *The larger of $1,250, or your earned income plus $400, up to the standard deduction amount for your filing status. In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages and you want to claim a refund. • You may qualify to claim a refundable credit. How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of your return. Electronically filed returns are generally received and processed faster. Paper returns must have all required Oregon sched­ ules, proof of tax withheld, and a copy of your federal return included to ensure smooth processing. If you don’t have a federal filing requirement, create a substi­ tute return and check the “calculated using ‘as-if’ fed­ eral return” box on your return. Returns mailed closer to April 15, when we receive the most returns, can take longer to process. Also, returns that require additional review can take more time to process. Typical reasons for additional review include: incomplete documentation, iden­ tity verification needed, claiming the working fam­ ily household and dependent care credit, proof of tax withheld needed, etc. To check the status of your refund, click on “Where’s my refund?” at www.oregon.gov/dor/personal. What income does Oregon tax? An Oregon resident is taxed on all income, including income from outside the state. A nonresident of Oregon is taxed only on income from Oregon sources. Residency Am I a resident, a nonresident, or a part-year resident? • You're a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: — You think of Oregon as your permanent home. — Oregon is the center of your financial, social, and family life. — Oregon is the place you intend to return. • You're still a full-year resident if: — You temporarily moved out of Oregon, or — You moved back to Oregon after a temporary absence. You may also be considered a full-year resident if you spent more than 200 days in Oregon during 2023 or you’re a non-U.S. citizen without permanent resident status. • You’re a nonresident if your permanent home was outside Oregon all year. • You’re a part-year resident if you moved into or out of Oregon during 2023. You're not considered a part- year resident if: — You temporarily moved out of Oregon, or — You moved back to Oregon after a temporary absence.

150-101-040-1 (Rev. 03-20-24) 6 2023 Form OR-40 Instructions

Special-case Oregon residents. If you’re an Oregon resident and you meet all of the following conditions, you’re considered a nonresident for tax purposes: • You maintained a permanent home outside Oregon for the entire year. • You didn't keep a home in Oregon during any part of the year. • You spent less than 31 days in Oregon during the year. Important. A recreational vehicle (RV) isn’t considered a permanent home outside of Oregon. Oregon residents living abroad. You’re considered a nonresident if you’re a qualified individual for pur­ poses of the federal foreign earned income or housing exclusion for U.S. residents living abroad. What form do I use? Use Form OR-40 if you’re a full-year Oregon resident. Use Form OR-40-P if any ONE of the following is true: • You’re a part-year resident. • You’re filing jointly and one of you is a full-year Ore­ gon resident and the other is a part-year resident. • You’re filing jointly and both of you are part-year Oregon residents. • You qualified as an Oregon resident living abroad for part of the year. Use Form OR-40-N if any ONE of the following is true: • You’re a nonresident. • You’re a special-case Oregon resident. • You’re filing jointly and one, or both, of you is a nonresident. • You meet the military personnel nonresident requirements. • You qualified as an Oregon resident living abroad for the entire year. Forms OR-40, OR-40-P, and OR-40-N can be found at www.oregon.gov/dor/forms or you can contact us to order it. Military personnel Nonresidents stationed in Oregon. Oregon doesn’t tax your military pay while you’re stationed in Oregon. File Form OR-40-N if you had other income from Oregon sources or to claim a refund of Oregon tax withheld from your military pay. Military spouses. Federal law does not allow Oregon to tax your wages if you’re in Oregon only to be with your spouse who is stationed in Oregon. If you’re domiciled in Oregon and your spouse is a resident of another state, federal law allows you to choose to be treated for tax purposes as a resident of your spouse’s state. File Form OR-40-N if you had other income from Oregon sources or are claiming a refund of withheld Oregon tax. Residents (or Oregon-domiciled service members) sta­ tioned outside of Oregon. If you meet the requirements for special-case Oregon residents or Oregon residents living abroad, file Form OR-40-N. File Form OR-40 if you don’t meet those requirements. Residents (or Oregon-domiciled service members) sta­ tioned in Oregon. Your pay is subject to tax, although the pay could qualify for certain subtractions. For more information on subtractions available to military per­ sonnel, see Publication OR-17. Military personnel on active service in Oregon are treated as nonresidents for tax purposes if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, regard­ less of where they are domiciled (ORS 316.027). Filing for a deceased person A personal income tax return must be filed for a per­ son who died if the person would have been required to file. See “Do I need to file?” on the previous page. Check the “Deceased” box next to the person’s name on the return. If you have been appointed personal repre­ sentative or you have filed a small estate affidavit, sign the return as ”personal representative.” A surviving spouse must sign if it’s a joint return. If there’s no per­ sonal representative, only the surviving spouse needs to sign a joint return. Note: Oregon has an estate transfer tax on estates val­ ued at $1 million or more. The tax is paid by the estate using Form OR-706, not by the individuals receiving the inheritance. For more information, see the instruc­ tions for Form OR-706. When should I file my return? The filing deadline for calendar year 2023 is April 15, 2024. If you can’t pay your tax by the due date, it’s important to file your return anyway to avoid a late- filing penalty. Returns for fiscal filers are due by the 15th day of the fourth month after the close of their tax year. What if I need more time to file? If you requested a federal extension to file, Oregon will allow the same extension. Don’t include a copy of your federal extension with your Oregon return; keep it with your records. If you need an extension of time to file only your Oregon return, see Publication OR-40-EXT. The due date for filing your return on extension is October 15, 2024.

150-101-040-1 (Rev. 03-20-24) 7 2023 Form OR-40 Instructions

An extension doesn’t mean more time to pay. To avoid interest charges, you must pay all of the tax you expect to owe by April 15, 2024. If you can’t pay all of the tax you expect to owe, pay what you can. You’ll owe interest on any unpaid tax starting April 16, 2024, until the date of your payment. You may also be charged a penalty for failing to pay your tax on time. See “Penalties” and the instructions for line 42. Don’t forget to check the “Extension filed” box on your return when you file. File your return by October 15, 2024. Penalties If you don’t pay all of your tax by April 15, 2024, you may be charged a 5 percent penalty on the unpaid amount, even if you requested an extension to file your return. Oregon doesn’t allow an extension of time to pay tax, even if the IRS does. You’ll be charged a 20 percent penalty for failing to file your return if you file it more than three months after the due date, including extensions. If both penalties apply, the total penalty will be 25 percent of the unpaid tax. Note: If you fail to file returns for three consecutive years by the due date for the third year’s return, includ­ ing extensions, you’ll be charged a penalty of 100 per­ cent of each year’s unpaid tax. For more information about these and other penalties, see the instructions for line 42 and “Interest and Penal­ ties” in Publication OR-17. 2024 estimated tax Estimated tax is the amount of tax (after credits and Oregon tax withheld) you expect will be shown on your return when you file. Do I need to make estimated payments? In most cases, if you expect your return to show that you will owe $1,000 or more in tax after credits and withholding you must make estimated payments. You may need to make estimated payments if: • You're self-employed and don’t have Oregon tax withheld from your income. • You have Oregon Lottery single-ticket winnings of less than $1,500. • Oregon tax isn’t withheld from other types of income (such as pensions, interest, or dividends) and you expect to owe tax of $1,000 or more. • You’re a wage earner but after withholding you still expect to owe tax of $1,000 or more on your 2024 return. You may want to increase the amount your employer withholds from your Oregon wages. For withholding information, go to www.oregon.gov/dor/personal. Oregon and federal estimated tax laws are not the same. See Publication OR-ESTIMATE for more infor­ mation, including: • Detailed instructions for calculating installment payments. • Tax rate charts for 2024. • Installment periods and due dates. • Helpful worksheets and examples. • Payment instructions. You can find Publication OR-ESTIMATE and the pay­ ment voucher, Form OR-40-V, on our website or you can contact us to order them. Interest on underpayment of estimated tax You may owe interest for underpaying your estimated tax if: • The tax on your return after credits and withholding is $1,000 or more; or • You underpaid one or more of your required esti­ mated tax installments. See the instructions for line 43 and Form OR-10 Instruc­ tions for more information. What if I’m self-employed? If you’re self-employed and do business in Mult­ nomah, Clackamas, or Washington counties, you may need to file Form OR-TM. If you’re self- employed and do business in Lane County, you may need to file Form OR-LTD. Go to our website to download the forms, contact us to order either form, or file electronically through Revenue Online at www.oregon.gov/dor. What if I need to change my Oregon return after filing? It depends on what you need to change. Follow these instructions for amending (changing) your return if: • You discover that your income, deductions, or other item(s) were wrong. • You used a form that didn’t match your residency status. • Your filing status wasn’t correct. • The IRS or another state adjusted or audited your return and it affects your Oregon tax. • You have a net operating loss (NOL) carryback.

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• Changes in federal or state income tax laws affect a return you’ve already filed. Don’t amend your Oregon return if: • We made changes to your return and you object to those changes. You must follow the appeal process in the notice we sent you. • You’re filing a protective claim for a refund. Use Form OR-PCR, which is available on our website or you can contact us to order it. There’s a time limit for filing an amended return to claim a refund. See the instructions for lines 46 through 50, and for more information, see “Amended returns” in Publication OR-17. How do I amend my 2023 return? General instructions • Complete the return as it should’ve been filed, includ­ ing adjustments we made. • Check the “Amended return” box on the first page. • In the “Amended statement” space, provide the return line number and reason for each change. • Use the Amended worksheet, below, to figure your amended tax due or refund. • If you’re amending your federal return or a return you filed with another state, include a copy of those amended returns with your amended Oregon return. If you’re only amending your Oregon return, include a copy of your original federal return. Don’t include a copy of your original Oregon return. Residency. Use the form that matches your residency status for the year you’re amending, even if your origi­ nal return was filed on a different form. Mailing address. Use your current address. Adjustment made by the IRS or another state. Include a copy of the corrected federal or other state return or audit report. Electronically file your amended return. You can now electronically file your Oregon amended return, if your chosen software supports filing an amended federal return. You will need to contact your software provider to find out if they support filing an amended federal return. NOL carryback. Enter the loss year in the NOL-year box on the first page of the return. If you’re carrying back an NOL from more than one year, file a separate amended return for each NOL year. In the “Amended statement” space, tell us the section number of the IRC or Oregon Revised Statute (ORS) that allows you to carry the NOL(s) back to the 2023 tax year. See “Net operating losses for Oregon” in Publication OR-17 for more information. What if I need to change a return I filed for an earlier year? Refer to the instructions for the tax year you need to amend. Visit our website or you can contact us if you need the form and instructions for a different year. How long will it take to process my amended return? It may take six months or longer to process your amended return. Amended worksheet Use this worksheet to figure your amended refund or tax to pay. Keep the completed worksheet with your records. Note: If we adjusted any of the amounts on your original 2023 return, use the adjusted amounts. 1. Amended tax after standard and 1. carryforward credits (amended Form OR-40, line 31). 2. Amended total payments and 2. refundable credits (amended Form OR-40, line 40). 3. Line 1 minus line 2. If less than 0, 3. use a minus sign. 4. Refund you already had for 2023 4. (original Form OR-40, line 47; Form OR-40-N, line 72; or Form OR-40-P, line 71). If you didn’t have a refund, enter 0. 5. Amended tax to pay or refund. 5. Line 3 plus line 4. If less than 0, you have a refund; go to line 6. If more than 0, you owe tax; skip to line 8. 6. Refund applications that weren’t 6. on your original return (amended Form OR-40, lines 48 through 51), up to the refund amount on line 5. Don’t use a minus sign. Example: If line 5 is –$500, you may apply up to $500 on your amended Form OR-40, lines 48 through 51. 7. Net amended refund. Line 5 plus 7. line 6. This can’t be more than 0. 8. Penalty and interest on amended 8. tax to pay (amended Form OR-40, line 45). 9. Total amended amount you owe. 9. Line 5 plus line 8. 10. Payments made on or after April 10. 15, 2024. 11. Total amount to pay with your 11. amended return. Line 9 minus line 10.

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General instructions for Form OR-40 Step 1: Complete your federal return Complete your federal return first. Do this even if you aren’t required to file a federal return. You must use the information from your federal return to com­ plete your Oregon return. You must include a copy (front and back) of your federal Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable), or 1040-NR with your Oregon return. If you're amending your Oregon return and your federal return, include a copy of Form 1040-X and an amended Form 1040 or 1040-SR with Schedules 1 through 3 (if applicable). If you don’t provide a copy of your federal return, we may adjust or deny your Oregon subtractions, deductions, and credits. Include federal Schedules 1 through 3 (if applicable); don’t include any other fed­ eral schedules unless otherwise instructed. We may ask you for copies of other schedules or additional information later. Oregon registered domestic partners (RDPs): To cor­ rectly determine your Oregon tax liability, you must complete a federal income tax return as if you were fil­ ing as married filing jointly or married filing separately. Check the “Calculated using ‘as if’ federal return” box on your Oregon return. For more information on how to file as an RDP, go to www.oregon.gov/dor and search for “RDP.” Step 2: Select the appropriate Oregon form To decide which form to use, see “What form do I use?” in the “General information” section. Step 3: Fill out the Oregon return Use blue or black ink only for easier reading and faster processing. The equipment used to scan documents and checks can’t read gel ink or certain colors, and using them will delay the processing of your return. Fiscal-year filers Write the ending date of your fiscal year in the “Fiscal year ending” box on the return. Check the boxes Amended return If you’re amending your 2023 return, check this box. See “What if I need to change my return after filing?” in the “General information” section for instructions. Calculated using “as if” federal return Check this box if: • You’re filing as an Oregon RDP. • Your filing status is married filing separately for Ore­ gon only because you and your spouse don’t have the same residency status. • You didn’t file a federal return. Short-year tax election If you’re filing a short-year return due to a bankruptcy, check this box and write the ending date in the “Fiscal year ending” box. Extension filed Check this box if you requested an extension to file your return. See “What if I need more time to file?” in the “General information” section and Publication OR-40-EXT for more information. Form OR-24 Check this box if you’re deferring gain on like-kind prop­ erty that was exchanged or converted. You will report the gain to Oregon when it’s reported on your federal return (federal Form 8824). You must include Form OR-24 with your Oregon return or provide it electronically through your Revenue Online account at www.oregon.gov/dor. Form OR-243 Check this box if you are attaching Form OR-243, Claim to Refund Due a Deceased Person. Federal Form 8379 Check this box if you’re requesting your joint refund be apportioned and you are attaching federal Form 8379. For additional information, see “Injured spouse refund claims” in Publication OR-17. Federal Form 8886 Check this box if you filed federal Form 8886, Reportable Transaction Disclosure Statement. Disaster relief If you were affected by a presidentially-declared natu­ ral disaster in 2023, check this box. Name and address Type or clearly print your own and, if married, your spouse's name, date of birth, and Social Security num­ ber (SSN). Enter your spouse’s information even if you’re filing as married filing separately. If you’re fil­ ing for someone who died in 2023 or 2024, check the “Deceased” box next to their name.

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SSN. You must provide your SSN per Section 405, Title 42, of the United States Code. We will only use it to establish your identity for tax purposes. Follow these instructions if you’ve filed previous tax returns using an individual taxpayer identification number (ITIN) and this is your first year filing using your new SSN: • Check the “First time using this SSN” box. • Write your previous identification number on the first line of the “Amended statement” space on page 8 of your return. ITIN. If the IRS assigned you an ITIN because you don’t qualify for an SSN, enter your ITIN wherever an SSN is requested. Refunds will not be issued without a valid SSN or ITIN. If you don’t have an ITIN, you must request one from the IRS. To get an ITIN application (federal Form W-7), go to www.irs.gov or call 800-829-1040. If you’ve applied for an ITIN but you haven’t received it yet: • Check the “Applied for ITIN” box. • File your return by April 15, 2024. • Don’t include Form W-7 with your return. Keep it with your records. • Once the IRS issues your ITIN, mail a copy of your ITIN letter to us at PO Box 14999, Salem OR 97309-0990. Mailing address: Enter your current mailing address. This is where we’ll send any refund or correspondence, if needed. Enter your current daytime phone number. Filing status Check the box next to your filing status. 1 – 5 Generally, you must use the same fil­ ing status for your Oregon and federal returns. Choose only one filing status. Exception for Oregon RDPs. As an Oregon RDP, you’re not eligible to use the single filing status on your Ore­ gon return. For Oregon, you’re generally required to use married filing jointly or married filing separately. For more information, go to our website, see “Filing an Oregon return” in Publication OR-17, or contact us. Exceptions for married persons who filed a joint fed­ eral return when each person had a different resi­ dency status. Use Table 2 to determine which return form to use if you file a joint return or separate returns for Oregon. Table 2. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full- year resident OR-40-P How to file separate returns for Oregon If you’re filing a joint federal return but separate Oregon returns, enter your spouse’s name, SSN, and date of birth on your return. Report your own share of federal AGI and deductions. Also, report your share of any Oregon additions or subtractions using this for­ mula to determine your percentage: Your share of federal AGI Your percentage = Joint federal AGI (not to exceed 100%) Check the “Calculated using ‘as if’ federal return” box on your return. You must include the following forms with both Oregon returns: • A federal Form 1040, 1040-SR, or 1040-NR with Sched­ ules 1 through 3 (if applicable) prepared as if you had filed as married filing separately. • A copy of the joint Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable) that you actually filed with the IRS. If the federal form you filed is an amendment, include Form 1040-X and federal returns as amended for your actual and “as if” returns. If possible, mail both spouses’ Oregon returns in the same envelope. Don’t staple the returns together. For more information, see “Filing status” in Publication OR-17. Exemptions Yourself and spouse. If you can’t be 6a & 6b claimed as a dependent on someone else’s return, check the “Regular” exemption box below line 6a; otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actually claim you as a dependent. Check the “Regular” exemption box below line 6b if no one else can claim your spouse as a dependent and you’re filing as: • Married filing jointly. • Married filing separately and your spouse has no income.

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Otherwise, check the "Someone else can claim you as a dependent" box, even if the other person doesn’t actu­ ally claim your spouse as a dependent. Severely disabled. Did you or your spouse have a severe disability at the end of 2023? If so, you can claim an additional exemption. This is different from the dis­ abled child exemption. You may qualify for and claim the severely disabled exemption even if someone else can claim you as a dependent. You're considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet. • You permanently lost the use of both hands. • You’re permanently blind. • You have a permanent condition that, without special equipment or outside help, limits your ability to earn a living, maintain a household, or transport yourself. • You're unable to earn a living due to a permanent condition or an impairment of indefinite duration. If you have a severe disability, your physician must write a letter describing it. Keep the letter with your records in case we request a copy. If you qualify, check the “Severely disabled” exemption box below line 6a. If your spouse qualifies, check the “Severely disabled” exemption box below line 6b. Total exemptions for you and spouse. Enter the total number of exemptions claimed for yourself on line 6a and for your spouse on line 6b. All dependents. Enter your dependents’ infor­ 6c mation in order from youngest to oldest. For each dependent, list their first name, last name, rela­ tionship code (see Table 3), SSN, and date of birth. In most cases, you will list the same dependents you claimed on your federal return. You can list up to three dependents on the return. If you have more than three dependents, fill out Schedule OR-ADD-DEP for your remaining dependents. If you have more than eight dependents, fill out and include an additional Schedule OR-ADD-DEP. Do not list the same dependents on your return and on Schedule OR-ADD-DEP. Include Schedule OR-ADD-DEP with your return. You can download the schedule from our website or contact us to order it. On line 6c, enter the total number of your depen­ dents, including the number from line 1 of Schedule OR-ADD-DEP. Table 3. Relationship codes Title Code Relationships included Child SD Biological or adopted child. Stepchild SC Stepchild. Foster child FC Foster child. Sibling SB Sibling, half sibling, stepsibling, or sibling-in-law. Parent PT Parent, stepparent, or parent-in-law. Spouse SP Spouse or RDP. Grandparent GP Grandparent or great-grandparent. Grandchild GC Grandchild or great-grandchild. Aunt/Uncle AU Parent's sibling or the sibling's spouse or RDP. Niece/Nephew NN Sibling's child, grandchild, or other descendant. Other relative OR Child's spouse or RDP, cousin, or other related individual. No relation NR Unrelated qualifying individual. Children with a disability. You may be entitled 6d to an additional personal exemption for your dependent child who has a qualifying disability. To qualify, all of the following must be true: • Your child (age 21 or younger) qualified as your dependent for 2023. • Your child was eligible for early intervention services or special education as defined by the State Board of Education of the state where the child attends school. • Your child had an eligible disability as of Decem­ ber 31, 2023 under the federal Individuals with Dis­ abilities Education Act. Eligible disabilities include: — Autism spectrum disorder. — Communication disorder. — Deafblindness. — Developmental delay. — Emotional disturbance. — Hearing impairment (including deafness). — Intellectual disability. — Orthopedic impairment. — Other health impairment. — Specific learning disability. — Traumatic brain injury. — Visual impairment (including blindness).

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Each year, you must be able to provide an eligibility statement confirming that your child has been diag­ nosed with one of the disabilities listed above and a cover sheet from one of the following: • The child’s Individualized Education Program (IEP). • The child’s Individualized Family Service Plan (IFSP). Keep the statement and cover sheet with your records. Check the “Check if child has a qualifying disability“ box next to the name of each child with a qualifying disability. Enter the total number of children with a qualifying disability, including the number of children on line 2 of Schedule OR-ADD-DEP, on line 6d. Total exemptions. Add lines 6a through 6d and 6e enter the total on line 6e. This is your total num­ ber of exemptions.

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7 8 Form OR-40 line instructions Don’t enter cents. You must round off cents to the near­ est dollar. For example, $99.49 becomes $99, and $99.50 becomes $100. If you don’t round entries to the nearest dollar, there may be small variations in the totals we use. Federal adjusted gross income (AGI). Enter your federal AGI from Form 1040, 1040-SR or 1040-NR, line 11; or Form 1040-X, line 1C. You must include a copy (front and back) of your fed­ eral return, including Schedules 1 through 3 (if applicable), with your Oregon return. This helps us verify your income and process your return faster. If you don’t include your federal return with your Oregon Form OR-40, items claimed on your return may be adjusted or denied. Additions Total additions from Schedule OR-ASC. Enter the total from Schedule OR-ASC, line A5. Include the schedule with your return. For more information about additions, see Sched­ ule OR-ASC and OR-ASC-NP Instructions or “Additions” in Publication OR-17. Subtractions 2023 federal tax liability subtraction. Complete 10 the following worksheet to determine your fed- eral tax liability subtraction for 2023. Carefully follow the instructions. Don’t confuse your federal tax liabil- ity on your federal return with the federal tax with- held on a Form W-2. They aren’t the same. RDPs and those filing as “married filing separately for Oregon only,” use amounts from your actual federal return(s), not your “as if” return. The federal tax liability subtraction limit for 2023 is $7,800 ($3,900 if married filing separately). The subtraction is further limited by the AGI phase-outs shown in Table 4. Note: Use the worksheet(s) in the “Federal income tax liability” section of Publication OR-17 if any of these situations apply: • You’re amending your 2023 federal return or we cor­ rected the federal tax liability subtraction on your original 2023 Oregon return. • A prior year’s federal return was audited or amended, resulting in additional federal tax paid or refunded in 2023. • You paid income tax to a foreign country. • You filed your federal return on Form 1040-NR. • You reported recapture taxes or credits on your fed­ eral return. Caution: Don’t include any of the following in your calculation: • Self-employment tax. • Social Security and Medicare tax on tips. • Household employment taxes. • Penalties or interest. Federal tax worksheet Note: All references to federal Form 1040 in this work­ sheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. This also includes versions of these forms in other languages. Instructions for Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonrefund­ able credits but before other taxes. This is found on Form 1040, line 22. Line 2: If you need to repay any of the advance pre­ mium tax credit that you received during the year, enter the repayment amount claimed on Form 1040, Schedule 2, line 2. If not, enter 0. Line 3: Line 1 minus line 2. If the results are less than 0, enter 0. Line 4: Enter the total of any other taxes, plus any addi­ tions to tax that include only income tax, such as tax credit recaptures, from Form 1040, Schedule 2, lines 8, 16, and 17. Also include the amount reported on Schedule 2, line 10, only if you’re repaying a 2008 first- time homebuyer credit and filing federal Form 5405. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any addi­ tions to tax from Schedule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter 0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allowable premium credit regardless of any excess advance pay­ ments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund­ able credits that must be subtracted from your federal income tax liability.

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Line 9: Line 5 minus line 8. If less than 0, enter 0. This is your federal income tax liability after refundable cred­ its (other than EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 4. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Federal tax liability subtraction worksheet 1. Federal tax liability (Form 1040 1. line 22). 2. Excess advance premium tax 2. credit (Form 1040, Schedule 2, line 2). 3. Line 1 minus line 2. (If less than 0, 3. enter 0). 4. Other taxes (see instructions). 4. 5. Line 3 plus line 4. 5. 6. American Opportunity credit 6. (form 1040, line 29). 7. Premium tax credit (Form 8962, 7. line 24). 8. Line 6 plus line 7. 8. 9. Line 5 minus line 8. (If less than 0, 9. enter 0). 10. Maximum subtraction amount 10. from Table 4. 11. Smaller of line 9 or line 10. 11. This is your federal tax liability subtraction. Are you amending your 2023 return? Usually you can't change your federal tax subtraction on your amended return. See the “Federal income tax liability” section in Publication OR-17 for more information before making changes to this subtraction. Table 4. Federal tax liability subtraction AGI phaseout And your Then your federal adjusted maximum gross income is: allowable tax liability If your filing At But less subtraction status is: least— than— is: Single 0 $125,000 $7,800 $125,000 $130,000 $6,250 $130,000 $135,000 $4,700 $135,000 $140,000 $3,100 $140,000 $145,000 $1,550 $145,000 or more 0 Married filing separately 0 $125,000 $3,900 $125,000 $130,000 $3,125 $130,000 $135,000 $2,350 $135,000 $140,000 $1,550 $140,000 $145,000 $775 $145,000 or more 0 Married filing jointly; or Head of household; or Qualifying surviving spouse 0 $250,000 $7,800 $250,000 $260,000 $6,250 $260,000 $270,000 $4,700 $270,000 $280,000 $3,100 $280,000 $290,000 $1,550 $290,000 or more 0 11 Social Security and tier 1 Railroad Retirement Board benefits income. Enter the amount from federal Form 1040 or 1040-SR, line 6b. If you have tier 2, windfall/vested dual, or supplemental Railroad Retirement Board benefits, these are subtracted in Sec­ tion B of the Schedule OR-ASC, using code 330. For more information, see this topic under “Income” in Publication OR-17. 12 Oregon income tax refund included in federal income. Enter your Oregon state income tax refund from federal Form 1040 or 1040-SR, Schedule 1, line 1. Don’t include local, county, or other states’ tax refunds. 13 Total subtractions from Schedule OR-ASC. Other subtractions not explained here are claimed on Schedule OR-ASC. Enter the total from Schedule OR­ ASC, line B7. Include the schedule with your return. For more information about subtractions, see Schedule OR-ASC and OR-ASC-NP Instructions or “Subtrac­ tions” in Publication OR-17.

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Deductions In general, you can claim Oregon itemized deductions or the standard deduction, whichever is larger, but not both. See the exceptions below for: • Dependents who can be claimed on another taxpay­ er’s return. • Non-U.S. citizens without permanent resident status. • Spouses filing separate returns. Itemized deductions. If you’re itemizing your 16 deductions for Oregon, enter the amount from Schedule OR-A, line 23. Note: Don’t enter your federal itemized deductions; the amount allowed for Oregon may be different. You can download Schedule OR-A and the instructions from our website or you can con­ tact us to order it. If you’re not itemizing, enter 0. Standard deduction. Generally, your standard 17 deduction is based on your filing status, as shown in Table 5: Table 5. Standard deduction Single $2,605 Married filing jointly $5,210 Married filing separately • If spouse claims standard deduction • If spouse claims itemized deductions $2,605 0 Head of household $4,195 Qualifying surviving spouse $5,210 Standard deduction—Age 65 or older, or blind. If you or your spouse turned age 65 by January 1, 2024, or were blind at the end of the tax year, you're entitled to a larger standard deduction. If you or your spouse are permanently blind, you may also qualify for the severely disabled exemption credit; see the instructions for lines 6a and 6b. Check the applicable boxes below line 17, then multiply the number of boxes checked by: • $1,200 if single or head of household filing status; or • $1,000 for all other filers. Add this amount to the standard deduction for your fil­ ing status from Table 5. Enter the total on line 17. Example: Joni and Mike are married. By January 1, 2024, Joni had turned 61 and Mike had turned 67. Joni files the return as the primary taxpayer. She checks the box for spouse age 65 or older and adds $1,000 to their standard deduction. Joni enters $6,210 ($5,210 + $1,000) on line 17. Standard deduction—Dependents who can be claimed on another taxpayer’s return. If someone else can claim you as a dependent, your standard deduction is limited to the larger of: • Your earned income plus $400, up to the maximum allowed for your filing status (see Table 5); or • $1,250. This limit applies even if the other person doesn't actu­ ally claim you as a dependent on their return. If you’re a dependent and not married, use the follow­ ing worksheet to figure your standard deduction. If you’re a dependent and married, see “Deductions and modifications” in Publication OR-17. Standard deduction worksheet for single dependents 1. Enter your earned income (see 1. definition below). 2. Additional $400. 2. $400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $1,250 5. Enter the larger of line 3 or line 4. 5. 6. Basic standard deduction for 6. $2,605 single. 7. Enter the smaller of line 5 or line 7. 6. 8. If you turned age 65 by 1/1/2024, 8. enter $1,200. Otherwise, enter 0. 9. If you’re blind, enter $1,200. 9. Otherwise, enter 0. 10. Add lines 7, 8, and 9. This is your 10. standard deduction. Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually performed, and any part of a scholarship or fellowship grant you received that is included in your gross income. Standard deduction—Non-U.S. citizen without per­ manent resident status. Your standard deduction is $0, but you may claim itemized deductions. Standard deduction—Married filing separately. The standard deduction for married individuals filing sep­ arately is $0 if one spouse itemizes. This applies even if the standard deduction is more than your itemized deductions.

150-101-040-1 (Rev. 03-20-24) 16 2023 Form OR-40 Instructions

20 Oregon tax Tax tables. Use the tax tables to find your tax if your taxable income on line 19 is less than $50,000. Find the range for your taxable income, then locate your tax in Column S or Column J: • Use Column S if your filing status is single or mar- ried filing separately. • Use Column J if your filing status is married filing jointly, head of household, or qualifying surviving spouse. Tax rate charts. If your taxable income on line 19 is $50,000 or more, calculate your tax using the formula in the tax rate chart for your filing status. • Use Chart S if your filing status is single or married filing separately. • Use Chart J if your filing status is married filing jointly, head of household, or qualifying surviving spouse. Example 1: Emily, a single taxpayer, has taxable income of $19,525. She uses Column S in the tax tables to find the tax on income that is at least $19,500 but less than $19,600. Emily enters $1,425 on line 20. Example 2: Daniel and Madison are filing a joint return. Their Oregon taxable income is $75,500. They use the formula in Chart J to calculate their tax as follows: Tax on the first $50,000 $3,805 (from the chart) Oregon taxable income $75,500 Minus the first $50,000 – 50,000 Excess over $50,000 $25,500 Multiply excess by 8.75% x 0.0875 Tax on excess over $50,000 + $2,231 Total Oregon tax $6,036 Other tax methods. If you qualify, you can compute your Oregon tax using any of the following methods: Farm income averaging method. Did you have income from a farm? You may use the federal farm income averaging method to compute your Oregon tax even if you didn’t use farm income averaging on your federal return. Use Schedule OR-FIA-40 to compute the Ore­ gon tax using this method. You can download it from our website or contact us to order it. If you use Schedule OR-FIA-40 to calculate your tax, enter the tax amount from Schedule OR-FIA-40, line 24 and check box 20a. Don’t include Schedule OR-FIA-40 with your return. Keep it with your records. Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming business in which you held at least a 10 percent ownership interest? If so, you may be eligible for a reduced tax rate on the net capital gain from the proceeds. Use Schedule OR­ FIA-40 to compute the Oregon tax using this method. You can download it from our website or contact us to order it. Enter the tax amount from Publication OR-FCG, line 9 and check box 20b. Don’t include Publication OR-FCG with your return. Keep it with your records. Oregon qualified business income reduced tax rate. Did you have business income from a sole proprietor­ ship, partnership, or S corporation in which you mate­ rially participated? If so, you may qualify to use this reduced tax rate. For details, see Schedule OR-PTE-FY on our website or you can contact us to order it. Note: If you elect to use this reduced tax rate for quali­ fying income, the election is irrevocable and must be made on your original return. An original return includes an amended return filed on or before the due date, including extensions. You can’t change the elec­ tion after your original return has been filed. If you use Schedule OR-PTE-FY to calculate your tax, enter the tax amount from Schedule OR-PTE-FY, line 14a and check box 20c. Include the schedule with your Oregon return or submit it at www.oregon.gov/dor; click the link for Revenue Online and log in or create an account. Interest on certain installment sales. Did you 21 have installment sales that required you to pay interest on the deferred tax liability for federal pur­ poses? If so, you must also compute interest for Oregon using the same method as for federal. The annual inter­ est rate is 6 percent for 2023 and 8 percent for 2024. Total tax recaptures from Schedule OR-ASC. 22 All tax recaptures are claimed on Schedule OR­ ASC. Enter the total from Schedule OR-ASC, line C5. Include Schedule OR-ASC with your return. Credits—Nonrefundable Nonrefundable credits can’t be more than your Ore­ gon tax liability. Carryforward credits allow you to claim unused amounts in a later year. Standard cred­ its can’t be used in any other year. For more informa­ tion about these and other nonrefundable credits, see Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17.

150-101-040-1 (Rev. 03-20-24) 17 2023 Form OR-40 Instructions

25 Exemption credit. If your federal AGI is more than $200,000 ($100,000 if your filing status is single or married filing separately), enter 0; otherwise, use this worksheet to figure your exemption credit. Exemption credit worksheet 1. If your federal AGI is more than $100,000 and your filing status is single or married filing separately, or more than $200,000 for all others, enter 0; otherwise, enter the number of “regular” exemptions from lines 6a and 6b plus the number of dependents from line 6c. 1. 2. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of “Severely disabled” exemptions from line 6a and 6b. 2. 3. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of exemptions for children with a qualifying disability from line 6d. 3. 4. Add lines 1, 2, and 3. 4. 5. Line 4 times $236. This is your exemption credit. 5. Political contribution credit. If your federal AGI 26 isn’t more than $75,000 ($150,000 if you’re filing a joint return), you may claim a standard credit of up to $50 ($100 if you’re filing a joint return) for cash contri­ butions you made during 2023 to any: • Qualified political party. • Qualified candidate for federal, state, or local elective office, or the candidate’s campaign, for an election in Oregon. • Political action committee certified in Oregon. Total standard credits from Schedule OR-ASC. 27 All other standard credits are claimed on Sched­ ule OR-ASC. Enter the total from Schedule OR-ASC, line D16. Include Schedule OR-ASC with your return. Total carryforward credits from Schedule OR­ 30 ASC. All carryforward credits are claimed on Schedule OR-ASC. Enter the total from Schedule OR­ ASC, line E9. Include Schedule OR-ASC with your return. Oregon income tax withheld. Enter the total 32 Oregon tax withheld from your wages and other income. State tax withheld from wages is shown in box 17 of Form W-2 and in the State area of various 1099 forms. Don’t include FICA (Social Security) tax with­ held or tax withheld from your wages by other states. You must include a legible, unaltered copy of your Form W-2 from each job and any Form 1099 showing Oregon income tax withheld with your Oregon return. If you don’t have a Form W-2 or 1099, you must provide other proof of Oregon tax withheld. Proof may include a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2024, we can only accept a Form W-2 or 1099 as proof. If you have tax to pay, you may want to increase the amount your employer or other payer withholds from your wages. For withholding information, go to www.oregon.gov/dor. Amount applied from your prior year’s tax 33 refund. Enter the amount of any prior-year refund you applied as a payment of 2023 estimated tax. If we adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your applied refund amount, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. Estimated tax payments for 2023. Enter the 34 total estimated tax payments you made before April 15, 2024. For calendar-year filers, these payments were due April 18, 2023; June 15, 2023; September 15, 2023; and January 16, 2024. If you're filing on extension, include any extension payment made on or before the due date (without extensions), but don't include any payments made after April 15, 2024. Don’t include the amount reported on line 33. If you need to verify your estimated payments, log into or create your Revenue Online account at www.oregon.gov/dor or contact us. Refundable credits Refundable credits reduce the amount of tax that you owe. Any amount that is more than your tax liability is treated the same way as an overpayment. Refund­ able credits not explained here are claimed on Schedule OR-ASC. For more information about refundable credits, see Schedule OR-ASC and OR-ASC-NP Instructions or “Credits” in Publication OR-17. Tax payments from a pass-through entity (PTE). 35 If you're an owner of a PTE that paid estimated tax for its owners, enter the amount of tax payments made by the PTE on your behalf.

150-101-040-1 (Rev. 03-20-24) 18 2023 Form OR-40 Instructions

36 37 Note: Do not include the PTE elective tax (PTE-E tax) credit on this line. Refer to Publication OR-17 for more information about the PTE-E tax credit. Earned income credit. Oregon’s earned income credit is a percentage of the earned income tax credit (EITC) claimed on your fed- eral return. The percentage is based on the age of your youngest dependent at the end of the tax year. Note to RDPs: You may claim this credit if you would otherwise qualify for the EITC using your “as if” fed- eral return. Note: If you can't claim the federal EITC or can only claim a portion of the federal EITC because you, your spouse, or your child(ren) do not have an SSN that is valid for work or are using an ITIN, you may qualify for the earned income credit for ITIN filers. See Sched­ ule OR-EIC-ITIN Instructions or Publication OR-17 for additional information. Use Table 6 and the following worksheet to figure your credit. Table 6. EIC percentage Age of youngest dependent at end of tax year Percentage of federal EITC At least 3 years old, or no dependents 9 percent (0.09) Younger than 3 12 percent (0.12) Earned income credit worksheet 1. Enter your federal EITC from Form 1040 or 1040-SR, line 27. 2. Enter the percentage from the table as a decimal. 1. 2. 3. Line 1 times line 2. This is your 3. Oregon earned income credit. Oregon Kids Credit. The Oregon Kids Credit is available for low-income taxpayers with depen- dents age 5 or younger on their Oregon tax return. Eligibility. To be eligible for the Oregon Kids Credit, you must: 1. Have a filing status of single, married filing jointly, head of household, or qualifying surviving spouse. Those filing as married filing separately do not qual­ ify for this credit. 2. Have dependents age 5 or younger at the end of 2023 listed on your Oregon return.* 3. Have a qualifying income of under $30,000, includ­ ing Oregon additions and subtractions. See work­ sheet instructions below for more information. Use the Oregon Kids Credit worksheet to figure your credit. Credit amount. The Oregon Kids Credit is up to $1,000 per qualifying dependent. * Note for divorced, separated, or unmarried parents: Special rules apply when the exemption for a child is released by the parent with whom the child lives for most of the year to the other (noncustodial) parent: • If a child is listed as a dependent on your Oregon return only because the custodial parent released the child’s exemption to you, the child doesn’t qualify for this credit. • A child whose exemption was released to the non- custodial parent, but who otherwise qualifies as your dependent, qualifies for this credit even if the child isn’t listed as your dependent on your Oregon return due to the released exemption. Instructions for Oregon Kids Credit worksheet. Line 3. This is your qualifying income. If this line is $30,000 or more, you can’t claim the Oregon Kids Credit. Line 10. Your qualifying income includes losses deducted from your federal AGI on your Form 1040, for losses over $20,000. Enter losses claimed on your Form 1040 and Schedule OR-ASC (using subtraction codes 321, 355, 356, or 357), as listed on lines 10a through 10g, and the total of those losses on 10h. If the amount shown on the referenced Form 1040 line is not a loss, do not enter it on the worksheet. Enter all losses as positive numbers. Example 1. Colten reported additional income from rental real estate on his Form 1040, Schedule 1, line 5 of $8,000. He also reported his farm loss on his Form 1040, Schedule 1, line 6 of $6,000. Colten enters 0 on line 10d for rental real estate, as he did not have a loss reported on his Form 1040 on Schedule 1, line 5. He enters 6,000 on line 10e, as he did report a farm loss on his Form 1040, Schedule 1, line 6. Colten enters his total losses of $14,000 on line 10h. He enters 0 on line 10, since his total losses minus 20,000 are less than 0. Example 2. Michaela reported a business loss on her Form 1040, Schedule 1, line 4 of ($15,500). She would enter $15,500 on line 10b of the worksheet. She had a rental real estate loss reported on her Form 1040, Sched­ ule 1, line 5 of ($8,000). She enters $8,000 on line 10d of the worksheet. She has no other losses reported. Michaela enters her total losses of $23,500 on line 10h. She enters $3,500 on line 10 (23,500 - 20,000). Line 10b. If you claimed a subtraction using code 359 or 385, compare your subtraction amount to the income reported on Form 1040, Schedule 1, line 3. If the subtrac­ tion is less than your income, you don't have a loss; skip line 10b. Otherwise, subtract the income amount from the subtraction amount and enter the result on line 10b.

150-101-040-1 (Rev. 03-20-24) 19 2023 Form OR-40 Instructions

Oregon Kids Credit Worksheet Part A: Credit amount 1. Enter your income after subtractions 1. from Form OR-40, line 15. 2. 2a. Did you claim any losses on Yes No your Form 1040? 2b. Did you enter an amount Yes No greater than 0 on your Form OR-40, line 13? If you answered no to both 2a and 2b, enter 0 on line 2 and continue. Do not complete Part B: Loss amount. If you answered yes to either 2a or 2b, complete Part B: Loss amount and enter the total from line 10 on line 2. 2. 3. Line 1 plus line 2 3. Is line 3 $30,000 or more? If yes, STOP. You can't claim the Oregon Kids Credit. If no, continue to line 4. 4. Phaseout amount 4. $25,000 5. Line 3 minus line 4. If less than zero, 5. enter 0. 6. Line 5 divided by $5,000. Round to two 6. decimal places. 7. Credit amount before phaseout: 7a. Number of dependent 7a. children age five or younger at the end of 2023. Don't enter more than 5. 7b. Maximum credit 7b. $1,000 amount per child. Line 7a multiplied by line 7b. 7. 8. Credit reduction. Line 6 multiplied by 8. line 7. 9. Line 7 minus line 8. This is your 9. Oregon Kids Credit. Enter the amount from line 9 on Form OR-40, line 37. Part B: Loss amount 10. Enter your losses, as positive amounts, from: 10a. Capital (loss) from 10a. Form 1040, line 7 10b. Business (loss) from 10b. Form 1040, Schedule 1, line 3. If you claimed Oregon subtraction code 359 or 385, see instructions. 10c. Other (loss) from Form 10c. 1040, Schedule 1, line 4. 10d. Rental real estate, etc. 10d. (loss) from Form 1040, Schedule 1, line 5. 10e. Farm (loss) from Form 10e. 1040, Schedule 1, line 6. 10f. Net operating loss 10f. from Form 1040, Schedule 1, line 8a. 10g. Losses from Schedule 10g. OR-ASC, Section B (codes 321, 355, 356, and 357). 10h. Add lines 10a through 10h. 10g. Line 10h minus 20,000. 10. If less than zero, enter 0. Enter the amount from line 10 on Part A, line 2. 38 Kicker (Oregon surplus) credit. The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. The Oregon Department of Administrative Services deter- mines whether there is a surplus and the amount to be returned to taxpayers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refund- able tax credit. If there’s no surplus, there’s no kicker. Eligibility. To be eligible for a kicker, you must: 1. File your 2022 Oregon return before you file your 2023 return. 2. Have an Oregon tax liability for 2022. 3. File a 2023 Oregon return, even if you don’t otherwise have a filing requirement. Kicker amount. In general, your kicker is a percentage of your total Oregon personal income tax liability for the prior year, as adjusted or amended. Your total per­ sonal income tax liability is your Oregon income tax before all payments or credits other than the credit for taxes paid to another state. For 2023, your kicker is 44.28 percent of your 2022 total Oregon personal income tax liability.

150-101-040-1 (Rev. 03-20-24) 20 2023 Form OR-40 Instructions

Amended 2022 returns. If your 2022 return is amended or adjusted after you file your 2023 return, we will auto­ matically adjust your kicker amount. If the changes to your 2022 return reduce your tax liability, your kicker amount may be reduced as well. If so, we may send you a bill for the amount of the reduction along with any interest or penalty. Kicker donation. Personal income taxpayers may elect to donate their kicker to the Oregon State School Fund for public K-12 education. This election is irrevocable after the due date of the original return. When you file your return, you must choose to do one of the following: • Claim all of your kicker credit; or • Donate all of your kicker to the State School Fund. If you want to donate only a part of your kicker, you first have to claim all of your kicker credit on your return. Then, once you receive it, use it to make your donation. The Oregon State School Fund’s address is: Oregon Department of Education Attn: OFA Cashier 255 Capitol St NE Salem OR 97301 Online assistance. Revenue Online can calculate your kicker amount if: • Your filing status was the same for 2022 and 2023, and • You filed with the same spouse (if married) for both years. Look for “What’s my Kicker” on Revenue Online at www.oregon.gov/dor. Kicker worksheet. This worksheet can help you calcu­ late your kicker amount. It’s divided into three parts: Part A— Calculate your 2022 total personal income tax liability and kicker amount. Part B— Prorate your total personal income tax liabil­ ity, if necessary. Part C— Add individual kicker amounts together for joint 2023 returns, if necessary. If you’re completing Part B or Part C, you may need to use Part A or Part B more than once. Same filing and marital status. For most taxpayers, all you need to do is multiply your 2022 total Oregon per­ sonal income tax liability times 0.4428. You can also use Part A of the worksheet. Change in filing or marital status. Some taxpayers who filed a joint return for 2022 must prorate their kicker based on their share of 2022 federal AGI. Some taxpayers whose filing or marital status was different in 2022 may need to combine their kickers on a joint 2023 return. Use Table 7 to see if you need to prorate your kicker using Part B and/or combine your kickers using Part C. Table 7. Prorated and/or combined kickers Complete Parts A, B, and C if: Your filing status in 2022 was: 2023 is: And: Joint Joint You were married in 2023 and you (or your spouse, or both) had a different spouse in 2022. Non-joint Joint You were married in 2023 and your spouse had a different spouse in 2022. Non-joint Joint You were married in 2023 and neither of you were married in 2022. (You may skip Part B) Complete Parts A and B if: Your filing status in 2022 was: 2023 is: And: Joint Non-joint You were divorced in 2022 or you’re married but filing separate returns. Joint Non-joint Your spouse died in 2022 and their personal representative or estate is filing a separate 2023 return on their behalf. Optional: Complete Part A if: Your filing status in 2022 was: 2023 is: And: Joint Joint You had the same spouse in both 2022 and 2023. Non-joint Non-joint Joint Joint or non-joint Your spouse died in 2022 and no separate 2023 return is being filed on their behalf, or your spouse died in 2023. Deceased taxpayer. The surviving spouse of a deceased taxpayer may claim the full amount of the kicker if a joint return was filed for 2022. A deceased taxpayer’s personal representative may file a 2023 return on the taxpayer’s behalf to claim their kicker. How do I find my 2022 total Oregon personal income tax liability? Use Table 8 and your 2022 Oregon return to locate your tax before credits and any credit(s) you claimed for income taxes you paid to another state (using code 802 or 815) on Schedule OR-ASC or OR-ASC-NP.

150-101-040-1 (Rev. 03-20-24) 21 2023 Form OR-40 Instructions

Table 8. Where to find tax liability If you filed: Tax before credits: Credits using code 802 or 815 from: Form OR-40 Line 22 Schedule OR-ASC, Section C Form OR-40-N Line 48 Schedule OR-ASC-NP, Section E Form OR-40-P Line 47 Kicker worksheet Part A—Total personal income tax liability and kicker. 1. Tax before credits (see Table 8). 1. 2. Credit for income taxes paid to 2. another state using code 802 or 815 (see Table 8). 3. Line 1 minus line 2. This is your 3. total personal income tax liabil­ ity for 2022. 4. Line 3 times 0.4428. Round to 4. the nearest dollar. This is your kicker. Part B – Prorated kicker. See Table 7. Complete lines 5 through 8 only if you filed a joint return in 2022 and your 2023 filing status is non- joint or joint but with a different spouse. Before you start, determine your share of 2022 federal AGI.* 5. Federal AGI for 2022. Form 5. OR-40, line 7; Form OR-40-N or OR-40-P line 29F. 6. Your share of federal AGI for 6. 2022. 7. Line 6 divided by line 5. Round 7. to two decimal places. 8. Line 4 times line 7. This is your 8. prorated kicker. Part C – Combined kicker. Complete Part C only if you’re filing a joint return for 2023 and you and your spouse didn’t file a joint return together for 2022. 9. Kicker amount from your 9. worksheet, line 4 (or line 8 if you completed Part B). 10. Your spouse’s kicker from their 10. worksheet, line 4 (or line 8, if they completed Part B). 11. Line 9 plus line 10. This is your 11. combined kicker. *Consider each spouse's individual income (such as wages, pensions, or self-employment) and adjustments. Use a reasonable method to divide joint income (such as capital gains from the sale of jointly-owned property or interest on joint bank accounts) and adjustments. If the 2022 federal AGI on a joint return was zero or less, but the Oregon tax liability was more than zero, contact us for help. Example 1: Hudson and Olivia each filed their 2022 Oregon return using the single filing status. Hudson’s tax liability was $8,000 and he claimed a $500 credit for income taxes paid to another state on Schedule OR­ ASC. Olivia’s tax liability was $3,000, and she paid state income tax only to Oregon. Hudson and Olivia were married in 2023 and are filing a joint Oregon return. They each complete Part A of the worksheet as follows: Hudson’s worksheet: Part A: 1. Tax before credits $ 8,000 2. Credit for tax paid – 500 3. Total personal tax liability $ 7,500 4. Line 3 times 0.4428 $ 3,321 Olivia’s worksheet: Part A: 1. Tax before credits $ 3,000 2. Credit for tax paid – 0 3. Total personal tax liability $ 3,000 4. Line 3 times 0.4428 $ 1,328 They skip Part B because neither one filed a joint return for 2022. They complete Part C to find their combined kicker: 9. Hudson’s kicker line 4 of his worksheet $ 3,321 10. Olivia’s kicker from line 4 of her worksheet $ 1,328 11. Line 9 plus line 10 $ 4,649 Hudson and Olivia’s combined kicker is $4,649. Example 2: Ella and Emerson filed a joint 2022 Oregon return. They were divorced in 2023 and are filing sepa­ rate returns. On their 2022 return, their tax before cred­ its was $6,500, and they had a $300 credit for income tax they paid to another state. Their 2022 federal AGI was $90,000; Ella’s share was $40,000 and Emerson’s share was $50,000. Each completes Parts A and B of the work­ sheet to find their prorated kicker. Ella’s worksheet: Part A: 1. Tax before credits $ 6,500 2. Credit for tax paid – 300 3. Total personal tax liability $ 6,200 4. Line 3 times 0.4428 $ 2,745 Part B: 5. Federal AGI $ 90,000 6. Ella’s share of AGI $ 40,000 7. Line 6 divided by line 5 0.44 8. Line 4 times line 7 $ 1,208

150-101-040-1 (Rev. 03-20-24) 22 2023 Form OR-40 Instructions

Emerson’s worksheet: Part A: 1. Tax before credits $ 6,500 2. Credit for tax paid – 300 3. Total personal tax liability $ 6,200 4 Line 3 times 0.4428 $ 2,745 Part B: 5. Federal AGI $ 90,000 6. Emerson’s share of AGI $ 50,000 7. Line 6 divided by line 5 0.56 8. Line 4 times line 7 $ 1,537 Ella’s prorated kicker is $1,208 and Emerson’s prorated kicker is $1,537. Example 3: Orlando and Cortney filed a joint Oregon return in 2022. Their Oregon tax before credits was $7,500, and they didn’t claim a credit for income taxes paid to any other state. Their federal AGI was $80,000; Cortney’s share was $48,000 and Orlando’s share was $32,000. They were divorced in early 2023, and Cortney married Justin later that year. Justin had filed a non-joint Oregon return for 2022. His Oregon tax before credits was $2,000 and he claimed a $200 credit for taxes paid to another state. Orlando didn’t remarry in 2023. Orlando, Cortney, and Justin figure their kickers as follows: Orlando’s worksheet: Part A: 1. Tax before credits $ 7,500 2. Credit for tax paid 0 3. Total personal tax liability $ 7,500 4. Line 3 times 0.4428 $ 3,321 Part B: 5. Federal AGI $ 80,000 6. Orlando’s share of AGI $ 32,000 7. Line 6 divided by line 5 0.40 8. Line 4 times line 7 $ 1,328 Cortney’s worksheet: Part A: 1. Tax before credits $ 7,500 2. Credit for tax paid 0 3. Total personal tax liability $ 7,500 4. Line 3 times 0.4428 $ 3,321 Part B: 5. Federal AGI $ 80,000 6. Cortney’s share of AGI $ 48,000 7. Line 6 divided by line 5 0.60 8. Line 4 times line 7 $ 1,993 Justin’s worksheet: Part A: 1. Tax before credits $ 2,000 2. Credit for tax paid – 200 3. Total personal tax liability $ 1,800 4. Line 3 times 0.4428 $ 797 Justin skips Part B because he filed a non-joint return for 2022. He and Cortney complete Part C: 9. Cortney’s kicker from line 8 of her worksheet $ 1,993 10. Justin’s kicker from line 4 of his worksheet $ 797 11. Line 9 plus line 10 $ 2,790 Cortney and Justin’s combined kicker is $2,790. Orlan­ do’s kicker is $1,328. Claim your kicker credit. If you’re claiming your kicker credit, enter the amount from line 4, line 8, or line 11 of the worksheet, as applicable, on line 38. Donate your kicker. If you elect to donate your kicker to the Oregon State School Fund, enter 0 on line 38 and see the instructions for line 55. Reminder: This elec­ tion is irrevocable after the due date of the original return. Note about offsets: If you claim the kicker credit and it reduces your 2023 tax liability to zero, any excess will be treated like a refund of overpaid tax. This means that it may be offset (applied as a payment) against any tax or other liabilities you owe before the balance is refunded to you or applied (see Refund applications, below). If you donate your kicker, it may be used first to offset tax or other liabilities you owe, with any remain­ ing amount donated to the Oregon State School Fund. If this happens, we’ll send you a notice to let you know. Total refundable credits from Schedule OR-ASC. 39 Enter your total refundable credits from Sched­ ule OR-ASC, line F7. Include Schedule OR-ASC with your return. Penalties and interest Your 2023 tax must be paid by April 15, 2024, 43 even if you requested an extension of time to file your return. Your 2023 return must be filed by April 15, 2024. If you requested an extension, your return must be filed by October 15, 2024. Round the total of penalties and interest to the near­ est whole dollar. For more information and examples showing how penalties and interest are calculated, see “Interest and penalties” in Publication OR-17.

150-101-040-1 (Rev. 03-20-24) 23 2023 Form OR-40 Instructions

Penalties Penalty amounts are based on the tax after all credits shown on your return minus payments that you made by the due date of the return. To find your tax after all credits, start with your tax after standard and carry- forward credits on line 31, then subtract the refundable credit amounts on lines 36 through 39. Failure-to-file penalty. Include a penalty for failure to file a return if: • Your return is filed more than three months after the due date (or extension due date); and • You didn’t pay all of your tax by April 15, 2024. The penalty for failure to file is 20 percent of your tax after all credits that wasn’t paid by April 15, 2024. Failure-to-pay penalty. Include a penalty for failure to pay if: • Less than 90 percent of your tax after all credits was paid by April 15, 2024, or • You paid at least 90 percent of your tax after credits by April 15, 2024, but you aren’t paying the balance of unpaid tax in full when you file. The penalty for failure to pay is 5 percent of your tax after all credits that wasn’t paid by April 15, 2024. Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax after all credits that wasn’t paid by April 15, 2024. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal. Include a pen­ alty of 5 percent of the funds withdrawn from your FTHBSA if you withdrew funds from your account for a purpose other than purchasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per­ form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties pro­ vided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions” in Publication OR-17. Interest on unpaid tax You’ll owe interest on the amount of tax that wasn’t paid by April 15, 2024. Interest starts accruing on April 16, 2024 and continues to accrue every day, includ­ ing the date of your payment. Interest is figured daily, based on a 365-day year. The annual interest rate for 2024 is 8 percent, or 0.0219 per­ cent per day. To figure your interest, count the number of days start­ ing with April 16, 2024, and ending with the date of your payment. Multiply your unpaid tax by the num­ ber of days, then multiply that amount by 0.000219 (the daily rate converted to a decimal). Interest rate increase. If we bill you for unpaid tax, and the tax isn’t paid in full within 60 days from the date of our billing notice, the annual interest rate increases by 4 percentage points, to 12 percent. Amended return. If you’re amending your return, cal­ culate the interest based on the additional amount of tax you must pay (line 5 of the Amended worksheet). Interest on underpayment of estimated tax. 44 Underpayment interest is charged if: • Your tax after all credits and withholding is $1,000 or more; • You were required to make estimated tax payments; • One or more of your required installments was underpaid; and • You don’t qualify for an exception. Note: You could be charged interest on underpayment of estimated tax even if line 41 shows a refund. See Form OR-10 to determine if you owe underpayment interest or qualify for an exception. Download the form from our website or contact us to order it. If you owe underpayment interest, enter the amount from line 4 of Form OR-10. If you qualify for an excep­ tion, enter the exception number from line 1 of the form inside box 44a. If you used the Annualized Income Worksheet (located in Form OR-10 Instructions) to figure your interest, check box 44b. Include Form OR-10 with your return. Keep your underpayment interest work­ sheets and any required statements with your records. Amount due Amount you owe. Enter your total unpaid tax 46 plus penalties and interest. Note: If you have an overpayment on line 41 and the overpayment is less than the total penalties and interest you entered on line 45, enter the amount from line 45 minus the amount on line 41. Amount to pay. If you’re filing your return on or before the due date (without extensions), pay the amount shown on line 46. If you’re filing your original return after the due date, subtract any payments you made after the due date of the return (without extensions) from the amount on line 46 before you make your pay­ ment. For amended returns, pay the amount shown on the Amended Worksheet, line 11.

150-101-040-1 (Rev. 03-20-24) 24 2023 Form OR-40 Instructions

Payment options Refund You may pay electronically from your checking or sav­ ings account, by credit card, or with a check, cashier’s check, or money order. Cash payments can be made only at our main office in Salem. If the amount due is less than $2, no payment is required. Electronic payment from your checking or savings account You can pay your current year income taxes, 2024 esti­ mated income taxes, any prior year taxes due, and amended return taxes directly from your checking or savings account. There is no fee to use this service. This option is available only through our website. Go to www.oregon.gov/dor and click the link for Revenue Online. Direct debit may be available with e-filed returns at the time of filing. Credit card payments You can pay with your Discover, MasterCard, or Visa credit card. The service provider will charge you a convenience fee. The service provider will tell you what the fee is during the transaction; you will have the option to continue or cancel the transaction before entering your credit card information. If you complete the credit card transaction, you will receive a confir­ mation number. Keep this confirmation number as proof of payment—don’t send it with your return. To pay by credit card, go to www.oregon.gov/dor and click the link for Revenue Online. Check or money order • Make your check or money order payable to “Oregon Department of Revenue.” • Write all of the following on your payment: — The tax year (2023). — The form you’re filing (Oregon Form OR-40). — The last four digits of your SSN or ITIN. • Use blue or black ballpoint ink. Don’t use red or pur­ ple ink or gel pens. • Don’t send cash or a postdated check. Form OR-40-V. Use the voucher only if you’re mak­ ing a separate payment by check, cashier’s check, or money order. Don’t use the voucher if you’re including a payment with your return or making an electronic payment. See Form OR-40-V Instructions for additional information. Payment plan. If you can’t pay in full now, pay what you can. Contact us and we will help you set up a pay­ ment plan for the amount you're unable to pay with your return. 47 Refund. Enter your overpayment from line 41 minus any penalty or interest from line 45. Note: If the amount on line 45 is more than the over­ payment on line 41, see the instructions for line 46. You have three years from the due date of the return to file a claim for your refund. By law, we can’t issue a refund if you file your return more than three years after the return’s due date (without extensions) or if the refund is less than $1. For more information about the time limit for claiming a refund, see “Payments and refunds” in Publication OR-17. Interest on refunds. See “Interest and penalties” in Publication OR-17 for information about interest paid on refunds. Refund applications If line 47 shows a refund, you may use some or all of it to: • Make an estimated tax payment for a later year. • Donate to one or more of the charitable organizations listed on Schedule OR-DONATE. • Contribute to the political party of your choice. • Make a deposit to an Oregon college or MFS 529 sav­ ings plan account. Each of these applications will reduce your refund. The combined total of all applications can’t be more than the amount of your refund. Note: A refund of overpaid tax will be offset against outstanding debt before any amount is applied or refunded to you. Instructions for amended returns. If line 5 of the Amended worksheet shows a refund, you can use some or all of it for the refund applications listed above. However, you can’t reduce any amounts you’ve already applied from a refund on your original return. See the instructions for each application for details. 48 Open estimated tax account. Enter the amount of your refund you want to apply as a tax pay­ ment for a later year. This amount will be applied to your open estimated tax account (to a year where you will be filing a tax return). Generally, the payment will be applied to the 2024 tax year, unless you're filing a delinquent or amended return. For more information, see “Payments and refunds” in Publication OR-17. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you’ve already applied as an estimated tax payment for a later year. If line 5 of the Amended worksheet shows a refund and you want to apply some or all of it as an estimated tax payment, include the amount you want to apply.

150-101-040-1 (Rev. 03-20-24) 25 2023 Form OR-40 Instructions

Charitable checkoff. Enter the amount from line 49 30 of Schedule OR-DONATE. For more informa­ tion, see the schedule instructions. You can download Schedule OR-DONATE from our website or you can contact us to order it. Note: If your refund—after any application to an open estimated tax account—is less than your total donation amount, your donations will be prorated. To make direct donations instead, you can find each charity’s address listed on our website. Don’t mail your donations to us. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as charitable donations using Schedule OR­ DONATE. If line 5 of the Amended worksheet shows a refund, you can donate some or all of it to one or more of the listed charities. Include this amount and an amended Schedule OR-DONATE with your amended return. Note: The refund from your amended return will be applied as a donation for the calendar year in which you’re filing it. Political party checkoff. You may use your 50 refund to contribute $3 to the Oregon political party of your choice. If you’re filing a joint return, you and your spouse may each contribute $3. Note: Your contribution will reduce your refund and does not qualify for the political contribution credit. To make a contribution: 1. Designate the political party of your choice using the party’s code from the alphabetized list below. — If you contribute, enter one code in box 50a. — If your spouse contributes on a joint return, enter one code in box 50b. Enter only one code per taxpayer. Spouses filing a joint return don’t have to enter the same code. • Constitution Party of Oregon [code 500]. • Democratic Party of Oregon [code 501]. • Independent Party of Oregon [code 502]. • Libertarian Party of Oregon [code 503]. • Oregon Republican Party [code 504]. • Pacific Green Party of Oregon [code 505]. • Progressive Party [code 506]. • Working Families Party of Oregon [code 507]. 2. Enter your total contribution amount. — If you or your spouse contribute, enter $3. — If both you and your spouse contribute on a joint return, enter $6. Note: Your political party contribution won’t be made if: • Your refund—after any application to an open esti- mated tax account or charitable checkoff donation— is less than your total contribution amount. • You enter an amount but don’t designate a party (or parties). • You designate a party (or parties) but don’t enter an amount. • You enter more than one party code per taxpayer. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as a political party contribution. If line 5 of the Amended worksheet shows a refund and you didn’t make the maximum political party contribution on your original return, you may use the refund to make a contribution on your amended return. Oregon college or MFS 529 savings plan. Enter 51 the amount from line 5 of Schedule OR-529. For minimum deposit amounts and other information, see the schedule instructions. You can download Sched­ ule OR-529 from our website or contact us to order it. Note: If the amount of your refund—after any applica­ tion to an open estimated tax account, charitable check­ off donation, or political party contribution—is less than the total amount you want to deposit, no deposit will be made. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as an Oregon college or MFS 529 savings plan deposit. If line 5 of the Amended worksheet shows a refund, add the amount you want to apply as a deposit and include an amended Schedule OR-529 with your amended return. The refund will be applied for the year in which you’re filing the amended return. Net refund. You must reduce your refund by 53 any amounts applied to your open estimated tax account, charitable checkoff donations, political party contributions, and Oregon college or MFS 529 savings plan accounts. By law, we can’t issue or apply a refund if you file your return more than three years after the return’s due date (excluding extensions). Direct deposit Direct deposit. In most cases, we can deposit 54 your refund directly into your checking or sav­ ings account instead of mailing you a check. However, federal banking regulations prevent us from making a refund by direct deposit if the final destination is an account outside the United States. In that case, we must issue a paper check instead. Before you enter your information, verify that your deposit will be accepted and confirm your routing and account numbers. You can find a diagram of a personal check showing where these numbers are located in the “Payments and refunds” section of Publication OR-17.

150-101-040-1 (Rev. 03-20-24) 26 2023 Form OR-40 Instructions

Follow these steps to make sure your refund will be deposited into the correct account: 1. Check the box if the final destination for your refund would be an account outside the United States. Note: If you check this box, you will be issued a paper check. 2. Check the appropriate box, either checking or sav­ ings, but not both. 3. Enter your nine-digit routing number. Routing numbers begin with the digits 01 through 12, 21 through 32, or 61 through 72. 4. Enter your account number. Account numbers can be up to 17 characters (both numbers and letters). Don’t include hyphens, spaces, or special symbols. 5. Double-check the account and routing numbers. These numbers can’t be changed after the return is filed. Kicker donation Kicker Donation. You may choose to donate all 55 of your kicker to the Oregon State School Fund. The election to donate your kicker cannot be changed after the due date of the original return. No partial donations are allowed. If any amount other than 0 is entered on line 38, your donation won’t be made. To make the donation: 1. See the instructions for line 38 to calculate you kicker amount. 2. Make sure that you’ve entered 0 on line 38. 3. Check box 55a. 4. Enter your entire kicker amount on line 55b. Reminder: This election is irrevocable. The election to donate your kicker can not be changed or revoked after the due date of the original return. To make a change or correction to your election, your amended return must be received by the due date of the original return. See the instructions for calculating your kicker for more information. Signature block Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both taxpayers must sign. By signing the return, you acknowledge, under penalty of false swearing, that the information on the return and any attachments is true, correct, and complete. Minor child’s return. If your child can’t sign their tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By [your signature], parent (or other legal guardian) of minor child.” Preparer signature. Anyone who prepares, advises, or assists in preparing personal income tax returns in exchange for compensation of any kind must be licensed to prepare Oregon returns and must sign the return. Signing the return doesn't grant your preparer the right to represent you or make decisions on your behalf. For more information about representation and authoriza­ tion, download Form OR-AUTH from our website or contact us to order it. Contact the following agencies to check the status of your Oregon tax practitioner: • State Board of Tax Practitioners at 503-378-4034 (Salem) for licensed tax consultants or preparers, or go to www.oregon.gov/obtp. • State Board of Accountancy at 503-378-4181 (Salem) for public accountants and certified public accoun­ tants, or go to www.oregon.gov/boa. Preparer license number. Licensed tax consultants and tax preparers: enter your license number. CPAs: enter your certificate number. Tax-Aide volunteers: enter your TCE site number. All others: leave blank. Don’t enter your driver license number. Before you file Copy of federal return. Before you assemble your Ore­ gon return, make a copy of both sides of your federal Form 1040, 1040-SR, or 1040-NR, along with Schedules 1 through 3 (as applicable), or Form 1040-X. Don’t include any other federal schedules. Keep these with your records; we may ask for them later. If you created an “as if” federal return, use blue or black ink to label it “as if” on the top left corner. Include it along with the copy of your actual federal return (and any amendments). Failure to include your federal return will delay pro­ cessing, and items claimed on your Oregon return may be adjusted or denied. Amended Oregon return. If you’re amending your Oregon return due to changes to your federal return or a return you filed with another state, include a copy of your amended or corrected federal or other state return or audit report. If you’re amending only your Oregon return, include a copy of your original federal or other state return. Assemble your Oregon return. Assemble your return in the order shown below. If a form has more than one page, be sure that you’ve included all pages and that they’re all from the same 2023 form. For example, if you’re filing Schedule OR-WFHDC, Schedule OR-A, or Schedule OR-ASC, be sure that “2023 Schedule OR­ WFHDC”, "2023 Schedule OR-A", or "2023 Schedule

150-101-040-1 (Rev. 03-20-24) 27 2023 Form OR-40 Instructions

OR-ASC" is printed at the top of each page and that you’ve included all pages associated with each schedule. Important: Don’t use staples, paperclips, tape, or other fasteners. Doing so will delay processing. 1. Payment by check or money order, if any. Don’t use a voucher. 2. Form(s) W-2 and 1099 showing Oregon tax withheld. 3. Form OR-40. 4. Schedule OR-A. 5. Schedule OR-ASC. 6. Schedule OR-ADD-DEP. 7. Schedule OR-DONATE. 8. Schedule OR-529. 9. Schedule OR-PTE-FY. 10. Form OR-10. 11. Schedule OR-EIC-ITIN. 12. Schedule OR-WFHDC. 13. Other Oregon schedules required to be included with your return. 14. If you’re an RDP filing separately for Oregon, your partner’s Oregon return. 15. Your federal return(s) and schedules. Note: If you’re making an estimated tax payment for 2024 by check or money order, send the payment in a separate envelope with a completed Form OR-40-V. Don’t include your 2024 payment or voucher with your 2023 return. Avoid processing delays Type or clearly print your name, SSN, date of birth, complete mailing address, and daytime phone number on your return. Include all pages of your Oregon return. Double-check your figures and other numbers, including your SSN. Errors will delay processing. Common mistakes are: • Math errors. • A wrong amount claimed for the federal tax liability subtraction. • Using the wrong line or column on the tax tables. • Using the wrong tax chart. If you have tax to pay, review the instructions for line 46. Verify your account information if you’re requesting a refund by direct deposit. Sign your return. Both spouses must sign a joint return. Include legible copies of all W-2 and 1099 forms show­ ing Oregon income tax withheld. Place them on top of your return along with any payment by check, cashier’s check, or money order. Include a copy of your federal return (front and back) with your Oregon return. Include federal Schedules 1 through 3 (if applicable), but don’t include other federal schedules unless otherwise instructed. Place it behind all Oregon forms and schedules. Payment by check, cashier’s check, or money order should be placed on top of your return. Don’t mail cash. Don’t use a voucher. Don’t use staples, paper clips, tape, or other fasteners. Mail your return in a stamped envelope. Use a busi­ ness-size (4 × 9½ inches) or larger envelope with ade­ quate postage. Don’t use a smaller envelope—it delays processing. Tax return mailing addresses Mail refund returns or Mail tax-to-pay no-tax-due returns to: returns to: REFUND Oregon Department of Revenue PO Box 14700 PO Box 14555 Salem OR 97309-0930 Salem OR 97309-0940

150-101-040-1 (Rev. 03-20-24) 28 2023 Form OR-40 Instructions

2023 Tax Tables for Form OR-40 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 0 0 – 20 0 0 20 – 50 2 2 $ 50 50 – 100 4 4 100 – 200 7 7 200 – 300 12 12 300 – 400 17 17 400 – 500 21 21 500 – 600 26 26 600 – 700 31 31 700 – 800 36 36 800 – 900 40 40 900 – 1,000 45 45 $ 1,000 1,000 – 1,100 50 50 1,100 – 1,200 55 55 1,200 – 1,300 59 59 1,300 – 1,400 64 64 1,400 – 1,500 69 69 1,500 – 1,600 74 74 1,600 – 1,700 78 78 1,700 – 1,800 83 83 1,800 – 1,900 88 88 1,900 – 2,000 93 93 $ 2,000 2,000 – 2,100 97 97 2,100 – 2,200 102 102 2,200 – 2,300 107 107 2,300 – 2,400 112 112 2,400 – 2,500 116 116 2,500 – 2,600 121 121 2,600 – 2,700 126 126 2,700 – 2,800 131 131 2,800 – 2,900 135 135 2,900 – 3,000 140 140 $ 3,000 3,000 – 3,100 145 145 3,100 – 3,200 150 150 3,200 – 3,300 154 154 3,300 – 3,400 159 159 3,400 – 3,500 164 164 3,500 – 3,600 169 169 3,600 – 3,700 173 173 3,700 – 3,800 178 178 3,800 – 3,900 183 183 3,900 – 4,000 188 188 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 4,000 4,000 – 4,100 192 192 4,100 – 4,200 199 197 4,200 – 4,300 206 202 4,300 – 4,400 212 207 4,400 – 4,500 219 211 4,500 – 4,600 226 216 4,600 – 4,700 233 221 4,700 – 4,800 239 226 4,800 – 4,900 246 230 4,900 – 5,000 253 235 $ 5,000 5,000 – 5,100 260 240 5,100 – 5,200 266 245 5,200 – 5,300 273 249 5,300 – 5,400 280 254 5,400 – 5,500 287 259 5,500 – 5,600 293 264 5,600 – 5,700 300 268 5,700 – 5,800 307 273 5,800 – 5,900 314 278 5,900 – 6,000 320 283 $ 6,000 6,000 – 6,100 327 287 6,100 – 6,200 334 292 6,200 – 6,300 341 297 6,300 – 6,400 347 302 6,400 – 6,500 354 306 6,500 – 6,600 361 311 6,600 – 6,700 368 316 6,700 – 6,800 374 321 6,800 – 6,900 381 325 6,900 – 7,000 388 330 $ 7,000 7,000 – 7,100 395 335 7,100 – 7,200 401 340 7,200 – 7,300 408 344 7,300 – 7,400 415 349 7,400 – 7,500 422 354 7,500 – 7,600 428 359 7,600 – 7,700 435 363 7,700 – 7,800 442 368 7,800 – 7,900 449 373 7,900 – 8,000 455 378 $ 8,000 8,000 – 8,100 462 382 8,100 – 8,200 469 388 8,200 – 8,300 476 395 8,300 – 8,400 482 402 8,400 – 8,500 489 409 8,500 – 8,600 496 415 8,600 – 8,700 503 422 8,700 – 8,800 509 429 8,800 – 8,900 516 436 8,900 – 9,000 523 442 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 9,000 9,000 – 9,100 530 449 9,100 – 9,200 536 456 9,200 – 9,300 543 463 9,300 – 9,400 550 469 9,400 – 9,500 557 476 9,500 – 9,600 563 483 9,600 – 9,700 570 490 9,700 – 9,800 577 496 9,800 – 9,900 584 503 9,900 – 10,000 590 510 $ 10,000 10,000 – 10,100 597 517 10,100 – 10,200 604 523 10,200 – 10,300 611 530 10,300 – 10,400 620 537 10,400 – 10,500 629 544 10,500 – 10,600 638 550 10,600 – 10,700 646 557 10,700 – 10,800 655 564 10,800 – 10,900 664 571 10,900 – 11,000 673 577 $ 11,000 11,000 – 11,100 681 584 11,100 – 11,200 690 591 11,200 – 11,300 699 598 11,300 – 11,400 708 604 11,400 – 11,500 716 611 11,500 – 11,600 725 618 11,600 – 11,700 734 625 11,700 – 11,800 743 631 11,800 – 11,900 751 638 11,900 – 12,000 760 645 $ 12,000 12,000 – 12,100 769 652 12,100 – 12,200 778 658 12,200 – 12,300 786 665 12,300 – 12,400 795 672 12,400 – 12,500 804 679 12,500 – 12,600 813 685 12,600 – 12,700 821 692 12,700 – 12,800 830 699 12,800 – 12,900 839 706 12,900 – 13,000 848 712 $ 13,000 13,000 – 13,100 856 719 13,100 – 13,200 865 726 13,200 – 13,300 874 733 13,300 – 13,400 883 739 13,400 – 13,500 891 746 13,500 – 13,600 900 753 13,600 – 13,700 909 760 13,700 – 13,800 918 766 13,800 – 13,900 926 773 13,900 – 14,000 935 780 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 14,000 14,000 – 14,100 944 787 14,100 – 14,200 953 793 14,200 – 14,300 961 800 14,300 – 14,400 970 807 14,400 – 14,500 979 814 14,500 – 14,600 988 820 14,600 – 14,700 996 827 14,700 – 14,800 1,005 834 14,800 – 14,900 1,014 841 14,900 – 15,000 1,023 847 $ 15,000 15,000 – 15,100 1,031 854 15,100 – 15,200 1,040 861 15,200 – 15,300 1,049 868 15,300 – 15,400 1,058 874 15,400 – 15,500 1,066 881 15,500 – 15,600 1,075 888 15,600 – 15,700 1,084 895 15,700 – 15,800 1,093 901 15,800 – 15,900 1,101 908 15,900 – 16,000 1,110 915 $ 16,000 16,000 – 16,100 1,119 922 16,100 – 16,200 1,128 928 16,200 – 16,300 1,136 935 16,300 – 16,400 1,145 942 16,400 – 16,500 1,154 949 16,500 – 16,600 1,163 955 16,600 – 16,700 1,171 962 16,700 – 16,800 1,180 969 16,800 – 16,900 1,189 976 16,900 – 17,000 1,198 982 $ 17,000 17,000 – 17,100 1,206 989 17,100 – 17,200 1,215 996 17,200 – 17,300 1,224 1,003 17,300 – 17,400 1,233 1,009 17,400 – 17,500 1,241 1,016 17,500 – 17,600 1,250 1,023 17,600 – 17,700 1,259 1,030 17,700 – 17,800 1,268 1,036 17,800 – 17,900 1,276 1,043 17,900 – 18,000 1,285 1,050 $ 18,000 18,000 – 18,100 1,294 1,057 18,100 – 18,200 1,303 1,063 18,200 – 18,300 1,311 1,070 18,300 – 18,400 1,320 1,077 18,400 – 18,500 1,329 1,084 18,500 – 18,600 1,338 1,090 18,600 – 18,700 1,346 1,097 18,700 – 18,800 1,355 1,104 18,800 – 18,900 1,364 1,111 18,900 – 19,000 1,373 1,117 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse.

150-101-040-1 (Rev. 03-20-24) 29 2023 Form OR-40 Instructions

2023 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: $ 19,000 $ 24,000 $ 29,000 $ 34,000 19,000 – 19,100 1,381 1,124 24,000 – 24,100 1,819 1,534 29,000 – 29,100 2,256 1,972 34,000 – 34,100 2,694 2,409 19,100 – 19,200 1,390 1,131 24,100 – 24,200 1,828 1,543 29,100 – 29,200 2,265 1,981 34,100 – 34,200 2,703 2,418 19,200 – 19,300 1,399 1,138 24,200 – 24,300 1,836 1,552 29,200 – 29,300 2,274 1,989 34,200 – 34,300 2,711 2,427 19,300 – 19,400 1,408 1,144 24,300 – 24,400 1,845 1,561 29,300 – 29,400 2,283 1,998 34,300 – 34,400 2,720 2,436 19,400 – 19,500 1,416 1,151 24,400 – 24,500 1,854 1,569 29,400 – 29,500 2,291 2,007 34,400 – 34,500 2,729 2,444 19,500 – 19,600 1,425 1,158 24,500 – 24,600 1,863 1,578 29,500 – 29,600 2,300 2,016 34,500 – 34,600 2,738 2,453 19,600 – 19,700 1,434 1,165 24,600 – 24,700 1,871 1,587 29,600 – 29,700 2,309 2,024 34,600 – 34,700 2,746 2,462 19,700 – 19,800 1,443 1,171 24,700 – 24,800 1,880 1,596 29,700 – 29,800 2,318 2,033 34,700 – 34,800 2,755 2,471 19,800 – 19,900 1,451 1,178 24,800 – 24,900 1,889 1,604 29,800 – 29,900 2,326 2,042 34,800 – 34,900 2,764 2,479 19,900 – 20,000 1,460 1,185 24,900 – 25,000 1,898 1,613 29,900 – 30,000 2,335 2,051 34,900 – 35,000 2,773 2,488 $ 20,000 20,000 – 20,100 1,469 20,100 – 20,200 1,478 20,200 – 20,300 1,486 20,300 – 20,400 1,495 20,400 – 20,500 1,504 20,500 – 20,600 1,513 20,600 – 20,700 1,521 20,700 – 20,800 1,530 20,800 – 20,900 1,539 20,900 – 21,000 1,548 $ 21,000 21,000 – 21,100 1,556 21,100 – 21,200 1,565 21,200 – 21,300 1,574 21,300 – 21,400 1,583 21,400 – 21,500 1,591 21,500 – 21,600 1,600 21,600 – 21,700 1,609 21,700 – 21,800 1,618 21,800 – 21,900 1,626 21,900 – 22,000 1,635 $ 22,000 22,000 – 22,100 1,644 22,100 – 22,200 1,653 22,200 – 22,300 1,661 22,300 – 22,400 1,670 22,400 – 22,500 1,679 22,500 – 22,600 1,688 22,600 – 22,700 1,696 22,700 – 22,800 1,705 22,800 – 22,900 1,714 22,900 – 23,000 1,723 $ 23,000 23,000 – 23,100 1,731 23,100 – 23,200 1,740 23,200 – 23,300 1,749 23,300 – 23,400 1,758 23,400 – 23,500 1,766 23,500 – 23,600 1,775 23,600 – 23,700 1,784 23,700 – 23,800 1,793 23,800 – 23,900 1,801 23,900 – 24,000 1,810 1,192 1,198 1,205 1,212 1,219 1,228 1,237 1,246 1,254 1,263 1,272 1,281 1,289 1,298 1,307 1,316 1,324 1,333 1,342 1,351 1,359 1,368 1,377 1,386 1,394 1,403 1,412 1,421 1,429 1,438 1,447 1,456 1,464 1,473 1,482 1,491 1,499 1,508 1,517 1,526 $ 25,000 $ 26,000 $ 27,000 $ 28,000 $ 30,000 $ 31,000 $ 32,000 $ 33,000 $ 35,000 $ 36,000 $ 37,000 $ 38,000 25,000 – 25,100 1,906 25,100 – 25,200 1,915 25,200 – 25,300 1,924 25,300 – 25,400 1,933 25,400 – 25,500 1,941 25,500 – 25,600 1,950 25,600 – 25,700 1,959 25,700 – 25,800 1,968 25,800 – 25,900 1,976 25,900 – 26,000 1,985 1,622 1,631 1,639 1,648 1,657 1,666 1,674 1,683 1,692 1,701 26,000 – 26,100 1,994 26,100 – 26,200 2,003 26,200 – 26,300 2,011 26,300 – 26,400 2,020 26,400 – 26,500 2,029 26,500 – 26,600 2,038 26,600 – 26,700 2,046 26,700 – 26,800 2,055 26,800 – 26,900 2,064 26,900 – 27,000 2,073 1,709 1,718 1,727 1,736 1,744 1,753 1,762 1,771 1,779 1,788 27,000 – 27,100 2,081 27,100 – 27,200 2,090 27,200 – 27,300 2,099 27,300 – 27,400 2,108 27,400 – 27,500 2,116 27,500 – 27,600 2,125 27,600 – 27,700 2,134 27,700 – 27,800 2,143 27,800 – 27,900 2,151 27,900 – 28,000 2,160 1,797 1,806 1,814 1,823 1,832 1,841 1,849 1,858 1,867 1,876 28,000 – 28,100 2,169 28,100 – 28,200 2,178 28,200 – 28,300 2,186 28,300 – 28,400 2,195 28,400 – 28,500 2,204 28,500 – 28,600 2,213 28,600 – 28,700 2,221 28,700 – 28,800 2,230 28,800 – 28,900 2,239 28,900 – 29,000 2,248 1,884 1,893 1,902 1,911 1,919 1,928 1,937 1,946 1,954 1,963 30,000 – 30,100 2,344 30,100 – 30,200 2,353 30,200 – 30,300 2,361 30,300 – 30,400 2,370 30,400 – 30,500 2,379 30,500 – 30,600 2,388 30,600 – 30,700 2,396 30,700 – 30,800 2,405 30,800 – 30,900 2,414 30,900 – 31,000 2,423 2,059 2,068 2,077 2,086 2,094 2,103 2,112 2,121 2,129 2,138 31,000 – 31,100 2,431 31,100 – 31,200 2,440 31,200 – 31,300 2,449 31,300 – 31,400 2,458 31,400 – 31,500 2,466 31,500 – 31,600 2,475 31,600 – 31,700 2,484 31,700 – 31,800 2,493 31,800 – 31,900 2,501 31,900 – 32,000 2,510 2,147 2,156 2,164 2,173 2,182 2,191 2,199 2,208 2,217 2,226 32,000 – 32,100 2,519 32,100 – 32,200 2,528 32,200 – 32,300 2,536 32,300 – 32,400 2,545 32,400 – 32,500 2,554 32,500 – 32,600 2,563 32,600 – 32,700 2,571 32,700 – 32,800 2,580 32,800 – 32,900 2,589 32,900 – 33,000 2,598 2,234 2,243 2,252 2,261 2,269 2,278 2,287 2,296 2,304 2,313 33,000 – 33,100 2,606 33,100 – 33,200 2,615 33,200 – 33,300 2,624 33,300 – 33,400 2,633 33,400 – 33,500 2,641 33,500 – 33,600 2,650 33,600 – 33,700 2,659 33,700 – 33,800 2,668 33,800 – 33,900 2,676 33,900 – 34,000 2,685 2,322 2,331 2,339 2,348 2,357 2,366 2,374 2,383 2,392 2,401 35,000 – 35,100 2,781 35,100 – 35,200 2,790 35,200 – 35,300 2,799 35,300 – 35,400 2,808 35,400 – 35,500 2,816 35,500 – 35,600 2,825 35,600 – 35,700 2,834 35,700 – 35,800 2,843 35,800 – 35,900 2,851 35,900 – 36,000 2,860 2,497 2,506 2,514 2,523 2,532 2,541 2,549 2,558 2,567 2,576 36,000 – 36,100 2,869 36,100 – 36,200 2,878 36,200 – 36,300 2,886 36,300 – 36,400 2,895 36,400 – 36,500 2,904 36,500 – 36,600 2,913 36,600 – 36,700 2,921 36,700 – 36,800 2,930 36,800 – 36,900 2,939 36,900 – 37,000 2,948 2,584 2,593 2,602 2,611 2,619 2,628 2,637 2,646 2,654 2,663 37,000 – 37,100 2,956 37,100 – 37,200 2,965 37,200 – 37,300 2,974 37,300 – 37,400 2,983 37,400 – 37,500 2,991 37,500 – 37,600 3,000 37,600 – 37,700 3,009 37,700 – 37,800 3,018 37,800 – 37,900 3,026 37,900 – 38,000 3,035 2,672 2,681 2,689 2,698 2,707 2,716 2,724 2,733 2,742 2,751 38,000 – 38,100 3,044 38,100 – 38,200 3,053 38,200 – 38,300 3,061 38,300 – 38,400 3,070 38,400 – 38,500 3,079 38,500 – 38,600 3,088 38,600 – 38,700 3,096 38,700 – 38,800 3,105 38,800 – 38,900 3,114 38,900 – 39,000 3,123 2,759 2,768 2,777 2,786 2,794 2,803 2,812 2,821 2,829 2,838

150-101-040-1 (Rev. 03-20-24) 30 2023 Form OR-40 Instructions

2023 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: But At less least: than: S J But At less least: than: S J But At less least: than: S J But At less least: than: S J Your tax is: Your tax is: Your tax is: Your tax is: $ 39,000 $ 42,000 $ 45,000 $ 48,000 39,000 – 39,100 3,131 2,847 42,000 – 42,100 3,394 3,109 45,000 – 45,100 3,656 3,372 48,000 – 48,100 3,919 3,634 39,100 – 39,200 3,140 2,856 42,100 – 42,200 3,403 3,118 45,100 – 45,200 3,665 3,381 48,100 – 48,200 3,928 3,643 39,200 – 39,300 3,149 2,864 42,200 – 42,300 3,411 3,127 45,200 – 45,300 3,674 3,389 48,200 – 48,300 3,936 3,652 39,300 – 39,400 3,158 2,873 42,300 – 42,400 3,420 3,136 45,300 – 45,400 3,683 3,398 48,300 – 48,400 3,945 3,661 39,400 – 39,500 3,166 2,882 42,400 – 42,500 3,429 3,144 45,400 – 45,500 3,691 3,407 48,400 – 48,500 3,954 3,669 39,500 – 39,600 3,175 2,891 42,500 – 42,600 3,438 3,153 45,500 – 45,600 3,700 3,416 48,500 – 48,600 3,963 3,678 39,600 – 39,700 3,184 2,899 42,600 – 42,700 3,446 3,162 45,600 – 45,700 3,709 3,424 48,600 – 48,700 3,971 3,687 39,700 – 39,800 3,193 2,908 42,700 – 42,800 3,455 3,171 45,700 – 45,800 3,718 3,433 48,700 – 48,800 3,980 3,696 39,800 – 39,900 3,201 2,917 42,800 – 42,900 3,464 3,179 45,800 – 45,900 3,726 3,442 48,800 – 48,900 3,989 3,704 39,900 – 40,000 3,210 2,926 42,900 – 43,000 3,473 3,188 45,900 – 46,000 3,735 3,451 48,900 – 49,000 3,998 3,713 $ 40,000 $ 43,000 $ 46,000 $ 49,000 40,000 – 40,100 3,219 2,934 43,000 – 43,100 3,481 3,197 46,000 – 46,100 3,744 3,459 49,000 – 49,100 4,006 3,722 40,100 – 40,200 3,228 2,943 43,100 – 43,200 3,490 3,206 46,100 – 46,200 3,753 3,468 49,100 – 49,200 4,015 3,731 40,200 – 40,300 3,236 2,952 43,200 – 43,300 3,499 3,214 46,200 – 46,300 3,761 3,477 49,200 – 49,300 4,024 3,739 40,300 – 40,400 3,245 2,961 43,300 – 43,400 3,508 3,223 46,300 – 46,400 3,770 3,486 49,300 – 49,400 4,033 3,748 40,400 – 40,500 3,254 2,969 43,400 – 43,500 3,516 3,232 46,400 – 46,500 3,779 3,494 49,400 – 49,500 4,041 3,757 40,500 – 40,600 3,263 2,978 43,500 – 43,600 3,525 3,241 46,500 – 46,600 3,788 3,503 49,500 – 49,600 4,050 3,766 40,600 – 40,700 3,271 2,987 43,600 – 43,700 3,534 3,249 46,600 – 46,700 3,796 3,512 49,600 – 49,700 4,059 3,774 40,700 – 40,800 3,280 2,996 43,700 – 43,800 3,543 3,258 46,700 – 46,800 3,805 3,521 49,700 – 49,800 4,068 3,783 40,800 – 40,900 3,289 3,004 43,800 – 43,900 3,551 3,267 46,800 – 46,900 3,814 3,529 49,800 – 49,900 4,076 3,792 40,900 – 41,000 3,298 3,013 43,900 – 44,000 3,560 3,276 46,900 – 47,000 3,823 3,538 49,900 – 50,000 4,085 3,801 $ 41,000 $ 44,000 $ 47,000 41,000 – 41,100 3,306 3,022 44,000 – 44,100 3,569 3,284 47,000 – 47,100 3,831 3,547 41,100 – 41,200 3,315 3,031 44,100 – 44,200 3,578 3,293 47,100 – 47,200 3,840 3,556 41,200 – 41,300 3,324 3,039 44,200 – 44,300 3,586 3,302 47,200 – 47,300 3,849 3,564 41,300 – 41,400 3,333 3,048 44,300 – 44,400 3,595 3,311 47,300 – 47,400 3,858 3,573 41,400 – 41,500 3,341 3,057 44,400 – 44,500 3,604 3,319 47,400 – 47,500 3,866 3,582 41,500 – 41,600 3,350 3,066 44,500 – 44,600 3,613 3,328 47,500 – 47,600 3,875 3,591 41,600 – 41,700 3,359 3,074 44,600 – 44,700 3,621 3,337 47,600 – 47,700 3,884 3,599 41,700 – 41,800 3,368 3,083 44,700 – 44,800 3,630 3,346 47,700 – 47,800 3,893 3,608 41,800 – 41,900 3,376 3,092 44,800 – 44,900 3,639 3,354 47,800 – 47,900 3,901 3,617 41,900 – 42,000 3,385 3,101 44,900 – 45,000 3,648 3,363 47,900 – 48,000 3,910 3,626 2023 Tax rate charts Chart S: For persons filing single or married/RDP filing separately— If your taxable income is $50,000 or more but not over $125,000 .....your tax is $4,090 plus 8.75% of excess over $50,000 If your taxable income is over $125,000 ..................................................... your tax is $10,652 plus 9.9% of excess over $125,000 Chart J: For persons filing jointly, head of household, or qualifying surviving spouse— If your taxable income is $50,000 or more but not over $250,000 .....your tax is $3,805 plus 8.75% of excess over $50,000 If your taxable income is over $250,000.....................................................your tax is $21,305 plus 9.9% of excess over $250,000

2024 Oregon Income Tax Form OR-40 Instructions Full-year Resident Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Use Direct File Oregon to file your return. • Check the status of your refund. • View and print Form 1099-G or letters from us. • Make or schedule payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up. • April 15, 2025 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Do you qualify for the Oregon Kids Credit or the earned income credit? See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC Instructions for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. www.oregon.gov/dor 150-101-040-1 (Rev. 12-13-24)

150-101-040-1 (Rev. 12-13-24) 2 2024 Form OR-40 Instructions

Contents Electronic filing ................................................................. 3 Federal tax law .................................................................. 4 New information ............................................................... 4 Important reminders........................................................ 5 General information......................................................... 6 Do I need to file an Oregon return? .......................... 6 Residency....................................................................... 6 What form do I use?..................................................... 7 Military personnel ....................................................... 7 What if I need more time to file?................................ 8 Penalties......................................................................... 8 What if I need to change my return after filing? .. 8 2025 estimated tax....................................................... 9 General instructions for Form OR-40............................11 Check the boxes...........................................................11 Name and address ......................................................11 Filing status................................................................. 12 Exemptions.................................................................. 12 Form OR-40 line instructions .........................................14 Additions......................................................................14 Subtractions..................................................................14 Deductions ...................................................................16 Oregon tax....................................................................16 Credits—nonrefundable ........................................... 17 Tax payments ...............................................................18 Refundable credits ......................................................18 Penalties and interest................................................. 20 Amount due ................................................................ 21 Payment options......................................................... 22 Refund.......................................................................... 22 Direct deposit.............................................................. 24 Before you file ............................................................. 24 Avoid processing delays............................................ 25 Tax return mailing addresses................................... 25 Tax tables ......................................................................... 26 Tax rate charts ................................................................. 28 Do you have questions or need help? Internet Phone www.oregon.gov/dor • Download forms, instructions, and publications. • Access additional information not included in these instructions. Revenue Online www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. • Check your refund status. • Make or schedule payments. • View your account history. • Find out how much you owe. • File an appeal. • View letters and your Form 1099-G, if applicable. Email or write questions.dor@dor.oregon.gov preguntas.dor@dor.oregon.gov Oregon Department of Revenue 955 Center St NE Salem OR 97301-2555 • Include your name and daytime phone number. • Include the last four digits of your SSN or ITIN. To request printed forms or publications: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 503-378-4988 or 800-356-4222 Monday–Friday, 7:30 a.m.– 5 p.m. Closed Thursdays from 9–11 a.m. Closed holidays. Wait times may vary. Contact us for ADA accommodations or assistance in other languages. In person Offices are located in Salem, Portland, Eugene, Bend, Gresham, and Medford. Find hours and directions to our offices on our website. Our main office is located at: 955 Center St NE Salem, OR 97301-2555 Taxpayer Advocacy If you think you are not being treated fairly, or if you have a problem or complaint, please contact the Office of the Taxpayer Advocate for assistance. 503-945-8700 TTY: We accept all relay calls. taxpayer.advocate@dor.oregon.gov Photo on cover: Historic Columbia Highway Trail, Mosier. Highway Trail east of Hood River County. Gary Halvorson, Oregon State Archives.

150-101-040-1 (Rev. 12-13-24) 3 2024 Form OR-40 Instructions

Electronic filing If you haven't yet tried electronic filing, why not try it this year? Join more than 2 million other Oregon tax- payers who file their returns electronically. Direct File Oregon Use Direct File Oregon to file your return for free. It’s easy, safe, and secure. Direct File Oregon is interview- based software that many full-year residents may use to file an original or amended return through Revenue Online. You can use Direct File with or without a Revenue Online account; however, without a Revenue Online account, some features may be limited. To sign up for a Revenue Online account, you must have: • Filed an Oregon return within the last three years, or • Received a letter from us, or • Made a payment. Assistance provided. Direct File guides you through the return, providing help with things like common deductions and credits along the way. It does the math for you and computes your tax. If you’re familiar with the instructions in this publication before you start, Direct File will be that much easier for you. Note: If you have a complex tax situation, Direct File may not be for you. At this time, Direct File can’t be used to file a nonresident or part-year resident return. Federal return needed. Your federal return must be filed separately with the Internal Revenue Service (IRS). You’ll need to have the information from your federal return and schedules available when you use Direct File Oregon. For more information about Direct File Oregon, includ- ing a complete list of everything you’ll need to get started, go to www.oregon.gov/dor and look for the link on our Individuals webpage. E-file E-filing is another fast way to file your return and receive your refund. Electronic returns are received and processed with more accuracy and speed than paper returns, greatly reducing errors and delays. E-fil- ing uses secure technology to ensure the safety of your personal information when it’s sent to the IRS and the Department of Revenue. Oregon participates in the IRS Federal/State E-file pro- gram. This program allows you to electronically file both your federal and Oregon returns at the same time. If you’ve already filed your federal return, you can still electronically file your Oregon return. You can take advantage of e-file in one of two ways: 1. Ask your tax preparer. If your tax preparer is an authorized IRS e-file pro- vider, your preparer can electronically file your fed- eral and Oregon returns. Many Tax-Aide and Tax Counseling for the Elderly (TCE) sites set up by the IRS are authorized IRS e-file providers. 2. Use online tax preparation software. You can file your federal and state returns from your home, work, or library computer using Oregon- approved online tax preparation products. Go to our website at www.oregon.gov/dor/e-filing for a list of tax preparation products to use in preparing your federal and Oregon returns. You may be eligible for free e-file. Several tax prepara- tion software providers offer free online electronic tax filing. You can also try Oregon Free File Fillable Forms. These online forms are an electronic version of paper return forms. Entering your information is just like fill- ing in paper forms. For free online tax preparation pro- grams, go to www.oregon.gov/dor/e-filing.

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Federal tax law No extension to pay. Oregon doesn’t allow an exten- sion of time to pay your tax, even if the IRS allows an extension. Your 2024 Oregon tax is due April 15, 2025. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2023. Oregon exceptions to federal law. Oregon is discon- nected from the business income deduction allowed by Section 199A of the Internal Revenue Code (IRC). Due to the way Oregon’s returns are designed, no addition is required. Oregon is also disconnected from IRC Sec- tion 139A, the tax exemption for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. Oregon is disconnected from IRC Section 529 tax exemption for earnings on higher education savings plan funds used for K-12 tuition. Funds in Oregon Col- lege Savings Plan and MFS 529 Savings Plan accounts may be used for higher education expenses only. If you based a previous subtraction or credit on contributions that are withdrawn and used for K-12 tuition, you may need to report an addition or tax recapture on your Oregon return. See "Additions" and "Additions to tax" in Publication OR-17 for more information. New information Wildfire settlement or judgment subtractions. You may be able to subtract income from a settlement or judgment related to a wildfire that hasn't been deducted elsewhere on your federal or Oregon return. Legal expenses related to the settlement or judgment may also be subtracted. Returns for tax years 2018 through 2021 may be amended to claim the subtractions if they are filed by May 14, 2025. See our website or Publication OR-17 for more information. Voluntary self-identification. Oregon will now be ask- ing you to voluntarily identify your race or ethnicity when you file Form OR-40. You can select up to three race or ethnicity categories using Form OR-VSI. The information gathered from Form OR-VSI will be used only for research purposes to help make Oregon's tax laws more equitable. For more information, see Form OR-VSI Instructions or our website. Form 1099-G is no longer being mailed. We will send you an informational postcard about Form 1099-G if you received an Oregon income tax refund in 2024 and you claimed itemized deductions on your 2023 fed- eral return. The postcard will tell you how to get your Form 1099-G through Revenue Online. The form will be available by January 31. If you don't have internet access, contact us by phone for assistance. Oregon Kids Credit. For 2024, the income limit for the full credit is $25,750. The maximum credit amount for 2024 is $1,000 per qualifying dependent child, and phases down to zero for income at or above $30,750. See the instructions for line 37. Higher education savings and ABLE account credit limits. The 2024 limits for the credits for contributions made to a higher education savings account (Oregon College Savings Plan or MFS 529 Savings Plan) or an ABLE account are $360 if you're married and filing a joint return or $180 for all others. See "Refundable cred- its" in Publication OR-17 for more information. First-time home buyer savings account (FTHBSA) subtraction. The limits for this subtraction are now adjusted for inflation. The 2024 maximum limits for the FTHBSA subtraction are $11,865 for joint account holders who file a joint return and $5,930 for all other account holders. For phaseout limits and other infor- mation, see "Subtractions" in Publication OR-17. Federal tax liability subtraction. The 2024 federal tax subtraction limit is $8,250 ($4,125 for married filing separately). It may be limited further based on your adjusted gross income (AGI). See the instructions for line 10.

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Important reminders Federal return. When you file your Oregon return, you must include a copy of your federal Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable), or Form 1040-X if you're filing an amended return. Items on your Oregon return may be adjusted or denied if your federal return isn't included. Schedule OR-ASC. Are you reporting an Oregon addi- tion or claiming any Oregon subtractions or credits that have a three-digit code? If so, you must include Schedule OR-ASC when you file your Oregon return. Items with a code may be adjusted or denied if Sched- ule OR-ASC isn't included with your return. A list of current codes can be found in Publication OR-CODES, Publication OR-17, or on our website. You can down- load these publications along with Schedule OR-ASC and its instructions from our website or contact us to order them. Publication OR-17. Publication OR-17 is your guide to Oregon personal income taxes. It covers the gen- eral rules for filing an Oregon income tax return and expands on the information contained in these instructions. Publication OR-17 also explains Oregon's tax laws to make sure you pay only the tax you owe and no more. You can download Publication OR-17 from our website or contact us to order it. Transit self-employment tax. If you're self-employed and doing business within the Lane Transit District (LTD) or the TriMet District (Clackamas, Multnomah, and Washington counties), you may need to pay transit self-employment tax. See the instructions for Form OR- LTD or Form OR-TM on our website or contact us for more information. Statewide transit tax - individuals. If you're an Oregon resident working for an employer outside the state who doesn't withhold Oregon taxes from your pay, you may need to report and pay Oregon's statewide transit tax. See the instructions for Form OR-STI on our website or contact us for more information. Data security breaches. Tax professionals suffering a data breach associated with tax return preparation must report the breach promptly to us. See our website for additional information.

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General information Do I need to file an Oregon return? You need to file if your gross income is more than the amount shown below for your filing status. Table 1. Filing thresholds Amounts apply to full-year residents only. Number of boxes And your Your filing checked on line gross income status is: 17 of return: is more than: Dependent Any $1,300* 0 $7,710 Single 1 $8,910 2 $10,110 0 $15,425 1 $16,425 Married filing jointly 2 $17,425 3 $18,425 4 $19,425 0 $7,710 Married filing separately 1 $8,710 2 $9,710 0 $9,665 Head of household 1 $10,865 2 $12,065 0 $10,740 Qualifying surviving spouse 1 $11,740 2 $12,740 *The larger of $1,300, or your earned income plus $450, up to the standard deduction amount for your filing status. In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages and you want to claim a refund. • You may qualify to claim a refundable credit. How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of your return. Electronically filed returns are generally received and processed faster. Paper returns must have all required Oregon sched- ules, proof of tax withheld, and a copy of your federal return included to ensure smooth processing. If you don’t have a federal filing requirement, create a substi- tute federal return and check the “calculated using ‘as- if’ federal return” box on your Oregon return. Returns mailed closer to April 15, when we receive the most returns, can take longer to process. Also, returns that require additional review can take more time to process. Typical reasons for additional review include: incomplete documentation, identity verification needed, claiming a refundable credit, proof of tax withheld needed, etc. To check the status of your refund, click on “Where’s my refund?” at www.oregon.gov/dor/personal. What income does Oregon tax? An Oregon resident is taxed on all income, including income from outside the state. A nonresident of Oregon is taxed only on income from Oregon sources. Residency As an Oregon taxpayer, you are taxed as a full-year resident, a nonresident, or a part-year resident. Note: If you served in the military during 2024, see “Military personnel” below. Full-year resident You’re a full-year Oregon resident if your domicile is in Oregon—that is, if all the following are true for you: • You think of Oregon as your permanent home. • The center of your financial, social, and family life is in Oregon. • You intend to return to Oregon when you’re away. You’re still a full-year resident even if you temporarily moved out of Oregon, or if you moved back into Ore- gon after a temporary absence, during 2024. You may be taxed as a full-year Oregon resident, even if your domicile is outside Oregon, if you maintained a permanent home in Oregon and spent more than 200 days in this state during 2024, unless you can show that you were in Oregon only for a temporary purpose. Nonresident You’re a nonresident if both of the following are true for you:

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• Your domicile is outside of Oregon: that is, the place that you think of as your permanent home, where the center of your financial, social, and family life is, and where you intend to return when you’re away, is not Oregon; and • If you maintain a permanent home in Oregon, you didn’t spend more than 200 days in this state during 2024 (or you can show that you were in Oregon only for a temporary purpose). Important. A recreational vehicle (RV) isn’t considered a permanent home outside of Oregon. Special-case Oregon resident. You may be taxed as a nonresident, even if your domicile is in Oregon, if all the following are true for you: • You don’t maintain a permanent home in Oregon. • You maintain a permanent home outside Oregon. • You spent a total of 30 days or less in Oregon during 2024. Oregon residents living abroad. You may be taxed as a nonresident if you qualify for the federal foreign earned income or housing exclusions for U.S. residents living abroad. Part-year resident You were a part-year resident if you were an Oregon resident for part of the year and a nonresident for the rest of the year. See Publication OR-17 for examples and more informa- tion about residency. What form do I use? Use Form OR-40 if: • You're a full-year resident and you're not filing a joint return. • Both you and your spouse are full-year residents, if you're filing a joint return. Use Form OR-40-P if any ONE of the following is true: • You’re a part-year resident and you're not filing a joint return. • Both you and your spouse are part-year residents, or one of you is a full-year Oregon resident and the other is a part-year resident, if you're filing a joint return. • You (and your spouse, if you're filing a joint return) qualified as an Oregon resident living abroad for part of the year. Use Form OR-40-N if any ONE of the following is true: • You’re a nonresident. • You’re a special-case Oregon resident. • You or your spouse are a nonresident, if you're filing a joint return. • You (or your spouse, if you're filing a joint return) are in the military, and you're treated as a nonresident for state income tax purposes. • You (or your spouse, if you're filing a joint return) qualified as an Oregon resident living abroad for the entire year. Military personnel If you were in the military during 2024, you are taxed as a full-year resident only if all of the following were true for you: • Your domicile was in Oregon (or you elect to be treated as an Oregon resident for state income tax purposes). • You were unmarried, or you were married and filing a joint return and your spouse was also domiciled in Oregon (or you both elect to be treated as Oregon residents for state income tax purposes). • Your address in the Defense Finance and Accounting System (DFAS) payroll records was in Oregon. If you’re taxed as a resident, you may be able to subtract some or all of your military pay. For more information about the military pay subtraction, see “Subtractions” in Publication OR-17. If any of the above are not true for you, you (or your spouse, if you're filing a joint return) may be treated as a nonresident for state income tax purposes. Nonresidents stationed in Oregon. Oregon does not tax your military pay unless you elect to be treated as an Oregon resident for state income tax purposes. File a nonresident return and check the “Military” box if you have other income from Oregon sources or to request a refund of withheld Oregon tax. Military spouses. Unless you elect to be treated as an Oregon resident for state income tax purposes, Oregon does not tax your wages if your domicile is outside the state and you’re in Oregon only to be with your spouse who is stationed here. File a nonresident return and check the “Military” box if you have income from Ore- gon sources other than wages or to request a refund of withheld Oregon tax. For more information, see "Military personnel filing information" in Publication OR-17. Filing for a deceased person A personal income tax return must be filed for a per- son who died if the person would have been required to file. See “Do I need to file?” on the previous page.

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Check the “Deceased” box next to the person’s name on the return. If you have been appointed personal repre- sentative or you have filed a small estate affidavit, sign the return as ”personal representative.” A surviving spouse must sign if it’s a joint return. If there’s no per- sonal representative, only the surviving spouse needs to sign a joint return. Note: Oregon has an estate transfer tax on estates val- ued at $1 million or more. The tax is paid by the estate using Form OR-706, not by the individuals receiving the inheritance. For more information, see the instruc- tions for Form OR-706. When should I file my return? The filing deadline for calendar year 2024 is April 15, 2025. If you can’t pay your tax by the due date, it’s important to file your return anyway to avoid a late- filing penalty. Returns for fiscal filers are due by the 15th day of the fourth month after the close of their tax year. What if I need more time to file? If you requested a federal extension to file, Oregon will allow the same extension. Don’t include a copy of your federal extension with your Oregon return; keep it with your records. If you need an extension of time to file only your Oregon return, see Publication OR-40-EXT. The due date for filing your return on extension is October 15, 2025. An extension doesn’t mean more time to pay. To avoid interest charges, you must pay all of the tax you expect to owe by April 15, 2025. If you can’t pay all of the tax you expect to owe, pay what you can. You’ll owe interest on any unpaid tax starting April 16, 2025, until the date of your payment. You may also be charged a penalty for failing to pay your tax on time. See “Penalties” and the instructions for line 43. Don’t forget to check the “Extension filed” box on your return when you file. File your return by October 15, 2025. Penalties If you don’t pay all of your tax by April 15, 2025, you may be charged a 5 percent penalty on the unpaid amount, even if you requested an extension to file your return. Oregon doesn’t allow an extension of time to pay tax, even if the IRS does. You’ll be charged a 20 percent penalty for failing to file your return if you file it more than three months after the due date, including extensions. If both penalties apply, the total penalty will be 25 percent of the unpaid tax. Note: If you fail to file returns for three consecutive years by the due date for the third year’s return, includ- ing extensions, you’ll be charged a penalty of 100 per- cent of each year’s unpaid tax. For more information about these and other penalties, see the instructions for line 43 and “Interest and penal- ties” in Publication OR-17. Interest on underpayment of estimated tax You may owe interest for underpaying your estimated tax if: • The tax on your return after credits and withholding is $1,000 or more; and • You underpaid one or more of your required esti- mated tax installments. See the instructions for line 44 and Form OR-10 Instruc- tions for more information. What if I need to change my Oregon return after filing? It depends on what you need to change. Follow these instructions for amending (changing) your return if: • You discover that your income, deductions, or other item(s) were wrong. • You used a form that didn’t match your residency status. • Your filing status wasn’t correct. • The IRS or another state adjusted or audited your return and it affects your Oregon tax. • You have a net operating loss (NOL) carryback. • Changes in federal or state income tax laws affect a return you’ve already filed. Don’t amend your Oregon return if: • We made changes to your return and you object to those changes. You must follow the appeal process in the notice we sent you. • You’re filing a protective claim for a refund. Use Form OR-PCR, which is available on our website or you can contact us to order it. Refer to the instructions for the return you need to amend. Visit our website or contact us if you need forms and instructions. It may take six months or longer to pro- cess your amended return. There’s a time limit for filing an amended return to claim a refund. See the instructions for lines 47 through

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51, and for more information, see “Amended returns” in Publication OR-17. How do I amend my 2024 return? General instructions • Complete the return as it should’ve been filed, includ- ing adjustments we made. • Check the “Amended return” box on the first page. • In the “Amended statement” space on the last page, provide the return line number and reason for each change. • Use the Amended worksheet to figure your amended tax due or refund. • If you’re amending your federal return or a return you filed with another state, include a copy of those amended returns with your amended Oregon return. If you’re only amending your Oregon return, include a copy of your original federal return. Don’t include a copy of your original Oregon return. Residency. Use the form that matches your residency status for the year you’re amending, even if your origi- nal return was filed on a different form. Mailing address. Use your current address. Adjustment made by the IRS or another state. Include a copy of the corrected federal or other state return or audit report. Electronically file your amended return. You can now electronically file your Oregon amended return using Direct File Oregon or e-file software. Go to Revenue Online to amend your return through Direct File, or contact your software provider to find out if they sup- port filing an amended federal return. NOL carryback. Enter the loss year in the NOL tax year box on the first page of the return. If you’re carrying back an NOL from more than one year, file a separate amended return for each NOL year. In the “Amended statement” space on the last page of the return, tell us the section number of the IRC or Oregon Revised Stat- ute (ORS) that allows you to carry the NOL(s) back to the 2024 tax year. See “Net operating losses for Oregon” in Publication OR-17 for more information. Amended worksheet Use this worksheet to figure your amended refund or tax to pay. Keep the completed worksheet with your records. Note: If we adjusted any of the amounts on your original 2024 return, use the adjusted amounts. 1. Amended tax after standard and 1. carryforward credits (amended Form OR-40, line 31). 2. Amended total payments and 2. refundable credits (amended Form OR-40, line 40). 3. Line 1 minus line 2. If less than 0, 3. use a minus sign. 4. Refund you already had for 2024 4. (original Form OR-40, line 47; Form OR-40-N, line 72; or Form OR-40-P, line 71). If you didn’t have a refund, enter 0. 5. Amended tax to pay or refund. 5. Line 3 plus line 4. If less than 0, you have a refund; go to line 6. If more than 0, you owe tax; skip to line 8. 6. Refund applications that weren’t 6. on your original return (amended Form OR-40, lines 48 through 51), up to the refund amount on line 5. Don’t use a minus sign. Example: If line 5 is –$500, you may apply up to $500 on your amended Form OR-40, lines 48 through 51. 7. Net amended refund. Line 5 plus 7. line 6. This can’t be more than 0. 8. Penalty and interest on amended 8. tax to pay (amended Form OR-40, line 45). 9. Total amended amount you owe. 9. Line 5 plus line 8. 10. Payments made on or after April 10. 15, 2025. 11. Total amount to pay with your 11. amended return. Line 9 minus line 10. 2025 estimated tax Estimated tax is the amount of tax (after credits and withholding) you expect will be shown on your return when you file. Do I need to make estimated payments? In most cases, if you expect your return to show that your tax will be at least $1,000 after credits and with- holding, you must make estimated payments. You may need to make estimated payments if: • You're self-employed and don’t have Oregon tax withheld from your income. • You have Oregon Lottery single-ticket winnings of less than $1,500.

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• Oregon tax isn’t withheld from other types of income (such as pensions, interest, or dividends) and you expect to owe tax of $1,000 or more on this income. • You’re a wage earner, but after credits and withhold- ing, the tax on your return will still be $1,000 or more. In that case, you may want to increase the amount your employer withholds from your Oregon wages. For withholding information, go to the Individuals page on our website and look for Do a paycheck checkup. Oregon and federal estimated tax laws are not the same. See Publication OR-ESTIMATE for more infor- mation, including: • Detailed instructions for calculating installment payments. • Installment periods and due dates. • Helpful worksheets and examples. • Payment instructions. You can find Publication OR-ESTIMATE and the pay- ment voucher, Form OR-40-V, on our website or you can contact us to order them.

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General instructions for Form OR-40 Step 1: Complete your federal return Complete your federal return first. Do this even if you aren’t required to file a federal return. You must use the information from your federal return to com- plete your Oregon return. You must include a copy (front and back) of your federal Form 1040, 1040-SR , or 1040-NR with Schedules 1 through 3 (if applicable) with your Oregon return. If you're amending your Oregon return and your federal return, include a copy of Form 1040-X and an amended Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable). If you don’t provide a copy of your federal return, we may adjust or deny your Oregon subtractions, deductions, and credits. Include federal Schedules 1 through 3 (if applicable); don’t include any other fed- eral schedules unless otherwise instructed. We may ask you for copies of other schedules or additional information later. Oregon registered domestic partners (RDPs): To cor- rectly determine your Oregon tax liability, you must complete a federal income tax return as if you were fil- ing as married filing jointly or married filing separately. Check the “Calculated using ‘as if’ federal return” box on your Oregon return. For more information on how to file as an RDP, see Pub- lication OR-17 or visit our website. Step 2: Select the appropriate Oregon form To decide which form to use, see “What form do I use?” in the “General information” section. Step 3: Fill out the Oregon return Use blue or black ink only for easier reading and faster processing. The equipment used to scan documents and checks can’t read gel ink or certain colors, and using them will delay the processing of your return. Fiscal-year filers Write the ending date of your fiscal year in the “Fiscal year ending” box on the return. Check the boxes Amended return If you’re amending your 2024 return, check this box. See “What if I need to change my return after filing?” in the “General information” section for instructions. Calculated using “as if” federal return Check this box if: • You’re filing as an Oregon RDP. • Your filing status is married filing separately for Ore- gon only because you and your spouse don’t have the same residency status. • You didn’t file a federal return. Short-year tax election If you’re filing a short-year return due to a bankruptcy, check this box and write the ending date in the “Fiscal year ending” box. Extension filed Check this box if you requested an extension to file your return. See “What if I need more time to file?” in the “General information” section and Publication OR-40-EXT for more information. Form OR-24 Check this box if you’re deferring gain on like-kind property that was exchanged or converted. You will report the gain to Oregon when it’s reported on your federal return (federal Form 8824). You must include Form OR-24 with your Oregon return or provide it elec- tronically through your Revenue Online account. Form OR-243 Check this box if you are attaching Form OR-243, Claim to Refund Due a Deceased Person. Federal Form 8379 Check this box if you’re requesting your joint refund be apportioned and you are attaching federal Form 8379. For additional information, see “Injured spouse refund claims” in Publication OR-17. Federal Form 8886 Check this box if you filed federal Form 8886, Reportable Transaction Disclosure Statement. Disaster relief If you were affected by a presidentially-declared natu- ral disaster in 2024, check this box. Name and address Type or clearly print your own and, if married, your spouse's name, date of birth, and Social Security num- ber (SSN). Enter your spouse’s information even if you’re filing separately.

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SSN. You must provide your SSN per Section 405, Title 42, of the United States Code. We will only use it to establish your identity for tax purposes. Follow these instructions if you’ve filed previous tax returns using an individual taxpayer identification number (ITIN) and this is your first year filing using your new SSN: • Check the “First time using this SSN” box. • Write your previous identification number on the first line of the “Amended statement” space on the last page of your return. ITIN. If the IRS assigned you an ITIN because you don’t qualify for an SSN, enter your ITIN wherever an SSN is requested. Refunds will not be issued without a valid SSN or ITIN. If you don’t have an ITIN, you must request one from the IRS. To get an ITIN application (federal Form W-7), go to www.irs.gov or call 800-829-1040. If you’ve applied for an ITIN but you haven’t received it yet: • Check the “Applied for ITIN” box. • File your return by April 15, 2025. • Don’t include Form W-7 with your return. Keep it with your records. • Once the IRS issues your ITIN, mail a copy of your ITIN letter to us at PO Box 14999, Salem OR 97309-0990. Deceased taxpayer. Mark the "Deceased" box for a tax- payer who died during 2024 or 2025. Mailing address: Enter your current mailing address. This is where we’ll send any refund or correspondence, if needed. Enter your current daytime phone number. Filing status Check the box next to your filing status. 1 – 5 Generally, you must use the same fil- ing status for your Oregon and federal returns. Choose only one filing status. Exception for Oregon RDPs. As an Oregon RDP, you’re not eligible to use the single filing status on your Ore- gon return. For Oregon, you’re generally required to use the married filing jointly or married filing sepa- rately filing status. For more information, go to our website, see “Filing an Oregon return” in Publication OR-17, or contact us. Exceptions for married persons who filed a joint fed- eral return when each person had a different resi- dency status. Use Table 2 to determine which return form to use if you file a joint return or separate returns for Oregon. Table 2. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full- year resident OR-40-P How to file separate returns for Oregon If you’re filing a joint federal return but separate Oregon returns, enter your spouse’s name, date of birth, and SSN on your return. Report your own share of federal AGI and deductions. Also, report your share of any Oregon additions or subtractions using this for- mula to determine your percentage: Your share of federal AGI Your percentage = Joint federal AGI (not to exceed 100%) Check the “Calculated using ‘as if’ federal return” box on your return. You must include the following forms with both Oregon returns: • A federal Form 1040, 1040-SR, or 1040-NR with Sched- ules 1 through 3 (if applicable) prepared as if you had filed separate federal returns. • A copy of the joint Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable) that you actually filed with the IRS. If the federal form you filed is an amendment, include Form 1040-X and federal returns as amended for your actual and “as if” returns. If possible, mail both Oregon returns in the same enve- lope. Don’t staple the returns together. For more information, see “Filing status” in Publication OR-17. Exemptions

If you're married and filing a joint return (or filing separately but your spouse has no income) and your spouse can't be claimed as a dependent on someone else's return, check the “Regular” exemption box below line 6b; otherwise, check the "Someone else can claim

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your spouse as a dependent" box, even if the other per- son doesn't actually claim your spouse as a dependent. Severe disability exemption. You or your spouse may qualify for the additional "severe disability" exemption, even if someone else can claim you or your spouse as a dependent, if any of the following apply to you or your spouse: • You permanently lost the use of one or both legs or feet. • You permanently lost the use of both hands. • You’re permanently blind. • You have a permanent condition that, without special equipment or outside help, limits your ability to earn a living, maintain a household, or transport yourself. • You're unable to earn a living due to a permanent condition or an impairment of indefinite duration. To confirm that you or your spouse qualify for the additional exemption, a licensed physician must write a letter describing the nature and extent of the disabil- ity. Keep the letter with your records in case we request a copy. If you qualify for this additional exemption, check the “Severe disability” box below line 6a. If your spouse qualifies, check the box below line 6b. Total exemptions for yourself and your spouse. Enter the total number of boxes you checked for yourself on line 6a and for your spouse on line 6b. Dependents. List your dependents in order from 6c youngest to oldest. For each dependent, enter their full name, date of birth, SSN, and relationship code (see Table 3). Table 3. Relationship codes Title Code Relationships included Child Stepchild Foster child Sibling Parent Spouse Grandparent Grandchild Aunt/Uncle Niece/Nephew Other relative No relation SD SC FC SB PT SP GP GC AU NN OR NR Biological or adopted child. Stepchild. Foster child. Sibling, half sibling, stepsibling, or sibling-in-law. Parent, stepparent, or parent-in-law. Spouse or RDP. Grandparent or great-grandparent. Grandchild or great-grandchild. Parent's sibling or the sibling's spouse or RDP. Sibling's child, grandchild, or other descendant. Child's spouse or RDP, cousin, or other related individual. Unrelated qualifying individual. Schedule OR-ADD-DEP. You can list up to three depen- dents on Form OR-40. If you have more than three, use Schedule OR-ADD-DEP to list your other dependents. You can download the schedule from our website or contact us to order it. Use as many additional schedules as needed. Don't list dependents on Schedule OR-ADD- DEP who are already listed on Form OR-40. Include Schedule OR-ADD-DEP when you file your return. Total number of dependents. On line 6c, enter your total number of dependents, including the total(s) from Schedule OR-ADD-DEP, line 6. Child with a disability. The additional "Child 6d with a disability" exemption is for a dependent child, age 21 or younger, who was eligible for early intervention or special education services, as defined by the State Board of Education of the state where the child attended school, as of the end of the tax year. The child must have had an eligible disability under the federal Individuals with Disabilities Education Act. Eligible disabilities include: • Autism spectrum disorder. • Communication disorder. • Deafblindness. • Developmental delay. • Emotional disturbance. • Hearing impairment (including deafness). • Intellectual disability. • Orthopedic impairment. • Other health impairment. • Specific learning disability. • Traumatic brain injury. • Visual impairment (including blindness). Each year, you must be able to provide an eligibility statement and a cover sheet from the child's IEP (Indi- vidualized Education Program) or IFSP (Individualized Family Service Plan). Keep these with your tax records. Check the "Child with a disability" exemption box for each qualifying child listed on Form OR-40 and Sched- ule OR-ADD-DEP. Total number of children with a disability. On line 6d, enter the total number of boxes checked for this addi- tional exemption, including the total(s) from Schedule OR-ADD-DEP, line 7. Total exemptions. Add lines 6a through 6d and 6e enter the total on line 6e. This is your total num- ber of exemptions.

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7 8 Form OR-40 line instructions Don’t enter cents. You must round off cents to the near- est dollar. For example, $99.49 becomes $99, and $99.50 becomes $100. If you don’t round entries to the nearest dollar, there may be small variations in the totals we use. Federal adjusted gross income (AGI). Enter your federal AGI from Form 1040, 1040-SR or 1040-NR, line 11; or Form 1040-X, line 1C. You must include a copy (front and back) of your fed- eral return, including Schedules 1 through 3 (if applicable), with your Oregon return. This helps us verify your income and process your return faster. If you don’t include your federal return with your Oregon return, items claimed on your Oregon return may be adjusted or denied. Additions Total additions from Schedule OR-ASC. Addi- tions are reported on Schedule OR-ASC. Enter the total from Schedule OR-ASC, line A5. Include the schedule with your return. For more information about additions, see “Additions” in Publication OR-17. Subtractions 2024 federal tax liability subtraction. Your fed- 10 eral tax liability subtraction amount is your fed- eral income tax after all credits other than the earned income tax credit (EITC). For 2024, the amount you may subtract is limited to $8,250 ($4,125 if married fil- ing separately) and is further limited by your AGI (see Table 4). Follow the instructions for the Federal tax liability worksheet carefully. Note: Use the amounts from your actual federal return(s), not your "as if" return(s), if you are: • Spouses filing a joint federal return but separate Ore- gon returns due to a difference in residency. • RDPs filing separate federal returns and a joint Ore- gon return. Note: Use the worksheet(s) in the “Federal income tax liability” section of Publication OR-17 if any of these situations apply: • You’re amending your 2024 federal return or we cor- rected the federal tax liability subtraction on your original 2024 Oregon return. • A prior year’s federal return was audited or amended, resulting in additional federal income tax paid or refunded in 2024. • You paid income tax to a foreign country. • You filed your federal return on Form 1040-NR. • You reported recapture taxes or credits on your fed- eral return. Caution: Don’t include any of the following in your calculation: • Self-employment tax. • Social Security and Medicare tax on tips. • Household employment taxes. • Penalties or interest. Federal tax worksheet Note: All references to federal Form 1040 in this work- sheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. This also includes versions of these forms in other languages. Instructions for Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonrefund- able credits but before other taxes. This is found on Form 1040, line 22. Line 2: If you need to repay any advance premium tax credit that you received during the year, enter the repayment amount from Form 1040, Schedule 2, line 1a. If not, enter 0. Line 3: Line 1 minus line 2. If the results are less than 0, enter 0. Line 4: Enter the total of any other taxes, plus any tax recaptures or other additions to tax that include only income tax, from Form 1040, Schedule 2, lines 8, 16, and 17. If you’re repaying a 2008 first-time homebuyer credit and filing federal Form 5405 , include the amount from Schedule 2, line 10. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any additions to tax from Schedule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter 0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allowable

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premium credit regardless of any excess advance pay- ments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund- able credits that must be subtracted from your federal income tax liability. Line 9: Line 5 minus line 8. If less than 0, enter 0. This is your federal income tax liability after refundable cred- its (other than EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 4. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Federal tax liability subtraction worksheet 1. Federal tax liability (Form 1040 1. line 22). 2. Excess advance premium tax 2. credit (Form 1040, Schedule 2, line 1a). 3. Line 1 minus line 2. (If less than 0, 3. enter 0). 4. Other taxes (see instructions). 4. 5. Line 3 plus line 4. 5. 6. American Opportunity credit 6. (form 1040, line 29). 7. Premium tax credit (Form 8962, 7. line 24). 8. Line 6 plus line 7. 8. 9. Line 5 minus line 8. (If less than 0, 9. enter 0). 10. Maximum subtraction amount 10. from Table 4. 11. Smaller of line 9 or line 10. 11. This is your federal tax liability subtraction. Are you amending your 2024 return? Usually you can't change your federal tax subtraction on your amended return, but there are some exceptions. See the “Fed- eral income tax liability” section in Publication OR-17 for more information before making changes to this subtraction. Table 4. Federal tax liability subtraction AGI phaseout If your filing status is: And your federal adjusted gross income is: Then your maximum allowable tax liability subtraction is: At least— But less than— Single 0 $125,000 $125,000 $130,000 $130,000 $135,000 $135,000 $140,000 $140,000 $145,000 $145,000 or more $8,250 $6,600 $4,950 $3,300 $1,650 0 Married filing separately 0 $125,000 $125,000 $130,000 $130,000 $135,000 $135,000 $140,000 $140,000 $145,000 $145,000 or more $4,125 $3,300 $2,475 $1,650 $825 0 Married filing jointly; or Head of household; or Qualifying surviving spouse 0 $250,000 $250,000 $260,000 $260,000 $270,000 $270,000 $280,000 $280,000 $290,000 $290,000 or more $8,250 $6,600 $4,950 $3,300 $1,650 0 Social Security and tier 1 Railroad Retirement 11 Board benefits income. Enter the amount from federal Form 1040 or 1040-SR, line 6b. If you have tier 2, windfall/vested dual, or supplemental Railroad Retire- ment Board benefits, these are subtracted on Schedule OR-ASC. For more information, see this topic under “Income” and "Subtractions" in Publication OR-17. Oregon income tax refund included in federal 12 income. Enter your Oregon state income tax refund from federal Form 1040 or 1040-SR, Schedule 1, line 1. Don’t include local, county, or other states’ tax refunds. Total subtractions from Schedule OR-ASC. Other 13 subtractions not explained here are claimed on Schedule OR-ASC. Enter the total from Schedule OR- ASC, line B7. Include the schedule with your return. For more information about subtractions, see Schedule OR-ASC and OR-ASC-NP Instructions or “Subtrac- tions” in Publication OR-17.

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Deductions In general, you can claim Oregon itemized deductions or the standard deduction, whichever is larger, but not both. See the exceptions below for: • Dependents who can be claimed on another taxpay- er’s return. • Non-U.S. citizens without permanent resident status. • Spouses filing separate returns. Itemized deductions. If you’re itemizing your 16 deductions for Oregon, enter the amount from Schedule OR-A, line 23. Note: Don’t enter your federal itemized deductions; the amount allowed for Oregon may be different. You can download Schedule OR-A and the instructions from our website or you can con- tact us to order them. If you’re not itemizing, enter 0. Standard deduction. Generally, your standard 17 deduction is based on your filing status, as shown in Table 5: Table 5. Standard deduction Single $2,745 Married filing jointly $5,495 Married filing separately • If spouse claims standard deduction $2,745 • If spouse claims itemized deductions 0 Head of household $4,420 Qualifying surviving spouse $5,495 Standard deduction—Age 65 or older, or blind. If you or your spouse turned age 65 by January 1, 2025, or were blind at the end of the tax year, you're entitled to a larger standard deduction. If you or your spouse are permanently blind, you may also qualify for the severe disability exemption claimed on lines 6a and 6b. Check the applicable boxes below line 17, then multiply the number of boxes checked by: • $1,200 if single or head of household filing status; or • $1,000 for all other filers. Add this amount to the standard deduction for your fil- ing status from Table 5. Enter the total on line 17. Example: Joni and Mike are married. By January 1, 2025, Joni had turned 61 and Mike had turned 67. Joni files the return as the primary taxpayer. She checks the box for spouse age 65 or older and adds $1,000 to their standard deduction. Joni enters $6,495 ($5,495 + $1,000) on line 17. Standard deduction—Dependents who can be claimed on another taxpayer’s return. If someone else can claim you as a dependent, your standard deduction is limited to the larger of: • Your earned income plus $450, up to the maximum allowed for your filing status (see Table 5); or • $1,300. This limit applies even if the other person doesn't actu- ally claim you as a dependent on their return. If you’re a dependent and not married, use the follow- ing worksheet to figure your standard deduction. If you’re a dependent and married, see “Deductions and modifications” in Publication OR-17. Standard deduction worksheet for single dependents 1. Enter your earned income (see 1. definition below). 2. Additional $450. 2. $450 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $1,300 5. Enter the larger of line 3 or line 4. 5. 6. Basic standard deduction for 6. $2,745 single. 7. Enter the smaller of line 5 or line 7. 6. 8. If you turned age 65 by 1/1/2025, 8. enter $1,200. Otherwise, enter 0. 9. If you’re blind, enter $1,200. 9. Otherwise, enter 0. 10. Add lines 7, 8, and 9. This is your 10. standard deduction. Earned income includes salaries, wages, tips, profes- sional fees, or other amounts received as pay for work you actually performed, and any part of a scholarship or fellowship grant you received that is included in your federal gross income. Standard deduction—Non-U.S. citizen without per- manent resident status. Your standard deduction is $0, but you may claim itemized deductions. Standard deduction—Married filing separately. The standard deduction for married individuals filing sep- arately is $0 if one spouse itemizes. This applies even if the standard deduction is more than your itemized deductions. Oregon tax 20 Tax tables. Use the tax tables to find your tax if your taxable income on line 19 is less than

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$50,000. Find the range for your taxable income, then locate your tax in Column S or Column J: • Use Column S if your filing status is single or mar- ried filing separately. • Use Column J if your filing status is married filing jointly, head of household, or qualifying surviving spouse. Tax rate charts. If your taxable income on line 19 is $50,000 or more, calculate your tax using the formula in the tax rate chart for your filing status. • Use Chart S if your filing status is single or married filing separately. • Use Chart J if your filing status is married filing jointly, head of household, or qualifying surviving spouse. Example 1: Emily, a single taxpayer, has taxable income of $19,525. She uses Column S in the tax tables to find the tax on income that is at least $19,500 but less than $19,600. Emily enters $1,409 on line 20. Example 2: Daniel and Madison are filing a joint return. Their Oregon taxable income is $75,500. They use the formula in Chart J to calculate their tax as follows: Tax on the first $50,000 $3,774 (from the chart) Oregon taxable income $75,500 Minus the first $50,000 – 50,000 Excess over $50,000 $25,500 Multiply excess by 8.75% x 0.0875 Tax on excess over $50,000 + $2,231 Total Oregon tax $6,005 Other tax methods. If you qualify, you can compute your Oregon tax using any of the following methods: Farm income averaging method. Did you have income from a farm? You may use the federal farm income averaging method to compute your Oregon tax even if you didn’t use farm income averaging on your fed- eral return. Use Publication OR-FIA and Schedule OR- FIA-40 to compute the Oregon tax using this method. You can download them from our website or contact us to order them. If you use farm income averaging to calculate your tax, enter the tax amount from Schedule OR-FIA-40, line 24 and check box 20a. Don’t include the schedule with your return. Keep it with your records. Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming business in which you held at least a 10 percent ownership interest? If so, you may be eligible for a reduced tax rate on the net capital gain from the proceeds. Use Worksheet FCG inside Publication OR-FCG to compute the Oregon tax using this method. You can download it from our web- site or contact us to order it. Enter the tax amount from Worksheet FCG, line 9, and check box 20b. Don’t include the worksheet with your return. Keep it with your records. Oregon qualified business income reduced tax rate. Did you have business income from a sole proprietor- ship, partnership, or S corporation in which you mate- rially participated? If so, you may qualify to use this reduced tax rate. For details, see Schedule OR-PTE-FY and instructions on our website or contact us to order them. Note: If you elect to use this reduced tax rate for quali- fying income, the election is irrevocable and must be made on your original return. An original return includes an amended return filed on or before the due date, including extensions. You can’t change the elec- tion after your original return has been filed. If you elect to use the reduced rate to calculate your tax, enter the tax amount from Schedule OR-PTE-FY, line 14a and check box 20c. Include the schedule with your Oregon return. Interest on certain installment sales. Did you 21 have installment sales that required you to pay interest on the deferred tax liability for federal pur- poses? If so, you must also compute interest for Oregon using the same method as for federal. The annual inter- est rate is 8 percent for 2024 and 9 percent for 2025. Total tax recaptures from Schedule OR-ASC. Tax 22 recaptures are forfeited tax credits that increase your tax. For information about tax recaptures, see "Additions to tax" in Publication OR-17. Tax recaptures are reported on Schedule OR-ASC. Enter the total from Schedule OR-ASC, line C5. Include Schedule OR-ASC with your return. Credits—Nonrefundable Nonrefundable credits can’t be more than your Oregon tax liability. Carryforward credits allow you to claim unused amounts in a later year. Standard credits can’t be used in any other year. For more information about nonrefundable credits, see “Credits” in Publication OR-17. Exemption credit. Depending on your AGI, you 25 may be allowed to claim a credit for the exemp- tions claimed on line 6 of your return. If your federal AGI is more than $200,000 ($100,000 if your filing status is single or married filing separately),

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enter 0; otherwise, use this worksheet to figure your exemption credit. Exemption credit worksheet 1. If your federal AGI is more than $100,000 and your filing status is single or married filing separately, or more than $200,000 for all others, enter 0; otherwise, enter the number of “Regular” boxes checked on lines 6a and 6b plus the number of dependents from line 6c. 1. 2. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of “Severe disability” boxes checked on lines 6a and 6b. 2. 3. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of exemptions for children with a qualifying disability from line 6d. 3. 4. Add lines 1, 2, and 3. 4. 5. Line 4 times $249. This is your exemption credit. 5. Political contribution credit. If your federal AGI 26 isn’t more than $75,000 ($150,000 if you’re filing a joint return), you may claim a standard credit of up to $50 ($100 if you’re filing a joint return) for cash contri- butions you made during 2024 to any: • Qualified political party. • Qualified candidate for federal, state, or local elective office, or the candidate’s campaign, for an election in Oregon. • Political action committee certified in Oregon. Total standard credits from Schedule OR-ASC. 27 All other standard credits are claimed on Sched- ule OR-ASC. Enter the total from Schedule OR-ASC, line D16. Include Schedule OR-ASC with your return. Total carryforward credits from Schedule OR- 30 ASC. All carryforward credits are claimed on Schedule OR-ASC. Enter the total from Schedule OR- ASC, line E9. Include Schedule OR-ASC with your return. Tax payments and refundable credits Oregon income tax withheld. Enter the total 32 Oregon tax withheld from your wages and other income. State tax withheld from wages is shown in box 17 of Form W-2 and in the State area of various 1099 forms. Don’t include FICA (Social Security) tax with- held or tax withheld from your wages by other states. You must include a legible, unaltered copy of your Form W-2 from each job and any Form 1099 showing Oregon income tax withheld with your Oregon return. If you don’t have a Form W-2 or 1099, you must provide other proof of Oregon tax withheld. Proof may include a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2025, we can only accept a Form W-2 or 1099 as proof. If you have tax to pay, you may want to increase the amount your employer or other payer withholds from your wages. You can find withholding information and do a "paycheck checkup" on our website. Prior-year refund applied as estimated tax 33 payment. Enter the amount of any prior-year refund you applied as a payment of 2024 estimated tax. If we adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your applied refund amount, log into or create your Revenue Online account on our website or contact us. Estimated tax payments for 2024. Enter the 34 total estimated tax payments you made before April 15, 2025. For calendar-year filers, these payments were due April 15, 2024; June 17, 2024; September 16, 2024; and January 15, 2025. If you're filing on extension, include any extension payment made on or before the due date (without extensions), but don't include any payments made after April 15, 2025. Don’t include the amount reported on line 33. If you need to verify your estimated payments, log into or create your Revenue Online account on our website or contact us. Estimated tax payments from Schedule OR-K-1, 35 line 20. An Oregon pass-through entity (PTE) or an out-of-state PTE with Oregon-source income may choose to make estimated Oregon tax payments on its owners’ behalf. PTEs report these payments to us on Form OR-19 and to owners on Schedule OR-K-1. Enter the amount from Schedule OR-K-1, line 20. If the PTE didn’t provide Schedule OR-K-1 to you, enter the amount of estimated tax paid on your behalf that the PTE reported to us on Form OR-19. Don’t include any PTE elective tax payments or credit from Schedule OR- 21-K-1. See Publication OR-17 for information about the PTE elective tax and related credit.

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36 Refundable credits Refundable credits reduce the amount of tax that you owe. Any amount that is more than your tax liability is treated the same way as an overpayment. Refund- able credits not explained here are claimed on Schedule OR-ASC. For more information about refundable credits, see “Credits” in Publication OR-17. Earned income credit. Oregon’s earned income credit is a percentage of the earned income tax credit (EITC) claimed on your fed- eral return. The percentage is based on the age of your youngest dependent at the end of the tax year. Note to RDPs: You may claim this credit if you would otherwise qualify for the EITC using your “as if” fed- eral return. Schedule OR-EIC-ITIN. If you can't claim any or all of the federal EITC because you, your spouse, or your child(ren) do not have an SSN that is valid for work or are using an ITIN, you may qualify for Oregon's earned income credit for ITIN filers. See Schedule OR-EIC- ITIN Instructions for more information. The schedule and instructions are available in English and Spanish. Download them from our website or contact us to order them. Credit amount. Use Table 6 and the following work- sheet to figure your credit. Table 6. EITC percentage Age of youngest dependent at end of tax year Percentage of federal EITC At least 3 years old, or no dependents 9 percent (0.09) Younger than 3 12 percent (0.12) Earned income credit worksheet 1. Enter your federal EITC from Form 1040 or 1040-SR, line 27. 2. Enter the percentage from the table as a decimal. 1. 2. 3. Line 1 times line 2. This is your Oregon earned income credit. 3. 37 Oregon Kids Credit. The Oregon Kids Credit is available for certain taxpayers with qualifying depen- dent children who were under the age of six at the end of the tax year. See "Exemption credit" in Publication OR-17 for information about qualifying children. Eligibility. To be eligible for the Oregon Kids Credit, you must: 1. Use a filing status other than married filing sepa- rately. If you're married and filing separate returns, you do not qualify for this credit. 2. Have one or more dependents age five or younger at the end of 2024 listed on your Oregon return.* 3. Have qualifying income under $30,750. If you're eligible, use the Oregon Kids Credit work- sheet to figure your credit. Credit amount. For 2024, the maximum amount of the Oregon Kids Credit is $1,000 per qualifying dependent, for up to five dependents. Your credit amount may be limited by your income. * Note for divorced, separated, or unmarried parents: If a child is listed as a dependent on your Oregon return only because the custodial parent released the child’s dependent exemption to you, the child doesn’t qualify for purposes of this credit. If you're the custodial parent of an otherwise quali- fying child, you may be able to claim this credit even if the child's dependent exemption has been released to the other parent. Instructions for Oregon Kids Credit worksheet Part A: Credit amount Line 1. Enter your income after subtractions from Form OR-40, line 15. Line 2. If you're claiming a loss on your federal return or a subtraction on Schedule OR-ASC, see the instruc- tions for Part B. Otherwise, enter 0 on line 2. Line 3. Qualifying income. If the amount on this line is: • $25,750 or less, your Oregon Kids Credit is $1,000 times the number of your qualifying dependents (up to a maximum of $5,000). • More than $25,750 but less than $30,750, your credit will be reduced using the steps on lines 5 through 9. • $30,750 or more, you can’t claim the Oregon Kids Credit. Part B: Loss add back Your qualifying income may include up to $20,000 in losses deducted from your federal AGI or subtracted on your Oregon return. Loss amounts above $20,000 must be added back to your income after Oregon additions and subtractions. Line 10. Enter losses claimed on your Form 1040 and Schedule OR-ASC (using subtraction codes 321, 355, 356, or 357 only), as indicated on lines 10a through 10g. If the amount shown on the indicated line is not a loss, do not enter it on the worksheet. Enter all losses as posi- tive numbers.

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• Line 10b. If you claimed a subtraction using code 359 or 385, compare your subtraction amount to the income reported on Form 1040, Schedule 1, line 3. If the subtraction is less than your income, you don't have a loss; skip line 10b. Otherwise, subtract the income amount from the subtraction amount and enter the result on line 10b. Example 1. Colten reported $8,000 in additional income from rental real estate on Form 1040, Schedule 1, line 5. He also reported a $6,000 farm loss on Form 1040, Schedule 1, line 6. Colten enters 0 on line 10d of the worksheet for rental real estate, as he did not have a loss reported on Form 1040, Schedule 1, line 5. He enters 6,000 on line 10e, as he did report a farm loss on Form 1040, Schedule 1, line 6. Colten enters his total losses of $6,000 on line 10h. He enters 0 on line 10, because his total losses minus 20,000 are less than 0. He also enters 0 on line 2. Example 2. Michaela reported a business loss of ($15,500) on Form 1040, Schedule 1, line 4. She enters 15,500 on line 10b of the worksheet. She had a rental real estate loss of ($8,000) reported on Form 1040, Schedule 1, line 5. She enters 8,000 on line 10d. She has no other losses. Michaela enters her total losses of 23,500 (15,500 + 8,000) on line 10h. She enters 3,500 (23,500 - 20,000) on line 2 in Part A. Oregon Kids Credit Worksheet Part A: Credit amount 1. Enter your income after subtractions 1. from Form OR-40, line 15. 2. Loss add back. If you are claiming any 2. losses on Form 1040 or have an amount greater than 0 on Form OR-40, line 13, complete Part B and enter the amount from line 10 here. Otherwise, enter 0 here and go to line 3. 3. Line 1 plus line 2. 3. Is line 3 $30,750 or more? • If yes, STOP. You can't claim the Oregon Kids Credit. • If no, continue to line 4. 4. Phaseout amount 4. $25,750 5. Line 3 minus line 4. If less than zero, 5. enter 0. 6. Line 5 divided by $5,000. Round to two 6. decimal places. 7. Credit amount before phaseout: 7a. Number of dependent 7a. children age five or younger at the end of 2024. Don't enter more than 5. 7b. Maximum credit amount 7b. $1,000 per child. Line 7a multiplied by line 7b. 7. 8. Credit reduction. Line 6 multiplied by 8. line 7. 9. Line 7 minus line 8. This is your 9. Oregon Kids Credit. Enter the amount from line 9 on Form OR-40, line 37. Part B: Loss add back 10. Enter your losses, as positive amounts, from: 10a. Capital (loss) from 10a. Form 1040, line 7 10b. Business (loss) from 10b. Form 1040, Schedule 1, line 3. If you claimed Oregon subtraction code 359 or 385, see instructions. 10c. Other (loss) from Form 10c. 1040, Schedule 1, line 4. 10d. Rental real estate, etc. 10d. (loss) from Form 1040, Schedule 1, line 5. 10e. Farm (loss) from Form 10e. 1040, Schedule 1, line 6. 10f. Net operating loss 10f. from Form 1040, Schedule 1, line 8a. 10g. Losses from Schedule 10g. OR-ASC, Section B (codes 321, 355, 356, and 357 only). 10h. Add lines 10a through 10h. 10g. Line 10h minus 20,000. 10. If less than zero, enter 0. Enter the amount from line 10 on Part A, line 2. 38 39 Reserved. Total refundable credits from Schedule OR-ASC. Enter your total refundable credits from Sched- ule OR-ASC, line F7. Include Schedule OR-ASC with your return. Penalties and interest 43 Your 2024 tax must be paid by April 15, 2025, even if you requested an extension of time to file your return. Your 2024 return must be filed by April 15,

150-101-040-1 (Rev. 12-13-24) 21 2024 Form OR-40 Instructions

2025. If you requested an extension, your return must be filed by October 15, 2025. Round the total of penalties and interest to the near- est whole dollar. For more information and examples showing how penalties and interest are calculated, see “Interest and penalties” in Publication OR-17. Penalties Penalty amounts are based on the tax after all credits shown on your return minus payments that you made by the due date of the return. To find your tax after all credits, start with your tax after standard and carry- forward credits on line 31, then subtract the refundable credit amounts on lines 36 through 39. Failure-to-file penalty. Include a penalty for failure to file a return if: • Your return is filed more than three months after the due date (or extension due date); and • You didn’t pay all of your tax by April 15, 2025. The penalty for failure to file is 20 percent of your tax after all credits that wasn’t paid by April 15, 2025. Failure-to-pay penalty. Include a penalty for failure to pay if: • Less than 90 percent of your tax after all credits was paid by April 15, 2025, or • You paid at least 90 percent of your tax after credits by April 15, 2025, but you aren’t paying the balance of unpaid tax in full when you file. The penalty for failure to pay is 5 percent of your tax after all credits that wasn’t paid by April 15, 2025. Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax after all credits that wasn’t paid by April 15, 2025. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal. Include a pen- alty of 5 percent of the funds withdrawn from your FTHBSA if you withdrew funds from your account for a purpose other than purchasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties pro- vided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions” in Publication OR-17. Interest on unpaid tax You’ll owe interest on the amount of tax that wasn’t paid by April 15, 2025. Interest starts accruing on April 16, 2025 and continues to accrue every day, includ- ing the date of your payment. Interest is figured daily, based on a 365-day year. The annual interest rate for 2025 is 9 percent, or 0.0247 per- cent per day. To figure your interest, count the number of days start- ing with April 16, 2025, and ending with the date of your payment. Multiply your unpaid tax by the num- ber of days, then multiply that amount by 0.000247 (the daily rate converted to a decimal). Interest rate increase. If we bill you for unpaid tax, and the tax isn’t paid in full within 60 days from the date of our billing notice, the annual interest rate increases by 4 percentage points, to 13 percent. Amended return. If you’re amending your return, cal- culate the interest based on the additional amount of tax you must pay (line 5 of the Amended worksheet). Interest on underpayment of estimated tax. 44 Underpayment interest is charged if: • Your tax after all credits and withholding is $1,000 or more; • You were required to make estimated tax payments; • One or more of your required installments was underpaid; and • You don’t qualify for an exception. Note: You could be charged interest on underpayment of estimated tax even if line 41 shows an overpayment. See Form OR-10 Instructions to determine if you owe underpayment interest or qualify for an exception. Download Form OR-10 and the instructions from our website or contact us to order them. If you owe underpayment interest, enter the amount from line 4 of Form OR-10. If you qualify for an excep- tion, enter the exception number from line 1 of the form inside box 44a. If you used the Annualized Income Work- sheet (located in Form OR-10 Instructions) to figure your interest, check box 44b. Include Form OR-10 with your return. Keep your underpayment interest worksheets and any required statements with your records. Amount due Amount you owe. Enter your total unpaid tax 46 plus penalties and interest. Note: If you have an overpayment on line 41 and the overpayment is less than the total penalties and interest you entered on line 45, enter the amount from line 45 minus the amount on line 41.

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Amount to pay. If you’re filing your return on or before the due date (without extensions), pay the amount shown on this line. If you’re filing your original return after the due date, subtract any payments you made after the due date of the return (without extensions) from the amount on this line before you make your payment. For amended returns, pay the amount shown on the Amended Worksheet, line 11. Payment options You may pay electronically from your checking or sav- ings account, by credit card, or with a check, cashier’s check, or money order. Cash payments can be made only at our main office in Salem. If the amount due is less than $2, no payment is required. Electronic payment from your checking or savings account You can pay your current year income taxes, 2025 esti- mated income taxes, any prior year taxes due, and amended return taxes directly from your checking or savings account. There is no fee to use this service. This option is available only through Revenue Online. Direct debit may be available with Direct File or e-filed returns at the time of filing. Credit card payments You can pay with your Discover, MasterCard, or Visa credit card. The service provider will charge you a convenience fee. The service provider will tell you what the fee is during the transaction; you will have the option to continue or cancel the transaction before entering your credit card information. If you complete the credit card transaction, you will receive a confir- mation number. Keep this confirmation number as proof of payment—don’t send it with your return. To pay by credit card, go to Revenue Online on our website or contact us by phone. Check or money order • Make your check or money order payable to “Oregon Department of Revenue.” • Write all of the following on your payment: — The tax year (2024). — The form you’re filing (Oregon Form OR-40). — The last four digits of your SSN or ITIN. • Use blue or black ballpoint ink. Don’t use red or pur- ple ink or gel pens. • Don’t send cash or a postdated check. Form OR-40-V. Use the voucher only if you’re mak- ing a separate payment by check, cashier’s check, or money order. Don’t use the voucher if you’re including a payment with your return or making an electronic payment. See Form OR-40-V Instructions for additional information. Payment plan. If you can’t pay in full now, pay what you can. Contact us and we will help you set up a pay- ment plan for the remaining amount. Refund Refund. Enter your overpayment from line 47 41 minus any penalty or interest from line 45. Note: If the total penalty and interest is more than your overpayment, see the instructions for line 46. You have three years from the due date of the return to file a claim for your refund. By law, we can’t issue a refund if you file your return more than three years after the return’s due date (without extensions) or if the refund is less than $1. For more information about the time limit for claiming a refund, see “Payments and refunds” in Publication OR-17. Interest on refunds. See “Interest and penalties” in Publication OR-17 for information about interest paid on refunds. Refund applications If line 47 shows a refund, you may use some or all of it to: • Make an estimated tax payment for a later year. • Donate to one or more of the charitable organizations listed on Schedule OR-DONATE. • Contribute to the political party of your choice. • Make a deposit to an Oregon higher education sav- ings plan account. Each of these applications will reduce your refund. The combined total of all applications can’t be more than the amount of your refund. Note: A refund of overpaid tax will be offset against outstanding debt before any amount is applied or refunded to you. Instructions for amended returns. If line 5 of the Amended worksheet shows a refund, you can use some or all of it for the refund applications listed above. However, you can’t reduce any amounts you’ve already applied from a refund on your original return. See the instructions for each application for details. Apply refund as estimated tax payment. Enter 48 the amount of your refund you want to apply as an estimated tax payment for a later year. The payment will be applied to the 2025 tax year unless you're filing this return after January 15, 2026. For more information about open estimated tax accounts, see “Payments and refunds” in Publication OR-17.

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Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you’ve already applied as an estimated tax payment for a later year. If line 5 of the Amended worksheet shows a refund and you want to apply some or all of it as an estimated tax payment, include the amount you want to apply. Charitable checkoff donations. Enter the 49 amount from line 30 of Schedule OR-DONATE. For more information, see the instructions on the schedule. You can download Schedule OR-DONATE from our website or contact us to order it. Note: If your refund—after any application as a pay- ment of estimated tax—is less than your total donation amount, your donations will be prorated. To make direct donations instead, you can find each charity’s address listed on our website. Don’t mail your donations to us. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as charitable donations using Schedule OR- DONATE. If line 5 of the Amended worksheet shows a refund, you can donate some or all of it to one or more of the listed charities. Include this amount and an amended Schedule OR-DONATE with your amended return. Note: The refund from your amended return will be applied as a donation for the calendar year in which you’re filing it. Political party checkoff. You may use your 50 refund to contribute $3 to the Oregon political party of your choice. If you’re filing a joint return, you and your spouse may each contribute $3. Note: Your contribution will reduce your refund and does not qualify for the political contribution credit. To make a contribution: 1. Designate the political party of your choice using the party’s code from the alphabetized list below. — If you contribute, enter one code in box 50a. — If your spouse contributes on a joint return, enter one code in box 50b. Enter only one code per taxpayer. Spouses filing a joint return don’t have to enter the same code. • Constitution Party of Oregon [code 500]. • Democratic Party of Oregon [code 501]. • Independent Party of Oregon [code 502]. • Libertarian Party of Oregon [code 503]. • Oregon Republican Party [code 504]. • Pacific Green Party of Oregon [code 505]. • Progressive Party [code 506]. • We the People Party [code 508]. • Working Families Party of Oregon [code 507]. 2. Enter your total contribution amount. — If you or your spouse contribute, enter $3. — If both you and your spouse contribute on a joint return, enter $6. Note: Your political party contribution won’t be made if: • Your refund—after any application as a payment of estimated tax or charitable checkoff donation—is less than your total contribution amount. • You enter an amount but don’t designate a party (or parties). • You designate a party (or parties) but don’t enter an amount. • You enter more than one party code per taxpayer. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as a political party contribution. If line 5 of the Amended worksheet shows a refund and you didn’t make the maximum political party contribution on your original return, you may use the refund to make a contribution on your amended return. Oregon higher education savings plan depos- 51 its. Enter the amount from line 5 of Schedule OR-529. For minimum deposit amounts and other information, see the schedule instructions. You can download Schedule OR-529 and instructions from our website or contact us to order them. You can also use Schedule OR-529 to provide your information to the Oregon Treasury Savings Network if you'd like them to set up an Oregon College Savings Plan account for you. However, you can make contri- butions from a refund on your return only after the account has been created. See Schedule OR-529 Instruc- tions for details. Note: If the amount of your refund—after any applica- tion as a payment of estimated tax, charitable checkoff donation, or political party contribution—is less than the total amount you want to deposit, no deposit will be made. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as an Oregon higher education savings plan deposit. If line 5 of the Amended worksheet shows a refund, add the amount you want to apply as a deposit and include an amended Schedule OR-529 with your amended return. The refund will be applied for the year in which you’re filing the amended return. Net refund. You must reduce your refund by 53 any amounts applied as a payment of estimated tax, charitable checkoff donations, political party con- tributions, and Oregon higher education savings plan deposits. By law, we can’t issue or apply a refund if you file your return more than three years after the return’s due date (excluding extensions).

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54 Direct deposit In most cases, we can deposit your refund directly into your checking or savings account instead of mailing you a check. However, federal bank- ing regulations prevent us from making a refund by direct deposit if the final destination is an account outside the United States. In that case, we must issue a paper check instead. Before you enter your information, verify that your deposit will be accepted and confirm your routing and account numbers. You can find a diagram of a personal check showing where these numbers are located in the “Payments and refunds” section of Publication OR-17. Follow these steps to make sure your refund will be deposited into the correct account: 1. Check the box if the final destination for your refund would be an account outside the United States. Note: If you check this box, you will be issued a paper check. 2. Check the appropriate box, either checking or sav- ings, but not both. 3. Enter your nine-digit routing number. Routing numbers begin with the digits 01 through 12, 21 through 32, or 61 through 72. 4. Enter your account number. Account numbers can be up to 17 characters (both numbers and letters). Don’t include hyphens, spaces, or special symbols. 5. Double-check the account and routing numbers. These numbers can’t be changed after the return is filed. Reserved 55 Reserved. Signature block Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both taxpayers must sign. By signing the return, you acknowledge, under penalty of false swearing, that the information on the return and any attachments is true, correct, and complete. Minor child’s return. If your child can’t sign their tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By [your signature], parent (or other legal guardian) of minor child.” Preparer signature. Anyone who prepares, advises, or assists in preparing personal income tax returns in exchange for compensation of any kind must be licensed to prepare Oregon returns and must sign the return. Signing the return doesn't grant your preparer the right to represent you or make decisions on your behalf. For more information about representation and authoriza- tion, download Form OR-AUTH-REP and instructions from our website or contact us to order them. Contact the following agencies to check the status of your Oregon tax practitioner: • State Board of Tax Practitioners at 503-378-4034 (Salem) for licensed tax consultants or preparers, or go to www.oregon.gov/obtp. • State Board of Accountancy at 503-378-4181 (Salem) for public accountants and certified public accoun- tants, or go to www.oregon.gov/boa. Preparer license number. Licensed tax consultants and tax preparers: enter your license number. CPAs: enter your certificate number. Tax-Aide volunteers: enter your TCE site number. All others: leave blank. Don’t enter your driver license number. Form OR-VSI The Oregon legislature’s goal is to make Oregon’s tax policies equitable for everyone. To help in this effort, you may voluntarily provide information about your race or ethnicity when you file your Oregon return, using Form OR-VSI. On Form OR-VSI, you may identify your primary race or ethnicity (or indicate that you don’t have one) and up to two additional races or ethnicities. There’s also a way to indicate that you aren’t sure about your race or ethnicity. If you’re married and filing a joint return, you and your spouse complete separate forms. The information you provide will be used for research purposes only. For more information, see Form OR-VSI Instructions or go to our website and look for “Volun- tary Self-Identification.” You can download the form and instructions from our website or contact us to order them. Before you file Copy of federal return. Before you assemble your Ore- gon return, make a copy of both sides of your federal Form 1040, 1040-SR, or 1040-NR, along with Schedules 1 through 3 (as applicable), or Form 1040-X. Don’t include any other federal schedules. Keep these with your records; we may ask for them later. If you created an “as if” federal return, use blue or black ink to label it “as if” on the top left corner. Include it along with the copy of your actual federal return (and any amendments).

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Failure to include your federal return will delay pro- cessing, and items claimed on your Oregon return may be adjusted or denied. Amended Oregon return. If you’re amending your Oregon return due to changes to your federal return or a return you filed with another state, include a copy of your amended or corrected federal or other state return or audit report. If you’re amending only your Oregon return, include a copy of your original federal or other state return. Assemble your Oregon return. Assemble your return in the order shown below. If a form has more than one page, be sure that you’ve included all pages and that they’re all from the same 2024 form. For example, if you’re filing Schedule OR-WFHDC, Schedule OR-A, or Schedule OR-ASC, be sure that “2024 Schedule OR- WFHDC”, "2024 Schedule OR-A", or "2024 Schedule OR- ASC" is printed at the top of each page and that you’ve included all pages associated with each schedule. Important: Don’t use staples, paperclips, tape, or other fasteners. Doing so will delay processing. 1. Payment by check or money order, if any. Don’t use a voucher. 2. Form(s) W-2 and 1099 showing Oregon tax withheld. 3. Form OR-40. 4. Schedule OR-A. 5. Schedule OR-ASC. 6. Schedule OR-ADD-DEP. 7. Schedule OR-DONATE. 8. Schedule OR-529. 9. Schedule OR-PTE-FY. 10. Form OR-10. 11. Schedule OR-EIC-ITIN. 12. Schedule OR-WFHDC. 13. Form OR-VSI. 14. Other Oregon schedules required to be included with your return. 15. If you’re an RDP filing separately for Oregon, your partner’s Oregon return. 16. Your federal return(s) and schedules. Note: If you’re making an estimated tax payment for 2025 by check or money order, send the payment in a separate envelope with a completed Form OR-40-V. Don’t include your 2025 payment or voucher with your 2024 return. You can download the voucher and instructions from our website or contact us to order them. Avoid processing delays Type or clearly print your name, date of birth, SSN, complete mailing address, and daytime phone number on your return. Include all pages of your Oregon return. Double-check your figures and other numbers, including your SSN. Errors will delay processing. Common mistakes are: • Math errors. • A wrong amount claimed for the federal tax liability subtraction. • Using the wrong line or column on the tax tables. • Using the wrong tax chart. If you have tax to pay, review the instructions for line 46. Verify your account information if you’re requesting a refund by direct deposit. Sign your return. Both spouses must sign a joint return. Include legible copies of all W-2 and 1099 forms show- ing Oregon income tax withheld. Place them on top of your return along with any payment by check, cashier’s check, or money order. Include a copy of your federal return (front and back) with your Oregon return. Include federal Schedules 1 through 3 (if applicable), but don’t include other federal schedules unless otherwise instructed. Place it behind all Oregon forms and schedules. Payment by check, cashier’s check, or money order should be placed on top of your return. Don’t mail cash. Don’t use a voucher. Don’t use staples, paper clips, tape, or other fasteners. Mail your return in a stamped envelope. Use a busi- ness-size (4 × 9½ inches) or larger envelope with ade- quate postage. Don’t use a smaller envelope—it delays processing. Tax return mailing addresses Mail refund returns or Mail tax-to-pay no-tax-due returns to: returns to: REFUND Oregon Department of Revenue PO Box 14700 PO Box 14555 Salem OR 97309-0930 Salem OR 97309-0940

150-101-040-1 (Rev. 12-13-24) 26 2024 Form OR-40 Instructions

2024 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 0 0 – 20 0 0 20 – 50 2 2 $ 50 50 – 100 4 4 100 – 200 7 7 200 – 300 12 12 300 – 400 17 17 400 – 500 21 21 500 – 600 26 26 600 – 700 31 31 700 – 800 36 36 800 – 900 40 40 900 – 1,000 45 45 $ 1,000 1,000 – 1,100 50 50 1,100 – 1,200 55 55 1,200 – 1,300 59 59 1,300 – 1,400 64 64 1,400 – 1,500 69 69 1,500 – 1,600 74 74 1,600 – 1,700 78 78 1,700 – 1,800 83 83 1,800 – 1,900 88 88 1,900 – 2,000 93 93 $ 2,000 2,000 – 2,100 97 97 2,100 – 2,200 102 102 2,200 – 2,300 107 107 2,300 – 2,400 112 112 2,400 – 2,500 116 116 2,500 – 2,600 121 121 2,600 – 2,700 126 126 2,700 – 2,800 131 131 2,800 – 2,900 135 135 2,900 – 3,000 140 140 $ 3,000 3,000 – 3,100 145 145 3,100 – 3,200 150 150 3,200 – 3,300 154 154 3,300 – 3,400 159 159 3,400 – 3,500 164 164 3,500 – 3,600 169 169 3,600 – 3,700 173 173 3,700 – 3,800 178 178 3,800 – 3,900 183 183 3,900 – 4,000 188 188 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 4,000 4,000 – 4,100 192 192 4,100 – 4,200 197 197 4,200 – 4,300 202 202 4,300 – 4,400 207 207 4,400 – 4,500 214 211 4,500 – 4,600 221 216 4,600 – 4,700 228 221 4,700 – 4,800 234 226 4,800 – 4,900 241 230 4,900 – 5,000 248 235 $ 5,000 5,000 – 5,100 255 240 5,100 – 5,200 261 245 5,200 – 5,300 268 249 5,300 – 5,400 275 254 5,400 – 5,500 282 259 5,500 – 5,600 288 264 5,600 – 5,700 295 268 5,700 – 5,800 302 273 5,800 – 5,900 309 278 5,900 – 6,000 315 283 $ 6,000 6,000 – 6,100 322 287 6,100 – 6,200 329 292 6,200 – 6,300 336 297 6,300 – 6,400 342 302 6,400 – 6,500 349 306 6,500 – 6,600 356 311 6,600 – 6,700 363 316 6,700 – 6,800 369 321 6,800 – 6,900 376 325 6,900 – 7,000 383 330 $ 7,000 7,000 – 7,100 390 335 7,100 – 7,200 396 340 7,200 – 7,300 403 344 7,300 – 7,400 410 349 7,400 – 7,500 417 354 7,500 – 7,600 423 359 7,600 – 7,700 430 363 7,700 – 7,800 437 368 7,800 – 7,900 444 373 7,900 – 8,000 450 378 $ 8,000 8,000 – 8,100 457 382 8,100 – 8,200 464 387 8,200 – 8,300 471 392 8,300 – 8,400 477 397 8,400 – 8,500 484 401 8,500 – 8,600 491 406 8,600 – 8,700 498 412 8,700 – 8,800 504 419 8,800 – 8,900 511 426 8,900 – 9,000 518 433 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 9,000 9,000 – 9,100 525 439 9,100 – 9,200 531 446 9,200 – 9,300 538 453 9,300 – 9,400 545 460 9,400 – 9,500 552 466 9,500 – 9,600 558 473 9,600 – 9,700 565 480 9,700 – 9,800 572 487 9,800 – 9,900 579 493 9,900 – 10,000 585 500 $ 10,000 10,000 – 10,100 592 507 10,100 – 10,200 599 514 10,200 – 10,300 606 520 10,300 – 10,400 612 527 10,400 – 10,500 619 534 10,500 – 10,600 626 541 10,600 – 10,700 633 547 10,700 – 10,800 639 554 10,800 – 10,900 648 561 10,900 – 11,000 657 568 $ 11,000 11,000 – 11,100 665 574 11,100 – 11,200 674 581 11,200 – 11,300 683 588 11,300 – 11,400 692 595 11,400 – 11,500 700 601 11,500 – 11,600 709 608 11,600 – 11,700 718 615 11,700 – 11,800 727 622 11,800 – 11,900 735 628 11,900 – 12,000 744 635 $ 12,000 12,000 – 12,100 753 642 12,100 – 12,200 762 649 12,200 – 12,300 770 655 12,300 – 12,400 779 662 12,400 – 12,500 788 669 12,500 – 12,600 797 676 12,600 – 12,700 805 682 12,700 – 12,800 814 689 12,800 – 12,900 823 696 12,900 – 13,000 832 703 $ 13,000 13,000 – 13,100 840 709 13,100 – 13,200 849 716 13,200 – 13,300 858 723 13,300 – 13,400 867 730 13,400 – 13,500 875 736 13,500 – 13,600 884 743 13,600 – 13,700 893 750 13,700 – 13,800 902 757 13,800 – 13,900 910 763 13,900 – 14,000 919 770 If income from Form OR-40, And you line 19 is: use column: But At less S J least: than: Your tax is: $ 14,000 14,000 – 14,100 928 777 14,100 – 14,200 937 784 14,200 – 14,300 945 790 14,300 – 14,400 954 797 14,400 – 14,500 963 804 14,500 – 14,600 972 811 14,600 – 14,700 980 817 14,700 – 14,800 989 824 14,800 – 14,900 998 831 14,900 – 15,000 1,007 838 $ 15,000 15,000 – 15,100 1,015 844 15,100 – 15,200 1,024 851 15,200 – 15,300 1,033 858 15,300 – 15,400 1,042 865 15,400 – 15,500 1,050 871 15,500 – 15,600 1,059 878 15,600 – 15,700 1,068 885 15,700 – 15,800 1,077 892 15,800 – 15,900 1,085 898 15,900 – 16,000 1,094 905 $ 16,000 16,000 – 16,100 1,103 912 16,100 – 16,200 1,112 919 16,200 – 16,300 1,120 925 16,300 – 16,400 1,129 932 16,400 – 16,500 1,138 939 16,500 – 16,600 1,147 946 16,600 – 16,700 1,155 952 16,700 – 16,800 1,164 959 16,800 – 16,900 1,173 966 16,900 – 17,000 1,182 973 $ 17,000 17,000 – 17,100 1,190 979 17,100 – 17,200 1,199 986 17,200 – 17,300 1,208 993 17,300 – 17,400 1,217 1,000 17,400 – 17,500 1,225 1,006 17,500 – 17,600 1,234 1,013 17,600 – 17,700 1,243 1,020 17,700 – 17,800 1,252 1,027 17,800 – 17,900 1,260 1,033 17,900 – 18,000 1,269 1,040 $ 18,000 18,000 – 18,100 1,278 1,047 18,100 – 18,200 1,287 1,054 18,200 – 18,300 1,295 1,060 18,300 – 18,400 1,304 1,067 18,400 – 18,500 1,313 1,074 18,500 – 18,600 1,322 1,081 18,600 – 18,700 1,330 1,087 18,700 – 18,800 1,339 1,094 18,800 – 18,900 1,348 1,101 18,900 – 19,000 1,357 1,108

150-101-040-1 (Rev. 12-13-24) 27 2024 Form OR-40 Instructions

2024 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: If income from Form OR-40, line 19 is: And you use column: At least: But less than: S J Your tax is: $ 19,000 $ 24,000 $ 29,000 $ 34,000 19,000 – 19,100 1,365 1,114 24,000 – 24,100 1,803 1,503 29,000 – 29,100 2,240 1,941 34,000 – 34,100 2,678 2,378 19,100 – 19,200 1,374 1,121 24,100 – 24,200 1,812 1,512 29,100 – 29,200 2,249 1,949 34,100 – 34,200 2,687 2,387 19,200 – 19,300 1,383 1,128 24,200 – 24,300 1,820 1,521 29,200 – 29,300 2,258 1,958 34,200 – 34,300 2,695 2,396 19,300 – 19,400 1,392 1,135 24,300 – 24,400 1,829 1,529 29,300 – 29,400 2,267 1,967 34,300 – 34,400 2,704 2,404 19,400 – 19,500 1,400 1,141 24,400 – 24,500 1,838 1,538 29,400 – 29,500 2,275 1,976 34,400 – 34,500 2,713 2,413 19,500 – 19,600 1,409 1,148 24,500 – 24,600 1,847 1,547 29,500 – 29,600 2,284 1,984 34,500 – 34,600 2,722 2,422 19,600 – 19,700 1,418 1,155 24,600 – 24,700 1,855 1,556 29,600 – 29,700 2,293 1,993 34,600 – 34,700 2,730 2,431 19,700 – 19,800 1,427 1,162 24,700 – 24,800 1,864 1,564 29,700 – 29,800 2,302 2,002 34,700 – 34,800 2,739 2,439 19,800 – 19,900 1,435 1,168 24,800 – 24,900 1,873 1,573 29,800 – 29,900 2,310 2,011 34,800 – 34,900 2,748 2,448 19,900 – 20,000 1,444 1,175 24,900 – 25,000 1,882 1,582 29,900 – 30,000 2,319 2,019 34,900 – 35,000 2,757 2,457 $ 20,000 20,000 – 20,100 1,453 20,100 – 20,200 1,462 20,200 – 20,300 1,470 20,300 – 20,400 1,479 20,400 – 20,500 1,488 20,500 – 20,600 1,497 20,600 – 20,700 1,505 20,700 – 20,800 1,514 20,800 – 20,900 1,523 20,900 – 21,000 1,532 $ 21,000 21,000 – 21,100 1,540 21,100 – 21,200 1,549 21,200 – 21,300 1,558 21,300 – 21,400 1,567 21,400 – 21,500 1,575 21,500 – 21,600 1,584 21,600 – 21,700 1,593 21,700 – 21,800 1,602 21,800 – 21,900 1,610 21,900 – 22,000 1,619 $ 22,000 22,000 – 22,100 1,628 22,100 – 22,200 1,637 22,200 – 22,300 1,645 22,300 – 22,400 1,654 22,400 – 22,500 1,663 22,500 – 22,600 1,672 22,600 – 22,700 1,680 22,700 – 22,800 1,689 22,800 – 22,900 1,698 22,900 – 23,000 1,707 $ 23,000 23,000 – 23,100 1,715 23,100 – 23,200 1,724 23,200 – 23,300 1,733 23,300 – 23,400 1,742 23,400 – 23,500 1,750 23,500 – 23,600 1,759 23,600 – 23,700 1,768 23,700 – 23,800 1,777 23,800 – 23,900 1,785 23,900 – 24,000 1,794 1,182 1,189 1,195 1,202 1,209 1,216 1,222 1,229 1,236 1,243 1,249 1,256 1,263 1,270 1,276 1,284 1,293 1,302 1,311 1,319 1,328 1,337 1,346 1,354 1,363 1,372 1,381 1,389 1,398 1,407 1,416 1,424 1,433 1,442 1,451 1,459 1,468 1,477 1,486 1,494 $ 25,000 25,000 – 25,100 1,890 25,100 – 25,200 1,899 25,200 – 25,300 1,908 25,300 – 25,400 1,917 25,400 – 25,500 1,925 25,500 – 25,600 1,934 25,600 – 25,700 1,943 25,700 – 25,800 1,952 25,800 – 25,900 1,960 25,900 – 26,000 1,969 $ 26,000 26,000 – 26,100 1,978 26,100 – 26,200 1,987 26,200 – 26,300 1,995 26,300 – 26,400 2,004 26,400 – 26,500 2,013 26,500 – 26,600 2,022 26,600 – 26,700 2,030 26,700 – 26,800 2,039 26,800 – 26,900 2,048 26,900 – 27,000 2,057 $ 27,000 27,000 – 27,100 2,065 27,100 – 27,200 2,074 27,200 – 27,300 2,083 27,300 – 27,400 2,092 27,400 – 27,500 2,100 27,500 – 27,600 2,109 27,600 – 27,700 2,118 27,700 – 27,800 2,127 27,800 – 27,900 2,135 27,900 – 28,000 2,144 $ 28,000 $ 30,000 1,591 1,599 1,608 1,617 1,626 1,634 1,643 1,652 1,661 1,669 30,000 – 30,100 2,328 30,100 – 30,200 2,337 30,200 – 30,300 2,345 30,300 – 30,400 2,354 30,400 – 30,500 2,363 30,500 – 30,600 2,372 30,600 – 30,700 2,380 30,700 – 30,800 2,389 30,800 – 30,900 2,398 30,900 – 31,000 2,407 $ 31,000 1,678 1,687 1,696 1,704 1,713 1,722 1,731 1,739 1,748 1,757 31,000 – 31,100 2,415 31,100 – 31,200 2,424 31,200 – 31,300 2,433 31,300 – 31,400 2,442 31,400 – 31,500 2,450 31,500 – 31,600 2,459 31,600 – 31,700 2,468 31,700 – 31,800 2,477 31,800 – 31,900 2,485 31,900 – 32,000 2,494 $ 32,000 1,766 1,774 1,783 1,792 1,801 1,809 1,818 1,827 1,836 1,844 32,000 – 32,100 2,503 32,100 – 32,200 2,512 32,200 – 32,300 2,520 32,300 – 32,400 2,529 32,400 – 32,500 2,538 32,500 – 32,600 2,547 32,600 – 32,700 2,555 32,700 – 32,800 2,564 32,800 – 32,900 2,573 32,900 – 33,000 2,582 $ 33,000 $ 35,000 2,028 2,037 2,046 2,054 2,063 2,072 2,081 2,089 2,098 2,107 35,000 – 35,100 2,765 35,100 – 35,200 2,774 35,200 – 35,300 2,783 35,300 – 35,400 2,792 35,400 – 35,500 2,800 35,500 – 35,600 2,809 35,600 – 35,700 2,818 35,700 – 35,800 2,827 35,800 – 35,900 2,835 35,900 – 36,000 2,844 $ 36,000 2,116 2,124 2,133 2,142 2,151 2,159 2,168 2,177 2,186 2,194 36,000 – 36,100 2,853 36,100 – 36,200 2,862 36,200 – 36,300 2,870 36,300 – 36,400 2,879 36,400 – 36,500 2,888 36,500 – 36,600 2,897 36,600 – 36,700 2,905 36,700 – 36,800 2,914 36,800 – 36,900 2,923 36,900 – 37,000 2,932 $ 37,000 2,203 2,212 2,221 2,229 2,238 2,247 2,256 2,264 2,273 2,282 37,000 – 37,100 2,940 37,100 – 37,200 2,949 37,200 – 37,300 2,958 37,300 – 37,400 2,967 37,400 – 37,500 2,975 37,500 – 37,600 2,984 37,600 – 37,700 2,993 37,700 – 37,800 3,002 37,800 – 37,900 3,010 37,900 – 38,000 3,019 $ 38,000 28,000 – 28,100 2,153 28,100 – 28,200 2,162 28,200 – 28,300 2,170 28,300 – 28,400 2,179 28,400 – 28,500 2,188 28,500 – 28,600 2,197 28,600 – 28,700 2,205 28,700 – 28,800 2,214 28,800 – 28,900 2,223 28,900 – 29,000 2,232 1,853 1,862 1,871 1,879 1,888 1,897 1,906 1,914 1,923 1,932 33,000 – 33,100 2,590 33,100 – 33,200 2,599 33,200 – 33,300 2,608 33,300 – 33,400 2,617 33,400 – 33,500 2,625 33,500 – 33,600 2,634 33,600 – 33,700 2,643 33,700 – 33,800 2,652 33,800 – 33,900 2,660 33,900 – 34,000 2,669 2,291 2,299 2,308 2,317 2,326 2,334 2,343 2,352 2,361 2,369 2,466 2,474 2,483 2,492 2,501 2,509 2,518 2,527 2,536 2,544 2,553 2,562 2,571 2,579 2,588 2,597 2,606 2,614 2,623 2,632 2,641 2,649 2,658 2,667 2,676 2,684 2,693 2,702 2,711 2,719 38,000 – 38,100 3,028 38,100 – 38,200 3,037 38,200 – 38,300 3,045 38,300 – 38,400 3,054 38,400 – 38,500 3,063 38,500 – 38,600 3,072 38,600 – 38,700 3,080 38,700 – 38,800 3,089 38,800 – 38,900 3,098 38,900 – 39,000 3,107 2,728 2,737 2,746 2,754 2,763 2,772 2,781 2,789 2,798 2,807

150-101-040-1 (Rev. 12-13-24) 28 2024 Form OR-40 Instructions

2024 Tax Tables for Form OR-40 S Use column S if you are: • Single. • Married filing separately. Use column J if you are: J • Married filing jointly. • Head of household. • Surviving spouse. If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: If income from Form OR-40, line 19 is: And you use column: But At less least: than: S J But At less least: than: S J But At less least: than: S J But At less least: than: S J Your tax is: Your tax is: Your tax is: Your tax is: $ 39,000 $ 42,000 $ 45,000 $ 48,000 39,000 – 39,100 3,115 2,816 42,000 – 42,100 3,378 3,078 45,000 – 45,100 3,640 3,341 48,000 – 48,100 3,903 3,603 39,100 – 39,200 3,124 2,824 42,100 – 42,200 3,387 3,087 45,100 – 45,200 3,649 3,349 48,100 – 48,200 3,912 3,612 39,200 – 39,300 3,133 2,833 42,200 – 42,300 3,395 3,096 45,200 – 45,300 3,658 3,358 48,200 – 48,300 3,920 3,621 39,300 – 39,400 3,142 2,842 42,300 – 42,400 3,404 3,104 45,300 – 45,400 3,667 3,367 48,300 – 48,400 3,929 3,629 39,400 – 39,500 3,150 2,851 42,400 – 42,500 3,413 3,113 45,400 – 45,500 3,675 3,376 48,400 – 48,500 3,938 3,638 39,500 – 39,600 3,159 2,859 42,500 – 42,600 3,422 3,122 45,500 – 45,600 3,684 3,384 48,500 – 48,600 3,947 3,647 39,600 – 39,700 3,168 2,868 42,600 – 42,700 3,430 3,131 45,600 – 45,700 3,693 3,393 48,600 – 48,700 3,955 3,656 39,700 – 39,800 3,177 2,877 42,700 – 42,800 3,439 3,139 45,700 – 45,800 3,702 3,402 48,700 – 48,800 3,964 3,664 39,800 – 39,900 3,185 2,886 42,800 – 42,900 3,448 3,148 45,800 – 45,900 3,710 3,411 48,800 – 48,900 3,973 3,673 39,900 – 40,000 3,194 2,894 42,900 – 43,000 3,457 3,157 45,900 – 46,000 3,719 3,419 48,900 – 49,000 3,982 3,682 $ 40,000 $ 43,000 $ 46,000 $ 49,000 40,000 – 40,100 3,203 2,903 43,000 – 43,100 3,465 3,166 46,000 – 46,100 3,728 3,428 49,000 – 49,100 3,990 3,691 40,100 – 40,200 3,212 2,912 43,100 – 43,200 3,474 3,174 46,100 – 46,200 3,737 3,437 49,100 – 49,200 3,999 3,699 40,200 – 40,300 3,220 2,921 43,200 – 43,300 3,483 3,183 46,200 – 46,300 3,745 3,446 49,200 – 49,300 4,008 3,708 40,300 – 40,400 3,229 2,929 43,300 – 43,400 3,492 3,192 46,300 – 46,400 3,754 3,454 49,300 – 49,400 4,017 3,717 40,400 – 40,500 3,238 2,938 43,400 – 43,500 3,500 3,201 46,400 – 46,500 3,763 3,463 49,400 – 49,500 4,025 3,726 40,500 – 40,600 3,247 2,947 43,500 – 43,600 3,509 3,209 46,500 – 46,600 3,772 3,472 49,500 – 49,600 4,034 3,734 40,600 – 40,700 3,255 2,956 43,600 – 43,700 3,518 3,218 46,600 – 46,700 3,780 3,481 49,600 – 49,700 4,043 3,743 40,700 – 40,800 3,264 2,964 43,700 – 43,800 3,527 3,227 46,700 – 46,800 3,789 3,489 49,700 – 49,800 4,052 3,752 40,800 – 40,900 3,273 2,973 43,800 – 43,900 3,535 3,236 46,800 – 46,900 3,798 3,498 49,800 – 49,900 4,060 3,761 40,900 – 41,000 3,282 2,982 43,900 – 44,000 3,544 3,244 46,900 – 47,000 3,807 3,507 49,900 – 50,000 4,069 3,769 $ 41,000 $ 44,000 $ 47,000 41,000 – 41,100 3,290 2,991 44,000 – 44,100 3,553 3,253 47,000 – 47,100 3,815 3,516 41,100 – 41,200 3,299 2,999 44,100 – 44,200 3,562 3,262 47,100 – 47,200 3,824 3,524 41,200 – 41,300 3,308 3,008 44,200 – 44,300 3,570 3,271 47,200 – 47,300 3,833 3,533 41,300 – 41,400 3,317 3,017 44,300 – 44,400 3,579 3,279 47,300 – 47,400 3,842 3,542 41,400 – 41,500 3,325 3,026 44,400 – 44,500 3,588 3,288 47,400 – 47,500 3,850 3,551 41,500 – 41,600 3,334 3,034 44,500 – 44,600 3,597 3,297 47,500 – 47,600 3,859 3,559 41,600 – 41,700 3,343 3,043 44,600 – 44,700 3,605 3,306 47,600 – 47,700 3,868 3,568 41,700 – 41,800 3,352 3,052 44,700 – 44,800 3,614 3,314 47,700 – 47,800 3,877 3,577 41,800 – 41,900 3,360 3,061 44,800 – 44,900 3,623 3,323 47,800 – 47,900 3,885 3,586 41,900 – 42,000 3,369 3,069 44,900 – 45,000 3,632 3,332 47,900 – 48,000 3,894 3,594 2024 Tax rate charts Chart S: For persons filing single or married filing separately— If your taxable income is $50,000 or more but not over $125,000 .....your tax is $4,073 plus 8.75% of excess over $50,000 If your taxable income is over $125,000 ..................................................... your tax is $10,636 plus 9.9% of excess over $125,000 Chart J: For persons filing jointly, head of household, or qualifying surviving spouse— If your taxable income is $50,000 or more but not over $250,000 ..... your tax is $3,774 plus 8.75% of excess over $50,000 If your taxable income is over $250,000..................................................... your tax is $21,274 plus 9.9% of excess over $250,000

2024 Oregon Income Tax Form OR-40-N and Form OR-40-P Instructions 150-101-048-1 (Rev. 10-16-24) Nonresident/Part-year Resident www.oregon.gov/dor • April 15, 2025 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Do you qualify for the Oregon Kids Credit or the earned income credit? See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC Instructions for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Check the status of your refund. • View and print Form 1099-G or letters from us. • Make or schedule payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up.

150-101-048-1 (Rev. 10-16-24) 2 2024 Form OR-40-N and Form OR-40-P Instructions Contents Electronic filing ..................................................................3 Federal tax law ...................................................................3 New information ................................................................4 Important reminders .........................................................4 General information ..........................................................5 Do I need to file an Oregon return? .............................5 What does income from Oregon sources include? ....5 Residency .........................................................................6 What form do I use? .......................................................7 Military personnel ..........................................................7 What if I need more time to file? ..................................7 P enalties ...........................................................................8 What if I need to change my Oregon return after filing? ....................................................................8 2025 estimated tax ..........................................................9 General instructions for Forms OR-40-N and OR-40-P ......................................................................10 Check the boxes ............................................................10 Name and address ........................................................11 Filing status ...................................................................11 Exemptions ....................................................................12 Federal column instructions, lines 7F–29F ..................14 Oregon column instructions, lines 7S–29S ..................14 Adjustments ..................................................................16 Additions .......................................................................17 Subtractions ...................................................................17 Oregon percentage .......................................................17 Deductions and modifications ...................................18 Oregon tax .....................................................................21 Tax rate charts ..................................................................21 Credits—nonrefundable ..............................................22 Tax payments and refundable credits .......................23 Penalties and interest ...................................................26 Amount due and payment options ............................27 Refund ............................................................................28 Direct deposit ................................................................29 Before you file ...............................................................30 Avoid processing delays ..............................................31 Tax return mailing addresses .....................................31 Photo on cover: Historic Columbia River Highway Trail west of Mosier. Wasco County. Creator Gary Halvorson, Oregon State Archives. Do you have questions or need help? Internet www.oregon.gov/dor • Download forms, instructions, and publications. • Access additional information not included in these instructions. Revenue Online www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. • Check your refund status. • Make or schedule payments. • View your account history. • Find out how much you owe. • File an appeal. • View letters and your Form 1099-G, if applicable. Email or write questions.dor@dor.oregon.gov preguntas.dor@dor.oregon.gov Oregon Department of Revenue 955 Center St NE Salem OR 97301-2555 • Include your name and daytime phone number. • Include the last four digits of your SSN or ITIN. To request printed forms or publications: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Phone 503-378-4988 or 800-356-4222 Monday–Friday, 7:30 a.m.– 5 p.m. Closed Thursdays from 9:00–11:00 a.m and closed on holidays. Wait times may vary. Contact us for ADA accommodations or assistance in other languages. In person Offices are located in Salem, Portland, Eugene, Bend, Gresham, and Medford. Find hours and directions to our offices on our website. Our main office is located at: 955 Center St NE Salem, OR 97301-2555 Taxpayer Advocacy If you think you are not being treated fairly, or if you have a problem or complaint, please contact the Office of the Tax- payer Advocate for assistance. 503-945-8700 TTY: We accept all relay calls. taxpayer.advocate@dor.oregon.gov

150-101-048-1 (Rev. 10-16-24) 3 2024 Form OR-40-N and Form OR-40-P Instructions Electronic filing If you haven’t yet tried electronic filing, why not try it this year? Join more than 2 million other Oregon tax- payers who file their returns electronically. E-filing is the fastest way to file your return and receive your refund. Electronic returns are received and pro- cessed with more accuracy and speed than paper returns, greatly reducing errors and delays. E-filing uses secure technology to ensure the safety of your personal information when it’s sent to the IRS and the Department of Revenue. Oregon participates in the IRS Federal/State E-file pro- gram. This program allows you to electronically file both your federal and Oregon returns at the same time. If you’ve already filed your federal return, you can still electronically file your Oregon return. You can take advantage of e-file in one of two ways: 1. Ask your tax preparer.

If your tax preparer is an authorized IRS e-file pro- vider, your preparer can electronically file your fed- eral and Oregon returns. Many Tax-Aide and Tax Counseling for the Elderly (TCE) sites set up by the IRS are authorized IRS e-file providers. 2. Use online tax preparation software.

You can file your federal and state returns from your home, work, or library computer using Oregon- approved online tax preparation products. Go to our website at www.oregon.gov/dor/e-filing for a list of tax preparation products to use in preparing your federal and Oregon returns. You may be eligible for free e-file. Several tax prepara- tion software providers offer free online electronic tax filing. You can also try Oregon Free File Fillable Forms. These online forms are an electronic version of paper return forms. Entering your information is just like fill- ing in paper forms. For free online tax preparation programs, go to www. oregon.gov/dor/e-filing. Federal tax law No extension to pay. Oregon doesn’t allow an exten- sion of time to pay your tax, even if the IRS allows an extension. Your 2024 Oregon tax is due April 15, 2025. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2023. Oregon exceptions to federal law. Oregon is discon- nected from the business income deduction allowed by Section 199A of the Internal Revenue Code (IRC). Due to the way Oregon’s returns are designed, no addition is required. Oregon is also disconnected from IRC Sec- tion 139A , the tax exemption for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. Oregon is disconnected from IRC Section 529 tax exemption for earnings on higher education savings plan funds used for K-12 tuition. Funds in Oregon Col- lege Savings Plan and MFS 529 Savings Plan accounts may be used for higher education expenses only. If you based a previous subtraction or credit on contributions that are withdrawn and used for K-12 tuition, you may need to report an addition or tax recapture on your Oregon return. See “Additions” and “Additions to tax” in Publication OR-17 for more information. Form 1099-G is no longer being mailed. We will send you an informational postcard about Form 1099-G if you received an Oregon income tax refund in 2024 and you claimed itemized deductions on your 2023 fed- eral return. The postcard will tell you how to get your Form 1099-G through Revenue Online. The form will be available by January 31. If you don’t have internet access, contact us by phone for assistance.

150-101-048-1 (Rev. 10-16-24) 4 2024 Form OR-40-N and Form OR-40-P Instructions New information Wildfire settlement or judgment subtractions. You may be able to subtract income from a settlement or judgment related to a wildfire that hasn’t been deducted elsewhere on your federal or Oregon return. Legal expenses related to the settlement or judgment may also be subtracted. Returns for tax years 2018 through 2021 may be amended to claim the subtractions if they are filed by May 14, 2025. See our website or Publication OR-17 for more information. Voluntary self-identification. Oregon will now be ask- ing you to voluntarily identify your race or ethnicity when you file Form OR-40-N or Form OR-40-P. You can select up to three race or ethnicity categories using Form OR-VSI. The information gathered from Form OR-VSI will be used only for research purposes to help make Oregon’s tax laws more equitable. For more infor- mation, see Form OR-VSI Instructions or our website. Oregon Kids Credit. For 2024, the income limit for the full credit is $25,750. The maximum credit amount for 2024 is $1,000 per qualifying dependent child, and phases down to zero for income at or above $30,750. See the instructions for OR-40-N, line 62, or OR-40-P, line 61. Higher education savings and ABLE account credit limits. The 2024 limits for the credits for contributions made to a higher education savings account (Oregon College Savings Plan or MFS 529 Savings Plan) or an ABLE account are $360 if you’re married and filing a joint return or $180 for all others. See “Refundable cred- its” in Publication OR-17 for more information. First-time home buyer savings account (FTHBSA) sub- traction. The 2024 maximum limits for the FTHBSA subtraction are $11,865 for joint account holders who file a joint return and $5,930 for all other account hold- ers. For phaseout limits and other information, see “Subtractions” in Publication OR-17. Federal tax liability subtraction. The 2024 federal tax subtraction limit is $8,250 ($4,125 for married filing separately). It may be limited further based on your adjusted gross income (AGI). See the instructions for line 40. Important reminders Federal return. When you file your Oregon return, you must include a copy of your federal Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable), or Form 1040-X if you’re filing an amended return. Items on your Oregon return may be adjusted or denied if your federal return isn’t included. Schedule OR-ASC-NP. Are you reporting an Oregon addition or claiming any Oregon subtractions or cred- its that have a three-digit code? If so, you must include Schedule OR-ASC-NP when you file your Oregon return. Items with a code may be adjusted or denied if Schedule OR-ASC-NP isn’t included with your return. A list of current codes can be found in Publication OR- CODES, Publication OR-17, or on our website. You can download these publications along with Schedule OR- ASC and its instructions from our website or contact us to order them. Publication OR-17. Publication OR-17 is your guide to Oregon personal income taxes. It covers the gen- eral rules for filing an Oregon income tax return and expands on the information contained in these instruc- tions. Publication OR-17 also explains Oregon’s tax laws to make sure you pay only the tax you owe and no more. You can download Publication OR-17 from our website or contact us to order it. Transit self-employment tax. If you’re self-employed and doing business within the Lane Transit District (LTD) or the TriMet District (Clackamas, Multnomah, and Washington counties), you may need to pay transit self-employment tax. See the instructions for Form OR- LTD or Form OR-TM on our website or contact us for more information. Statewide transit tax - individuals. If you were a part- year Oregon resident working for an employer outside the state who didn’t withhold Oregon taxes from your pay while you were a resident, you may need to report and pay Oregon’s statewide transit tax. See the instruc- tions for Form OR-STI on our website or contact us for more information. Data security breaches. Tax professionals suffering a data breach associated with tax return preparation must report the breach promptly to us. See our website for additional information.

150-101-048-1 (Rev. 10-16-24) 5 2024 Form OR-40-N and Form OR-40-P Instructions General information Do I need to file an Oregon return? You need to file an Oregon income tax return if your Oregon-source income while you’re a nonresident and any income received while you’re a resident is more than your standard deduction. See Table 1. If your Oregon income is less than your standard deduc- tion, you’re not required to file a return for Oregon. However, you must file an Oregon return if you had $1 or more of Oregon income tax withheld from your wages and you want to claim a refund, or if you qualify to claim a refundable credit. Full-year residents. Oregon taxes your income from all sources. Part-year residents. Oregon taxes your income from all sources earned or received while you were an Oregon resident. Oregon also taxes your income from Oregon sources while you were a nonresident. Nonresidents. Oregon taxes only your income from Oregon sources. Nonresident trusts. If you file federal Form 1040-NR for a trust, you must file Oregon’s fiduciary return, Form OR-41. Don’t file an Oregon Form OR-40-N. Table 1. Filing thresholds You must file an Oregon income tax return if: Your filing status is— And your Oregon gross income is more than— Can be claimed on another’s return $1,300* Single $2,745 Married filing jointly $5,495 Married filing separately • If spouse claims standard deduction • If spouse itemizes deductions $2,745 0 Head of household $4,420 Qualifying surviving spouse $5,495 *The larger of $1,300, or your earned income plus $450, up to the standard deduction amount for your filing status. How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of your return. Electronically filed returns are generally received and processed faster. Paper returns must have all required Oregon sched- ules, proof of tax withheld, and a copy of your federal return included to ensure smooth processing. If you don’t have a federal filing requirement, create a substi- tute federal return and check the “calculated using ‘as- if’ federal return” box on your Oregon return. Returns mailed closer to April 15, when we receive the most returns, can take longer to process. Also, returns that require additional review can take more time to process. Typical reasons for additional review include: incomplete documentation, identity verification needed, claiming a refundable credit, proof of tax withheld needed, etc. To check the status of your refund, click on “Where’s my refund?” at www.oregon.gov/dor/personal. What does income from Oregon sources include? Oregon income includes income shown on your federal return for services performed in Oregon. Compute your Oregon-source income using the for- mula for line 7S if: • You have wages from an Oregon employer; • While you were a nonresident, you performed ser- vices for your employer in Oregon and another state; and • Your Oregon wages aren’t stated separately on your Form W-2 from this employer. Other Oregon sources of income (and losses) include: • Businesses, partnerships, limited liability companies taxed as partnerships, and S corporations located or doing business in Oregon or providing services to Oregonians. • Unemployment insurance benefits received because of an Oregon job.

150-101-048-1 (Rev. 10-16-24) 6 2024 Form OR-40-N and Form OR-40-P Instructions • Severance pay received because of an Oregon job. • Farms located in Oregon. • Sick pay and vacation pay earned from an Oregon job. • Estates and trusts in Oregon or that have Oregon property or businesses. • Oregon State Lottery. • Sale of Oregon property. • Rents and royalties for use of Oregon property. • Community property. If you’re a resident of Oregon and your spouse is a resident of a state with com- munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you’re taxed on any of your spouse’s income. Income not considered from Oregon sources includes: • Interest and dividends. However, you must include them in Oregon income if they were: —From an Oregon business you own. —Received during the part of the year you were a resident. —Passed through from an S corporation or partner- ship doing business in Oregon. • Oregon retirement income received while you were a nonresident unless you were domiciled in Oregon. See “Retirement income” in Publication OR-17. • Interstate transportation wages from an interstate railroad company, interstate motor carrier, air carrier, or interstate motor private carrier. You must be a non- resident and have regularly assigned duties in more than one state. See “Interstate transportation wages” in Publication OR-17. • Waterway, air carrier, or hydroelectric dam compen- sation, if you’re a nonresident: — Working as crew or pilot on a vessel in navigable waters between Oregon and another state. — Working as crew or pilot on an aircraft in Oregon and at least one other state. — Working on a dam that spans a river between Ore- gon and another state. Note: See the “Income” section in Publication OR-17 for more details regarding waterway, air carrier, and dam workers’ compensation. • Military pay of a nonresident. • Winnings of a nonresident from tribal gaming cen- ters in Oregon. • Wages earned by a nonresident military spouse who is in Oregon only to be with the service member who is stationed here. Residency As an Oregon taxpayer, you are taxed as a full-year resident, a nonresident, or a part-year resident. Note: If you served in the military during 2024, see “Military personnel” below. Full-year resident You’re a full-year Oregon resident if your domicile is in Oregon—that is, if all the following are true for you: • You think of Oregon as your permanent home. • The center of your financial, social, and family life is in Oregon. • You intend to return to Oregon when you’re away. You’re still a full-year resident even if you temporarily moved out of Oregon, or if you moved back into Ore- gon after a temporary absence, during 2024. You may be taxed as a full-year Oregon resident, even if your domicile is outside Oregon, if you maintained a permanent home in Oregon and spent more than 200 days in this state during 2024, unless you can show that you were in Oregon only for a temporary purpose. Nonresident You’re a nonresident if both of the following are true for you: • Your domicile is outside of Oregon: that is, the place that you think of as your permanent home, where the center of your financial, social, and family life is, and where you intend to return when you’re away, is not Oregon; and • If you maintain a permanent home in Oregon, you didn’t spend more than 200 days in this state during 2024 (or you can show that you were in Oregon only for a temporary purpose). Important: A recreational vehicle (RV) is not consid- ered to be a permanent home outside of Oregon. Special-case Oregon resident. You may be taxed as a nonresident, even if your domicile is in Oregon, if all the following are true for you: • You don’t maintain a permanent home in Oregon. • You maintain a permanent home outside Oregon. • You spent a total of 30 days or less in Oregon during 2024. Oregon residents living abroad. You may be taxed as a nonresident if you qualify for the federal foreign earned income or housing exclusions for U.S. residents living abroad. Part-year resident You were a part-year resident if you were an Oregon resident for part of the year and a nonresident for the rest of the year.

150-101-048-1 (Rev. 10-16-24) 7 2024 Form OR-40-N and Form OR-40-P Instructions See Publication OR-17 for examples and more informa- tion about residency. What form do I use? Use Form OR-40-P if any ONE of the following is true: • You’re a part-year resident and you’re not filing a joint return. • Both you and your spouse are part-year residents, or one of you is a full-year Oregon resident and the other is a part-year resident, if you’re filing a joint return. • You (or your spouse, if filing a joint return) qualified as an Oregon resident living abroad for part of the year. Use Form OR-40-N if any ONE of the following is true: • You’re a nonresident. • You’re a special-case Oregon resident. • You (or your spouse, if you’re filing a joint return) are in the military, and you’re treated as a nonresident for state income tax purposes. • You (or your spouse, if you’re filing a joint return) qualified as an Oregon resident living abroad for the entire year. Use Form OR-40 if any ONE of the following is true: • You’re a full-year resident and you’re not filing a joint return. • You’re filing a joint return and both you and your spouse are full-year residents. Military personnel If you were in the military during 2024, you are taxed as a full-year resident only if all the following were true for you: • Your domicile was in Oregon (or you elect to be treated as an Oregon resident for state income tax purposes). • You were unmarried, or you were married and filing a joint return and your spouse was also domiciled in Oregon (or you both elect to be treated as Oregon residents for state income tax purposes). • Your address in the Defense Finance and Accounting System (DFAS) payroll records was in Oregon. If you’re taxed as a resident, you may be able to subtract some or all of your military pay. For more information about the military pay subtraction, see “Subtractions” in Publication OR-17. If any of the above are not true for you, you may be treated as a nonresident for state income tax purposes. Nonresidents stationed in Oregon. Oregon does not tax your military pay unless you elect to be treated as an Oregon resident for state income tax purposes. File a nonresident return and check the “Military” box if you have other income from Oregon sources or to request a refund of withheld Oregon tax. Military spouses. Unless you elect to be treated as an Oregon resident for state income tax purposes, Oregon does not tax your wages if your domicile is outside the state and you’re in Oregon only to be with your spouse who is stationed here. File a nonresident return and check the “Military” box if you have income from Ore- gon sources other than wages or to request a refund of withheld Oregon tax. For more information, see “Military personnel filing information” in Publication OR-17. Filing for a deceased person A personal income tax return must be filed for a per- son who died if the person would have been required to file. See “Do I need to file?”. Check the “Deceased” box next to the person’s name on the return. If you have been appointed personal representative or you have filed a small estate affidavit, sign the return as ”per- sonal representative.” A surviving spouse must sign if it’s a joint return. If there’s no personal representative, only the surviving spouse needs to sign a joint return. Note: Oregon has an estate transfer tax on estates val- ued at $1 million or more. The tax is paid by the estate using Form OR-706, not by the individuals receiving the inheritance. For more information, see the instruc- tions for Form OR-706. When should I file my return? The filing deadline for calendar year 2024 is April 15, 2025. If you can’t pay your tax by the due date, it’s important to file your return anyway to avoid a late- filing penalty. Returns for fiscal filers are due by the 15th day of the fourth month after the close of their tax year. What if I need more time to file? If you requested a federal extension to file, Oregon will allow the same extension. Don’t include a copy of your federal extension with your Oregon return; keep it with your records. If you need an extension of time to file only your Oregon return, see Publication OR-40-EXT. The due date for filing your return on extension is October 15, 2025. An extension doesn’t mean more time to pay. To avoid interest charges, you must pay all of the tax you expect to owe by April 15, 2025. If you can’t pay all of the tax you expect to owe, pay what you can. You’ll owe interest on any unpaid tax starting

150-101-048-1 (Rev. 10-16-24) 8 2024 Form OR-40-N and Form OR-40-P Instructions April 16, 2025, until the date of your payment. You may also be charged a penalty for failing to pay your tax on time. See “Penalties” and the instructions for Form OR- 40-N, line 68 or Form OR-40-P, line 67. Don’t forget to check the “Extension filed” box on your return when you file. File your return by Octo- ber 15, 2025. Penalties If you don’t pay all of your tax by April 15, 2025, you may be charged a 5 percent penalty on the unpaid amount, even if you requested an extension to file your return. Oregon doesn’t allow an extension of time to pay tax, even if the IRS does. You’ll be charged a 20 percent penalty for failure to file your return if you file it more than three months after the due date, including extensions. If both pen- alties apply, the total penalty will be 25 percent of the unpaid tax. Note: If you fail to file returns for three consecutive years by the due date for the third year’s return, includ- ing extensions, you’ll be charged a penalty of 100 per- cent of each year’s unpaid tax. For more information about these and other penalties, see the instructions for Form OR-40-N, line 68 or Form OR-40-P, line 67, and “Interest and penalties” in Publi- cation OR-17. Interest on underpayment of estimated tax You may owe interest for underpaying your estimated tax if: • The tax on your return after credits and withholding is $1,000 or more; and • You underpaid one or more of your required esti- mated tax installments. See the instructions for Form OR-40-N, line 69, or Form OR-40-P, line 68, and Form OR-10 Instructions for more information. What if I need to change my Oregon return after filing? It depends on what you need to change. Follow these instructions for amending (changing) your return if: • You discover that your income, deductions, or other item(s) were wrong. • You used a form that didn’t match your residency status. • Your filing status wasn’t correct. • The IRS or another state adjusted or audited your return and it affects your Oregon tax. • You have a net operating loss (NOL) carryback. • Changes in federal or state income tax laws affect a return you’ve already filed. Don’t amend your Oregon return if: • We made changes to your return and you object to those changes. You must follow the appeal process in the notice we sent you. • You’re filing a protective claim for a refund. Use Form OR-PCR, which is available on our website or you can contact us to order it. Refer to the instructions for the return you need to amend. Visit our website or contact us if you need forms and instructions. It may take six months or lon- ger to process your amended return. There’s a time limit for filing an amended return to claim a refund. See the instructions for Form OR-40-N, lines 72 to 75 or Form OR-40-P, lines 71 to 74. For more information, see “Amended returns” in Publication OR-17. How do I amend my 2024 return? General instructions • Complete the return as it should’ve been filed, includ- ing adjustments we made. • Check the “Amended return” box on the first page. • In the “Amended statement” space on the last page, provide the return line number and reason for each change. • Use the Amended worksheet to figure your amended tax due or refund. • If you’re amending your federal return or a return you filed with another state, include a copy of those amended returns with your amended Oregon return. If you’re only amending your Oregon return, include a copy of your original federal return. Don’t include a copy of your original Oregon return. Residency. Use the form that matches your residency status for the year you’re amending, even if your origi- nal return was filed on a different form. Mailing address. Use your current address. Adjustment made by the IRS or another state. Include a copy of the corrected federal or other state return or audit report. Electronically file your amended return. You can now electronically file your Oregon amended return using e-file software. Contact your software provider to find out if they support filing an amended federal return.

150-101-048-1 (Rev. 10-16-24) 9 2024 Form OR-40-N and Form OR-40-P Instructions NOL carryback. Enter the loss year in the NOL tax year box on the first page of the return. If you’re carrying back an NOL from more than one year, file a separate amended return for each NOL year. In the “Amended statement” space on the last page of the return, tell us the section number of the IRC or Oregon Revised Stat- ute (ORS) that allows you to carry the NOL(s) back to the 2024 tax year. See “Net operating losses for Oregon” in Publication OR-17 for more information. Amended worksheet Use this worksheet to figure your amended refund or tax to pay. Keep the completed worksheet with your records. Note: If we adjusted any of the amounts on your original 2024 return, use the adjusted amounts. 1. Amended tax after standard and carryforward credits (amended Form OR-40-N, line 56; Form OR- 40-P, line 55). 1. 2. Amended total payments and refundable credits (amended Form OR-40-N, line 65; Form OR- 40-P, line 64). 2. 3. Line 1 minus line 2. If less than 0, use a minus sign. 3. 4. Refund you already had for 2024 (original Form OR-40-N, line 72; Form OR-40-P, line 71; Form OR-40, line 47). If you didn’t have a refund, enter 0. 4. 5. Amended tax to pay or refund. Line 3 plus line 4. If less than 0, you have a refund; go to line 6. If 0 or more, you owe tax; skip to line 8. 5. 6. Refund applications that weren’t on your original return (amended Form OR-40-N, lines 73 through 75; Form OR-40-P, lines 72 through 74), up to the refund amount on line 5. Don’t use a minus sign. Example: If line 5 is –$500, you may apply up to $500 on your amended Form OR-40-N, lines 73 through 75, or Form OR-40-P, lines 72 through 74. 6. 7. Net amended refund. Line 5 plus line 6. This can’t be more than 0. 7. 8. Penalty and interest on amended tax to pay (amended Form OR- 40-N, line 68; Form OR-40-P, line 67). 8. 9. Total amended amount you owe. Line 5 plus line 8. 9. 10. Payments made on or after April 15, 2025. 10. 11. Total amount to pay with your amended return. Line 9 minus line 10. 11. 2025 estimated tax Estimated tax is the amount of tax (after credits and withholding) you expect will be shown on your return when you file. Do I need to make estimated payments? In most cases, if you expect your return to show that your tax will be at least $1,000 after credits and with- holding, you must make estimated payments. You may need to make estimated payments if: • You’re self-employed and don’t have Oregon tax withheld from your income. • You have Oregon Lottery single-ticket winnings of less than $1,500. • Oregon tax isn’t withheld from other types of income (such as pensions, interest, or dividends) and you expect to owe tax of $1,000 or more on this income. • You’re a wage earner, but after credits and with- holding, the tax on your return will still be $1,000 or more. In that case, you may want to increase the amount your employer withholds from your Oregon wages. For withholding information, go to the Indi- viduals page on our website and look for Do a paycheck checkup. Oregon and federal estimated tax laws are not the same. See Publication OR-ESTIMATE for more infor- mation, including: • Detailed instructions for calculating installment payments. • Installment periods and due dates. • Helpful worksheets and examples. • Payment instructions. You can find Publication OR-ESTIMATE and the pay- ment voucher, Form OR-40-V, on our website or you can contact us to order them.

150-101-048-1 (Rev. 10-16-24) 10 2024 Form OR-40-N and Form OR-40-P Instructions General instructions for Forms OR-40-N & OR-40-P Step 1: Complete your federal return Your Oregon tax is determined using the ratio of your Oregon-source income to your entire federal income. Complete your federal return first. Do this even if you aren’t required to file a federal return. You must use the information from your federal return to com- plete your Oregon return. You must include a copy (front and back) of your federal Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable) with your Oregon return. If you’re amending your Oregon return and your federal return, include a copy of Form 1040-X and an amended Form 1040, 1040-SR, or 1040- NR with Schedules 1 through 3 (if applicable). If you don’t provide a copy of your federal return, we may adjust or deny your Oregon subtractions, deduc- tions, and credits. Include federal Schedules 1 through 3 (if applicable); don’t include any other federal sched- ules. We may ask you for copies of other schedules or additional information later. Oregon registered domestic partners (RDPs): To cor- rectly determine your Oregon tax liability, you must complete a federal income tax return as if you were fil- ing as married filing jointly or married filing separately. Check the “Calculated using ‘as if’ federal return” box on your Oregon return. For more information on how to file as an RDP, see Pub- lication OR-17 or our website. Step 2: Select the appropriate Oregon return To decide which form to use, see “What form do I use?” in the “General information” section. Step 3: Fill out the Oregon return Use blue or black ink only for easier reading and faster processing. The equipment used to scan documents and checks can’t read gel ink or certain colors, and using them will delay the processing of your return. Fiscal-year filers Write the ending date of your fiscal year in the “Fiscal year ending” box on the return. Oregon resident—Form OR-40-P only Enter the dates you were an Oregon resident during 2024. For example, “from 01/01/2024 to 04/15/2024,” or “from 03/01/2024 to 12/31/2024” Check the boxes Amended return If you’re amending your 2024 return, check this box. See “What if I need to change my return after filing?” in the “General information” section for instructions. Calculated using “as if” federal return Check this box if: • You’re filing as an Oregon RDP. • Your filing status is married filing separately for Ore- gon only because you and your spouse don’t have the same residency status. • You didn’t file a federal return. Short-year tax election If you’re filing a short-year return due to a bankruptcy, check this box and write the ending date in the “Fiscal year ending” box. Extension filed Check this box if you requested an extension to file your return. See “What if I need more time to file?” in the “General information” section and Publication OR-40-EXT for more information. Form OR-24 Check this box if you’re deferring gain on like-kind property that was exchanged or converted. You’ll report the gain to Oregon when it’s reported on your federal return (federal Form 8824). You must include Form OR-24 with your Oregon return or provide it elec- tronically through your Revenue Online account. Form OR-243 Check this box if you are attaching Form OR-243, Claim to Refund Due a Deceased Person. Federal Form 8379 Check this box if you’re requesting your joint refund be apportioned and you are attaching federal Form 8379. For additional information, see “Injured spouse refund claims” in Publication OR-17.

150-101-048-1 (Rev. 10-16-24) 11 2024 Form OR-40-N and Form OR-40-P Instructions Federal Form 8886 Check this box if you filed federal Form 8886, Report- able Transaction Disclosure Statement. Disaster relief If you were affected by a presidentially-declared natu- ral disaster in 2024, check this box. Military Check this box if you’re a nonresident with military pay. See “Military personnel.” Employment exception Check this box if you have interstate transportation wages or you’re a waterway, air carrier, or hydroelectric dam worker. See the exceptions in the instructions for line 7S and the “Income” section in Publication OR-17 for more information. Name and address Type or clearly print your own and, if married, your spouse’s name, date of birth, and Social Security num- ber (SSN). Enter your spouse’s information even if you’re filing as married filing separately. SSN. You must provide your SSN per Section 405, Title 42, of the United States Code. We will only use it to establish your identity for tax purposes. Follow these instructions if you’ve filed previous tax returns using an individual taxpayer identification number (ITIN) and this is your first year filing using your new SSN: • Check the “First time using this SSN” box. • Write your previous identification number on the first line of the “Amended statement” space on the last page of your return. ITIN. If the IRS assigned you an ITIN because you don’t qualify for an SSN, enter your ITIN wherever an SSN is requested. Refunds will not be issued without a valid SSN or ITIN. If you don’t have an ITIN, you must request one from the IRS. To get an ITIN application (federal Form W-7), go to www.irs.gov or call 800-829-1040. If you’ve applied for an ITIN but you haven’t received it yet: • Check the “Applied for ITIN” box. • File your return by April 15, 2025. • Don’t include Form W-7 with your return. Keep it with your records. • Once the IRS issues your ITIN, mail a copy of your ITIN letter to us at PO Box 14999, Salem OR 97309-0990. Deceased taxpayer. Mark the “Deceased” box for a taxpayer who died during 2024 or 2025. Mailing address. Enter your current mailing address. This is where we’ll send any refund or correspondence, if needed. Enter your current daytime phone number. Filing status 1 5 –

Check the box next to your filing status. Generally, you must use the same fil- ing status for your Oregon and federal returns. Choose only one filing status. Exception for Oregon RDPs. As an Oregon RDP, you’re not eligible to use the single filing status on your Ore- gon return. For Oregon, you’re generally required to use the married filing jointly or married filing sepa- rately filing status. For more information, go to our website, see “Filing an Oregon return” in Publication OR-17, or contact us. Exceptions for married persons who filed a joint fed- eral return when each person had a different resi- dency status. Use Table 2 to determine which return form to use if you file a joint return or separate returns for Oregon. Table 2. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P How to file separate returns for Oregon If you’re filing a joint federal return but separate Oregon returns, enter your spouse’s name, date of birth, and SSN on your return. Report your own share of federal AGI and deductions. Also, report your share of any Oregon additions or subtractions using this for- mula to determine your percentage: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI Check the “Calculated using ‘as if’ federal return” box on your return. You must include the following forms with both Oregon returns:

150-101-048-1 (Rev. 10-16-24) 12 2024 Form OR-40-N and Form OR-40-P Instructions • A federal Form 1040, 1040-SR, or 1040-NR with Sched- ules 1 through 3 (if applicable) prepared as if you had filed separate federal returns. • A copy of the joint Form 1040, 1040-SR, or 1040-NR with Schedules 1 through 3 (if applicable) that you actually filed with the IRS. If the federal form you filed is an amendment, include Form 1040-X and federal returns as amended for your actual and “as if” returns. If possible, mail both Oregon returns in the same enve- lope. Don’t staple the returns together. For more information, see “Filing status” in Publication OR-17. Exemptions

If you’re married and filing a joint return (or filing separately but your spouse has no income) and your spouse can’t be claimed as a dependent on someone else’s return, check the “Regular” exemption box below line 6b; otherwise, check the “Someone else can claim your spouse as a dependent” box, even if the other per- son doesn’t actually claim your spouse as a dependent. Severe disability exemption. You or your spouse may qualify for the additional “severe disability” exemp- tion, even if someone else can claim you or your spouse as a dependent, if any of the following apply to you or your spouse: • You permanently lost the use of one or both legs or feet. • You permanently lost the use of both hands. • You’re permanently blind. • You have a permanent condition that, without special equipment or outside help, limits your ability to earn a living, maintain a household, or transport yourself. • You’re unable to earn a living due to a permanent condition or an impairment of indefinite duration. To confirm that you or your spouse qualify for the additional exemption, a licensed physician must write a letter describing the nature and extent of the disabil- ity. Keep the letter with your records in case we request a copy. If you qualify for this additional exemption, check the “Severe disability” box below line 6a. If your spouse qualifies, check the box below line 6b. Total exemptions for yourself and your spouse. Enter the total number of boxes you checked for yourself on line 6a and for your spouse on line 6b. 6c Dependents. List your dependents in order from youngest to oldest. For each dependent, enter their full name, date of birth, SSN, and relation- ship code (see Table 3). Schedule OR-ADD-DEP. You can list up to three depen- dents on Form OR-40-N or Form OR-40-P. If you have more than three, use Schedule OR-ADD-DEP to list your other dependents. You can download the schedule from our website or contact us to order it. Use as many additional sched- ules as needed. Don’t list dependents on Schedule OR- ADD-DEP who are already listed on Form OR-40-N or OR-40-P. Include Schedule OR-ADD-DEP when you file your return. Total number of dependents. On line 6c, enter your total number of dependents, including the total(s) from Schedule OR-ADD-DEP, line 6. Table 3. Relationship codes Title Code Relationships included Child SD Biological or adopted child. Stepchild SC Stepchild. Foster child FC Foster child. Sibling SB Sibling, half sibling, stepsibling, or sibling-in-law. Parent PT Parent, stepparent, or parent-in-law. Spouse SP Spouse or RDP. Grandparent GP Grandparent or great-grandparent. Grandchild GC Grandchild or great-grandchild. Aunt/Uncle AU Parent's sibling or the sibling's spouse or RDP. Niece/Nephew NN Sibling's child, grandchild, or other descendant. Other relative OR Child's spouse or RDP, cousin, or other related individual. No relation NR Unrelated qualifying individual. 6d Child with a disability. The additional “Child with a disability” exemption is for a dependent child, age 21 or younger, who was eligible for early intervention or special education services, as defined by the State Board of Education of the state where the child attended school, as of the end of the tax year. The child must have had an eligible disability under the federal Individuals with Disabilities Education Act. Eligible disabilities include:

150-101-048-1 (Rev. 10-16-24) 13 2024 Form OR-40-N and Form OR-40-P Instructions • Autism spectrum disorder. • Communication disorder. • Deafblindness. • Developmental delay. • Emotional disturbance. • Hearing impairment (including deafness). • Intellectual disability. • Orthopedic impairment. • Other health impairment. • Specific learning disability. • Traumatic brain injury. • Visual impairment (including blindness). Each year, you must be able to provide an eligibil- ity statement and a cover sheet from the child’s IEP (Individualized Education Program) or IFSP (Individu- alized Family Service Plan). Keep these with your tax records. Check the “Child with a disability” exemption box for each qualifying child listed on Form OR-40-N or OR- 40-P and Schedule OR-ADD-DEP. Total number of children with a disability. On line 6d, enter the total number of boxes checked for this addi- tional exemption, including the total(s) from Schedule OR-ADD-DEP, line 7. 6e Total exemptions. Add lines 6a through 6d and enter the total on line 6e. This is your total num- ber of exemptions.

150-101-048-1 (Rev. 10-16-24) 14 2024 Form OR-40-N and Form OR-40-P Instructions Forms OR-40-N and OR-40-P line instructions Don’t enter cents. You must round off cents to the nearest whole dollar. For example, $99.49 becomes $99 and $99.50 becomes $100. If you don’t round entries to the nearest dollar, there may be small variations in the totals we use. The forms have two columns for figures. These are to show your federal adjusted gross income (AGI), addi- tions, and subtractions. The columns compare your total (column F) to the portion that Oregon taxes (column S). You must include a copy (front and back) of your fed- eral return, including Schedules 1 through 3 (if appli- cable), with your Oregon return. This helps us verify your income and process your return faster. If you don’t include your federal return with your Oregon return, items claimed on your Oregon return may be adjusted or denied. Federal column (F) instructions, lines 7F–29F The first column is called “Federal column (F).” For lines 7F–29F of the federal column, transfer the amounts you reported on your federal return. If you used Form 1040 or 1040-SR, these will be the amounts on lines 1a through 11 and Schedule 1, lines 1 through 26. Line 29F, “Income after adjustments,” must match your 2024 federal AGI from Form 1040, 1040-SR, or 1040-NR, line 11; or Form 1040-X, line 1C. If it doesn’t match, check that you transferred the figures from your federal return correctly. Oregon column (S) instructions, lines 7S–29S The second column is called “Oregon column (S).” Use this column to list the amounts from the federal col- umn that are taxed by Oregon. Nonresidents. Oregon taxes only your income from Oregon sources. To determine your Oregon-source income, see “What does income from Oregon sources include?” in the “General information” section. Part-year residents. Oregon taxes your income from all sources earned or received while you were an Oregon resident. Oregon also taxes your income from Oregon sources while you were a nonresident. To determine your Oregon-source income, see “What does income from Oregon sources include?” in the “General infor- mation” section. Full-year residents. Oregon taxes your income from all sources. If you’re a full-year resident filing jointly on Form OR-40-N or OR-40-P, all of your income in the fed- eral column must be included in the Oregon column. 7S Wages, salaries, and other pay for work. Part- year residents—enter amounts you earned while an Oregon resident and any amounts you earned working in Oregon while you were a nonresident. Full-year residents—enter all of your income included in the federal column. Nonresidents—enter the amount you earned while working in Oregon for each job. If that amount differs from the Oregon wages on your Form W-2, request a signed statement from your employer verifying the number of days worked in Oregon and the total num- ber of days worked everywhere. Keep this document and a statement explaining your calculations with your records. If your Oregon wages aren’t stated sepa- rately on your Form W-2, compute your Oregon-source income using the following formula: Days actually worked in Oregon × Total wages (line 7F) = Oregon wages (line 7S) Days actually worked everywhere Don’t include holidays, vacation days, and sick days as days actually worked. However, you must include sick pay, holiday pay, and vacation pay in total wages. See the example below. If Oregon is the only state you worked in, don’t use this formula; all your earnings are taxable and should be reported in the Oregon column. Example: Savannah lives in Idaho but works in Oregon. Of her 260 total days paid, she worked 138 days in Ore- gon and 92 days from her home in Idaho. She received 14 days vacation pay, eight days sick pay, and eight days holiday pay. She earned $50,000 in wages. She figured the amount subject to Oregon tax as follows: Total days paid

260 Less: Vacation days

-14

Sick days

-8

Holidays

-8 Total days worked everywhere 230 Days actually worked in Oregon (138) × $50,000 (Total wages) = $30,000 Days actually worked everywhere (230)

150-101-048-1 (Rev. 10-16-24) 15 2024 Form OR-40-N and Form OR-40-P Instructions Savannah’s compensation reported in the federal col- umn, line 7F is $50,000 and in the Oregon column, line 7S is $30,000. Exceptions Interstate employment. Check the “Employment exception” box on page 1 and don’t include the follow- ing types of compensation in the Oregon column of the return if you’re a nonresident who works: • For an interstate transportation provider and whose wages qualify for special treatment under the federal laws formerly known as the “Amtrak Act.” • On the Bonneville, The Dalles, John Day, or McNary hydroelectric dams. • As a crewmember or pilot on a vessel in interstate navigable waters. If you’re a nonresident who works as a crewmember or pilot on aircraft in Oregon and at least one other state, you may be able to exclude your compensation from the Oregon column. See the “Income” section of Publication OR-17 for details about these exceptions. Military. Check the “Military” box on page 1 of the return if you’re a: • Nonresident member of the U.S. Armed Forces sta- tioned in Oregon. Don’t report your military pay in the Oregon column on line 7S. If you have another job, those wages are taxable to Oregon and must be included on line 7S. Only your military pay is exempt. • Nonresident military spouse. Your wages are exempt from state tax if you’re only in Oregon because your spouse is stationed here. Don’t report your wages in the Oregon column on line 7S. If Oregon taxes were withheld from your exempt wages, you should file a new withholding form with your employer. Use Form OR-W-4 and follow the instructions to declare that you’re exempt using the appropriate code and give the form to your employer. You can download Form OR-W-4 and instructions from our website or you can contact us to order them. 8S Taxable interest income. Determine the amount of interest income on line 8F that you received from an Oregon business activity while you were a nonresident. Add any interest included on line 8F that you received during the part of the year you were an Oregon resident. 9S Dividend income. Determine the amount of div- idends on line 9F that you received from an Ore- gon business activity source while you were a nonresi- dent. This includes dividends passed through to you from an S corporation or partnership doing business in Oregon or providing services for Oregonians. These are dividends your S corporation or partnership received on the stock of another corporation. Add any dividend income included on line 9F that you received during the part of the year you were an Oregon resident. 10S State and local income tax refunds. If you received an income tax refund from another state or local government that is included in your fed- eral income, and you deducted those taxes on a prior year’s Oregon return, include the refund in your Ore- gon income. This refund is not taxable to Oregon if you did not deduct the taxes on an Oregon return. Oregon doesn’t tax Oregon state income tax refunds you received, so don’t include amounts received from Oregon on line 10S. 11S Alimony received. Enter alimony you received for the part of the year you were an Oregon resident. 12S Business income or loss. Determine the amount of income or loss from an Oregon business activ- ity for the part of the year you were a nonresident. Add all business income or losses incurred during the part of the year you were an Oregon resident. 13S Capital gain or loss. Determine the amount of gain or loss and capital gain distributions from Oregon sources for the part of the year you were a non- resident. Add the amount of your capital gains received and losses incurred during the part of the year you were an Oregon resident. Limit losses to $3,000 ($1,500 if married filing separately). 14S Other gains or losses. Determine the amount of gain or loss from Oregon sources for the part of the year you were a nonresident. Add the gain received or loss incurred during the part of the year you were an Oregon resident. 15S IRA distributions. Determine the amount of any taxable individual retirement arrangement (IRA) distributions you received while an Oregon resident. Include any amounts you converted from a regular IRA into a Roth IRA while you lived in Oregon. If you lived in another state when you made contributions to your IRA, you may need more information. If so, contact us. 16S Pension and annuities. Enter the amount of taxable pensions and annuities (including fed- eral pensions), you received while an Oregon resident. Don’t include any Railroad Retirement Benefits (RRB- 1099-R). If you’re domiciled in Oregon, you must also include any Oregon-source pensions you received. This is true even though you may qualify to file as a nonresi- dent under the tests for special-case Oregon residents or Oregon residents living abroad.

150-101-048-1 (Rev. 10-16-24) 16 2024 Form OR-40-N and Form OR-40-P Instructions For example, if you lived in Oregon before you retired and have not changed your permanent home to another state, you must report the pension you earned while you worked in Oregon. If you have a federal pen- sion, you may qualify for a subtraction on Schedule OR- ASC-NP. If you need help, contact us. 17S Schedule E income. Determine the income received and losses incurred from rents, royal- ties, partnerships, S corporations, real estate invest- ment trusts (REITs), estates, trusts, etc. reported on fed- eral Schedule E from Oregon sources during the part of the year you were a nonresident. Add the amount received or incurred during the part of the year you were an Oregon resident. 18S Farm income or loss. Determine the amount of income received or loss incurred from an Oregon farm while you were a nonresident. Add the amount of farm income received or loss incurred dur- ing the part of the year you were an Oregon resident. 19S Unemployment insurance (UI) benefits and all other taxable income. Include on line 19S: • UI benefits received from an Oregon job or while an Oregon resident, • Oregon Lottery winnings (see additional informa- tion below), • Other winnings received while an Oregon resident, • Severance pay received from an Oregon job or while an Oregon resident, and • Any other taxable income on line 19F from Oregon sources or received while an Oregon resident. Don’t include Social Security, Railroad Retirement Board benefits, or Railroad Retirement Board unem- ployment benefits, as Oregon doesn’t tax this income. Include all payments received from the Oregon Lot- tery in the Oregon column. Oregon Lottery means all games offered by the Oregon State Lottery Commis- sion and purchased in Oregon. For more information, see Publication OR-17. Adjustments 21S IRA or self-employed SEP and SIMPLE contri- butions. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. Deter- mine the amount you paid during the part of the year you were an Oregon resident. Add the amount calcu- lated for the time you were a nonresident. • IRA. Use the following formula to determine your deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident • Self-employed SEP, SIMPLE, and qualified plans. Use the following formula to determine your allow- able deduction for the part of the year you were a nonresident: Oregon compensation while a nonresident × Contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident This deduction can’t be more than the amount of compensation included in the Oregon column. 22S Education deductions. The following instruc- tions will help you figure the amount you can claim on your Oregon return. • Educator expenses deduction from federal Form 1040 or 1040-SR, Schedule 1, line 11. For the part of the year you were a nonresident, determine the amount of qualified educator expenses you paid while work- ing in or providing educator services to students in Oregon elementary or secondary schools. Add the qualified educator expenses you paid during the part of the year you were an Oregon resident. Enter the smaller of the result or the amount deducted on your federal return. • Student loan interest deduction from federal Form 1040 or 1040-SR, Schedule 1, line 21. Use the following formula to calculate your deduc- tions for the part of the year you were a nonresident: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Add all interest paid during the part of the year you were an Oregon resident. Enter the result or the amount of federal student loan interest from your federal return, whichever is less. Add the Oregon amounts for your educator expenses deduction and student loan interest deduction. Enter the total on line 22S. 23S Moving expenses. Enter moving expenses in the Oregon column only if all of the following are true for you (or your spouse, if filing jointly):

150-101-048-1 (Rev. 10-16-24) 17 2024 Form OR-40-N and Form OR-40-P Instructions • You are on active duty in the United States Army, Navy, Air Force, Marines, or Coast Guard. • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move). • Your new duty station is in Oregon. • You have taxable income from employment (military, civilian, or self-employment) performed in Oregon. 24S Deductions for self-employment tax. Use the following formula to determine the amount of your self-employment tax on earnings taxed by Oregon: Self-employment earnings taxed by Oregon × Federal deduction for self- employment tax = Oregon deduction Total taxable self- employment earnings The Oregon deduction can’t be more than the federal deduction. 25S Self-employed health insurance deduction. Oregon allows a deduction of 100 percent of your health insurance premiums related to your self- employment for the part of the year you were an Ore- gon resident. Add the health insurance premiums paid by your Oregon business while a nonresident. Your total Oregon deduction can’t be more than your federal deduction. 26S Alimony paid. Determine if the alimony you paid to your former spouse is deductible for fed- eral purposes. If so, use the following formula to calcu- late your Oregon deduction for the part of the year you were a nonresident: Oregon-source income while a nonresident × Alimony paid while a nonresident = Nonresident deduction Total income while a nonresident Add to that amount the alimony you paid while you were a resident. 27F/S Total adjustments from Schedule OR-ASC-NP. Other adjustments not explained here are claimed on Schedule OR-ASC-NP. From Schedule OR- ASC-NP, enter the total on line A7 in the federal col- umn and the total on line A8 in the Oregon column. If you’re reporting an adjustment, you must include Schedule OR-ASC-NP with your return. For more information about adjustments, see Sched- ule OR-ASC and OR-ASC-NP Instructions or “Adjust- ments” in Publication OR-17. Additions 30F/S Total additions from Schedule OR-ASC-NP. Addi- tions are reported on Schedule OR-ASC-NP. From Schedule OR-ASC-NP, enter the total from line B7 in the federal column and the total from line B8 in the Oregon column. Include the schedule with your return. For more information about additions, see “Additions” in Publication OR-17. Subtractions 32F Social Security and tier 1 Railroad Retirement Board benefits. Enter Social Security and tier 1 Railroad Retirement Board benefits you included on line 7F or 19F. If you have tier 2, windfall/vested dual, or supple- mental Railroad Retirement Board benefits, these are subtracted on Schedule OR-ASC-NP. For more informa- tion, see this topic under “Income” or “Subtractions” in Publication OR-17. 33F/S Total subtractions from Schedule OR-ASC-NP. Other subtractions not explained here are claimed on Schedule OR-ASC-NP. Enter the total from line C7 in the federal column and the total from line C8 in the Oregon column. Include the schedule with your return. For more information about subtractions, see Schedule OR-ASC and OR-ASC-NP Instructions or “Subtrac- tions” in Publication OR-17. 35 Oregon percentage. In most cases, to find your Oregon percentage, divide the amount on line 34S by the amount on line 34F. If the amount on line 34S is more than the amount on line 34F or if the amount on line 34S is positive but the amount on line 34F is zero or negative, your Oregon percentage is 100 percent. If both amounts are negative, treat both as if they’re positive, and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon number, divide the federal number by the Oregon number. Round the decimal to three places and enter the result as a percentage as shown in Table 4. Don’t enter more than 100 percent or less than 0.

150-101-048-1 (Rev. 10-16-24) 18 2024 Form OR-40-N and Form OR-40-P Instructions Table 4. Oregon percentage examples Line 34S Line 34F Oregon percentage line 35 $8,000 ÷ $30,000 = 0.266666 Round to 0.267 ( __ __ __.__% 2 6 7 ) $20,000 ÷ $15,000 = 1.333 Limited to 1.000 ( __ __ __.__% 1 0 0 0 ) -$1,000 ÷ $15,000 = 0 (0%) ( __ __ __.__% 0 0 ) $1,000 ÷ -$5,000 = (100%) ( __ __ __.__% 1 0 0 0 ) -$2,000 2,000 ÷ -$8,000 8,000 = Oregon number smaller than federal number ( __ __ __.__% 1 0 0 0 ) -$10,000 10,000 ÷ -$6,000 6,000 = Federal number smaller than Oregon number 6,000 / 10,000 = 0.6 ( __ __ __.__% 6 0 0 ) Deductions and modifications Deductions and other modifications further adjust your Oregon taxable income. Modifications not explained here are reported on Schedule OR-ASC-NP. For more information about deductions and modifications, see Schedule OR-ASC and OR-ASC-NP Instructions, or Publication OR-17. In general, you can claim Oregon itemized deductions or the standard deduction, whichever is larger, but not both. See the exceptions below for: • Dependents who can be claimed on another taxpay- er’s return. • Non-U.S. citizens without permanent resident status. • Spouses filing separate returns. 37 Itemized deductions. If you’re itemizing your deductions for Oregon, enter the amount from Schedule OR-A, line 23. Note: Don’t enter your federal itemized deductions; the amount allowed for Oregon may be different. You can download Schedule OR-A and the instructions from our website or you can con- tact us to order them. If you’re not itemizing, enter 0. 38 Standard deduction. Generally, your standard deduction is based on your filing status, as shown in Table 5. Table 5. Standard deduction Single $2,745 Married filing jointly $5,495 Married filing separately • If spouse claims standard deduction $2,745 • If spouse claims itemized deductions 0 Head of household $4,420 Qualifying surviving spouse $5,495 Standard deduction—Age 65 or older, or blind. If you or your spouse turned age 65 by January 1, 2025, or were blind at the end of the tax year, you’re entitled to a larger standard deduction. If you or your spouse are permanently blind, you may also qualify for the severe disability exemption claimed on lines 6a and 6b. Check the applicable boxes below line 38, then multiply the number of boxes checked by: • $1,200 if single or head of household filing status; or • $1,000 for all other filers. Add this amount to the standard deduction for your fil- ing status from Table 5. Enter the total on line 38. Example: Joni and Mike are married. By January 1, 2025, Joni had turned 61 and Mike had turned 67. Joni files the return as the primary taxpayer. She checks the box for spouse age 65 or older and adds $1,000 to their standard deduction. Joni enters $6,495 ($5,495 + $1,000) on line 38. Standard deduction—Dependents who can be claimed on another taxpayer’s return. If someone else can claim you as a dependent, your standard deduction is limited to the larger of: • Your earned income plus $450, up to the maximum allowed for your filing status (see Table 5); or • $1,300. This limit applies even if the other person doesn’t actu- ally claim you as a dependent on their return. If you’re a dependent and not married, use the follow- ing worksheet to figure your standard deduction. If you’re a dependent and married, see “Deductions and modifications” in Publication OR-17. Standard deduction worksheet for single dependents 1. Enter your earned income (see definition below). 1. 2. Additional $450. 2. $450 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $1,300 5. Enter the larger of line 3 or line 4. 5. 6. Basic standard deduction for single. 6. $2,745 7. Enter the smaller of line 5 or line 6. 7. 8. If you turned 65 by 1/1/2025, enter $1,200. Otherwise, enter 0. 8. 9. If you’re blind, enter $1,200. Otherwise, enter 0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Earned income includes salaries, wages, tips, profes- sional fees, or other amounts received as pay for work

150-101-048-1 (Rev. 10-16-24) 19 2024 Form OR-40-N and Form OR-40-P Instructions you actually performed, and any part of a scholarship or fellowship grant you received that is included in your federal gross income. Standard deduction—Non-U.S. citizen without per- manent resident status. Your standard deduction is $0, but you may claim itemized deductions. Standard deduction—Married filing separately. The standard deduction for married individuals filing sep- arately is $0 if one spouse itemizes. This applies even if the standard deduction is more than your itemized deductions. 40 2024 federal tax liability subtraction. Your fed- eral tax liability subtraction amount is your fed- eral income tax after all credits other than the earned income tax credit (EITC). For 2024, the amount you may subtract is limited to $8,250 ($4,125 if married fil- ing separately) and is further limited by your AGI (see Table 6). Follow the instructions for the Federal tax liability worksheet carefully. Note: Use the amounts from your actual federal return(s), not your “as if” return(s), if you are: • Spouses filing a joint federal return but separate Ore- gon returns due to a difference in residency. • RDPs filing separate federal returns and a joint Ore- gon return. Note: Use the worksheet(s) in the “Federal income tax liability” section of Publication OR-17 if any of these situations apply: • You‘re amending your 2024 federal return or we cor- rected the federal tax liability subtraction on your original 2024 Oregon return. • A prior year’s federal return was audited or amended, resulting in additional federal income tax paid or refunded in 2024. • You paid income tax to a foreign country. • You filed your federal return on Form 1040-NR. • You reported recapture taxes or credits on your fed- eral return. Caution: Don’t include any of the following in your calculation: • Self-employment tax. • Social Security and Medicare tax on tips. • Household employment taxes. • Penalties or interest. Federal tax worksheet Note: All references to federal Form 1040 in this work- sheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. This also includes versions of these forms in other languages. Instructions for Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonrefund- able credits but before other taxes. This is found on Form 1040, line 22. Line 2: If you need to repay any advance premium tax credit that you received during the year, enter the repayment amount from Form 1040, Schedule 2, line 1a. If not, enter 0. Line 3: Line 1 minus line 2. If the results are less than 0, enter 0. Line 4: Enter the total of any other taxes, plus any tax recaptures or other additions to tax that include only income tax, from Form 1040, Schedule 2, lines 8, 16, and 17. If you’re repaying a 2008 first-time homebuyer credit and filing federal Form 5405, include the amount from Schedule 2, line 10. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any additions to tax from Schedule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter 0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allowable premium credit regardless of any excess advance pay- ments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund- able credits that must be subtracted from your federal income tax liability. Line 9: Line 5 minus line 8. If less than 0, enter 0. This is your federal income tax liability after refundable cred- its (other than EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 6. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction.

150-101-048-1 (Rev. 10-16-24) 20 2024 Form OR-40-N and Form OR-40-P Instructions Federal tax liability subtraction worksheet 1. Federal tax liability (Form 1040 line 22). 1. 2. Excess advance premium tax credit (Form 1040, Schedule 2, line 1a). 2. 3. Line 1 minus line 2. (If less than 0, enter 0). 3. 4. Other taxes (see instructions). 4. 5. Line 3 plus line 4. 5. 6. American Opportunity credit (form 1040, line 29). 6. 7. Premium tax credit (Form 8962, line 24). 7. 8. Line 6 plus line 7. 8. 9. Line 5 minus line 8. (If less than 0, enter 0). 9. 10. Maximum subtraction amount from Table 6. 10. 11. Smaller of line 9 or line 10. This is your federal tax liability subtraction. 11. Are you amending your 2024 return? Usually you can’t change your federal tax subtraction on your amended return, but there are some exceptions. See the “Fed- eral income tax liability” section in Publication OR-17 for more information before making changes to this subtraction. Table 6. Federal tax liability subtraction AGI phase out If your filing status is: And your federal adjusted gross income is: Then your maximum allowable tax liability subtraction is: At least— But less than— Single 0 $125,000 $8,250 $125,000 $130,000 $6,600 $130,000 $135,000 $4,950 $135,000 $140,000 $3,300 $140,000 $145,000 $1,650 $145,000 or more 0 Married filing separately 0 $125,000 $4,125 $125,000 $130,000 $3,300 $130,000 $135,000 $2,475 $135,000 $140,000 $1,650 $140,000 $145,000 $825 $145,000 or more 0 Married filing jointly; or Head of household; or Qualifying surviving spouse 0 $250,000 $8,250 $250,000 $260,000 $6,600 $260,000 $270,000 $4,950 $270,000 $280,000 $3,300 $280,000 $290,000 $1,650 $290,000 or more 0 41 Total modifications from Schedule OR-ASC-NP. Enter the total from Schedule OR-ASC-NP, line D7. Include the schedule with your return. For more information about modifications, see “Deduc- tions and modifications” in Publication OR-17.

150-101-048-1 (Rev. 10-16-24) 21 2024 Form OR-40-N and Form OR-40-P Instructions Form OR-40-N 42 Deductions and modifications multiplied by the Ore- gon percentage (Form OR-40-N filers only). Nonresi- dents must complete the worksheet below to determine the amount of deductions and modifications they’re entitled to claim. 1. Amount from Form OR-40-N, line 39. 1. 2. Amount from Form OR-40-N, line 40. 2. 3. Amount from Form OR-40-N, line 41. 3. 4. Add lines 1, 2, and 3 above. 4. 5. Oregon percentage from Form OR-40-N, line 35. 5. 6. Line 4 times line 5. Enter result on Form OR-40-N, line 42. These are your Oregon deductions and modifications. 6. Form OR-40-N 43 Charitable art donation (Form OR-40-N filers only). Artists who make a charitable art donation may take a full deduction. See “Artist’s charitable contribution” in Publication OR-17 to calculate this subtraction. Oregon tax Form OR-40-N 46

Form OR-40-P 44 Tax rate charts. Calculate your tax using the applicable formula in the tax rate chart for your filing status. • Use Chart S if your filing status is single or married filing separately. • Use Chart J if your filing status is married filing jointly, head of household, or qualifying surviving spouse. Example: Daniel and Madison are filing a joint return. Their Oregon taxable income is $75,500. They use the formula in Chart J for taxable income over $21,500 but not over $250,000 to calculate their tax as follows: Tax on the first $21,500 (from the chart) $1,280 Oregon taxable income $75,500 Minus the first $21,500 – 21,500 Excess over $21,500 $54,000 Multiply excess by 8.75% x 0.0875 Tax on excess over $21,500 + $4,725 Total Oregon tax $6,005 Other tax methods. If you qualify, you can compute your Oregon tax using any of the following methods: Farm income averaging method. Did you have income from a farm? You may use the federal farm income averaging method to compute your Oregon tax even if you didn’t use farm income averaging on your federal return. Only Oregon-source farm income is consid- ered elected farm income. Use Publication OR-FIA and Schedule OR-FIA-40-N or OR-FIA-40-P to compute the Oregon tax using this method. You can download them from our website or contact us to order them. If you use farm income averaging to calculate your tax, enter the tax amount from Schedule OR-FIA-40-N, line 21, on Form OR-40-N, line 46, and check box 46a, or enter the tax amount from Schedule OR-FIA-40-P, line 20, on Form OR-40-P, line 44, and check box 44a. Don’t include Schedule OR-FIA-40-N or Schedule OR-FIA-40-P with your Oregon return. Keep it with your records. Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming business in which you held at least a 10 percent ownership interest? If so, you may be eligible for a reduced tax rate on the 2024 Tax rate charts Chart S: For persons filing single or married filing separately— If your taxable income is not over $4,300 ......................................................................................your tax is 4.75% of taxable income If your taxable income is over $4,300 but not over $10,750 .........................your tax is $204 plus 6.75% of excess over $4,300 If your taxable income is over $10,750 but not over $125,000 ................... your tax is $639 plus 8.75% of excess over $10,750 If your taxable income is over $125,000 ........................................................your tax is $10,636 plus 9.9% of excess over $125,000 Chart J: For persons filing jointly, head of household, or qualifying surviving spouse— If your taxable income is not over $8,600 ......................................................................................your tax is 4.75% of taxable income If your taxable income is over $8,600 but not over $21,500 .........................your tax is $409 plus 6.75% of excess over $8,600 If your taxable income is over $21,500 but not over $250,000 ...............your tax is $1,280 plus 8.75% of excess over $21,500 If your taxable income is over $250,000....................................................... your tax is $21,274 plus 9.9% of excess over $250,000

150-101-048-1 (Rev. 10-16-24) 22 2024 Form OR-40-N and Form OR-40-P Instructions net capital gain from the proceeds. Use Worksheet FCG inside Publication OR-FCG to compute the Oregon tax using this method. You can download Publication OR- FCG from our website or you can contact us to order it. Enter the tax amount from Worksheet FCG, line 9, on Form OR-40-N, line 46 and check box 46b or on Form OR-40-P, line 44 and check box 44b. Don’t include the worksheet with your return. Keep it with your records. Oregon qualified business income reduced tax rate. Did you have business income from a sole proprietorship, partnership, or S corporation in which you materially participated? If so, you may qualify to use this reduced tax rate. For details, see Schedule OR-PTE-NR or OR-PTE- PY and instructions on our website or contact us to order them. Note: If you elect to use this reduced tax rate for quali- fying income, the election is irrevocable and must be made on your original return. An original return includes an amended return filed on or before the due date, including extensions. You can’t change the elec- tion after your original return has been filed. If you elect to use the reduced rate to calculate your tax, enter the tax amount from Schedule OR-PTE-NR, line 14a on Form OR-40-N, line 46 and check box 46c or enter the tax amount from Schedule OR-PTE-PY, line 19a on Form OR-40-P, line 44 and check box 44c. Include the schedule with your Oregon return. Form OR-40-P 45 Tax multiplied by Oregon percentage (Form OR-40-P filers only). Your Oregon tax is found by multiplying the tax on your income after Oregon modifications (your taxable income) by your Oregon percentage. Example: Emily, a single taxpayer, became an Oregon resident in April. Her taxable income on line 43 is $40,000 and her Oregon percentage is 65 percent. She uses Chart S to figure the amount to enter on line 44 as follows: Tax on the first $10,750 (from the chart) $639 Oregon taxable income $40,000 Minus the first $10,750 – 10,750 Excess over $10,750 $29,750 Multiply excess by 8.75% x 0.0875 Tax on excess over $10,750 + $2,603 Total Oregon tax $3,242 Emily enters $3,242 on line 44. Next, she multiplies this amount by 65 percent. She enters $2,107 ($3,242 x 65%) on line 45. Note: If you calculated your tax using Schedule OR- FIA-40-P or Schedule OR-PTE-PY, do not multiply the amount from line 44 by your Oregon percentage. Enter the amount from line 44 on line 45. Form OR-40-N 47

Form OR-40-P 46 Interest on certain installment sales. Did you have installment sales that required you to pay interest on the deferred tax liability for federal purposes? If so, you must also compute interest for Oregon using the same method as for federal. The annual interest rate is 8 per- cent for 2024 and 9 percent for 2025. Nonresidents. Compute interest only on installment obligations from dispositions of Oregon property. Part-year residents. Compute interest on installment obligations from dispositions of Oregon property while you were a nonresident and from dispositions of all property while you were a resident. Form OR-40-N 48

Form OR-40-P 47 Total tax recaptures from Schedule OR-ASC-NP. Tax recaptures are forfeited tax credits that increase your tax. For information about tax recaptures, see “Addi- tions to tax” in Publication OR-17. Tax recaptures are reported on Schedule OR-ASC-NP. Enter the total from Schedule OR-ASC-NP, line E5. Include Schedule OR- ASC-NP with your return. Credits—Nonrefundable Nonrefundable credits can’t be more than your Oregon tax liability. Carryforward credits allow you to claim unused amounts in a later year. Standard credits can’t be used in any other year. For more information about nonrefundable credits, see “Credits” in Publication OR-17. Form OR-40-N 51

Form OR-40-P 50 Exemption credit. Depending on your AGI, you may be allowed to claim a credit for the exemptions claimed on line 6 of your return. Your credit must be prorated by your Oregon percentage. If your federal AGI is more than $200,000 ($100,000 if your filing status is single or married filing separately), enter 0; otherwise, use this worksheet to figure your exemption credit:

150-101-048-1 (Rev. 10-16-24) 23 2024 Form OR-40-N and Form OR-40-P Instructions Exemption credit worksheet 1. If your federal AGI is more than $100,000 and your filing status is single or married filing separately, or more than $200,000 for all others, enter 0; otherwise, enter the number of “Regular” boxes checked on lines 6a and 6b plus the number of dependents from line 6c. 1. 2. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of “Severe disability” boxes checked on lines 6a and 6b. 2. 3. If your federal AGI is more than $100,000, enter 0; otherwise, enter the number of exemptions for children with a qualifying disability from line 6d. 3. 4. Add lines 1, 2, and 3. 4. 5. Line 4 times $249. 5. 6. Enter your Oregon percentage from Form OR-40-N or OR-40-P, line 35, as a decimal. 6. 7. Line 5 times line 6. Round to the nearest whole dollar. This is your exemption credit. 7. Form OR-40-N 52

Form OR-40-P 51 Total standard credits from Schedule OR-ASC-NP. All other standard credits are claimed on Schedule OR- ASC-NP. Enter the total from Schedule OR-ASC-NP, line F16. Include Schedule OR-ASC-NP with your return. Form OR-40-N 55

Form OR-40-P 54 Total carryforward credits from Schedule OR-ASC-NP. All carryforward credits are claimed on Schedule OR- ASC-NP. Enter the total from Schedule OR-ASC-NP, line G9. Include Schedule OR-ASC-NP with your return. Tax payments and refundable credits Form OR-40-N 57

Form OR-40-P 56 Oregon income tax withheld. Enter the total Oregon tax withheld from your wages and other income. State tax withheld from wages is shown in box 17 of Form W-2 and in the State area of various 1099 forms. Don’t include the FICA (Social Security) tax with- held or tax withheld from your wages by other states. You must include a legible, unaltered copy of your Form W-2 from each job and any Form 1099 showing Oregon income tax withheld with your Oregon return. If you don’t have a Form W-2 or 1099, you must provide other proof of Oregon tax withheld. Proof may include a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2025, we can accept only a Form W-2 or 1099 as proof. If you have tax to pay, you may want to increase the amount your employer or other payer withholds from your wages or other income. You can find withhold- ing information and do a “paycheck checkup” on our website. Form OR-40-N 58

Form OR-40-P 57 Prior-year refund applied as estimated tax payment. Enter the amount of any prior-year refund you applied as a payment of 2024 estimated tax. If we adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your applied refund amount, log into or create your Revenue Online account on our website or contact us. Form OR-40-N 59

Form OR-40-P 58 Estimated tax payments for 2024. Enter the total estimated tax payments you made before April 15, 2025. For calendar-year filers, these pay- ments were due April 15, 2024; June 17, 2024; September 16, 2024; and January 15, 2025. If you’re fil- ing on extension, include any extension payment made on or before the due date (without extension), but don’t include any payments made after April 15, 2025. Include any payments from real estate transactions. Don’t include the amount reported on Form OR-40-N, line 58 or Form OR-40-P, line 57. If you need to verify your estimated payments, log into or create your Rev- enue Online account on our website or contact us.

150-101-048-1 (Rev. 10-16-24) 24 2024 Form OR-40-N and Form OR-40-P Instructions Form OR-40-N 60

Form OR-40-P 59 Withheld tax or estimated tax payments from Schedule OR-K-1, line 20. An Oregon pass-through entity (PTE) or an out-of-state PTE with Oregon-source income may be required to withhold Oregon tax or may choose to make estimated Oregon tax payments on its owners’ behalf. PTEs report these payments to us on Form OR-19 and to owners on Schedule OR-K-1. Enter the amount from Schedule OR-K-1, line 20. If the PTE didn’t provide Schedule OR-K-1 to you, enter the amount of withheld tax or estimated tax paid on your behalf that the PTE reported to us on Form OR-19. Don’t include any composite return (Form OR-OC) payments from Schedule OR-K-1, line 21, or any PTE elective tax payments or credit from Schedule OR-21-K-1. See Pub- lication OR-17 for information about nonresident with- holding requirements, composite returns, and the PTE elective tax and related credit. Refundable credits Refundable credits reduce the amount of tax that you owe. Any amount that is more than your tax liability is treated the same way as an overpayment. Refund- able credits not explained here are claimed on Schedule OR-ASC-NP. For more information about refundable credits, see “Credits” in Publication OR-17. Form OR-40-N 61

Form OR-40-P 60 Earned income credit. Oregon’s earned income credit is a percentage of the earned income tax credit (EITC) claimed on your federal return. The percentage is based on the age of your youngest dependent at the end of the tax year. Note to RDPs: You may claim this credit if you would otherwise qualify for the EITC using your “as if” federal return. Schedule OR-EIC-ITIN. If you can’t claim any or all of the federal EITC because you, your spouse, or your child(ren) do not have an SSN that is valid for work or are using an ITIN, you may qualify for Oregon’s earned income credit for ITIN filers. See Schedule OR-EIC- ITIN Instructions for more information. The schedule and instructions are available in English and Spanish. Download them from our website or contact us to order them. Credit amount. Use Table 7 and the following work- sheet to figure your credit. Your credit must be pro- rated using your Oregon percentage. Table 7. EITC percentage Age of youngest dependent at end of tax year Percentage of federal EITC At least 3 years old, or no dependents 9 percent (0.09) Younger than 3 12 percent (0.12) Earned income credit worksheet 1. Enter your federal EITC from Form 1040 or 1040-SR, line 27. 1. 2. Enter the percentage from the table as a decimal. 2. 3. Line 1 times line 2. 3. 4. Enter your Oregon percentage from line 35, as a decimal. 4. 5. Line 3 times line 4. This is your Oregon earned income credit. 5. Form OR-40-N 62

Form OR-40-P 61 Oregon Kids Credit. The Oregon Kids Credit is avail- able for certain taxpayers with dependents who were under the age of six at the end of the tax year. Eligibility. To be eligible for the Oregon Kids Credit, you must: 1. Use a filing status other than married filing sepa- rately. If you’re married and filing separate returns, you do not qualify for this credit. 2. Have one or more dependents age five or under at the end of 2024 listed on your Oregon return.* 3. Have qualifying income under $30,750. Use the Ore- gon Kids Credit worksheet to figure your credit. Credit amount. For 2024, the maximum amount of the Oregon Kids Credit is $1,000 per qualifying dependent, for up to five dependents. Your credit amount may be limited by your income, and must be multiplied by your Oregon percentage. * Note for divorced, separated, or unmarried parents: If a child is listed as a dependent on your Oregon return only because the custodial parent released the child’s dependent exemption to you, the child doesn’t qualify for purposes of this credit. If you’re the custodial parent of an otherwise qualify- ing child, you may be able to claim this credit even if the child’s dependent exemption has been released to the other parent.

150-101-048-1 (Rev. 10-16-24) 25 2024 Form OR-40-N and Form OR-40-P Instructions Instructions for Oregon Kids Credit worksheet Part A: Credit amount Line 1. Nonresidents. If you show an amount other than 0 on line 40, 41, or 43 of Form OR-40-N, subtract those amounts from Form OR-40-N, line 34F. Enter the total on line 1 of the worksheet. Part-year residents. If you show an amount other than 0 on line 40 or 41 of Form OR-40-P, subtract those amounts from Form OR-40-P, line 34F. Enter the total on line 1 of the worksheet. Line 2. If you’re claiming a loss on your federal return or a subtraction on Schedule OR-ASC-NP, see the instructions for Part B. Otherwise, enter 0 on line 2. Line 3. Qualifying income. If the amount on this line is: • $25,750 or less, your Oregon Kids Credit is $1,000 times the number of your qualifying dependents (up to a maximum of $5,000), multiplied by your Oregon percentage. • More than $25,750 but less than $30,750, your credit will be reduced using the steps on lines 5 through 9, then multiplied by your Oregon percentage. • $30,750 or more, you can’t claim the Oregon Kids Credit. Part B: Loss add back Your qualifying income may include up to $20,000 in losses deducted from your federal AGI or subtracted on your Oregon return. Loss amounts above $20,000 must be added back to your income after Oregon additions and subtractions. Line 14. Enter losses claimed on Form 1040 and Sched- ule OR-ASC-NP (using subtraction codes 321, 355, 356, or 357 only), as indicated on lines 14a through 14g, If the amount shown on the indicated line is not a loss, do not enter it on the worksheet. Enter all losses as positive numbers. • Line 14b. If you claimed a subtraction using code 359 or 385, compare your subtraction amount to the income reported on Form 1040, Schedule 1, line 3. If the subtraction is less than your income, you don’t have a loss; skip line 14b. Otherwise, subtract the income amount from the subtraction amount and enter the result on line 14b. Example 1. Colten reported $8,000 in additional income from rental real estate on Form 1040, Schedule 1, line 5. He also reported a farm loss of ($6,000) on Form 1040, Schedule 1, line 6. Colten enters 0 on line 14d of the worksheet for rental real estate, as he did not have a loss reported on Form 1040, Schedule 1, line 5. He enters 6,000 on line 14e, as he did report a farm loss on Form 1040, Schedule 1, line 6. Colten enters his total losses of $6,000 on line 14h. He enters 0 on line 14, because his total losses minus 20,000 are less than 0. He also enters 0 on line 2. Example 2. Michaela reported a business loss of ($15,500) on Form 1040, Schedule 1, line 4. She enters 15,500 on line 14b of the worksheet. She had a rental real estate loss of ($8,000) reported on Form 1040, Schedule 1, line 5. She enters 8,000 on line 14d. She has no other losses. Michaela enters her total losses of $23,500 on line 14h. She enters $3,500 (23,500 - 20,000) on line 14. She also enters $3,500 on line 2. Oregon Kids Credit Worksheet Part A: Income 1. Enter your income after subtractions from Form OR-40-N or Form OR-40-P, line 34F (see instructions). 1. 2. Loss add back. If you are claiming any losses on Form 1040 or have an amount greater than 0 on Form OR-40-N or OR- 40-P, line 33, complete Part B and enter the amount from line 14 here. Other- wise, enter 0 here and go to line 3. 2. 3. Line 1 plus line 2. 3. 4. Enter the amount from Form 1040, line 11. 4. 5. If line 4 is more than line 3, enter the amount from line 4 here. Otherwise, enter the amount from line 3. 5. Is line 5 $30,750 or more? • If yes, STOP. You can’t claim the Oregon Kids Credit. • If no, continue to line 6. 6. Phaseout amount 6. $25,750 7. Line 5 minus line 6. If less than zero, enter 0. 7. 8. Line 7 divided by $5,000. Round to two decimal places. 8. 9. Credit amount before phaseout: 9a. Number of dependent children age five or younger at the end of 2024. Don't enter more than 5. 9a. 9b. Maximum credit amount per child. 9b. $1,000 Line 9a multiplied by line 9b. 9. 10. Credit reduction. Line 8 multiplied by line 9. 10. 11. Line 9 minus line 10. 11. 12. Enter your Oregon percentage from Form OR-40-N or OR-40-P, line 35. 12. 13. Line 11 multiplied by line 12. This is your Oregon Kids Credit. 13. Enter the amount from line 13 on Form OR-40-N, line 62 or Form OR-40-P, line 61.

150-101-048-1 (Rev. 10-16-24) 26 2024 Form OR-40-N and Form OR-40-P Instructions Part B: Loss add back 14. Enter your losses, as positive amounts, from: 14a. Capital (loss) from Form 1040, line 7. 14a. 14b. Business (loss) from Form 1040, Schedule 1, line 3. If you claimed Oregon subtraction code 359 or 385, see instructions. 14b. 14c. Other (loss) from Form 1040, Schedule 1, line 4. 14c. 14d. Rental real estate, etc. (loss) from Form 1040, Schedule 1, line 5. 14d. 14e. Farm (loss) from Form 1040, Schedule 1, line 6. 14e. 14f. Net operating loss from Form 1040, Schedule 1, line 8a. 14f. 14g. Losses from Schedule OR-ASC-NP, Section C (codes 321, 355, 356, and 357 only). 14g. 14h. Add lines 14a through 14g. 14h. Line 14h minus 20,000. If less than zero, enter 0. 14. Enter the amount from line 14 on Part A, line 2. Form OR-40-N 63

Form OR-40-P 62 Reserved.

Form OR-40-N 64

Form OR-40-P 63 Total refundable credits from Schedule OR-ASC-NP. Enter your total refundable credits from Schedule OR- ASC-NP, line H7. Include Schedule OR-ASC-NP with your return. Penalties and interest Form OR-40-N 68

Form OR-40-P 67 Your 2024 tax must be paid by April 15, 2025, even if you requested an extension of time to file your return. Your 2024 return must be filed by April 15, 2025. If you requested an extension, your return must be filed by October 15, 2025. Round the total of penalties and interest to the near- est whole dollar. For more information and examples showing how penalties and interest are calculated, see “Interest and penalties” in Publication OR-17. Penalties Penalty amounts are based on the tax after all credits shown on your return minus payments that you made by the due date of the return. To find your tax after all credits, start with your tax after standard and carry- forward credits (Form OR-40-N, line 56; Form OR-40-P, line 55), then subtract the refundable credit amounts (Form OR-40-N, lines 61 through 64; Form OR-40-P, lines 60 through 63). Failure-to-file penalty. Include a penalty for failure to file a return if: • Your return is filed more than three months after the due date (or extension due date); and • You didn’t pay all of your tax by April 15, 2025. The penalty for failure to file is 20 percent of your tax after all credits that wasn’t paid by April 15, 2025. Failure-to-pay penalty. Include a penalty for failure to pay if: • Less than 90 percent of your tax after all credits was paid by April 15, 2025, or • You paid at least 90 percent of your tax after cred- its by April 15, 2025, but you aren’t paying the bal- ance of unpaid tax in full when you file. The penalty for failure to pay is 5 percent of your tax after all credits that wasn’t paid by April 15, 2025. Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax after all credits that wasn’t paid by April 15, 2025. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal. Include a pen- alty of 5 percent of the funds withdrawn from your FTHBSA if you withdrew funds from your account for a purpose other than pur chasing a home. No penalty will be imposed if: • The account holder:

— Dies.

— Files bankruptcy.

— Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened.

150-101-048-1 (Rev. 10-16-24) 27 2024 Form OR-40-N and Form OR-40-P Instructions This penalty is in addition to all other penalties pro- vided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions” in Publication OR-17. Interest on unpaid tax You’ll owe interest on the amount of tax that wasn’t paid by April 15, 2025. Interest starts accruing on April 16, 2025 and continues to accrue every day, including the date of your payment. Interest is figured daily, based on a 365-day year. The annual interest rate for 2025 is 9 percent, or 0.0247 per- cent per day. To figure your interest, count the number of days start- ing with April 16, 2025, and ending with the date of your payment. Multiply your unpaid tax by the num- ber of days, then multiply that amount by 0.000247 (the daily rate converted to a decimal). Interest rate increase. If we bill you for unpaid tax, and the tax isn’t paid in full within 60 days from the date of our billing notice, the annual interest rate increases by 4 percentage points, to 13 percent. Amended return. If you’re amending your return, cal- culate the interest based on the additional amount of tax you must pay (line 5 of the Amended worksheet). Form OR-40-N 69

Form OR-40-P 68 Interest on underpayment of estimated tax. Under- payment interest is charged if: • Your tax after all credits and withholding is $1,000 or more; • You were required to make estimated tax payments; • One or more of your required installments was underpaid; and • You don’t qualify for an exception. Note: You could be charged interest on underpayment of estimated tax even if Form OR-40-N, line 66 or Form OR-40-P, line 65 shows an overpayment. See Form OR-10 Instructions to determine if you owe underpayment interest or qualify for an exception. Download Form OR-10 and the instructions from our website or contact us to order them. If you owe underpayment interest, enter the amount from line 4 of Form OR-10. If you qualify for an excep- tion, enter the exception number from line 1 of the form inside box 69a on Form OR-40-N or box 68a on Form OR-40-P. If you used the Annualized Income Worksheet (located in Form OR-10 Instructions) to figure your interest, check box 69b on Form OR-40-N or box 68b on Form OR-40-P. Include Form OR-10 with your return. Keep your underpayment interest worksheets and any required statements with your records. Amount due Form OR-40-N 71

Form OR-40-P 70 Amount you owe. Enter your total unpaid tax plus pen- alties and interest. Note: If you have an overpayment on Form OR-40-N, line 66 or Form OR-40-P, line 65 and the overpayment is less than the total penalties and interest you entered on Form OR-40-N, line 70 or Form OR-40-P, line 69: • On Form OR-40-N, enter the amount from line 70 minus the amount on line 66. • On Form OR-40-P, enter the amount from line 69 minus the amount on line 65. Amount to pay. If you’re filing your return on or before the due date (without extensions), pay the amount shown on this line. If you’re filing your original return after the due date, subtract any payments you made after the due date of the return (without extensions) from the amount on this line before you make your payment. For amended returns, pay the amount shown on the Amended Worksheet, line 11. Payment options You may pay electronically with your checking or sav- ings account, credit card, check, cashier’s check, or money order. Cash payments can be made only at our main office in Salem. If the amount due is less than $2, no payment is required. Electronic payment from your checking or savings account You can pay your current year income taxes, 2025 esti- mated income taxes, any prior year taxes due, and amended return taxes directly from your checking or savings account. There is no fee to use this service. This option is available only through Revenue Online. Direct debit may be available with e-filed returns at the time of filing. Credit card payments You can pay with your Discover, MasterCard, or Visa credit card. The service provider will charge you a con- venience fee. The service provider will tell you what the fee is during the transaction; you will have the option to continue or cancel the transaction before enter- ing your credit card information. If you complete the credit card transaction, you will receive a confirmation

150-101-048-1 (Rev. 10-16-24) 28 2024 Form OR-40-N and Form OR-40-P Instructions number. Keep this confirmation number as proof of payment—don’t send it with your return. To pay by credit card, go to Revenue Online on our website or contact us by phone. Check or money order • Make your check or money order payable to “Oregon Department of Revenue.” • Write all of the following on your payment: — The tax year (2024). — The form you’re filing (Oregon Form OR-40-N or OR-40-P). — The last four digits of your SSN or ITIN. • Use blue or black ballpoint ink. Don’t use red or pur- ple ink or gel pens. • Don’t send cash or a postdated check. Form OR-40-V. Use the voucher only if you’re mak- ing a separate payment by check, cashier’s check, or money order. Don’t use the voucher if you’re including a payment with your return or making an electronic payment. See Form OR-40-V Instructions for additional information. Payment plan. If you can’t pay in full now, pay what you can. Contact us and we will help you set up a pay- ment plan for the remaining amount. Refund Form OR-40-N 72

Form OR-40-P 71 Refund. Enter your overpayment minus any penalty or interest (Form OR-40-N, line 66 minus line 70; Form OR-40-P, line 65 minus line 69). Note: If the total pen- alty and interest is more than your overpayment, see the instructions for Form OR-40-N, line 71 or Form OR- 40-P, line 70. You have three years from the due date of the return to file a claim for your refund. By law, we can’t issue a refund if you file your return more than three years after the return’s due date (excluding extensions) or if the refund is less than $1. For more information about the time limit for claiming a refund, see “Payments and refunds” in Publication OR-17. Interest on refunds. See “Interest and penalties” in Publication OR-17 for information about interest paid on refunds. Refund applications If Form OR-40-N, line 72 or Form OR-40-P, line 71 shows a refund, you may use some or all of it to: • Make an estimated tax payment for a later year. • Donate to one or more of the charitable organizations listed on Schedule OR-DONATE. • Make a deposit to an Oregon higher education sav- ings account. Each of these applications will reduce your refund. The combined total of all applications can’t be more than the amount of your refund. Note: A refund of overpaid tax will be offset against outstanding debt before any amount is applied or refunded to you. Instructions for amended returns. If line 5 of the Amended worksheet shows a refund, you can use some or all of it for the refund applications listed above. However, you can’t reduce any amounts you’ve already applied from a refund on your original return. See the instructions for each application for details. Form OR-40-N 73

Form OR-40-P 72 Apply refund as estimated tax payment. Enter the amount of your refund you want to apply as an esti- mated tax payment for a later year. The payment will be applied to the 2025 tax year unless you’re filing this return after January 15, 2026. For more information see “Payments and refunds” in Publication OR-17. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you’ve already applied as an estimated tax payment for a later year. If line 5 of the Amended worksheet shows a refund and you want to apply some or all of it as an estimated tax payment, include the amount you want to apply. Form OR-40-N 74

Form OR-40-P 73 Charitable checkoff donations. Enter the amount from line 30 of Schedule OR-DONATE. For more informa- tion, see the instructions on the schedule. You can download Schedule OR-DONATE from our website or contact us to order it. Note: If your refund—after any application as a pay- ment of estimated tax—is less than your total donation amount, your donations will be prorated. To make direct donations instead, you can find each charity’s address listed on our website. Don’t mail your donations to us. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as charitable donations using Schedule OR-DONATE. If line 5 of the Amended worksheet shows a refund, you can donate some or all of it to one or more of the listed charities. Include this amount and an amended Schedule OR-DONATE with your

150-101-048-1 (Rev. 10-16-24) 29 2024 Form OR-40-N and Form OR-40-P Instructions amended return. Note: The refund from your amended return will be applied as a donation for the calendar year in which you’re filing it. Form OR-40-N 75

Form OR-40-P 74 Oregon higher education savings plan deposits. Enter the amount from line 5 of Schedule OR-529. For mini- mum deposit amounts and other information, see the schedule instructions. You can download Schedule OR-529 and instructions from our website or contact us to order them. You can also use Schedule OR-529 to provide your information to the Oregon Treasury Savings Network if you’d like them to set up an Oregon College Savings Plan account for you. However, you can make contri- butions from a refund on your return only after the account has been created. See Schedule OR-529 Instruc- tions for details. Note: If the amount of your refund —after any applica- tion as a payment of estimated tax or charitable check- off donation—is less than the total amount you want to deposit, no deposit will be made. Instructions for amended returns. Enter the amount, if any, from a refund on your original return that you applied as an Oregon higher education savings plan deposit. If line 5 of the Amended worksheet shows a refund, add the amount you want to apply as a deposit and include an amended Schedule OR-529 with your amended return. The refund will be applied for the year in which you’re filing the amended return. Form OR-40-N 77

Form OR-40-P 76 Net refund. You must reduce your refund by any amounts applied as a payment of estimated tax, chari- table checkoff donations, and Oregon higher education savings plan deposits. By law, we can’t issue or apply a refund if you file your return more than three years after the return’s due date (excluding extensions). Direct deposit Form OR-40-N 78

Form OR-40-P 77 In most cases, we can deposit your refund directly into your checking or savings account instead of mailing you a check. However, federal banking regulations pre- vent us from making a refund by direct deposit if the final destination is an account outside the United States. In that case, we must issue a paper check instead. Before you enter your information, verify that your deposit will be accepted and confirm your correct routing and account numbers. You can find a diagram of a per- sonal check showing where these numbers are located in the “Payments and refunds” section of Publication OR-17. Follow these steps to make sure your refund will be deposited into the correct account: 1. Check the box if the final destination for your refund would be an account outside the United States. Note: If you check this box, you will be issued a paper check. 2. Check the appropriate box, either checking or sav- ings, but not both. 3. Enter your nine-digit routing number. Routing numbers begin with the digits 01 through 12, 21 through 32, or 61 through 72. 4. Enter your account number. Account numbers can be up to 17 characters (both numbers and letters). Don’t include hyphens, spaces, or special symbols. 5. Double-check the account and routing numbers. These numbers can’t be changed after the return is filed. Form OR-40-N 79

Form OR-40-P 78 Reserved. Signature block Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both taxpayers must sign. By signing the return, you acknowledge, under penalty of false swearing, that the information on the return and any attachments is true, correct, and complete. Minor child’s return. If your child can’t sign their tax return, you may sign the child’s name as their legal agent. Sign the child’s name, then write “By [your signa- ture], parent (or other legal guardian) of minor child.” Preparer signature. Anyone who prepares, advises, or assists in preparing personal income tax returns in exchange for compensation of any kind must be licensed to prepare Oregon returns and must sign the return. Signing the return doesn’t grant your preparer the right to represent you or make decisions on your behalf. For

150-101-048-1 (Rev. 10-16-24) 30 2024 Form OR-40-N and Form OR-40-P Instructions more information about representation and authoriza- tion, download Form OR-AUTH-REP and instructions from our website or contact us to order them. Contact the following agencies to check the status of your Oregon tax practitioner: • State Board of Tax Practitioners at 503-378-4034 (Salem) for licensed tax consultants or preparers, or go to www.oregon.gov/obtp. • State Board of Accountancy at 503-378-4181 (Salem) for public accountants and certified public accoun- tants, or go to www.oregon.gov/boa. Preparer license number. Licensed tax consultants and tax preparers: enter your license number. CPAs: enter your certificate number. Tax-Aide volunteers: enter your TCE site number. All others: leave blank. Don’t enter your driver license number. Form OR-VSI The Oregon legislature’s goal is to make Oregon’s tax policies equitable for everyone. To help in this effort, you may voluntarily provide information about your race or ethnicity when you file your Oregon return, using Form OR-VSI. On Form OR-VSI, you may identify your primary race or ethnicity (or indicate that you don’t have one) and up to two additional races or ethnicities. There’s also a way to indicate that you aren’t sure about your race or ethnicity. If you’re married and filing a joint return, you and your spouse complete separate forms. The information you provide will be used for research purposes only. For more information, see Form OR-VSI Instructions or go to our website and look for “Volun- tary Self-Identification.” You can download the form and instructions from our website or contact us to order them. Before you file Copy of federal return. Before you assemble your Ore- gon return, make a copy of both sides of your federal Form 1040, 1040-SR, or 1040-NR along with Schedules 1 through 3 (as applicable), or Form 1040-X. Don’t include any other federal schedules. Keep these with your records; we may ask for them later. If you created an “as if” federal return, use blue or black ink to label it “as if” on the top left corner. Include it along with the copy of your actual federal return (and any amendments). Failure to include your federal return will delay pro- cessing, and items claimed on your Oregon return may be adjusted or denied. Amended Oregon return. If you’re amending your Oregon return due to changes to your federal return or a return you filed with another state, include a copy of your amended or corrected federal or other state return or audit report. If you’re amending only your Oregon return, include a copy of your original federal or other state return. Assemble your Oregon return. Assemble your return in the order shown below. If a form has more than one page, be sure that you’ve included all pages and that they’re all from the same 2024 form. For example, if you’re filing Schedule OR-WFHDC, Schedule OR-A, or Schedule OR-ASC-NP, be sure that “2024 Schedule OR-WFHDC”, “2024 Schedule OR-A” or “2024 Sched- ule OR-ASC-NP” is printed at the top of each page and that you’ve included all pages associated with each schedule. Important: Don’t use staples, paperclips, tape, or other fasteners. Doing so will delay processing. 1. Payment by check or money order, if any. Don’t use a voucher. 2. Form(s) W-2 and 1099 showing Oregon tax withheld. 3. Form OR-40-N or Form OR-40-P. 4. Schedule OR-A. 5. Schedule OR-ASC-NP. 6. Schedule OR-ADD-DEP. 7. Schedule OR-DONATE. 8. Schedule OR-529. 9. Schedule OR-PTE-NR or OR-PTE-PY. 10. Form OR-10. 11. Schedule OR-EIC-ITIN. 12. Schedule OR-WFHDC. 13. Form OR-VSI. 14. Other Oregon schedules required to be included with your return. 15. If you’re an RDP filing separately for Oregon, your partner’s Oregon return. 16. Your federal return(s) and schedules. Note: If you’re making an estimated tax payment for 2025 by check or money order, send the payment in a separate envelope with a completed Form OR-40-V. Don’t include your 2025 payment or voucher with your 2024 return.

150-101-048-1 (Rev. 10-16-24) 31 2024 Form OR-40-N and Form OR-40-P Instructions Avoid processing delays Type or clearly print your name, date of birth, SSN, complete mailing address, and daytime phone number on your return. Include all pages of your Oregon return. Double-check your figures and other numbers, including your SSN. Errors will delay processing. Common mistakes are: • Math errors. • A wrong amount claimed for the federal tax liability subtraction. • Using the wrong tax chart. If you have tax to pay, review the instructions for Form OR-40-N, line 71 or Form OR-40-P, line 70. Verify your account information if you’re requesting a refund by direct deposit. Sign your return. Both spouses must sign a joint return. Include legible copies of all W-2 and 1099 forms show- ing Oregon income tax withheld. Place them on top of your return along with any payment by check, cashier’s check, or money order. Include a copy of your federal return (front and back) with your Oregon return. Include federal Schedules 1 through 3 (if applicable), but don’t include other federal schedules unless otherwise instructed. Place it behind all Oregon forms and schedules. Payment by check, cashier’s check, or money order should be placed on top of your return. Don’t mail cash. Don’t use a voucher. Don’t use staples, paper clips, tape, or other fasteners. Mail your return in a stamped envelope. Use a busi- ness-size (4 × 9½ inches) or larger envelope with ade- quate postage. Don’t use a smaller envelope—it delays processing. Tax return mailing addresses Mail refund returns or no-tax-due returns to: REFUND PO Box 14700 Salem OR 97309-0930 Mail tax-to-pay returns to: Oregon Department of Revenue PO Box 14555 Salem OR 97309-0940

150-101-431 (Rev. 04-01-22) 2020 OREGON Publication OR-17 Individual Income Tax Guide

Important updates April 1, 2022 This publication was updated on April 1, 2022 to correct a line reference on page 103 (retirement income credit worksheet). April 1, 2021 Due date extension. Director’s Order 21-01 extended the Oregon tax filing and payment deadline for 2020 individual income taxes from April 15, 2021 to May 17, 2021. As a result, interest and penalties with respect to the Oregon tax filings and payments extended by the order will begin to accrue on May 18, 2021. See “Interest and penalties” for more information. March 15, 2021 Unemployment benefits exclusion. On March 11, 2021, the American Rescue Plan Act of 2021 became law. The Act allows up to $10,200 of unemployment benefits received by a taxpayer in 2020 to be excluded from income if the modified adjusted gross income (AGI) on the taxpayer’s federal return is less than $150,000. Modified AGI refers to AGI before excluding any unemployment benefits. Oregon allows the same exclusion. • Full-year residents. Your federal exclusion flows through to your Oregon return. • Part-year residents and nonresidents. Your Oregon exclusion is proportional to your Oregon-source benefits. See our updated instructions under “Unemployment insurance benefits” in “Income.” February 9, 2021 Federal stimulus payments. When Congress created the first and second rounds of Economic Impact Payments, they made them a prepayment of the 2020 federal Recovery Rebate credit. These payments were essentially a reduction of your 2020 federal taxes, received in advance. The payments that taxpayers received in 2020 and early 2021 are not taxed as income in Oregon. However, the payments may impact the federal tax calculations used on your 2020 Oregon income tax return. Under current Oregon law, taxpayers’ federal tax subtraction will be reduced by the combined total of their Economic Impact Payments, plus any Recovery Rebate credit claimed on the federal return. This means some Oregon income tax filers may owe state tax on more of their income and, therefore, may have a larger Oregon income tax bill or a reduced refund. Taxpayers who won’t be affected include: • Lower-income taxpayers who don’t have a federal tax liability. • Taxpayers whose federal income tax after subtracting their Economic Impact Payments and Recovery Rebate credit, is more than their federal tax subtraction limit. • Taxpayers who didn’t receive Economic Impact Payments and won’t receive the Recovery Rebate credit on their federal return. We have updated the instructions for line 8 of the federal tax subtraction worksheet on pages 65 and 66 to clarify that any Economic Impact Payments you received in 2020 or 2021 that were an advance payment of your 2020 credit must be included in the amount entered on that line.

This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax For Individuals. This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administra­ tive Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 questions.dor@oregon.gov Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include .txt files in your email, but we are unable to open any other type of attachments. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. • Personal and partnership income tax: prac.revenue@oregon.gov. • Corporate income or excise tax: corp.help.dor@oregon.gov. • Corporate minimum tax: corp.help.dor@oregon.gov. • Corporate nexus and voluntary disclosure: nexus.dor@oregon.gov. • Payroll and business tax: payroll.help.dor@oregon.gov. • Fiduciary/estate/inheritance tax: estate.help.dor@oregon.gov. • Transit self-employment taxes: tse.help.dor@oregon.gov. Revenews. To receive emailed information from us, subscribe to Revenews, at www.oregon.gov/dor/preparers and navigate to Revenews.

150-101-431 (Rev. 04-01-22) 4 Contents Federal tax law ....................................................................7 New information .................................................................7 Important reminders ..........................................................7 General information ..................................................9 Do I have to file an Oregon income tax return? .............9 Electronic filing for Oregon ............................................11 2-D barcode filing for Oregon .........................................11 Why Oregon needs a federal return ..............................11 Record-keeping requirements .........................................11 Filing an Oregon return .........................................13 Residency ...........................................................................13 Extensions of time to file .................................................15 Which form do I file? ........................................................15 Filing status........................................................................16 Registered domestic partners (RDPs) ............................19 Individual Taxpayer Identification Number .................19 Military personnel filing information ...........................20 Payments and refunds ...........................................25 Payment options ................................................................25 Direct deposit of refund ...................................................25 Application of refund .......................................................26 Refund processing ............................................................27 Injured spouse refund claims .........................................27 Oregon statute of limitations on refunds .....................27 Amended returns .....................................................29 How do I amend my Oregon return? ............................29 Interest and penalties.............................................31 Interest ................................................................................31 Penalties ..............................................................................32 Audits and appeals ...................................................35 What to do if your return is audited ..............................35 Appeals ...............................................................................36 Failure to file an Oregon income tax return ...39 Filing a return after tax is assessed ................................39 Income ............................................................................41 What income is taxable to Oregon? ................................41 Air carrier employees .......................................................41 Alimony received ..............................................................42 Business income or loss ....................................................42 Federal Schedule E and F income ...................................42 Gain, loss, and distributions ...........................................42 Global intangible low-taxed income (GILTI) ................42 Hydroelectric dam workers .............................................42 Individual Retirement Account (IRA) distributions ...43 Interest and dividend income .........................................43 Interstate transportation wages (Amtrak Act ) ............43 Like-kind exchange or involuntary conversion ...........45 Retirement income ............................................................46 Social Security and Railroad Retirement Board benefits ..........................................46 State and local income tax refunds ................................46 Unemployment insurance benefits and other taxable income ............................................46 Wages, salaries, and other pay for work ........................47 Waterway workers ............................................................47 Adjustments .................................................................48 Alimony paid .....................................................................48 Certain business expenses of reservists, performing artists, and fee-basis government officials ...............48 Charitable deduction ........................................................49 Educator expenses ............................................................49 Health savings account (HSA) deduction .....................49 IRA or self-employed SEP and SIMPLE contributions ...50 Moving expenses ..............................................................50 Penalty on early withdrawal of savings ........................50 Self-employed health insurance ....................................51 Self-employment tax ........................................................51 Student loan interest ........................................................51 Tuition and fees .................................................................51 Write-in adjustments on federal Form 1040, Schedule 1, line 22 .......................................................52 Additions ........................................................................53 Accumulation distribution from certain domestic trusts ..............................................................................53 Achieving a Better Life Experience (ABLE) Account nonqualified withdrawal ............................................53 Capital loss carryover difference ....................................53 Child Care Fund contributions .......................................53 Claim of right income repayments .................................54 College Opportunity Grant contributions ....................54 Depletion in excess of property basis ............................54 Disposition of inherited Oregon farmland or forestland ..................................................................54 Disqualified charitable donations ..................................55 Federal business income deduction ...............................55 Federal election on interest and dividends of a minor child ................................................................55 Federal estate tax ...............................................................56 Federal income tax refunds .............................................56 Federal subsidies for employer prescription drug plans ....................................................................57 First-time home buyer savings account nonqualified withdrawal ............................................57 Gambling losses claimed as an itemized deduction ...58 Income taxes paid to another state by a pass-through entity .....................................................58 Individual development account (IDA) .........................59 Interest and dividends on government bonds of other states ................................................................59 Lump-sum distributions ..................................................59 Nonresident capital losses and loss carryforwards .....60 Oregon College and MFS 529 Savings Plan nonqualified withdrawal ............................................60 Oregon Production Investment Fund (auction) ...........60 Refund of Oregon-only itemized deductions ...............61 University Venture Development Fund contributions .................................................................61 Unused business credits ..................................................61 WFHDC medical expenses..............................................61 Subtractions .................................................................62 ABLE Account deposit carryforward ............................62 American Indian ...............................................................62 Artist’s charitable contribution .......................................63

150-101-431 (Rev. 04-01-22) 5 Capital construction fund ................................................63 Construction worker and logger commuting expenses ........................................................................64 Conversions and exchanged property ...........................64 Domestic international sales corporation (DISC) dividend payments ......................................................65 Federal income tax liability .............................................65 Federal tax worksheet ......................................................65 Federal pension income ...................................................67 Federal tax credits .............................................................68 First-time home buyer savings account (FTHBSA) contributions and earnings ........................................69 Foreign income tax ...........................................................69 Income on a composite return ........................................70 Individual development account (IDA) .........................70 Interest and dividends on U.S. bonds and notes ..........70 Land donations to educational institutions carryforward.................................................................71 Legislative Assembly salary and expenses ...................72 Local government bond interest .....................................72 Lottery winnings ..............................................................72 Manufactured dwelling park capital gain exclusion ...72 Manufactured dwelling park payments........................73 Marijuana business expenses .........................................73 Mortgage interest credit ...................................................73 Oregon College and MFS 529 Savings Plan deposits carryforward.................................................................74 Oregon income tax refund ..............................................74 Oregon Investment Advantage .......................................74 Previously taxed employee retirement plans ...............75 Previously taxed IRA conversions .................................75 Public Safety Memorial Fund Awards...........................75 Railroad Retirement Board benefits ...............................75 Scholarship awards used for housing expenses ..........76 Social Security benefits ....................................................76 Special Oregon medical ...................................................76 Taxable benefits for former RDPs ...................................79 Tuition and fees .................................................................79 U.S. government interest in IRA or Keogh distributions ................................................80 Other items ...................................................................81 Net operating losses (NOLs) for Oregon .......................81 Depreciation and amortization .......................................84 Partnership and S corporation modifications for Oregon and Business tax credits from PTE .............84 CPAR adjustments ............................................................85 Qualified business income reduced tax rate ................85 Basis of business assets transferred into Oregon .........86 Sale of assets ......................................................................87 Gain on the sale of an Oregon residence .......................87 Fiduciary adjustment ........................................................88 Market-based sourcing ....................................................88 Passive activity losses (PALs) ..........................................88 Oregon percentage ............................................................89 Deductions and modifications ........................................89 Interest on certain installment sales ..............................91 Farm liquidation long-term capital gain tax rate .........91 Farm income averaging ...................................................92 Federal law disconnect .....................................................92 Credits ............................................................................93 Types of credits ..................................................................93 Standard credits ........................................................94 Exemption credit ...............................................................94 Income taxes paid to another state .................................96 Exception for Oregon resident partners and S corporation shareholders ............................................99 Mutually-taxed gain on the sale of residential property ...................................................100 Oregon Cultural Trust contributions ...........................101 Oregon Veterans’ Home physicians ............................101 Political contributions ....................................................101 Reservation enterprise zone ..........................................102 Retirement income ..........................................................102 Rural emergency medical service providers ..............104 Rural health practitioners ..............................................104 Carryforward credits .............................................105 Agriculture workforce housing ....................................105 Alternative qualified research activities carryforward...............................................................106 Biomass production/collection carryforward ............107 Bovine manure production/collection ........................107 Business energy carryforward ......................................107 Child and dependent care carryforward ....................107 Child Care Fund contributions .....................................107 College Opportunity Grant (auction) ...........................108 Crop donation ..................................................................108 Electronic commerce zone investment carryforward...............................................................109 Employer scholarship .....................................................109 Energy conservation project ..........................................109 Fish screening devices ....................................................109 Lender’s credit: affordable housing ..............................110 Lender’s credit: energy conservation carryforward ....110 Long-term enterprise zone facilities carryforward ...110 Oregon IDA Initiative Fund donation .........................110 Oregon Low-Income Community Jobs Initiative/ New Markets ..............................................................111 Oregon Production Investment Fund (auction) .........111 Pollution control facilities carryforward .....................111 Qualified research activities carryforward ................112 Renewable energy development contribution (auction) carryforward ..............................................112 Renewable energy resource equipment manufacturing facility carryforward .....................112 Residential energy ..........................................................112 Rural technology workforce development ..................112 Short line railroad rehabilitation ..................................113 Transportation projects ..................................................113 University Venture Development Fund contributions ............................................................... 114 Refundable credits .................................................115 ABLE account contributions ..........................................115 Claim of right income repayment ................................115 Earned income credit (EIC) ...........................................116 Manufactured home park closure ................................116 Oregon 529 College Savings Network account contributions ..............................................................116 Working family household and dependent care (WFHDC) ....................................................................117 Oregon surplus credit ....................................................118 Interest on underpayment of estimated tax ...119 Do I owe underpayment interest? ................................119

Figure your required annual payment ........................119 Exceptions to paying interest on an underpayment of estimated tax ...............................119 Estimated tax .............................................................121 Should I pay estimated tax?...........................................121 Exceptions ........................................................................121 Special situations ............................................................121 Appendix ......................................................................122

150-101-431 (Rev. 04-01-22) 7 Federal tax law No extension to pay. Oregon doesn’t allow an extension of time to pay your tax, even if the IRS is allowing an extension. Your 2020 Oregon tax is due May 17, 2021. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2018. Oregon exceptions to federal tax law: • Internal Revenue Code (IRC) Section 139A tax exemp­ tion for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. • IRC Section 529 tax exemption for earnings on col­ lege savings plan funds used for K-12 tuition. Ore­ gon College & MFS 529 Savings Plans may be used for higher education expenses only. • IRC Section 199A deduction for noncorporate quali­ fied business income (QBID). Oregon is discon­ nected from the QBID. This deduction doesn’t flow through to the Oregon personal income tax return, so there is no addition to report; however, the deduc­ tion must be added back on fiduciary returns. References to federal return forms. In this publica­ tion, references to the federal return or to Form 1040 also include a reference to Forms 1040-SR, 1040-NR, and 1040-X, unless otherwise indicated. New information Due date extension. Director’s Order 2021-01 extended the Oregon personal income tax filing and payment deadline to May 17, 2021. Interest and penalties with respect to the extended deadline begin to accrue on May 18, 2021. Unemployment exclusion. The federal exclusion applies to Oregon. See “Unemployment insurance benefits” in “Income.” Earned income credit (EIC). Oregon’s EIC has increased to 12 percent of the federal earned income tax credit (EITC) if you have a qualifying dependent under age 3 at the end of the tax year. For all other qualified taxpayers, the Oregon EIC is now 9 percent of your federal EITC. See “Refundable credits” for more information. Presidentially-declared disasters. If you were affected by a presidentially-declared disaster during 2020, be sure to check the “Federal disaster relief” box on your Oregon return. Disaster relief—underpayment interest. Were you unable to make one or more estimated tax payments on time due to a presidentially-declared disaster or other unusual circumstances? If so, you won’t be charged underpayment interest on those install­ ments. See “Underpayment of Estimated Tax,” Form OR-10 Instructions, and our website for more information. Special Oregon medical subtraction. You or your spouse must be age 66 or older on December 31, 2020 to qualify for the subtraction. See “Special Oregon medical subtraction.” Federal tax liability subtraction. The federal tax subtraction limit is $6,950 ($3,475 if married filing separately) for 2020. It may be limited further based on your adjusted gross income (AGI). See “Federal income tax liability” in “Subtractions.” Short-line railroad credit. A tax credit is now avail­ able for taxpayers who improve short-line railroad property. See “Carryforward credits.” Credits for Oregon 529 College Savings Network and ABLE account contributions. Starting with contribu­ tions made in tax years beginning on or after January 1, 2020, a tax credit based on your contributions to an Oregon College or MFS 529 Savings Plan account or an ABLE account may now be claimed. See these top­ ics under “Refundable credits.” Note: Excess contributions made in tax years begin­ ning before January 1, 2020 may be carried forward and subtracted for up to four years, subject to annual limitations. See “Subtractions.” Political contributions credit. The AGI limit for claiming this credit has been lowered to $150,000 for married taxpayers filing a joint return and $75,000 for all others. See “Standard credits.” Important reminders Revenue Online. Revenue Online provides conve­ nient, secure access to tools for managing your Ore­ gon tax account. With Revenue Online, you can: • Check the status of this year’s refund. • View and print letters from us. • Make or schedule payments. • Securely communicate with us. • Check balances and view your tax account history. • Submit your requests (such as penalty waivers or appeals) or information we’ve requested from you. • View your Form 1099-G, if applicable. Tax professionals with third party access have addi­ tional benefits, such as viewing clients’ accounts. For more information and instructions on setting up your personal Revenue Online account, go to www. oregon.gov/dor and click on “Revenue Online.” Unemployment benefits. If you received unemploy­ ment benefits during the year, any benefits that aren’t excluded are taxable income. If you owe tax on your Federal tax law

150-101-431 (Rev. 04-01-22) 8 2020 benefits because you elected not to have tax withheld, elect to have tax withheld from any future benefit payments by submitting Form 1040WH to the Oregon Employment Department. Military pay. Oregon doesn’t tax your military pay if you aren’t an Oregon resident. For more information about residency and the Oregon military pay subtrac­ tions, see “Military personnel filing information.” Federal centralized partnership audit regime (CPAR). Oregon recognizes CPAR, the federal regime for auditing partnerships. See “Audits and appeals” and “Other items.” Working family household and dependent care (WFHDC) credit. All filers who claim this credit must use Schedule OR-WFHDC, Oregon Working Family Household and Dependent Care Credit. There’s no sepa­ rate schedule for part-year or nonresident filers. Fiduciary returns. This publication includes infor­ mation for Oregon fiduciary return filers, where the treatment of the item may differ from the treatment on personal income tax returns. Also, see the instruc­ tions for Form OR-41, Oregon Fiduciary Income Tax Return. Statewide transit tax (STT). This income tax funds public transportation services and improvements within Oregon. The tax is equal to one-tenth of one percent (0.1% or 0.001) of the wages received by an employee who is an Oregon resident, or an employee who is a nonresident but who performs services in Oregon. If you are an Oregon resident or nonresi­ dent and work for a business located in Oregon, your employer is required by law to automatically with­ hold the STT from your wages. If you are an Oregon resident and work for an employer located outside of Oregon, your employer isn’t required to withhold the STT on your behalf, but may choose to do so volun­ tarily. If your out-of-state employer doesn’t withhold the STT from your wages, you must file Form OR-STI, Statewide Transit Individual Tax Return, and pay the tax due by May 17, 2021. See the instructions for Form OR-STI. Market-based sourcing. Nonresident taxpayers must apportion their business income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See ORS 314.665, 314.666, and OAR 150-314-0435. Payment options. We accept tax payments by check, money order, debit card, and credit card. See “Pay­ ments and refunds.” Direct deposit. Instead of receiving your refund check in the mail, you may have your refund depos­ ited directly into your account that accepts electronic deposits. See “Direct deposit of refund” in “Pay­ ments and refunds.” You can also have your refund deposited directly into an Oregon College or MFS 529 Savings Plan account. You may choose up to four accounts. See our full-year and part-year/nonresident booklets for more information. Minimum refund. Under Oregon law, the minimum refund that can be issued is $1. Minor child’s return and signature. If your child must file a tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By (your signature), parent (or legal guardian) for minor child.” Deceased person’s return. A final return for a person who died during the calendar year must be filed if a return would normally be required. If a return must be filed, check the “Deceased” box after the person’s name on the return. If you filed a final return with a refund and are unable to cash the refund check, you will need to return the check to us along with Form OR-243, Claim to Refund Due a Deceased Person. Go to our website to download the form or contact us to order it. If you are a court appointed personal representative or have filed a small estate affidavit and you need more information about trusts or estates, contact our Estate Unit at estate.help.dor@oregon.gov. Additional exemption credits. Additional exemption credits for severely disabled taxpayers and for dis­ abled children aren’t available for taxpayers whose AGI is more than $100,000, regardless of filing sta­ tus. For more information, see “Exemption credit” in “Standard credits.“ Oregon tax credits. Most Oregon tax credits are lim­ ited to your tax liability. However, report the full amount of each credit on Schedule OR-ASC or OR- ASC-NP, even if you can’t use all of the credit this year. Some credits allow a carryforward of any unused amount. When you prepare this year’s return, refer to last year’s Schedule OR-ASC or OR-ASC-NP to see if you have any unused credit to carry forward. See “Carryforward credits“ to find out which credits you can carry forward to future years. Registered domestic partners (RDPs). For Oregon tax purposes, same-sex RDPs are treated the same as married couples. References to “spouse” within this publication include RDPs. Nonresident disaster relief workers. You don’t need to file a return if you worked in Oregon solely to pro­ vide relief during a declared disaster or emergency. See “General information” for more details. Important reminders

150-101-431 (Rev. 04-01-22) 9 General information Do I have to file an Oregon income tax return? Use the following charts and examples to determine whether you are required to file an Oregon personal income tax return. See the explanations in this publi­ cation if you are unsure about: • Residency status—see “Residency.“ • Filing status—see “Filing status.“ • Taxable income—see “What income is taxable to Oregon?” • Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Oregon income tax withheld, even if you aren’t oth­ erwise required to file a return. Note: You don’t have to file an Oregon return if you are an out-of-state employee or the operator of an out-of-state business and you were in Oregon solely for purposes of performing disaster or emergency- related work (ORS 401.690). Full-year residents You need to file if your gross income is more than the amount shown for your filing status in Table 1. Note: The amounts in Table 1 apply to gross income from all taxable sources. Table 1. Filing thresholds for full-year residents Your filing status is: Number of boxes checked below line 17 of Form OR-40: And your gross income is more than: Single, can be claimed on another’s return Any See “Dependents” Single 0 $6,495 1 $7,695 2 $8,895 Married filing jointly 0 $12,990 1 $13,990 2 $14,990 3 $15,990 4 $16,990 Married filing separately 0 $6,495 1 $7,495 2 $8,495 Head of household 0 $8,150 1 $9,350 2 $10,550 Qualifying widow(er) 0 $9,055 1 $10,055 2 $11,055 In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages. Dependents. If you can be claimed as a dependent on another person’s return, you must file your own return if your income is more than the lesser of: • The standard deduction allowed on your federal return, or • The Oregon standard deduction for a single filer. You can use this worksheet, which has the federal amounts, to help you figure out if you need to file your own return. 1. Enter gross income from all 1. $ ________ taxable sources.

2. Earned income $_____ plus $350. 2. $ ________ Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ ________ 5. Enter the Oregon standard 5. $ ________ deduction for a single person: • Basic standard deduction: $2,315. • Age 65 or older, or blind: $3,515. • Age 65 or older and blind: $4,715. 6. Enter the smaller of line 4 or 5. 6. $ ________ If line 1 is more than line 6, you must file an Ore­ gon return. If line 6 is more than line 1, you aren’t required to file an Oregon return. Example 1: Emily is single, age 20, and a full-time college student. Her parents claim her as a depen­ dent. Emily has earned income of $800 from her job. She also has $29 of interest income from her savings account. 1. Enter gross income from all 1. $ 829 taxable sources. 2. Earned income $800 plus $350. 2. $ 1,150 Enter total. General information

150-101-431 (Rev. 04-01-22) 10 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,150 5. Enter the Oregon standard 5. $ 2,315 deduction for a single person: • Basic standard deduction: $2,315. • Age 65 or older, or blind: $3,515. • Age 65 or older and blind: $4,715. 6. Enter the smaller of line 4 or 5. 6. $ 1,150 Because line 6 ($1,150) is more than line 1 ($829), Emily isn’t required to file an Oregon return. Note: If Emily had any Oregon income tax withheld from her income, she must file an Oregon return to claim a refund. Example 2: Norman, age 77, is claimed as a depen­ dent by his son. Norman has income of $3,015 from a pension and interest. He doesn’t have any other tax­ able income. 1. Enter gross income from all 1. $ 3,015 taxable sources. 2. Earned income $0 plus $350. 2. $ 350 Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,100 5. Enter the Oregon standard 5. $ 3,515 deduction for a single person: • Basic standard deduction: $2,315. • Age 65 or older, or blind: $3,515. • Age 65 or older and blind: $4,715. 6. Enter the smaller of line 4 or 5. 6. $ 1,100 Because line 1 ($3,015) is more than line 6 ($1,100), Norman is required to file an Oregon return. Example 3: Katrina is single, age 19, a full-time stu­ dent, and claimed as a dependent by her mother. Katrina didn’t work but had $1,200 of unearned inter­ est income from her certificate of deposit. 1. Enter gross income from all 1. $ 1,200 taxable sources. 2. Earned income $0 plus $350. 2. $ 350 Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,100 5. Enter the Oregon standard 5. $ 2,315 deduction for a single person: • Basic standard deduction: $2,315. • Age 65 or older, or blind: $3,515. • Age 65 or older and blind: $4,715. 6. Enter the smaller of line 4 or 5. 6. $ 1,100 Because line 1 ($1,200) is more than line 6 ($1,100), Katrina is required to file an Oregon return. Part-year residents and nonresidents You need to file an Oregon return if your gross income is more than the amount shown for your fil­ ing status in Table 2. Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident and gross income from all taxable sources while an Oregon resident. Table 2. Filing thresholds for part-year residents and nonresidents Your filing status is: And your Oregon gross income is more than: Single, can be claimed on another’s return $1,100* Single $2,315 Married filing jointly $4,630 Married filing separately If spouse claims standard deduction $2,315 If spouse itemizes deductions 0 Head of household $3,725 Qualifying widow(er) $4,630 * The larger of $1,100 or your earned income plus $350, up to your standard deduction amount. If your Oregon income is less than the amount in Table 2, you aren’t required to file a return unless $1 or more of Oregon tax was withheld from your wages. Nonresidents with rental property in Oregon You don’t have to file an Oregon return if: • Your only Oregon-source income is from rental property, and • You have a loss from the rental activity for the year. However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-tax­ able transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return. General information

150-101-431 (Rev. 04-01-22) 11 Electronic filing for Oregon Electronic filing is a fast, efficient, and accurate way to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Practitioners are automatically approved for Oregon electronic filing after the IRS accepts your online application to become an authorized e-file provider. There is no separate registration required for Oregon. Paid preparers who meet the requirements of the fed­ eral e-file mandate must also e-file Oregon personal income tax returns. For information on waivers of this requirement, see the information for tax profes­ sionals on our website. The copy of a tax return provided to a client must be an exact copy of the tax return submitted to us. 2-D barcode filing for Oregon 2-D barcode filing is an alternative way to file a paper Oregon return. Oregon-approved tax software pack­ ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on the tax return is a “picture” of the information on the return, which is printed on the top right-hand cor­ ner of the return’s front page. A machine reads the barcode information so it doesn’t have to be entered manually into our computer system. If changes are made to the return after it has been printed, the entire return must be re-printed so that the barcode will reflect the correct information. The copy of a 2-D barcode return provided to a tax­ payer must be an exact copy of the tax return you submit to us. Why Oregon needs a federal return Most information to support the amounts on your Oregon return comes from your federal return. Even when Oregon law differs from federal law (such as additions, subtractions, and credits), we still need information from your federal return (ORS 314.380). If you file an electronic return, we will receive your federal return with your Oregon return. If you are filing a paper return, you must include a copy of the front and back of your federal return with Schedules 1 through 3 (if applicable). Also include any “as if” federal returns. If you’re not required to file a federal return, prepare a federal return as if you were actually filing it and include it with your Oregon return. Don’t include extension requests or federal schedules other than those listed above, but keep a copy of those with your tax records. We may ask for copies later. Record-keeping requirements Why is record-keeping important? • Keeping records of your income and deductions will help you prepare an accurate tax return and pay the correct tax. • You must be able to prove all items on your return with adequate records and sufficient evidence. Keep records that verify the income, deductions, credits, and other items reported on your tax return. Estimates or approximations don’t qualify as proof. • Accurate records will help you if we select your tax return for audit. Usually, an audit will occur one to three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from various sources. You may also have to pay more tax if you can’t prove the figures you used. How should I keep my records? You must keep accurate records, but no particular system is required for keeping them. Your records should contain all the information you used to fig­ ure your income, deductions, credits, and other items shown on your income tax return. What records should I keep? If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list of records you should keep: • Receipts and sales documents for deductible busi­ ness expenses, self-employment, farm, rentals, sale of assets, etc. • Dated and signed receipts for any cash payments that might be deductible. • Income statements, including Form W-2 for your wages and Form 1099 for interest, dividends, rents, and nonemployee compensation. • All payroll records including copies of W-2 and 1099 forms you’ve issued. • Pay statements if you have deductible expenses withheld from your paycheck. • Receipts and certificates to verify Oregon tax cred­ its claimed. • Copies of your tax returns, including complete federal returns with all required schedules, or an “as if” return if you don't have a federal filing requirement. General information

150-101-431 (Rev. 04-01-22) 12 • Copies of your “as if” returns if you were required to prepare them to claim a special filing status. • Worksheets, summary statements, calendars, log books, journals, etc. • Canceled checks, substitute checks or carbon cop­ ies of checks, bank deposit slips, and receipts. • Checking and savings account statements for both personal and business accounts. • If you deduct alimony payments, keep copies of canceled checks and the written separation agree­ ment or the divorce, separate maintenance, or sup­ port decree. • For property you own, keep proof of the purchase price, any purchase expenses, the cost of any improvements, and any other basis adjustments, such as depreciation and deductible casualty losses. If you received property as a gift, you must have records that show the donor’s adjusted basis just before the property was given to you, its fair market value on the date of the gift, and any gift tax paid on it. • The sale of a capital asset (and certain other assets). This type of sale is reported as a capital gain or loss. Your records must show when and how the asset was acquired, how it was used, and when and how you disposed of it. Records must also show your cost or other basis, the gross selling price, and the expenses of the sale. • Year-end statements showing total interest paid on loans, mortgages, or notes. • Statements and canceled checks, mortgage state­ ments, and other documents for your real estate and personal property taxes paid. • Proof of payment to your care provider if you are claiming the Oregon WFHDC credit. How do I document deductible expenses? A receipt is the best evidence to prove the amount of an expense. A canceled check, together with a bill or invoice from the payee, ordinarily establishes the cost. A canceled check might not prove a business expense without other evidence to show that it was for a business purpose. All records should show: • The date, • The amount, and • The purpose of the expense. To be deductible, a business expense must be both ordinary and necessary. How do I document car or truck expenses? You must have written records to verify your vehicle expenses. To deduct car or truck expenses, you must be able to prove: • The amount of each separate expense for a vehicle, such as the cost of purchase, capital improvements, lease payments, maintenance, and repairs. • The mileage for each business or investment use of the vehicle and the total miles for the tax year. • The date of the expense or use. Keep a trip log at the time of use, showing the date and mileage for each business use, including odometer readings. • The business or investment reason for the expense or use of the vehicle. Keep the proof you need for these items in an account book, diary, log, statement of expense, trip sheet, etc. Include all documents needed to verify the item. How long should I save my records? Keep records that support an item of income or a deduction on your return at least until the statute of limitations expires for that return. A statute of limita­ tions is the period of time after which no legal action can be brought. Usually this is three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. Returns filed before the due date are treated as if they were filed on the due date. Exceptions: There are times you should keep records longer, including the following: • Keep records that support your basis in property for at least four years after you sell or dispose of the property (including all capital improvements). • If you’re depreciating property, keep records related to each item’s depreciation expenses for its entire recovery period plus three years. • If your return was audited by the federal govern­ ment, Oregon has two years from the date we receive the federal audit report to review your Ore­ gon return for adjustments. • If you have employees, we recommend you keep all of your employment tax records for at least five years after the date the tax becomes due or is paid, whichever is later. This includes copies of Form W-2 for each employee, and all payroll records. • If you didn’t report some income and it’s more than 25 percent of the income shown on your return, the return may be audited within five years after it was filed. If a return is false or fraudulent or if no return is filed, there is no time limit. What if I don’t have all of my records? If records have been destroyed and your return is selected for audit, the auditor will advise you about reconstructing your records. General information

150-101-431 (Rev. 04-01-22) 13 Filing an Oregon return In order to correctly file an Oregon personal income tax return, you must know: • Your residency status. • Which form to file. • Your filing status. Residency (ORS 316.027) General rule. Oregon taxes residents on all sources of income. Oregon taxes nonresidents on income from Oregon sources. Residents An Oregon resident is someone who is domiciled in this state. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan to return after an absence. Domicile isn’t the same as home, abode, or residence. Intent is the deciding factor when you determine your domicile. The law assumes you have a domicile somewhere. It also assumes you have only one domicile. Home. If you have one home, your domicile is gen­ erally where that home is located. If you have two homes, your domicile follows your center of activity. To determine your center of activity and your domi­ cile, consider: • Physical characteristics of the place. • Time you spend there. • Things you do there. • People and property there. • Your attitude toward the place. • Your intent to return to the place when you are away. Family relations. Generally, spouses living together have the same domicile. The domicile of minor chil­ dren is determined by the domicile of the person who has legal custody of them. When living apart, spouses each may establish their own domicile if they meet the requirements for a change of domicile. Change of domicile. Intent is the most important factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your domicile. Once domicile is established, it’s never lost until all of the following happen: • You intend to abandon the old domicile, and • You intend to acquire a specific new domicile, and • You are physically present in the new domicile. The important points are physical presence at a new dwelling and the intent to make the new dwelling a home. Non-domiciled residents. An Oregon resident may also be someone who isn’t domiciled in Oregon, but: • Maintains a residence in Oregon, and • Spends a total of more than 200 days in Oregon during the taxable year. A fraction of a day is considered to be a whole day when figuring the 200 days. We won’t consider you to be a resident if you are in Oregon for a temporary purpose. The burden of proof is on you to show your stay here is only temporary. Consider both your domicile and the place where you live to determine how you are taxed. Special-case Oregon residents (Oregon residents liv­ ing in another US state). Even if you are domiciled in Oregon, you will be taxed as a nonresident if you meet all of the following requirements: • You don’t maintain a permanent residence in Ore­ gon for yourself or your family during any part of the year, and • You maintain a permanent residence outside Ore­ gon during the entire year, and • You spend less than 31 days of the year in Oregon. Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be taxed as foreign nonresidents. In general, you’re considered to be a foreign non­ resident if you meet the residency requirements for foreign earned income or housing exclusion under federal law. To qualify as a foreign nonresident, you must meet one of these two federal tests: • The “physical presence” test; or • The “bona fide residence” test. Note: You may be treated as an Oregon nonresident for tax purposes if you are in the civil service or mili­ tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel filing information” for more details. Physical presence test. To meet the requirements of the physical presence test: • Your tax home must be in a foreign country, and • You must be present in a foreign country or coun­ tries for 330 full days out of any consecutive 12-month period. “Tax home” is generally your regular place of busi­ ness or the location where you work, regardless of Filing an Oregon return

150-101-431 (Rev. 04-01-22) 14 where you live. For more information on tax home, refer to IRS Publication 17, Your Federal Income Tax for Individuals. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may begin on any date in the calendar year. The period ends the day before that same date, one year later. For example, a 12-month period beginning October 10 would end October 9 of the following year. The 330 full days must fall within that 12-month period. Example 1: Juan arrives in England on April 24, 2019, at noon. He establishes his tax home in England and remains there until 2 p.m. on March 21, 2021, when he leaves England to return to the United States. Juan is physically present in a foreign country for 330 full days during at least one 12-month period: • One 12-month period starts on his first full day in England, April 25, 2019, and ends April 24, 2020. • Another 12-month period starts on March 21, 2020, and ends March 20, 2021, his last full day in England. Juan may use any 12-month period that begins after his arrival in England and ends before he returned to the United States to meet the physical presence test. Juan qualifies for nonresident treatment for the months he was out of the country during 2019, 2020, and 2021. He should file Oregon part-year returns for 2019 and 2021, and a nonresident return for 2020. Example 2: Use the facts in Example 1, but change Juan’s arrival date to June 23, 2020. In this case, Juan won’t qualify for nonresident treatment because he wasn't physically present in a foreign country for 330 days. He must file a full-year resident return for 2020 and 2021 as well as 2019. Bona fide residence test. To meet the requirements of the bona fide residence test, you must: • Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country, and • Maintain a bona fide residence for an uninter­ rupted period that includes a full tax year. Example 3: Sandra is a calendar-year taxpayer. She establishes a bona fide residence in Russia on August 12, 2019. On June 10, 2020, she moves out of her residence and spends six weeks at a hotel in Alaska. On July 22, 2020, she establishes a bona fide residence in South Korea. She is transferred back to the United States on May 8, 2021. She doesn’t meet the require­ ments of the bona fide residence test because she doesn’t maintain a bona fide residence for an uninter­ rupted period that includes a full tax year. She also doesn’t qualify for the physical presence test because she isn’t physically present in a foreign country for 330 full days out of a consecutive 12-month period. Example 4: Use example 3, but instead of going to South Korea, Sandra continues to work in Russia until February 2021. She would now qualify under the bona fide residence test. Her residence was estab­ lished for a full tax year. Sandra should file a nonresi­ dent return for 2020. Sandra also qualifies for non­ resident treatment for the months in 2019 and 2021 that she maintained the bona fide foreign residence. She should file Oregon part-year returns for 2019 and 2021. For more information about physical presence or bona fide residence, see IRS Publication 54, A Tax Guide for U.S. Citizens and Resident Aliens Abroad. Tax treaties. If a U.S. tax treaty changes the meaning of terms used in determining federal taxable income, Oregon accepts the changed meaning as it applies to affected taxpayers. We may ask you to provide records showing how a particular treaty affects your taxable income. Nonresidents If you were domiciled outside Oregon and lived out­ side Oregon for the entire year, you were a nonresi­ dent of Oregon. If you are a nonresident, Oregon taxes only income you earned in Oregon and received from Oregon sources. In some cases, however, a taxpayer domiciled in Oregon can be treated as a nonresident. See “Special-case Oregon residents.“ Example 1: Misha was a permanent California resi­ dent in 2020. She temporarily worked in Medford as a computer consultant for two months in 2020. Misha is a nonresident of Oregon. She will pay Oregon tax on the income she earned in Oregon. California will also tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax her income, Misha may claim a credit for taxes paid to another state. For information about this credit, see “Income taxes paid to another state.” Example 2: Nash is a permanent Nevada resident. He has rental property in Oregon. Nash is a nonresident of Oregon. He will pay Oregon tax on the income from his Oregon rental property. Part-year residents If you were domiciled in Oregon for part of the year and in another state for part of the year, you were a part-year Oregon resident. Oregon taxes all of your income for the part of the year you were an Oregon resident. Oregon also taxes any income earned in Oregon or received from Oregon sources for the part of the year you were a nonresident. Filing an Oregon return

150-101-431 (Rev. 04-01-22) 15 Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and established a new domicile here. Gustav is considered to be a part-year Oregon resident for the tax year. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because she doesn’t abandon her Oregon domicile when she works in Alaska. Extensions of time to file If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For 2020 returns, this means you have until October 15, 2021, to file. An extension of time to file your return doesn’t mean you have more time to pay your taxes. You must pay any tax you expect to owe by May 17, 2021. If you don’t, you will owe interest on the unpaid balance from May 18, 2021 until the date it’s paid, and will be subject to a minimum penalty of 5 percent of the unpaid tax. To avoid penalty and interest charges, include enough payment with your extension to cover your tax liability. Once you file your return, if you have overpaid, we'll refund the overpayment. See “Interest and penalties” for more information. Were you stationed in a designated combat zone? If you were in the military and stationed in a desig­ nated combat zone, you may qualify for an automatic extension of time to file your return. See “Military personnel filing information.” Was your home or business located in a presidentially-declared disaster area? Did you receive additional time to file your federal tax return and pay your federal tax? If so, you may qualify for additional time to file your Oregon return and pay your Oregon tax. Check the “Federal disas­ ter relief” box on your return. Extension for filing returns Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to file your Oregon return and you owe tax, see the instruc­ tions for making an extension payment in Publication OR-EXT. Your extension payment must be received by May 17, 2021, to avoid penalties and interest. Download Publication OR-EXT from our website or contact us to order it. Whether you owe tax or are expecting a refund, mark the “Extension filed” box on your Oregon return and file your return by October 15, 2021. Which form do I file? Oregon has three types of personal income tax forms. The form you use depends on your residency status. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Part-year resident—Form OR-40-P Use Form OR-40-P if any one of the following is true: • You are a part-year resident; or • You are filing jointly and one spouse is a full-year Oregon resident and one is a part-year resident; or • You qualified as an Oregon resident living abroad for part of the year. Nonresident—Form OR-40-N Use Form OR-40-N if any one of the following is true: • You are a nonresident; or • You are a special-case Oregon resident (see “Resi­ dency”); or • You and your spouse are filing jointly and one (or both) of you is a nonresident; or • You meet the military personnel nonresident requirements (see “Military personnel filing infor­ mation”); or • You qualified as an Oregon resident living in a for­ eign country for the entire year (see “Residency”). You may need to file supplemental schedules or forms, depending on your circumstances. Nonresident trusts. If you file a federal Form 1040- NR and you’re filing an Oregon return for a nonresi­ dent trust, you must file using Form OR-41. Don’t file using Oregon Form OR-40-N. Sales of Oregon real property by nonresidents Withholding on real property sales. Authorized escrow agents may be required to withhold taxes due when a nonresident sells real property located in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: • Four percent of the consideration; • The net proceeds from the sale; or • Eight percent of the gain includible in Oregon tax­ able income. For more information about this requirement and its exceptions, see the instructions for Form OR-18-WC, Report of Tax Payment or Written Affirmation for Oregon Filing an Oregon return

150-101-431 (Rev. 04-01-22) 16 Real Property Conveyance, available on our website. If required, the nonresident transferor uses Form OR- 18-WC to calculate their gain or claim an exemption from withholding, then gives the form to the escrow agent. The escrow agent completes the rest of the form and submits it and any required payment to the department. Keep a copy of this form for your own records. Pass-through entities (PTEs) Partnerships. Except for publicly-traded partnerships taxed as corporations, every partnership with one or more Oregon resident partners, and every partner­ ship having income or loss derived from or connected with Oregon sources, must file Form OR-65, Oregon Partnership Return of Income. Partnership income is generally taxable to the partners rather than the part­ nership. See the Form OR-65 instructions for further details. Note: Oregon follows federal filing guide­ lines including the due date for filing a partner­ ship return. If you aren’t required to file a federal partnership return, you don't need to file one for Oregon. S corporations. S corporations doing business in Oregon or receiving income from Oregon sources are required to file Form OR-20-S, Oregon S Corporation Tax Return. S corporation income is generally tax­ able to the shareholders rather than the corporation. However, S corporations do pay Oregon tax on cer­ tain kinds of income. For more information, see the instructions for Form OR-20-S on our website. LLCs. Oregon LLCs and foreign LLCs doing business in Oregon are taxed and classified the same as for federal income tax purposes. • An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax Return, or Form OR-20-INC, Oregon Corporation Income Tax Return. • A multiple-member LLC that chooses to be taxed as a partnership files Form OR-65. • A single-member LLC that chooses to be taxed as a sole proprietorship and files Schedule C, Sched­ ule E, or Schedule F with their federal individual income tax return files the same way for Oregon. PTEs with nonresident owners (ORS 314.778, 314.784) Composite tax return. A PTE must file Form OR-OC, Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For forms and instructions, see our website. Nonresident withholding. A PTE must withhold tax on a nonresident owner’s share of Oregon-source income if the nonresident owner elects not to be included on Form OR-OC, unless the nonresident owner’s share of Oregon-source income is less than $1,000 or other exceptions listed in ORS 314.784 apply. For more information, see the instructions for Form OR-19, Annual Report of Nonresident Owner Tax Payments. Filing status General rule The filing status on your Oregon return must be the same as your filing status on your federal return, unless you’re married and have a different residency status than your spouse or you’re an RDP who isn’t married. Example 1: Minerva filed her federal return using the filing status of single. She must use the single filing status on her Oregon return. Example 2: Peter and Della are married and both are full-year Oregon residents. They filed a joint federal return. Peter and Della must use the married filing jointly filing status on their Oregon return. Example 3: Tia and Colin are married and choose the married filing separately filing status on their federal returns. They must use the married filing separately filing status on each of their separate Oregon returns. Exception: Filing status for married taxpayers with different residency status If you and your spouse file a joint federal return but each of you has a different residency status, you have a choice of two different filing statuses to use for Oregon: • You and your spouse may file one Oregon return using the married filing jointly status; or • You and your spouse may each file a separate Oregon return using the married filing separately status. You may not file as head of household (ORS 316.122). Note: This exception doesn’t apply to unmarried RDPs or married nonresident aliens because these taxpayers may not file joint federal returns. For information on RDP filing, see “Registered domestic partners.” Which forms do we file? Use this table to determine which return form to use if you file a joint return or separate returns for Oregon. Filing an Oregon return

150-101-431 (Rev. 04-01-22) 17 Table 3. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns, use: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P Note: If you file separate federal returns, you must file separate Oregon returns. If you are a married nonresident without Oregon income, and you and your spouse are filing separate returns, you aren’t required to file an Oregon return. What information goes on each return? On each spouse’s separate Oregon return, enter the filer’s name and Social Security number first, then the spouse’s name and Social Security number. Mark the “Married filing separately” box. “As if” federal returns. You must include an “as if” federal return showing how the return would have appeared if you had filed a separate federal return, along with a copy of the joint federal return that you actually filed. Label the “as if” federal returns and mark the “Calculated using ‘as if’ federal return” box on each Oregon return. If you are filing paper returns, mail both Oregon returns, the “as if” federal returns, and the actual federal return in the same envelope, but don’t staple them together. Income and deductions. You and your spouse each report your own share of income and deductions. Also, report your share of any Oregon additions, sub­ tractions, modifications, or adjustments, including the federal tax subtraction. Use the following guidelines when preparing your return: Your percentage. Use this formula to compute your share of certain deductions: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI If your share is less than $0, your percentage is 0. Federal tax subtraction. Each spouse may subtract their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (after all credits except the EIC) by your percentage to determine your federal tax subtraction, with the applicable AGI limitation. Itemized deductions. Multiply each itemized deduc­ tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Itemized Deductions, if you can't clearly determine each spouse’s deductions. For more information about itemized deductions, see the instructions for Schedule OR-A. • Standard deduction. The Oregon standard deduc­ tion is $2,315 for each spouse. • Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or before January 1, 2021 or if they’re blind. The addi­ tional deduction is $1,000 for married taxpayers filing separately. A taxpayer who is both age 65 or older and blind may claim two additional deduc­ tions plus the basic standard deduction. • Exception: If one spouse claims itemized deduc­ tions, the other spouse can’t claim the standard deduction. The other spouse may only claim item­ ized deductions. Exemption credits. You can’t prorate exemptions. You may claim exemptions for yourself and any dependents allowed on your federal return. You can’t claim an exemption for the same dependent claimed on your spouse’s return. Example: Jim worked and lived in Oregon all year. Mary moved from Idaho to Oregon in July and mar­ ried Jim. They filed a joint federal return and are fil­ ing separate returns for Oregon. Mary earned $30,000 in Oregon and $22,000 in Idaho. Jim earned $41,000 in Oregon. Their total federal AGI was $93,000. Jim and Mary claimed the standard deduction on their joint federal return. They had $12,200 in Oregon itemized deductions, including $4,000 in property tax and $6,400 in mortgage interest on their Oregon home, and $1,800 in charitable contributions. Their joint fed­ eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his income of $41,000. On the return, he enters his own name and Social Security number (SSN) first, then enters Mary’s information, and marks the “Married filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal return” box on the Oregon return, and claims the fol­ lowing federal tax liability and deductions: His share: $41,000 ÷ $93,000 = 0.44 (44%) Federal tax: 0.44 × $14,400 = $6,336 (His subtraction is limited to $3,475; see “Federal income tax liability” in “Subtractions.”) Oregon itemized deductions:

Property tax: 0.44 × $4,000 = $1,760 Mortgage interest: 0.44 × $6,400 = $2,816 Filing an Oregon return

150-101-431 (Rev. 04-01-22) 18 Charitable contributions: 0.44 × $1,800 = $792 Total Oregon itemized deductions:

$5,368 Jim will have Oregon itemized deductions of $5,368. He follows the line instructions for Oregon Form OR-40 and Schedule OR-A to complete his return. Mary, a part-year resident, files Form OR-40-P and reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and SSN first, then enters Jim’s information, and marks the “Married filing separately” box. She creates an “as if” federal return, marks the ”Calculated using 'as if' federal return” box on the Oregon return, and claims the following federal tax liability and deductions: Her share: $52,000 ÷ $93,000 = 0.56 (56%) Federal tax: 0.56 × $14,400 = $8,064 (Her subtraction is also limited to $3,475.) Oregon itemized deductions:

Property tax: 0.56 × $4,000 = $2,240 Mortgage interest: 0.56 × $6,400 = $3,584 Charitable contributions: 0.56 × $1,800 = $1,008 Total Oregon itemized deductions:

$6,832 Mary will have Oregon itemized deductions of $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. Married filing separately with community property income An Oregon resident whose spouse lives in a commu­ nity property state may have community property income that is taxable by Oregon. There are nine com­ munity property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Some residents of community property states aren’t subject to community property laws for various rea­ sons. You will need to check with your community property state for details. IRS Publication 555, Com­ munity Property, also contains information that may be helpful to you. Here are examples of how to file for Oregon: Example 1: Paul and Marie are married, but they are legally separated. Paul is an Oregon resident. Marie is a resident of California, a community property state. They maintain separate households, don’t combine funds, and have no plans to get back together. They file a joint return with the IRS. When Paul files his separate return for Oregon on Form OR-40, he doesn’t have to include any community property income because California’s community property laws don’t apply to him and Marie. Example 2: Renton is an Idaho resident. His wife, Julie, lives in Oregon. Julie plans to move to Idaho next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap­ ital gain, and $100 in interest. Because Renton is domiciled in Idaho, he and Julie are subject to Idaho’s community property laws. His income for the year is $60,000 in wages and $500 in interest. They plan to file a joint return with the IRS, but aren’t sure whether they want to file jointly for Oregon. If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain all of Julie’s income, because Oregon taxes all of her income from all sources. In addition to Julie’s sepa­ rate income, she has $30,250 of community property income for the year—half of Renton’s wages and bank interest. Line 34F (federal column) of their joint Form OR-40-N is $103,600, which is equal to their federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community property income ($40,000 + $3,000 + $100 + $30,250). They are also eligible for a credit for taxes paid to Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state“ for more information on this credit.) If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal return as if she had filed separately. She will include $73,350 in separate income and community property income. This amount flows through to Line 7 of her Oregon Form OR-40. She is eligible for a credit for taxes paid to Idaho, because she must also file a non­ resident Idaho return to report her community prop­ erty income of $30,250. Example 3: Kevin lives and works in California and is subject to California’s community property laws. Lori, his wife, moved to Oregon with their kids two years ago. Kevin supports them and will be ready to transfer to Oregon within the next two years. Kevin has $110,000 in wages. Kevin and Lori have joint income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. They decide to file separate federal returns. Lori’s federal AGI is $63,000: half of Kevin’s wages, half of their joint income, and all of her business income. Kevin’s federal AGI is $58,000; half of his wages and half of their joint income. Lori must file using the married filing separately filing status for Oregon on Form OR-40 because she did so on her federal return. She is eligible for a credit for taxes paid to another Filing an Oregon return

150-101-431 (Rev. 04-01-22) 19 state, but must claim it on her California nonresident return. Kevin isn’t required to file for Oregon. Important: You must check the laws of the commu­ nity property state to see if you, or your spouse, are subject to those laws even if your situation is similar to one of the examples. Registered domestic partners (RDPs) (ORS 314.023) Filing your Oregon income tax return The following section applies only to Oregon same-sex RDPs who haven’t been legally married. If you were legally married at the end of the tax year, you are considered mar­ ried for federal and Oregon purposes. You don’t need to complete an “as-if” federal return. Instead, attach your actual federal return to your Oregon return and follow the instructions for married individuals. In Oregon, a domestic partnership is a civil contract entered into between two individuals of the same sex, where at least one of the individuals is an Oregon res­ ident. RDPs are subject to the same tax statutes and regulations that apply to married filers. As an RDP, you are no longer eligible to use the single filing sta­ tus on your Oregon return; generally, you must use the married filing jointly or married filing separately status. See IRS Publication 17 for information about other filing status requirements. To correctly figure your Oregon tax liability, you need to complete an “as if” federal income tax return as if you are filing as married filing jointly or married filing separately for federal purposes. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return. You won't submit your “as if” fed­ eral return to the IRS, but you must include a copy with your Oregon tax return. Mark the “Calculated using ‘as if’ federal return” box on the Oregon return. General filing instructions for RDPs If you were an Oregon RDP on December 31, or if you were an RDP during the year and your partner died and you didn’t enter into a new registered domestic partnership or marry before the end of the year, fol­ low these directions for filing your income tax return: 1. Complete your federal return forms for each part- ner, using the appropriate federal filing status, such as single or head of household. File these returns with the IRS. 2. Use another federal form to complete an “as if” federal return. Use all the same IRS rules and procedures that apply to married couples, except for the federal tax liability. Important: Don’t file this “as if” federal return with the IRS. Note: If your wage statement includes the imputed value of health or education benefits you received from your employer for your partner or qualifying dependents, subtract the amount included in your wages on the “other income” line of your “as if” federal return. 3. Complete your Oregon return using the same fil- ing status you used on the “as if” federal return. Information used to fill out the Oregon return must be taken from the “as if” federal return and not the individual federal return that you actually filed with the IRS, except for the federal income tax liability subtraction. Use the amount each partner actually paid in federal tax to compute the correct federal tax subtraction. 4. Submit both of your actual federal returns, your “as if” federal return, and your Oregon return to us. If you and your partner file separate Oregon returns, send the returns in the same envelope, but don’t staple your separate returns together. It’s very important to keep copies of all “as if” fed­ eral returns with your tax records for future refer­ ence. For more information on filing your tax return as an Oregon RDP, visit our website and search for RDP information. Individual Taxpayer Identification Number The IRS issues individual taxpayer identification numbers (ITINs) to taxpayers and their dependents who don’t have SSNs. If you have your own SSN, don't apply for an ITIN; use your SSN. If you already have an ITIN, enter your ITIN wherever a SSN is requested. Requesting an ITIN from the IRS If you don’t have an ITIN, you must file your fed­ eral return and attach Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS will issue an ITIN, associate the ITIN with your return, and process your return. For Form W-7, go to the IRS website at www.irs.gov or call 800-829-3676. Filing your Oregon return before receiving your ITIN You may file your Oregon return without an SSN or ITIN. Follow these instructions if you, your spouse, or your dependents don’t have an ITIN when you file your Oregon return: 1. Complete and file each ITIN application (federal Form W-7) according to IRS instructions. 2. On your Oregon tax return, mark the “Applied for ITIN” box wherever the SSN is required for you or your family members who have applied for an ITIN. You don’t need the ITIN(s) to file your Filing an Oregon return

150-101-431 (Rev. 04-01-22) 20 Oregon tax return. Don’t attach your ITIN appli- cation to your Oregon tax return. 3. File your 2020 Oregon tax return by May 17, 2021. 4. The IRS will send you a letter with your ITIN information. We need this information to issue your refund and correctly apply your future tax payments to your account. Refunds won’t be issued without a valid SSN or ITIN. Send us your: • Name (and the name of your spouse and dependents if they applied for an ITIN). • Current address. • Previous SSNs or ITINs used when filing an Oregon return (if any); and • A copy of each of the letters you receive from the IRS with the ITINs for you, your spouse, or your dependents. Send this information to:

Oregon Department of Revenue

PO Box 14999

Salem OR 97309-0990 Military personnel filing information Oregon follows federal law, including the Service- member’s Civil Relief Act (SCRA). Under the SCRA, military pay of a nonresident for service within Oregon isn’t considered to be income from Oregon sources. As a member of the military, if you are sta­ tioned in Oregon, but you aren’t domiciled in Ore­ gon, your military pay isn’t taxed by Oregon. If you are domiciled in Oregon, but stationed outside of the state, you could be treated as a nonresident for tax purposes if you meet the “special-case nonresi­ dent” exception requirements. If you are domiciled in Oregon, and performing military service in Ore­ gon, your military pay is subject to tax, although the pay could qualify for certain subtractions. Military personnel performing active service within Oregon are treated as nonresidents for tax purposes, if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, no matter where they are domiciled (ORS 316.027). Moving expense deduction Your unreimbursed moving expenses may be deducted on your Oregon return only if: • You are on active duty in the U.S. Army, Navy, Air Force, Marines, or Coast Guard, • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move), • Your new duty station is in Oregon, and • You have taxable income from employment (mili­ tary pay or other employment, including self- employment) performed in Oregon. Note: Are you the spouse of a military member? See “Military spouses.“ Residency of military personnel Domicile. Generally, you are considered to be an Ore­ gon resident if your domicile is in Oregon. Your domi­ cile is the place that you consider to be your home. It’s the place where you are from, and where you plan to return when you are away. Your domicile doesn’t change if you are assigned to perform military ser­ vice in another state, unless you take other actions to establish a new domicile there. Domicile and resi­ dency are explained in more detail in “Residency.“ Exceptions to Oregon residency Even if you are domiciled in Oregon, you may be treated as a nonresident for tax purposes if you meet the requirements listed in A or B: A. Special-case nonresident. You are treated as a “special-case” nonresident of Oregon if you are stationed outside of Oregon and all three of the following are true: 1. You didn’t have a permanent residence in Ore- gon for yourself or your family during any part of the tax year, and 2. Your permanent residence was outside Oregon during the entire tax year, and 3. You spent less than 31 days in Oregon during the tax year. B. DFAS address outside of Oregon. You are treated as a nonresident of Oregon, no matter where you are stationed, if both of the following are true: 1. You are performing “active service,” as defined in 10 United States Code (U.S.C.) Section 101(d) (3), other than annual training duty or inactive- duty training, and 2. You are a resident of another state according to DFAS payroll records. If you meet the requirements in either A or B above, you are treated as a nonresident for Oregon tax pur­ poses and Oregon won’t tax your military pay. You will owe Oregon tax only if you had income from another Oregon source. This income may be from an Oregon property sale, a business, or rental property located in Oregon. If you have had Oregon income tax withheld from your military pay, you should file an Oregon nonresident tax return to get a refund of Filing an Oregon return

150-101-431 (Rev. 04-01-22) 21 the withheld tax. If you continue to be a nonresident, file an Oregon-only withholding certificate with your pay clerk as described in “Withholding exemption.” Oregon residents Stationed in Oregon. If you are domiciled in Oregon and stationed in Oregon, you are taxed on income from all sources, both inside and outside Oregon. This includes your military pay for service in Oregon if either of the following is true for you: • Your address in the DFAS payroll records is in Ore­ gon; or • Your military pay is from annual training duty, inactive-duty training, or other service in Oregon that isn’t “active service” as defined in 10 U.S.C. Section 101(d)(3). If neither of these are true, see the Exceptions to Ore­ gon residency, above, to see if you qualify for treat­ ment as a nonresident for tax purposes. Stationed outside Oregon. If you are domiciled in Oregon, but you are stationed outside of the state, see the Exceptions to Oregon residency, above, to find out whether you can be treated as a nonresident of Oregon for tax purposes. If you don’t qualify as a nonresident, you will be taxed as a resident on your income from all sources, both inside and outside Oregon. Military pay subtractions [Subtraction code 319] You may qualify for more than one subtraction for military pay. To be eligible for the subtractions, the military pay must be included in federal AGI. Mili­ tary pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual train­ ing, weekend drills, and inactive duty training. The Oregon military pay subtractions are: • Stationed outside Oregon. As of August 1, 1990, you can subtract military pay earned while sta­ tioned anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. The date wasn't set when this material was last revised. You aren’t required to be stationed in a designated com­ bat zone to be eligible for this subtraction. • Guard and reserve away from home. National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time. • Other military pay. You can subtract any remain­ ing taxable military pay after taking the above sub­ tractions, up to $6,000. Total subtraction. You may qualify for more than one military pay subtraction. However, your total subtraction can’t be more than the total military pay included in federal AGI. Note: Certain forms of military pay that aren’t included in federal AGI, such as combat pay, aren’t taxed in Oregon. They aren’t subtracted on your return because they aren’t included in your federal taxable income. The following examples show the military pay sub­ tractions described above. Example 1: Seth, an Oregon resident, enlisted in the Navy. He earned $10,000 of active duty pay in Spain and $8,000 of military pay inside Oregon during the year. His address in the DFAS payroll records is in Oregon. He included the $18,000 in his federal AGI. Seth’s total military pay subtraction is $16,000. Seth can subtract the $10,000 earned outside Oregon, and $6,000 of his military pay earned in Oregon. Seth files Oregon Form OR-40 and claims his military pay sub­ traction on Schedule OR-ASC. Example 2: Brett is an Oregon resident and files jointly with his wife, who lives and maintains a resi­ dence in Oregon. Brett served in a designated combat zone for five months this year and earned $8,000 in combat pay. He served in Germany for the rest of the year and earned $15,000 of military pay. The presi­ dent didn’t declare an end to combat zone activities this year. Because Brett excluded his combat pay on his federal return, he doesn’t have to subtract it on his Oregon return. Therefore, Brett’s Oregon subtraction is the $15,000 of military pay earned outside Oregon and included in federal AGI. Brett and his wife will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Example 3: Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a com­ bat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and again for two weeks in November. He served in Oregon when away from home. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and Merlin will include $31,500 of military pay in their federal AGI. Then they will determine their Oregon subtraction. • Stationed outside Oregon: All $21,000 of Ger­ trude’s active duty pay is eligible for this subtrac­ tion because she was stationed outside Oregon. Filing an Oregon return

150-101-431 (Rev. 04-01-22) 22 • Guard and reserve away from home: $8,000 of Merlin’s pay is eligible for this subtraction because he was away from home for more than 21 consecu­ tive days from April to July. The pay he received for the two weeks he was away from home in Novem­ ber doesn’t qualify. • Other military pay: Gertrude doesn’t have any other military pay not already eligible for the other subtractions. Merlin’s remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500. Combined, Gertrude and Merlin have a military pay subtraction of $31,500, because all of their military pay is eligible for at least one of Oregon’s military pay subtractions. They will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Nonresidents stationed in Oregon Oregon doesn’t tax your military pay if you are domi­ ciled in another state. You don’t need to file an Oregon return unless you had other income from an Oregon source or had Oregon tax withheld from your pay. Examples of Oregon-source income include: • Wages from a job held on off-duty hours. • Earnings from an Oregon business or rental property. Note: Nonresidents’ interest income from an Oregon bank account generally isn’t taxable by Oregon. If you had Oregon tax withheld from your military pay, you should file a return to claim a refund. You should also contact your payroll clerk to stop with­ holding Oregon taxes if Oregon isn’t your state of domicile. Example 1: Selina is a nonresident of Oregon in the U.S. Navy stationed in Portland. She has no other Oregon-source income and doesn’t have Oregon income tax withheld from her military pay. Selina isn’t required to file an Oregon return. Example 2: Jared is a nonresident of Oregon in the U.S. Coast Guard stationed in Astoria. In his off-duty hours he works part-time for an Oregon employer. Because Jared has Oregon income other than his mil­ itary wages, he will file Oregon Form OR-40-N as a nonresident. Example 3: Caitlyn was domiciled in Oregon when she joined the U.S. Army in 2011, and she hasn’t estab­ lished a new domicile in another state. Since July 2018 she has been stationed at the Army’s chemical depot in Umatilla, and her DFAS address is her apartment in Kennewick, Washington. Along with her mili­ tary pay, in 2020 she earned interest from a savings account in an Oregon bank and has wages from an off-duty job in Kennewick. Since Caitlyn is treated as a nonresident for tax purposes, her military pay isn’t taxed by Oregon. The interest she earned from the Oregon bank isn't taxed because she is considered to be a nonresident. She also isn't taxed on the wages from her Kennewick job. Caitlyn isn’t required to file an Oregon return for 2020 unless Oregon tax was withheld from her military pay. Filing your nonresident return If you have other income from Oregon sources, use Form OR-40-N. Enter your military income on line 7 in the federal column only. Don’t enter your mili­ tary pay in the Oregon column. Report other income taxable by Oregon in the Oregon column. On Sched­ ule OR-ASC-NP, enter the military wage income you reported in the federal column on line 7, but only in the federal column. In the Oregon column, enter $0. It’s important to enter your military pay this way because it affects the amount of deductions and cred­ its you’re entitled to claim. Mark the “Military” box on the return. If you and your spouse file a joint federal return, and you are both nonresidents of Oregon, you must file a joint Oregon return as well. Use Form OR-40-N. If your spouse is an Oregon resident, you have the option of using the married filing separately status for Oregon. Your spouse would file Form OR-40, or Form OR-40-P if a part-year Oregon resident, and you would file Form OR-40-N. If you file a joint return, use Form OR-40-N. Filing and payment date The due date for filing a calendar year return and payment of the tax is usually April 15. If the 15th falls on a Saturday, Sunday, or legal holiday, the due date is the next working day of the month. If you are out­ side the United States for military duty on the due date, the due date is extended by two months. Mark the “Extension filed” box on your return. See “Exten­ sions of time to file” for more information. If you owe tax on your Oregon income tax return, you must pay the entire amount by the due date. Interest and penalty will be added to all unpaid balances. Extension for filing your return You can get an extension to file your return, but you can’t get an extension to pay your tax. More informa­ tion can be found under “Extensions of time to file.” Combat zone/Contingency area. Were you sta­ tioned in a combat zone or contingency area? Did you receive additional time from the IRS to file your federal return and pay your tax? If both are true, Oregon allows the same additional time to file and Filing an Oregon return

150-101-431 (Rev. 04-01-22) 23 pay your Oregon tax. Mark the “Extension filed” and “Military” boxes on your return. Keep your payroll records or other proof of your combat zone/contin­ gency area service and the IRS extension with your tax records; we may request a copy at a later date. Note: Oregon follows federal law regarding the treatment of combat pay and related remedies. If you served in the Sinai Peninsula of Egypt at any time after June 9, 2015 and you’re amending your federal return to exclude this military pay, you may also amend your Oregon return if Oregon taxed this income. If you were assessed related penalties or interest, contact us for further instructions. Interest and collections If your active duty service (Title 10) has materially affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity while on active duty and up to 180 days thereafter. The interest rate on tax debt owed by mili­ tary members is limited to 6 percent annually. File a claim for relief by writing to us within 180 days after your active duty service has ended. Relief may not be available for the period prior to receiving your request. Include a copy of orders showing your active duty status and dates. You may qualify for relief of interest and collection activity under Oregon law if you meet all of the fol­ lowing requirements: • You have a tax liability that came due while on active duty under Title 10, • You have been on active duty for more than 90 con­ secutive days, • Your active duty service (Title 10) occurred on or after September 11, 2001, and • You notify us within 180 days after your active duty service has ended. Guard members called into active state service by the governor under Title 32 may qualify for relief of inter­ est and collection activities on any tax owed prior to active state service. Send a written request for relief to us within 180 days after the active state service has ended. Include a copy of your orders. Relief may not be available for the period prior to receiving your notification. Withholding exemption You have the option to stop Oregon withholding from your military pay if all of the following are true: • You had a right to a refund of all 2020 Oregon income tax withheld because you had no tax liabil­ ity, and • You expect a refund of all 2021 Oregon income tax withheld because you reasonably believe you won’t have any tax liability, and • For all of 2021, you expect to be stationed outside of Oregon or continue to have an address outside of Oregon in the DFAS payroll records. If all of the above are true and you don’t want Oregon tax withheld from your military pay, you must file an additional withholding certificate with your pay­ roll office. Use Form OR-W-4, Oregon Withholding, and follow the instructions to declare that you’re exempt using the appropriate code. Give Form OR-W-4 to your pay clerk, and submit a new form by February 15 each year that you’re exempt. Military spouses If you’re a military spouse, the state where you live may be different from the state where you are domi­ ciled. See “Residency” for more information about determining your domicile. Oregon follows federal law, including the SCRA and the Military Spouse Residency Relief Act (MSRRA). Under the SCRA, for tax purposes you may elect to be treated as a resident of the same state as the mili­ tary member. Under MSRRA, your income may not be taxable to Oregon if your spouse is stationed in Oregon, you are living in Oregon to be with your spouse, and you are domiciled outside of Oregon. In addition, your income may not be taxable if you are domiciled in Oregon, but you are living in another state where your spouse is stationed. See “Special- case Oregon residents” in “Residency” for details. Nonresident spouse of military member stationed in Oregon MSRRA prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you’re living in Oregon only to be with your spouse who is sta­ tioned here, and you’re domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and aren’t considered to be Oregon-source income. Note: This exemption doesn’t apply to spouses who are also members of the military. You aren’t required to file an Oregon return unless you had other income from an Oregon source or Ore­ gon taxes were withheld from your pay. Examples of Oregon-source income include: • Non-military wages earned by your spouse (the military member) in Oregon. • Income from a business you operate in Oregon. • Rental income from Oregon property. If you file an Oregon return, use Form OR-40-N. Include all of your wages on line 7 in the federal col­ umn only. Don’t include your exempt income (or your Filing an Oregon return

150-101-431 (Rev. 04-01-22) 24 spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the subtraction for your spouse’s military pay, see “Filing your nonresident return”, above. Example: Staff Sergeant Wilson, USAF, and his spouse, Tracy, are Arizona residents living in Klam­ ath Falls where SSgt Wilson is stationed. In addition to his military duty, SSgt Wilson works part-time at a local car dealership where Tracy works as the finance manager. They must file an Oregon nonresi­ dent return to report SSgt Wilson's wages from the car dealership. They report his military pay and all of their wages in the federal column of Form OR-40-N, and only his wages from the car dealership in the Oregon column. To stop withholding of Oregon income tax from your exempt wages, complete an additional withholding certificate. Use Form OR-W-4 and follow the instruc­ tions to declare that you’re exempt using the appro­ priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re exempt. Your employer may require proof that you qualify for the exemption. Oregon resident spouse of military member stationed outside Oregon If your spouse is stationed outside of Oregon, but you are an Oregon resident living in Oregon, your income is taxable for Oregon purposes. If you file a joint return with your spouse, use Form OR-40-N, and include all of your income in the Oregon column. If you and your spouse file a joint federal return, and your spouse isn’t a resident of Oregon, you have the option to file joint or separate returns. If you file a joint return, use Form OR-40-N; if you use the mar­ ried filing separately status, use Form OR-40 (or Form OR-40-P if you’re a part-year resident) and your spouse with Oregon-source income uses Form OR- 40-N. If your spouse doesn’t have income taxable to Oregon, they aren’t required to file a separate Oregon return. Use the general instructions for all taxpayers. Do you qualify to be treated as a nonresident because you meet the “special-case resident” requirements or you’re making the election under the SCRA? If so, you aren’t taxed on your out-of-state wages or self- employment income. This is the case even if the other state can’t tax you because of MSRRA. You don’t have to file an Oregon return unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. See “Special-case Oregon residents” in “Residency” for details. If you file an Oregon return, use Form OR-40-N. Moving expenses of military spouses As the spouse of an active duty member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, your unreimbursed moving expenses may be deducted on your Oregon return only if: • Your expenses are deductible on your federal return, • You relocate to, or within, Oregon when the mili­ tary member is ordered to relocate due to a perma­ nent change of duty station, known as a PCS move, and • You have taxable income from employment, includ­ ing self-employment, performed in Oregon. Filing an Oregon return

150-101-431 (Rev. 04-01-22) 25 Payments and refunds Payment options Payment is due on May 17, 2021, regardless of any extension you may have to file your return. If pay­ ment isn’t made by the due date, interest and penal­ ties may be charged. See “Interest and penalties” for more information. Electronic payments from your checking or savings account You can pay your prior year income taxes, current year income taxes, and 2021 estimated income taxes directly from your checking or savings account. You also have the option to pay by direct debit when you file your return. There is no fee for this. Visit our website for more information. Credit card payments You can pay your current-year balance due, make estimated tax payments for 2021, and pay prior year taxes with your Discover, MasterCard, or Visa credit card. To make an online payment, go to Revenue Online on our website. A convenience fee may be charged for this service. Keep the payment confirmation number for your records. Payment by check or money order • Make your check or money order payable to Oregon Department of Revenue. • Write the tax year, the form number or type of pay­ ment you’re making, and the last four digits of your SSN or ITIN on your check. • Use blue or black ballpoint pen. Don’t use red or purple ink or gel pens. • Don’t send cash or a postdated check. • If you’re mailing a payment with your return, send your payment in the same envelope with your return. Don’t use a payment voucher. • If you’re mailing a payment separate from your return, include the payment voucher, Form OR- 40-V, with your payment. Form OR-40-V is avail­ able in our tax booklets and on our website. Direct deposit of refund We can deposit your income tax refund directly into an account you designate, such as a checking, sav­ ings, or certain type of retirement account. Requirements for direct deposit: • The account must have routing and account num­ bers and be able to accept Automated Clearing House (ACH) payments. • The final destination for the deposit can’t be out­ side the United States. • If you are filing a joint return, both you and your spouse must sign the return. Note: Some accounts may not accept direct deposits. Also, some institutions don’t permit the deposit of a joint refund into an individual account. Payments and refunds Direct deposit—necessary numbers

150-101-431 (Rev. 04-01-22) 26 Contact your financial institution to verify your rout­ ing and account numbers and to make sure your deposit will be accepted. • Routing numbers are nine digits and must begin with 01 through 12, 21 through 32, or 61 through 72. • Account numbers can be up to 17 characters, both numbers and letters. Include hyphens, but don’t include spaces or special symbols. If your account number is fewer than 17 characters, leave the unused boxes (on your return) blank. See the sample check diagram for help with identify­ ing these numbers. Caution: It’s your responsibility to make sure your information is correct. These numbers can’t be changed after your return is filed, and we can’t undo a deposit that was made to the wrong account. We aren’t responsible when an institution rejects a direct deposit. If your direct deposit is rejected, we will issue a check and send it to the mailing address shown on your return. Application of refund If your original or amended return shows a refund, you may apply some or all of it to: • Make an estimated tax payment for a later tax year. • Donate to a charitable organization. • Make a deposit to one or more Oregon College or MFS 529 Savings Plan accounts. • Contribute to a political party (Form OR-40 filers only). Estimated tax payment. If you apply your refund as an estimated tax payment for a later tax year, the payment will be credited to your open estimated tax account as of the date shown in Table 4. Table 4. Refund applied as estimated tax payment If you file: The payment will be credited as of: An original return on or before the due date, without extension The date that the first estimated payment of the open tax period is due (usually April 15). An original return on extension, on or before the extension due date The later of: • The due date for the first estimated payment of the open tax period (usually April 15), or • The date of the pay­ ment that resulted in the refund. An original or amended return: • After the due date, without extension; or • On extension, after the extension due date The later of: • The date the return was filed, or • The date of the payment that resulted in the refund. The election to apply your refund as an estimated tax payment is irrevocable. Example 1: Beth made four estimated tax payments for tax year 2020; her last payment was made on Janu­ ary 15, 2021. On September 8, 2021, Beth filed her 2020 return on extension. Beth claimed a $500 refund and elected to have the refund applied as an estimated payment. The $500 refund will be credited to Beth’s 2021 tax account as of April 15, 2021 (the first esti­ mated payment due date for the open tax period). Example 2: Ray filed his 2019 return on May 13, 2021. Ray overpaid his 2019 tax by $2,500 and elected to apply $2,000 of the refund as an estimated tax pay­ ment. Because Ray’s 2019 return was filed after the due date, his estimated tax payment of $2,000 will be applied to his 2021 tax account as of May 13, 2021, the date he filed his return. Ray will claim $2,000 as an estimated payment when he files his 2021 return. Two open tax accounts. An estimated tax account is “open” for accepting payments from the first day of the tax year until 15 days after the last day of the tax year. For most taxpayers, this means they will have two “open” accounts from January 1 through January 15, one account for the later year that opens on Janu­ ary 1, and one account for the earlier year that closes on January 15. If a payment from an applied refund is credited at a time when two accounts are open, the payment will be automatically applied to the later year. If you want your payment to be applied to the earlier year instead, you must contact us in writing before the account for the earlier year closes (usually January 15). Example 3: Sally filed her 2018 Oregon return in April 2019 with tax to pay. On January 10, 2021, Sally filed an amended 2018 return showing a $1,500 refund. She elected to apply the refund as an estimated pay­ ment. Sally’s refund is automatically applied to her 2021 estimated tax account as of January 10, 2021, the date she filed her amended return. Sally can contact us in writing no later than January 15, 2021 and ask that the $1,500 payment be applied to tax year 2020 instead. Other refund applications. See your return instruc­ tions for details on using your refund to donate to a charitable organization, contribute to the politi­ cal party of your choice (Form OR-40 filers only), or Payments and refunds

150-101-431 (Rev. 04-01-22) 27 make a deposit to up to four Oregon College or MFS 529 Savings Plan accounts. Refund processing How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of the return. Electron­ ically-filed returns process faster. Paper returns must have all supporting documentation included to ensure smooth processing. Paper returns can also take longer as the due date approaches, when the largest number of returns are received. To check the status of your refund, go to www.oregon.gov/dor, click on “Revenue Online,” and click on “Where’s my refund?”. Refund delays Several things might delay processing of your tax return or your refund: • Failure to respond timely to requests for informa­ tion. If we send you a letter requesting informa­ tion to process your return, it’s important that you respond by the due date on the letter. Otherwise, we may adjust or invalidate your return. Contact us if you have questions about our letter. You may view most of the letters we send by logging into Revenue Online. Note: If we’re requesting informa­ tion about your WFHDC credit, responding to our request for information via Revenue Online allows us to respond faster. • Change in name. If you have a different name in our records from a previous filing, special han­ dling will be required. • If you notified us about identity theft, special han­ dling will be required. • Change in SSN. • Application for an ITIN. • Failure to attach proof of Oregon withholding (such as Form W-2 or 1099). • Failure to attach a copy of your federal return (with Schedules 1 through 3, if applicable). • Failure to include Schedule OR-A if you’re claiming itemized deductions. • Claiming the WFHDC or manufactured home park closure credit. These refundable tax credit claims are reviewed manually and take additional time to process. • Failure to identify additions, subtractions, adjust­ ments, modifications, or credits. Numeric codes are shown in the Appendix. • Debt to other agencies. If you, or your spouse, owe money to state or federal agencies (for such things as student loans, unpaid parking tickets, or back child support), your refund might be delayed or used to offset your debt. • Incorrect bank account information. Verify your bank account information for direct deposit refunds. If your bank information is incorrect, we must wait for the bank to return the funds before issuing a refund check. Injured spouse refund claims [ORS 314.415(7)] Are you filing a joint return with a spouse who is sep­ arately liable for a debt to a state or federal agency? If so, you may request that your joint refund be apportioned. When your return is processed, we will notify you of our intent to apply the joint refund to any debts owed. Within 30 days of the date of our notice, send us your request to apportion the refund. You may use federal Form 8379, Injured Spouse Alloca­ tion, and fill in the Oregon refund numbers, or create your own worksheet. Separate your withholding, tax payments, and items of income. Income from jointly held property must be split evenly, including interest earned on joint bank accounts. You may submit an apportionment request through Revenue Online or mail it to this address: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Visit www.oregon.gov/dor for answers to common questions. Click on “FAQ” under “Get Help,” then enter “injured spouse” in the search bar. Oregon statute of limitations on refunds Oregon law limits the time you have to claim a refund of Oregon tax. The allowable time depends on your circumstances. Withholding and estimated tax refunds You must file your original return within three years of the due date to claim a refund of tax withheld or estimated tax payments. The due date doesn’t include extensions. If you file more than three years after the due date, the excess tax withheld or estimated tax payments can’t be refunded or applied to tax you owe for another year. Amended returns If your original return was filed within three years of the due date, you may amend (change) your return Payments and refunds

150-101-431 (Rev. 04-01-22) 28 and file for a refund of an overpayment of tax by the date which is the latest of: • Three years from the due date of your original return; or • Three years from the date you filed your original return; or • Two years from the date you paid your tax or paid any part of your tax. If you file your amended return after three years, but within two years of the date you paid tax, your refund can’t be more than the amount of tax you paid during that two-year period. Note: If we adjusted items on your return and your right to appeal has expired, you can’t use the above rules. You can't claim a refund for those items. Example: Bob filed his 2017 Oregon return and paid $300 tax due on time. In March 2020, he discovered he had forgotten to report some interest income. He amended his return. He paid $220 additional tax on April 1, 2020. On August 4, 2021, Bob discovers he failed to claim a large charitable contribution he made in 2017. Bob must amend his 2017 return by April 1, 2022. His refund will be limited to $220, the additional tax he paid within the last two years. Federal or other state corrections to tax returns Sometimes the IRS or another state corrects your return with changes that could affect your Oregon return, resulting in a refund. You have two years from the date of the correction to amend your Oregon return and claim a refund, even if the three-year stat­ ute of limitations has expired. Payments and refunds

150-101-431 (Rev. 04-01-22) 29 Amended returns Reasons to file an amended return • An IRS audit (or other state audit) resulted in a change to your original return that affects your Oregon return. • You amended your federal (or other state) return and the changes you made affect your Oregon return. • You made an election on federal Form 4684, Casual­ ties and Thefts, to carry back a casualty loss result­ ing from a federally-declared disaster. • You have a net operating loss (NOL) to carry back, so you need to amend your return for the carry­ back year. • You need to correct the income or deductions you originally reported. How do I amend my Oregon return? You will need the following items: • The tax form and instruction booklet for the year that you are amending. This will usually be the same form type as your original return, unless you filed the incorrect form for your residency status. Use the correct form type to amend. • A copy of the Oregon tax return that you originally filed for the year being amended; this will provide the guidance needed for completing your amended return. • A copy of any previously amended returns you filed for the year being amended. • A copy of all notices from us, another state, or the IRS for the tax year being amended. Follow these steps to amend your return: 1. Read through these instructions before filling out your form. 2. Mark the “Amended” box on the return. 3. If we sent you a notice with corrections to your return, use the figures from that notice when amending your return. 4. Use the worksheet for amended returns in the instruction booklet to determine your amended refund or tax to pay. Complete the entire work- sheet using the corrected information. 5. If the amended return shows a refund, you can elect to apply it as a payment of estimated tax or make other refund applications, but you can’t change any election you made on your original return. See “Application of refund“ in “Payments and refunds.“ 6. Use the “Amended statement” section of the return to explain why you are amending your tax return. 7. Mail or drop off your amended tax return or, if your software allows it, you may file your amended return electronically. Be sure to include a copy of the federal or other state’s corrected return or audit report. If you’re amending your Oregon return only, include a copy of your origi- nal federal return. If you don’t have a copy of your original Oregon tax return, you may request a transcript or a copy of the return from us. A transcript is free but contains less information than your return. A copy of your tax return costs $5 for each tax year. You can request the transcript or copy through Revenue Online or mail the request (with any payment) to our main office in Salem. Partnership returns. Our website has information for partnerships that need to: • File an amended Form OR-OC, • Report audit adjustments made under CPAR, or • Make tax payments on behalf of partners due to CPAR adjustments. Also see “Audits and appeals.” How long do I have to file for a refund? In most cases, you must file for a refund within three years from the due date of your original return, or the date you filed your original return, whichever is later. For more information about time limits for filing a return to claim a refund, see “Oregon statute of limi­ tations on refunds.” When should I file and pay if I owe additional tax? File your amended return as soon as you know that a change needs to be made. Interest is calculated from the day after the due date of the original return up to the date the tax is paid. Pay any tax and interest due as soon as possible to avoid additional interest. There may also be a penalty. How do I file a protective claim for refund? You can file a protective claim for refund when the outcome of a court case or legislative action is expected to be known after the time for requesting a refund has expired. Use Form OR-PCR, Protective Claim for Refund, when your claim to a refund is con­ tingent on a pending court decision or legislative action. Notify us every six months on the status of the claim. If the court decision or legislative action changes your Oregon income tax, file an amended return within 90 days of the determination. Amended returns

150-101-431 (Rev. 04-01-22) 30 How long will it take to process my amended return? Processing time for amended returns varies. It may take six months or longer to process your amended return. How do I amend for an NOL? You may claim a refund from an NOL carryback within three years after the due date (including extensions) of the return that showed the NOL. Mark the “Amended return” box and enter the year of the NOL. See “NOLs for Oregon” in “Other items“ for more instructions. Do I change my federal tax liability on my amended return? Usually not, but there are a few exceptions to this general rule. Change allowed Changing the federal tax liability amount on your amended return is allowed only if one of these three exceptions applies: • Correction notice from us. Did we correct the fed­ eral tax subtraction on your original return? If so, change the amount on your amended return. Use the corrected amount from our notice. • Federal return amended before due date. Did you amend your federal return before the due date of the original return? If so, change the amount on your amended return. The federal tax on your amended federal return filed before the due date is the amount you will use for your amended Oregon return. • Different AGI phase-out limit. Does a different phase-out limit apply to your amended AGI? The amount of federal tax liability you may subtract on your return is limited if your AGI is within a cer­ tain range. These ranges and limitation amounts can be found in Table 7 under “Federal income tax liability“ in “Subtractions.“ If your amended AGI is now within a different range, change the amount on your amended return only if the taxes you are deducting were paid or accrued during the tax year you are amending. Increase or decrease the subtraction to match the limitation amount that applies to your amended AGI. Change not allowed Unless one of the above exceptions applies, you can’t change the amount of your federal tax liability on your amended return. However, you might have a subtraction or addition on your return for the year in which you file the amended return. • More federal tax paid. Did you pay additional federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Claim the additional federal tax as a subtraction on your Oregon return in the year you paid the additional tax. • Federal tax refund. Did you get a refund of federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Show the federal tax refund as an addition on your Oregon return in the year you received the refund, but only if you received a tax benefit. See “Federal income tax refunds“ in “Additions” for more information about the tax benefit doctrine. Example 1: Sergei received a notice from us in May and is filling out an amended return in July. The notice stated that his federal tax subtraction was reduced from $3,500 to $3,000. He will use the corrected fed­ eral tax subtraction of $3,000 on his amended return. Example 2: Alicia paid additional federal tax in 2020 for an audit adjustment on her 2017 federal tax return. She will include the adjusted items when she com­ pletes her amended 2017 Oregon tax return, but won’t change the 2017 federal tax subtraction. Because she paid the additional tax in 2020, she will subtract this amount, up to the annual limit, on her 2020 Oregon return. See “Federal income tax liability” in “Subtrac­ tions“ for the federal tax subtraction limits. Example 3: Tonya, a single taxpayer, timely filed her original 2019 return, with an AGI of $138,000. She paid $35,000 in federal taxes during 2019. Her federal tax subtraction was limited to $2,600 because of her AGI. In 2020, she amended her 2019 federal return to claim expenses she had left off of her original return. Her amended AGI is now $133,000. Tonya may change her federal tax liability on her amended return to $3,900, the amount she could have claimed on her original return, because her limitation amount has changed. Amended returns

150-101-431 (Rev. 04-01-22) 31 Interest and penalties Interest Interest rates are the same for taxes owed and for refunds. Interest is charged and paid on tax only. Interest isn’t charged on penalties. We don’t charge compound interest. Table 5 shows interest rates since 2018. For previous interest rates, see prior versions of this publication or contact us. Table 5. Interest percentage rates Interest as of: Annual Daily January 1, 2018 5% 0.0137% January 1, 2019 6% 0.0164% January 1, 2021 4% 0.0110% As of January 1, 2018, interest is figured daily, based on a 365-day year. The annual interest rate is 6 per­ cent for 2020 and 4 percent for 2021. The interest rate may be changed once per calendar year. Additional interest of 4 percent per year is charged as described under “Two-tiered interest on deficien­ cies and delinquencies.“ How to figure interest on tax you owe Your 2020 tax must be paid by May 17, 2021, even if you requested an extension to file your return. Inter­ est starts accruing on May 18 and continues to accrue every day, including the date of your payment. To figure your interest for 2021, count the number of days starting with May 18, 2021 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply by 0.000110 (the daily rate converted to a decimal). If you’re entering the interest amount on your return, round the total to the nearest whole dollar. Amended return. If you file an amended return, or if your taxable income changed because of a federal or state audit, and you have tax to pay, you will be charged interest starting the day after the due date of the original return until the date of your payment. Calculate interest based on the additional amount of tax you must pay. Example: Nick filed an amended income tax return for tax year 2018 on March 12, 2021. His original 2018 return was due on April 15, 2019. He paid additional tax of $500 with his amended return. Here is how Nick figures the interest that he owes: April 16, 2019 to December 31, 2020 626 days at 0.0164% 0.000164 x $500 x 626 days ...........................= $ 51.33 January 1, 2021 to March 12, 2021 71 days at a daily rate of 0.0110% 0.000110 x $500 x 71 days ..............................= $ 3.91 Total interest $55.24 Two-tiered interest on deficiencies and delinquencies Additional interest of 4 percent per year will be charged on deficiencies or delinquencies if: • You have filed a return showing tax due (a self- assessed tax liability) and don’t pay the tax due within 60 days after the date of our Notice of Assess­ ment, or • We have assessed an existing deficiency, and you don’t pay the assessment within 60 days after the date on the Notice of Assessment. If you appeal to us (or, in a hardship situation, to the Oregon Tax Court) without paying the tax, the increased interest rate will start 61 days after: • The date of our written objection decision; or • The date of our conference decision letter (CDL); or • The date the Magistrate Division enters its final decision; or • The date the Tax Court or the Oregon Supreme Court enters its final judgment. How to figure interest on refunds of personal income tax Generally, interest is paid on refunds issued more than 45 days after the later of: • The due date of the original return (without exten­ sions), or • The date you file your original return. Note: If your refund results from a payment you made after the due date of your return (without extensions), interest will be paid if the refund is issued more than 45 days from the date of that payment. Example 1: Irina filed her original 2018 income tax return on February 15, 2021, to claim a $1,900 refund of withheld tax. The return was due on April 15, 2019. We issued the refund on May 6, 2021, more than 45 days after Irina filed the return. The interest on the refund is calculated as follows: February 16, 2021 to April 1, 2021 45 days, no interest paid April 2, 2021 to May 6, 2021 0.000110 x $1,900 x 35 days $ 7.32 Interest and penalties

150-101-431 (Rev. 04-01-22) 32 Example 2: Jean filed her original 2018 return on April 15, 2019. She then filed an amended 2018 return on February 3, 2021, which shows a $1,000 refund of estimated tax. Here is how we figure the interest due on Jean’s refund, as of the date she filed the amended return: April 16, 2019 to June 1, 2019 45 days, no interest paid June 2, 2019 to December 31, 2020 0.000164 x $1,000 x 579 days .........................= $ 94.96 January 1, 2021 to February 3, 2021 0.000110 x $1,000 x 34 days ...........................= $ 3.74 Total interest $ 98.70 Note: Interest is calculated on the amount that is a refund of tax paid, including any refund amount that you choose to donate by charitable check-off, contrib­ ute to a political party, or deposit into an Oregon Col­ lege or MFS 529 Savings Plan account. Refunds that don’t accrue interest. Interest isn’t paid on the portion of a refund attributable to the EIC or the WFHDC credit. Also, interest doesn’t accrue on refunds applied as an estimated payment to a later year’s tax. See “Application of refund” in “Payments and refunds.“ Tax credit auction bid payments that are returned to the bidder don’t accrue interest. Two-tiered interest on refunds The interest rate will increase if we are unable to issue a refund within 60 days from the date of a Tax Court or Supreme Court judgment. The annual rate will increase by 4 percent beginning 61 days after the date the final judgment is entered. Penalties Penalties for filing or paying late Your 2020 tax must be paid by May 17, 2021, even if you requested an extension to file your return. Your 2020 return must be filed by May 17, 2021. If you requested an extension, your return must be filed by October 15, 2021. If you’re entering a penalty amount on your return, round the total to the nearest whole dollar. Five percent failure to pay penalty. You must pay a penalty if you don’t pay your tax by the original due date of the return, even if you have an extension of time to file. The failure-to-pay penalty is 5 percent of the tax (after all credits, withholding, and payments) that wasn't paid by the original due date. You won’t be charged the 5 percent failure-to-pay penalty if you meet all of the following requirements: • You file federal Form 4868, Extension of Time to File U.S. Individual Income Tax Return (the auto­ matic extension of time to file), or send us a pay­ ment according to the instructions in Publication OR-EXT; and • You pay at least 90 percent of your tax after credits by the original due date*; and • You file your return within the extension period; and • You pay the balance of tax due when you file your return; and • You pay the interest on the balance of tax due when you file your return or within 30 days of the date of the bill you receive from us. *To find your tax after credits, start with your tax after standard and carryforward credits, then sub- tract refundable credit amounts. If you file with a valid extension but didn’t pay 90 percent of your tax by the original due date, you will be charged the 5 percent failure-to-pay penalty. Twenty percent failure-to-file penalty. You must pay a penalty if you don’t file your return within three months after the due date (including extensions). The penalty is 20 percent of the tax (after all credits, with­ holding, and payments) that wasn’t paid by the origi­ nal due date. You won’t be charged the 20 percent failure-to-file penalty if you: • File federal Form 4868 (the automatic extension of time to file); or • Make a payment according to the instructions in Publication OR-EXT, and • File the return within three months after the due date (including extensions). Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax (after all credits, withholding, and payments) that wasn’t paid by May 17, 2021. Example. Emir filed his 2020 return on November 17, 2021. His return was due May 17, 2021 and he didn’t have an extension. Emir paid the tax due of $2,000 with the late filed return. His penalties total 25 per­ cent of the $2,000 tax: Failure-to-pay penalty: 0.05 x $2,000 ..................... $100 Failure-to-file penalty: 0.20 x $2,000 ......................$400 Total penalties: 0.25 x $2,000 $500 Note: Emir will also owe interest on the $2,000 tax. Additional 25 percent failure-to-file penalty If you fail to file a return within three months of the due date (including extensions), we may send you a Interest and penalties

150-101-431 (Rev. 04-01-22) 33 notice with a demand that you file. If you don't file a return within 30 days of the date the demand letter was mailed, an additional penalty of 25 percent of the unpaid tax will be assessed for a total penalty of 50 percent. One hundred percent failure–to–file penalty If you don’t file returns for three consecutive years by the due date of the third year’s return, including extensions, you must pay a 100 percent failure-to-file penalty on the tax due for each year. Penalty for intent to evade tax Filing a falsely prepared return with the intent to avoid tax will result in a penalty equal to 100 percent of the tax deficiency determined by the Department of Revenue. In addition, you could be charged with tax evasion, a class C felony. You could be fined up to $125,000, serve a jail sentence, or both. Total penalties The total of these penalties can’t be more than 100 percent of the tax due. Exceptions: Penalties for sub­ stantial understatement of net tax, filing a frivolous return, falsely claiming the WFHDC credit, making a non-qualified withdrawal from a first-time home buyer savings account, and abusive tax avoidance transactions may be imposed in addition to other penalties. Substantial understatement of net tax penalty If we determine that you have substantially under­ stated your net tax on your return, you must pay a penalty equal to 20 percent of the understated tax. A penalty will be assessed if net tax for 2020 has been understated by more than $2,550 ($3,700 for a C corporation). Substantially understated net tax also includes net tax on income attributable to an abusive tax shelter, even if fully disclosed. This penalty is in addition to all other penalties pro­ vided by law. $250 frivolous return penalty If you file a frivolous return that is meant to deliber­ ately delay or block the administration of tax laws, you must pay a $250 penalty. “Frivolous” includes, but isn’t limited to: • An argument, without any good basis, that there has been a violation of your constitutional rights. • Reliance on a “gold standard” or “war tax” deduction. • An argument that wages or salary aren’t taxable income. • An argument that the 16th Amendment to the U.S. Constitution wasn't properly adopted. • An argument that “unenfranchised, sovereign, freemen, or natural persons” aren’t subject to tax laws. This penalty is in addition to all other penalties pro­ vided by law. Working family household and dependent care (WFHDC) credit false claim penalty You may be charged a penalty if you knowingly falsely claim (or knowingly assist someone else in falsely claiming) the WFHDC credit. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjustment or denial of the credit. This penalty can be charged to each person involved with the false claim. This penalty is in addition to all other penalties pro­ vided by law. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal A penalty of 5 percent of the funds withdrawn from your FTHBSA may be imposed if you withdraw the funds from the account for a purpose other than pur­ chasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties provided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions.” Abusive tax avoidance transaction (ATAT) penalties Penalties can be imposed on income items identified by the IRS as ATATs, including listed transactions, reportable transactions, and promotion of tax shel­ ters, as follows: Interest and penalties

150-101-431 (Rev. 04-01-22) 34 • A penalty of 60 percent of the understated net income from a listed transaction understatement. This penalty is in addition to and not in lieu of any other penalties. • Failure to report a reportable transaction will result in a penalty of $3,300 for an individual taxpayer or $16,700 for a corporation. • If the reportable transaction is also a listed transac­ tion, the penalty is $33,000 for an individual tax­ payer and $66,000 for a corporation. • A promoter of tax shelters will be assessed a pen­ alty of 100 percent of the gross income derived from promoting the shelter. This penalty is in addition to and not in lieu of any other penalties. The ATAT penalties are in addition to all other penal­ ties provided by law. In addition to these penalties, if we find there is a deficiency in tax paid as a result of the use of a listed transaction reported or reflected by the return, the statute of limitations for issuing a notice of that deficiency is increased from three years to nine years from the date the return was filed. Interest and penalties

150-101-431 (Rev. 04-01-22) 35 Audits and appeals What to do if your return is audited General information We audit returns for several reasons. Many audits are based on adjustments made by the IRS, with whom we share information. Other returns are selected because there are sections of tax law that require additional focus due to difficulties or frequent errors in tax law application. An audit is the process of reviewing a return to make sure it was prepared correctly. If your return is cho­ sen for an audit, it doesn’t mean you made an error or are dishonest. By law, we must keep your tax information private. In rare situations involving returns filed after Decem­ ber 31, 2017, we may share information between tax­ payers who have claimed the same item on their indi­ vidual returns in order to efficiently resolve the mat­ ter—for example, divorced taxpayers who both claim an exemption credit for the same dependent. Other­ wise, we are prohibited from sharing your informa­ tion with anyone without your consent. People who prepare your return or represent you must also keep your information confidential. You have the right to know why we are asking for information, exactly how we will use any information you provide, and what might happen if you don’t provide the information. Our goal is to treat taxpayers fairly. We strive to be responsive to the issues and reasonable in our deci­ sions and actions. We will explain any changes we make to your return. We encourage you to ask about anything you don’t understand. For more information, read our publication Your Rights as an Oregon Taxpayer. You can find the publica­ tion at www.oregon.gov/dor/forms or contact us to order a copy. Types of reviews Processing adjustments. Processing adjustments are corrections we make to a return while we process it. We make some adjustments without the need for additional information, such as math errors. If we need additional information, we’ll send a letter. It’s important that we get a response by the date speci­ fied in the letter. Federal audits. These audits are based on informa­ tion from the IRS. This information includes their CP2000 program and federal Revenue Agent Reports. The CP2000 program matches Form W-2 and 1099 information reported by payers to what is shown on a return. A Revenue Agent Report is a federal audit report showing adjustments the IRS made to a return. If you received either of these reports from the IRS, you need to determine if the changes made by the IRS affect your Oregon return. If they do, you should amend your Oregon return as soon as possible. Inter­ est charges accrue until all tax is paid. If you don’t amend your Oregon return, you may receive a notice from us showing adjustments we have made to your return. Correspondence audits. These are written requests asking you to confirm items on a return. The letter will explain what items we are reviewing and what we need to verify them. You will be asked to send copies of the documents to the auditor who will review the information and notify you of the results. Correspondence audits usually don’t require a meet­ ing with the auditor. Field audits. These audits are more in-depth. They include the review of income and expenses from businesses, farms, partnerships, corporations, or rentals. Field audits usually require a meeting with the auditor. The time and place of the meeting will be arranged between you and the auditor. Partnership audits. Prior to tax year 2018, federal and state partnership tax collection and audit adjustments were conducted at the individual partner level. For tax years after 2017, the IRS will make audit adjust­ ments and collect taxes at the partnership level for partnerships subject to CPAR, IRC Sections 6225 to 6227. Oregon’s CPAR provisions can be found in ORS 314.731 to 314.739. If an IRS audit under CPAR results in adjustments that affect any partner’s Oregon tax, the partnership must follow certain procedures and timelines for reporting the adjustments to Oregon. The partnership may elect to pay any Oregon tax resulting from the adjustments on behalf of the part­ ners. See “Other items” or visit our website for more information. What records will I need for the audit? You’ll get a letter from us asking questions and requesting copies of specific documents. Answer the questions completely and send copies of the requested documents by the deadline in the letter. It’s important that you have a complete copy of your state and federal tax records and provide copies, as requested. See “Record-keeping requirements” in “General information” for additional tips. You should also keep a copy of your response to the audit letter. If you get a letter asking you to make an appoint­ ment, contact the auditor who sent the letter. We try to schedule audit appointments at your convenience. Audits and appeals

150-101-431 (Rev. 04-01-22) 36 It may be held at your home or office, at your repre­ sentative’s office, or at one of our field offices. The letter will explain the records needed for the audit. Organize the information for the appoint­ ment. The auditor may ask you to leave the records while the audit is being conducted. You may ask for a receipt for the records you leave. Generally, your return is examined in the district where you live. If your return can be examined more quickly and easily in another district (such as where the books and records are located), you may ask to have the audit transferred. Who can represent me? Throughout any audit, you can represent yourself, have someone accompany you, or designate some­ one to represent you. You may represent yourself in all stages of your audit and appeal. However, if your case is hard to understand or involves many issues, you may want someone to help you. Also, if some­ one else prepared the return, you may want their help. You may authorize someone to receive your confidential information (tax information authoriza­ tion), or you may designate someone to represent you (power of attorney for representation) who would be able to make decisions for you. People who can repre­ sent you are Oregon-licensed: • Lawyers. • Public accountants or certified public accountants. • Tax consultants. • Enrolled agents. Out-of-state CPAs may practice in Oregon if they meet the substantial equivalency requirements (ORS 673.010): 1. Licensed in another state; and 2. Have an accredited baccalaureate degree with at least 150 semester hours; and 3. Passed the Uniform CPA exam; and 4. Have a minimum of one year of experience. If you own a business and have an employee who regularly does your tax work, that employee can also represent you. You must give written authorization to a person you want to represent you. Use our Tax Information Autho­ rization and Power of Attorney for Representation form. The auditor handling the case can provide a copy of this form, or you can download it from our website or call us to order a copy. What if I disagree with the audit results? When we propose changes to your return, we will explain the reasons for them. It’s important that you understand why we propose changes before they become final. Ask about anything that is unclear to you. If you disagree with the final changes, you can appeal. Appeal rights will be included with the notice you receive. What if the IRS or another state has audited my return? We have an agreement with the IRS to exchange tax return information. If the IRS audits an Oregon tax­ payer's return, we may receive a copy of that infor­ mation. If your federal return or the return you filed with another state is adjusted, you should amend your Oregon tax return if that adjustment also affects your Oregon return. If your return was previously audited by the IRS and the notice you receive from us has a different adjust­ ment, send a copy of the final audit adjustments or cancellation from the IRS to us. If you filed an appeal with the IRS or the other state and you get a notice from us, send a copy of the IRS or other state appeal notification. We will suspend further action until your IRS or other state case is resolved. You have two years from the date of the correction to claim a refund of Oregon tax as a result of the audit adjustment. See “Oregon statute of limitations for refunds” in “Payments and refunds” for more information. Appeals If you disagree with an action we've taken, you have the right to appeal. Follow the appeal procedures out­ lined here if you have a disagreement with: • A Notice of Deficiency or Notice of Proposed Refund Adjustment. • Our notice based on a federal audit report or an audit by another state. • Penalties or interest charges shown on our notice. • Interest charged on underpayment of estimated tax. • A Notice of Assessment. You may be able to resolve certain issues without a formal appeal process. Contact us if your disagree­ ment concerns: • The date or amount of payments made to your account. • A withholding adjustment. Appealing a Notice of Deficiency or Notice of Proposed Refund Adjustment within 30 days If you disagree with a Notice of Deficiency or a Notice of Proposed Refund Adjustment, you may submit an Audits and appeals

150-101-431 (Rev. 04-01-22) 37 appeal online by logging in to Revenue Online within 30 days and following the instructions on your notice. Or, you may submit an appeal in writing within 30 days from the date on our notice. To make your appeal, choose just one of these two options: written objection or conference request. Written objection. Write to us explaining why you disagree with the Notice of Deficiency or Notice of Pro­ posed Refund Adjustment. Include any new informa­ tion you have. We will review your explanation, try to resolve the matter, and send you a written deci­ sion. If an auditor adjusted your return, that auditor will review your explanation, along with any infor­ mation you provide, and send you a written decision. Conference. Request a conference by sending us an explanation of why you disagree with our Notice of Deficiency or Notice of Proposed Refund Adjustment. Include any new information you have. Be sure to indicate that you are requesting a conference. A conference officer will discuss the matter with you or with someone you choose to represent you, usu­ ally by phone. The conference officer will send you a written decision. You may choose to receive the deci­ sion by either regular or certified mail. If you disagree with our decision, you may continue your appeal and will receive new appeal instructions. Appealing a Notice of Proposed Refund Adjustment after 30 days have passed If you don’t send us a written objection or conference request, but you still want to appeal a Notice of Pro­ posed Refund Adjustment, you must file a complaint with the Magistrate Division of the Oregon Tax Court no later than 120 days from the date of the notice. If you don’t file a complaint within 120 days, your appeal rights will expire and the adjustment can’t be changed. See “Appealing to the Oregon Tax Court” for more information. Appealing a deficiency based on federal audit reports or audit reports of other states Do you have an appeal in progress with the IRS or another state? If so, you may have extra time to file an appeal with the Magistrate Division of the Oregon Tax Court. To see if the appeal rights apply to you, answer the following questions: 1. Did you receive an Oregon notice of a deficiency on the same item billed by the IRS or another state? 2. Did you file a timely appeal with the IRS or another

state? If you answered “no” to either question, use the appeal procedures included with your Oregon notice. If you answered “yes” to both questions, you need to send us proof of your appeal to the IRS or other state. This should include a copy of the notice from the IRS or other state, plus a copy of your written appeal request. The time allowed for filing your proof of federal or other state’s appeal varies: • Did you receive a Notice of Deficiency from us? If so, send us proof of your IRS or other state appeal within 30 days of the date on the Notice of Deficiency. Your account will be assessed without penalty and held until the appeal with the IRS or other state is resolved. • Did you receive a Notice of Assessment from us before sending us proof of the appeal? If so, send us proof of your IRS or other state appeal as soon as possible. After you file proof of your appeal, we will delay any further action on your account until the appeal process is completed. Note: Interest will continue to accrue on any unpaid tax. You must notify us within 30 days of the final resolu­ tion of your appeal with the IRS or the other state. We will review the information and determine whether any adjustments need to be made to your Oregon tax return. You will receive written notification of our determination. If you disagree with our determina­ tion, you may appeal within 90 days to the Magis­ trate Division of the Oregon Tax Court. Your com­ plete appeal rights will be explained with the written determination. Appealing penalty or interest Do you believe there is reasonable cause for a reduc­ tion of penalties or interest? If so, you may ask for a waiver or reduction of part or all of the penalty and interest charges. However, we generally won’t waive interest charges. Waiver criteria are outlined in Oregon Administrative Rule (OAR) 150-305-0068. You must explain how your situation meets any of the criteria. We will review your waiver request and let you know our decision in writing. You’ll receive further appeal instructions to follow if you disagree with the decision. How to start the appeal process All appeals must be submitted through Revenue Online or sent to us in writing. If you are sending us a written appeal, you may submit it by regular mail, fax, or email. Your written appeal must include: Audits and appeals

150-101-431 (Rev. 04-01-22) 38 • Your full name. • Your current mailing address. • Your SSN or ITIN. • The tax year(s) involved. • A detailed explanation of why you are appealing. • Proof of your IRS or other state appeal, if applicable. • The waiver criteria if you are requesting a reduc­ tion of penalty or interest (OAR 150-305-0068). • Any new information you want us to consider; and • A daytime phone number. Be sure to indicate whether you are making a writ­ ten objection, requesting a conference, or requesting a waiver or reduction of penalties or interest. Keep us informed of any changes to your address or phone. Regular mail. Send your written appeal to: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Email. If you are appealing a determination made by an auditor, you may send a written objection or request for a conference to that auditor by email. You should note, however, that we are unable to guarantee the security of any information sent to us by email. Fax: You may fax your written appeal to 503-945-8738. Revenue Online: You may submit your appeal using your Revenue Online account. After logging in, sim­ ply click on the link for your personal income tax account, then select the “Appeals” link and follow the instructions. Be sure that the type of appeal you select is the one you intend to choose. Go to our web­ site for more information about setting up your Rev­ enue Online account. Appealing to the Oregon Tax Court If you disagree with a Notice of Assessment or a writ­ ten determination following your written objection or conference, you have the right to appeal. You must appeal to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the Notice of Assessment or our written determination. Complaint forms for appealing to the Magistrate Division are available from the Tax Court’s website, www.courts. oregon.gov/courts/tax, or you may contact the Ore­ gon Tax Court by mail or phone: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 Mail the signed complaint form along with the fil­ ing fee and a copy of the Notice of Assessment or other written determination to the above address. Note: You can’t appeal tax that you said you owed when you filed your return. Further appeal rights Tax paid in full. If you pay the tax due in the Notice of Deficiency in full, your deficiency is considered to be assessed either on the date of your payment or 30 days from the date of the notice, whichever is later. If you don’t file a timely appeal, you have two years from the date your liability is paid in full to appeal the assessment. Appeal to the Magistrate Division of the Oregon Tax Court as outlined above. Doubtful liability. In certain situations, we may con­ sider your case even if you didn’t file a timely appeal. Visit our website or contact us to see if you meet the conditions for “doubtful liability” relief. Interest charges Appealing a deficiency or an assessment won’t stop interest from accruing on the taxes owed. Interest is computed from the day after the due date of the original return, without extensions, to the date of payment. Interest is charged even if you have a valid extension. If your appeal results in a reduction of the tax due, the interest charges will also be reduced. Paying your taxes during the appeal You may pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the notice, but it does stop interest from accru­ ing on your liability. If you don’t pay before the tax is assessed, a 5 percent failure-to-pay penalty will be added to your balance due. If your appeal is successful, you will receive a refund of any overpayment, including interest. See “Payments and refunds“ for payment options, and “Interest and penalties“ for more information about the failure-to-pay penalty. Audits and appeals

150-101-431 (Rev. 04-01-22) 39 Failure to file an Oregon income tax return For information about penalties for failing to file an Oregon income tax return, see “Penalties.” Filing a return after tax is assessed When you don’t file a tax return but were required to file, we will “assess” your tax. This means we com­ pute how much tax you owe based on information we have available. You will then receive a Notice of Assessment. Even if we have assessed your tax for one or more years, you may still file returns for those years. Why you should file We compute your tax assessment using the infor­ mation available to us about your income, filing sta­ tus, exemptions, and withholding or estimated tax payments. Because we don’t have all your tax information, we may not be able to give you all the deductions or credits you may be entitled to. Once you file a tax return, we may be able to change the tax we assessed. You may receive a refund If your withholding and/or estimated tax payments add up to more than the tax due, we may be able to refund the excess to you. However, there are time limits. If you paid more tax than you should have, a refund will be allowed only if you file your return within three years of the due date of the original return, not including extensions. For example: • The return for 2018 was due April 15, 2019. Three years after that date is April 15, 2022. To receive a refund of excess tax payments for 2018, your return must be postmarked by April 15, 2022. • The return for 2019 was due on July 15, 2020. Three years after that date is July 15, 2023. To receive a refund of excess tax payments for 2019, your return must be postmarked by July 15, 2023. Where to mail your return after tax is assessed Send paper returns, with a copy of your federal return (including Schedules 1 through 3, if applicable) to: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Reviewing your return After reviewing your return, if we agree with the tax you show, we will change the tax assessed. If the income, deductions, credits, or payments shown on your return don’t match our information, we will notify you. The notice we send will explain our adjustments and what to do if you disagree. Your return must include information about filing status, exemptions, income, deductions, credits, tax, and payments. It must be signed and include a state­ ment that, to the best of your knowledge and belief, it’s true, correct, and complete. The full statement is printed on the forms provided by us and appears directly above the signature lines. If you change this statement on the form, your return may not be accepted. Your return also may not be accepted if: • It contains a frivolous argument concerning the payment of taxes; or • You file a return you know isn’t true or correct. You will receive a Notice of Rejection if your return isn’t accepted. This notice can be appealed to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the notice, but only if your return was sent to us within 90 days of the date on the Notice of Assessment. Appealing the Notice of Assessment to the Oregon Tax Court You may also choose to file an appeal with the Mag­ istrate Division of the Oregon Tax Court. Your appeal must be made within 90 days of the date of the Notice of Assessment or within two years after the tax, pen­ alty, and interest shown on the notice is paid in full. If you file an appeal with the Magistrate Division, you will usually be required to file a tax return before the court will change our assessment. You can get a complaint form for filing an appeal at: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 www.courts.oregon.gov/courts/tax Within 90 days of the date on your notice, mail the following items to the address above: • Your completed and signed complaint form. • Your filing fee, and • A copy of the Notice of Assessment. Failure to file

150-101-431 (Rev. 04-01-22) 40 Appealing doesn’t stop interest from being charged on the tax you owe. If you appeal and your tax assess­ ment is reduced, the penalty and interest charges will also be reduced. Paying your taxes during the appeal process You can pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the assessment, but it does stop interest from accruing on the assessed tax. If you pay, you can still appeal any time within two years of the date you pay the tax, penalty, and interest shown on the Notice of Assessment. See “Payments and refunds” for payment options. Requesting a waiver of penalty or interest You can ask for a discretionary waiver of part or all of the penalty and interest charges (OAR 150-305- 0066, 150-305-0068). We can resolve most penalty and interest charge disagreements. For more information about requesting a discretionary waiver, see “Appeal­ ing penalty or interest” in “Audits and appeals.“ If you believe part or all of the penalty and interest charges should be adjusted, write to: Oregon Department Revenue PO Box 14725 Salem OR 97309-5018 Failure to file

150-101-431 (Rev. 04-01-22) 41 Income What income is taxable to Oregon? Full-year residents (Form OR-40). You are taxed on income from all sources. Part-year residents (Form OR-40-P). You are taxed on income from all sources earned or received while an Oregon resident. For the period of time you were not an Oregon resident, Oregon taxes only certain income from Oregon sources. Nonresidents (Form OR-40-N). You are taxed on income from Oregon sources. This includes income shown on your federal return from Oregon wages or Oregon fees or for services performed in Oregon. Other income from Oregon sources includes: • Businesses, S corporations, partnerships, and lim­ ited liability companies taxed as partnerships located or doing business in Oregon, and in some cases, work that is performed in another state for Oregon customers. • Unemployment insurance benefits received because of an Oregon job. • Severance pay you received because of an Oregon job. • Oregon farms. • Oregon estates and trusts. • Sales of Oregon property. • Rents and royalties for use of Oregon property. • Wages for services performed in Oregon by employ­ ees who also telecommute from outside the state. Note: Community property income. Oregon isn’t a community property state. If you’re a resident of Ore­ gon and your spouse is a resident of a state with com­ munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you are taxed on any of your spouse’s income. See “Filing sta­ tus” for more information about community property. Air carrier employees (OAR 150-316-0173) Nonresidents. You are exempt from Oregon tax on wages earned while working on aircraft in Oregon, if you meet all of the following qualifications: • You are a nonresident of Oregon; and • You perform regularly assigned duties on air­ craft in Oregon and at least one other state as an employee of an air carrier; and • Your scheduled flight time in Oregon is 50 percent or less of your total scheduled flight time during the calendar year. Additionally, the air carrier you work for must provide: • Interstate or foreign air transportation of passen­ gers or property by aircraft as a common carrier for compensation; or • Interstate or foreign transportation of mail by aircraft. If you are a federal, state, or local government employee, you may not exclude your income under this section. (U.S. Postal Service employees are considered employ­ ees of the federal government.) If you meet all of these qualifications, file Form OR- 40-N and mark the “Employment exception” box on the return. [For more information about the “Employ­ ment exception” box, see “Interstate transportation wages (Amtrak Act).“] Show that your income is exempt by excluding it from the Oregon column. If all of your wages are exempt, enter $0 in the Oregon column. Example 1: Chantell is a nonresident who works as a pilot for an Oregon-based corporation, transporting the corporation’s executives to various job locations in the United States. Chantell isn’t exempt from Ore­ gon tax because she doesn’t work for an air carrier that provides air transportation for compensation. Her wages are subject to Oregon tax to the extent ser­ vices are performed in Oregon. Example 2: George is a nonresident who works as an office manager for an air carrier. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his pilot’s license. George doesn’t qualify as exempt from Oregon tax because his “reg­ ularly assigned duties” aren’t on an aircraft, but as a manager in an office. Example 3: Allison is a nonresident and works as a flight attendant for Delta Airlines. She regularly works on flights in California, Oregon, and Washing­ ton. Her scheduled flight time in Oregon amounts to 35 percent of her total scheduled flight time this year. Because Allison meets the qualifications mentioned above, she can exclude, from the Oregon column, all of her wages from Delta Airlines on her Oregon non­ resident return. Oregon withholding. To stop withholding of Ore­ gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that you’re exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re exempt. Income

150-101-431 (Rev. 04-01-22) 42 Alimony received Oregon only taxes alimony payments received that must be included on your federal return. Full-year residents. Oregon taxes all alimony you received during the year that is included on your fed­ eral return. Part-year residents. Oregon taxes any alimony you received for the part of the year you were a resident of Oregon that is included on your federal return. Nonresidents. Oregon doesn’t tax any alimony you received while a nonresident of Oregon. Business income or loss Full-year residents. Oregon taxes all of your business income (or allows your business loss) received during the year. Part-year residents. Oregon taxes all of your business income (or allows your business loss) while you’re an Oregon resident. Oregon also taxes income (or allows losses) from an Oregon business while a nonresident. Nonresidents. Oregon taxes your income (or allows your business loss) from an Oregon business. This includes apportioned business income and allocated nonbusiness income from sole proprietorships. Federal Schedule E and F income Full-year residents. Oregon taxes the income reported on federal Schedules E and F, including rent, royalty, Real Estate Mortgage Investment Conduits (REMIC), Real Estate Investment Trust (REIT), partnership, S corporation, estate, trust, and farm income. Part-year residents. Oregon taxes the income reported on federal Schedules E and F that you received while you were an Oregon resident. Oregon also taxes this income if you received or earned it from Oregon sources while a nonresident. Nonresidents. Oregon taxes the income reported on federal Schedules E and F that you received or earned from Oregon sources. Gain, loss, and distributions Capital gain, loss, and distributions Full-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) dur­ ing the year. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Part-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) while you were an Oregon resident. Oregon also taxes gain or distributions received (or allows losses you incurred) from Oregon sources while a nonresident. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Nonresidents. Oregon taxes your gain or distribution (or allows your loss) from Oregon sources. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Note: See “Capital loss carryover difference” under “Additions” for information about an addition to Ore­ gon income for capital losses carried over from last year’s return under certain unusual circumstances. Other gain or loss Full-year residents. Oregon taxes your gain (or allows your loss) received during the year. Part-year residents. Oregon taxes your gain (or allows your loss) while an Oregon resident. Oregon also taxes the amount from Oregon sources while a nonresident. Nonresidents. Oregon taxes your gain (or allows your loss) from Oregon sources. Global intangible low-taxed income (GILTI) This category of foreign income is included as "Other income" on the federal return. It must be reported as income when it's deemed received, even if it isn't actually received by the taxpayer during the tax year. Full-year residents. This income flows through to your Oregon return. Part-year residents. Report this income in the Ore­ gon column if you were an Oregon resident on the date you received it (actual or deemed receipt) or if it’s from property employed in a business, trade, pro­ fession, or occupation carried on in Oregon while a nonresident. Nonresidents. Report this income in the Oregon col­ umn if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon. Hydroelectric dam workers [ORS 316.127(8)] Full-year residents. Oregon taxes all of your wages earned while working on the McNary, John Day, The Dalles, or Bonneville dams. Income

150-101-431 (Rev. 04-01-22) 43 Part-year residents. Oregon taxes all the income you earned during the part of the year you were an Ore­ gon resident. For the part of the year you were a non­ resident, see the nonresident instructions. Exempt only the wages earned during the part of the year you were a nonresident of Oregon. Mark the “Employ­ ment exception” box on your return and exclude the wages you earned while working on any of the listed dams. Nonresidents. You are exempt from Oregon tax on wages earned while working on any of the listed dams. Mark the “Employment exception” box on Form OR-40-N, and show that this income is exempt by entering 0 in the Oregon column for these wages. If you have any other income from Oregon sources, you must show that income in the Oregon column. Oregon withholding. To stop withholding of Ore­ gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that you’re exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re exempt. Individual Retirement Account (IRA) distributions Full-year residents. Oregon taxes any taxable IRA distribution you received during the year and any amounts reported in federal income that you con­ verted from a regular IRA into a Roth IRA. Part-year residents. Oregon taxes any taxable IRA distribution you received while you were an Oregon resident. Oregon also taxes income amounts from IRA conversions if you were an Oregon resident at the time of the conversion. Nonresidents. Oregon doesn’t tax any amount unless you are a nonresident domiciled in Oregon. If you are domiciled in Oregon but otherwise taxed as a non­ resident, your Oregon-source IRA will still be taxed by Oregon. See “Retirement income.“ Interest and dividend income Interest Generally, interest income is only taxed by your state of residence. It includes any interest received or cred­ ited to your account that you could withdraw and any interest you received on tax refunds. See the following exceptions: • Interest and dividends on government bonds of other states. • Interest and dividends on U.S. bonds and notes. Full-year residents. Oregon taxes the interest income you received and reported on your federal return. Part-year residents. Oregon taxes the interest income you received while you were an Oregon resident. Oregon also taxes Oregon business activity interest income received while a nonresident. Nonresidents. Oregon taxes the interest income you received on funds used for business activity in Ore­ gon. Oregon doesn’t tax interest received on install­ ment sales. Dividends Generally, dividend income is only taxed by your state of residence. Include the stock dividends you received under a public utility dividend reinvestment plan in Oregon income. Full-year residents. Oregon taxes the dividends you received during the year. Part-year residents. Oregon taxes all dividends you received while an Oregon resident that are included on your federal return. Oregon also taxes any divi­ dends passed through to you during the part of the year you were a nonresident from an S corporation or partnership that has no business activity outside Oregon. Nonresidents. Oregon taxes dividends passed through to you from an S corporation or partnership that has no business activity outside Oregon. These are divi­ dends your S corporation or partnership received on the stock of another corporation. Interstate transportation wages (Amtrak Act ) (OAR 150-316-0173) Nonresidents. Are you a nonresident of Oregon with regularly assigned duties in Oregon and at least one other state? If you meet certain qualifications (listed below), Oregon won’t tax you on these wages. Mark the “Employment exception” box on Form OR-40-N, and show that this income is exempt by entering 0 in the Oregon column for these wages. State income tax provisions in the federal Amtrak Reauthorization and Improvement Act of 1990, Pub­ lic Law 101-322, can be found in U.S.C. Sections 11502 and 14503. These provisions, which we refer to as the “Amtrak Act,“ prohibit states and local governments from taxing compensation of certain nonresident employees who have regularly assigned duties in more than one state. If you are a federal, state, or local government employee, you may not exclude your income under these federal laws. (U.S. Postal Service employees are considered employees of the federal government.) Income

150-101-431 (Rev. 04-01-22) 44 Who qualifies? To qualify, you must work for: • An interstate railroad; or • An interstate motor carrier; or • An interstate motor private carrier. In addition, you must: • Be a nonresident of Oregon; and • Have regularly assigned duties in more than one state (that is, you perform duties in each state on a regular basis; duties you perform on an “on-call” or “as-needed” basis or on a sporadic or intermittent basis during the year aren’t considered “regularly assigned”); and • Be subject to the jurisdiction of the U.S. Secretary of Transportation; and • Not be covered under the overtime requirements of the Fair Labor Standards Act. Note: You may receive overtime payment at the dis­ cretion of your employer and be subject to the juris­ diction of the U.S. Secretary of Transportation. Refer to your employer to determine if you are subject to the jurisdiction of the U.S. Secretary of Transporta­ tion or to the Fair Labor Standards Act. You can’t be subject to both. For employees of interstate motor carriers or motor private carriers, you must meet both of the following requirements: • Perform work that directly affects the safety of a commercial motor vehicle. This means you are required by your regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be direct and hands-on, requiring you to physically move, touch, or affect the vehicle or its contents. Super­ visory, managerial, consulting, or other duties that indirectly affect the safety of a motor vehicle don’t meet the definition of “directly affects”. • Work as:

— An operator of a commercial motor vehicle;

— A mechanic;

— A freight handler; or

— Someone, other than an employer, who directly affects the safety of a motor vehicle. A commercial motor vehicle is any self-propelled or towed vehicle used on highways in interstate com­ merce to transport passengers or property if such vehicle: • Has a gross vehicle weight rating of more than 10,000 pounds; or • Is designed or used to transport passengers for compensation, except for vehicles providing taxi cab service when the vehicle has a capacity of eight or fewer passengers and isn’t operated on a regular route or between specified places; or • Is designed to transport more than 15 passengers, including the driver, and isn’t used to transport passengers for compensation; or • Is used and labeled for the transportation of haz­ ardous materials. Example 1: Adam and Natalya are married nonresi­ dents who are filing a joint federal return. Adam works for an Oregon interstate motor carrier as a commercial motor vehicle driver. He has a regular route from Idaho to Oregon, delivering products in Oregon. Because Adam is the driver of a commer­ cial motor vehicle and has regularly assigned duties in more than one state, this income is exempt from Oregon tax. Natalya is a chef at an Oregon restau­ rant. They must file a joint Form OR-40-N, but won't include the exempt income from Adam's wages in the Oregon column. Only Natalya's wages are entered in the Oregon column. Example 2: Brenda is a nonresident who works for an interstate motor carrier as a mechanic directly affect­ ing the safety of commercial motor vehicles engaged in interstate commerce. She has regular duties in a Washington terminal and an Oregon terminal. She works one day a week in Washington and four days a week in Oregon. Because Brenda directly affects the safety of a com­ mercial motor vehicle in interstate commerce and performs regularly assigned duties in two states, she is exempt from Oregon tax. It doesn’t matter that the majority of her work is performed in Oregon. Brenda must file a Form OR-40-N and show this income is exempt by entering a zero in the Oregon column for these wages. Example 3: Jorge is a nonresident who works as a mechanic for an interstate motor carrier, directly affecting the safety of commercial motor vehicles engaged in interstate commerce. He regularly works in Medford but is required to be on-call some week­ ends to perform minor repair work. Several times a year he may travel to California to repair a flat tire, do minor engine work, etc. Jorge doesn’t have regularly assigned duties in more than one state. Duties that are performed on an on- call or as-needed basis aren’t considered to be regu­ larly assigned. Jorge’s wages earned in Oregon are taxable by Oregon. He must file Form OR-40-N and report his wages in the Oregon column. Example 4: Carl is a nonresident who works for an interstate motor carrier as a driver. Carl picks up a lum­ ber delivery truck every morning in Washington and receives delivery assignments for the day. Depending on where the lumber needs to be delivered, he may Income

150-101-431 (Rev. 04-01-22) 45 not come to Oregon on a daily basis. Carl may pick up and deliver lumber only within Washington or only within Oregon. Carl drives to Oregon at least once a month. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself doesn’t know what each day’s delivery route will be until customers place orders. Although Carl may not have a regular route in Wash­ ington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have regularly assigned duties in two states, as long as all routes are assigned randomly among all drivers on a regu­ lar basis. Carl’s wages earned in Oregon are exempt from Oregon tax. Carl must file Form OR-40-N and show this income is exempt by entering $0 in the Ore­ gon column for these wages. Example 5: Ed is a nonresident who works for an Ore­ gon wholesaler as a shipping clerk. The company has one terminal in Oregon and one terminal in Washing­ ton. Ed regularly works in both terminals. Although he has regularly assigned duties in two states, Ed’s Oregon wages aren’t considered exempt within the scope of the Amtrak Act. He isn’t a driver, mechanic, or freight handler. His duties don’t directly affect the safety of a vehicle. Ed’s wages earned in Oregon are taxable by Oregon. He must file Form OR- 40-N and include his income in the Oregon column. Example 6: Frieda is a nonresident who works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occa­ sionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda doesn’t have “regularly assigned duties in more than one state” and she doesn’t work for an interstate motor carrier. Her Oregon-source wages are taxable by Oregon. Frieda must file Form OR-40-N and include her income in the Oregon column. Example 7: Butch is a nonresident who works for an Oregon-based interstate trucking carrier as a super­ visor. His regular duties within the state of Oregon include safety training. Also, Butch frequently drives to Washington to conduct safety training. Wages for performing supervisory duties don’t qual­ ify as exempt under the Amtrak Act. The employee’s duties must directly affect the safety of a commercial vehicle. Conducting safety training only indirectly affects the safety of a commercial motor vehicle. Butch’s wages are taxable by Oregon. He must file Form OR-40-N and include his wages in the Oregon column. Example 8: Connie Sue is a nonresident who works for an interstate trucking carrier at her company’s Oregon and Washington yards. She has a variety of duties, including helping load trucks. Connie Sue is allowed overtime as a result of being subject to the Fair Labor Standards Act. Because she is covered under the Fair Labor Stan­ dards Act and isn’t subject to the jurisdiction of the Secretary of Transportation, Connie Sue doesn’t qualify for the Amtrak Act exemption. Her wages are taxable by Oregon. She must file Form OR-40-N and include her wages in the Oregon column. Employer withholding If your wages are exempt from Oregon tax under the Amtrak Act, Oregon tax doesn’t have to be withheld from your wages. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that you’re exempt using the appropriate code. Give Form OR-W-4 to your employer and attach an explanation of your qualifying duties. Submit a new form and explanation by February 15 each year that you’re exempt. You must still file an Oregon tax return even if you claim exemp­ tion from withholding under the Amtrak Act. Like-kind exchange or involuntary conversion (ORS 316.738, 317.327) You may elect to defer gain on like-kind business or investment property not held primarily for sale that is exchanged, in the case of real property under IRC Section 1031, or involuntarily converted under IRC Section 1033. If Oregon real property is exchanged for real property in another state, or if property located in Oregon is involuntarily converted into similar prop­ erty located outside of Oregon, include Form OR-24 with your Oregon return in the year of the exchange or conversion, or submit it to us through Revenue Online. Submit the form to us each year, until you've disposed of the like-kind property, even if you don't have to file an Oregon income tax return. Download the form from our website or call us to order it. Full-year residents. Report your Oregon gain on the sale or other disposition of the acquired property when it’s reported on your federal return. Part-year residents and nonresidents. If you were an Oregon resident at the time of the exchange or invol­ untary conversion, file an Oregon return and report the Oregon portion of the gain when you report the gain on your federal return. If you were a nonresi­ dent at the time you exchanged or converted your Oregon property or you're a nonresident when the gain is reported on your federal return, you will need to file an Oregon Form OR-40-N to report the gain. Income

150-101-431 (Rev. 04-01-22) 46 Retirement income Full-year and part-year residents. Most retirement income is subject to Oregon tax when received by an Oregon resident. This is true even if you were a non­ resident when you earned the income. However, if you have federal pension income, you may subtract some or all of it from Oregon income. See “Federal pension income” in “Subtractions” for more information. For other exceptions, see “Previously taxed employee retirement plans” and “Previously taxed IRA conver­ sions” in “Subtractions.” Nonresidents. Oregon doesn’t tax your retirement income if you are a nonresident who isn’t domiciled in Oregon. If you are an Oregon nonresident who is still domiciled in Oregon, any Oregon-source retirement income is taxable by Oregon. This applies to most forms of retirement income taxed by Oregon, including public pension plans, corporate retirement plans, Keogh plans, simplified employee pensions (SEPs), and IRAs. For the definition of domicile, see “Residency.” Example: Hiro has always resided and worked in Oregon, which he thinks of as his home. He recently retired and now receives his pension and interest income from Oregon. Earlier this year, he sold his Oregon residence, bought an RV, and went to Ari­ zona, where he rents space year-round in an RV park. He intends to stay in Arizona for a year or two and then return to Oregon. Hiro hasn’t given up his Oregon driver’s license. His RV and vehicles are registered with the state of Ore­ gon. He hasn’t changed his voter registration to any other state. Hiro hasn’t shown an intent to give up Oregon as his home, and he hasn’t maintained a permanent home elsewhere. Based on these facts, Hiro's domicile is in the state of Oregon. Although Hiro may be treated as a nonresident for tax purposes on other forms of income (his interest income isn’t taxed by Oregon), because his domicile is still Oregon, his Oregon- source retirement income is taxable by Oregon. Retirement income means income from: • Qualifying employer pension and profit-sharing plans exempt from federal tax [IRC Section 401(a)]. • Annuity plans [IRC Sections 403(a) and 403(b)]. • Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]. • Simplified employee pension plans [IRC Section 408(k)]. • Individual retirement arrangements [IRC Sections 408(a) and 408(b)]. • Plans for federal, state, or local government employ­ ees [IRC Section 414(d)]. • Pay for uniformed service members under chapter 71 of Title 10 of the United States Code. • Trusts that were created before June 25, 1959 [IRC Section 501(c)(18)]. Payments received after termination of employ­ ment qualify if the payment is made under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described above. Payments received from nonqualified deferred com­ pensation plans [as described in IRC Section 3121(v) (2)(C)] qualify as retirement income if the payments are part of a series of substantially equal periodic payments made for a period of at least ten years or for the life or life expectancy of the recipient. Retirement income doesn’t include income received from: • Social Security, • Stock options, • Restructured stock plans, • Severance plans, or • Unemployment insurance benefits. Social Security and Railroad Retirement Board benefits (ORS 316.054) Oregon doesn’t tax any amount of your Social Security, Railroad Retirement Board, or railroad unemployment benefits. For information on the Railroad Retirement Board and Social Security benefits subtractions, see the related sections under “Subtractions.” State and local income tax refunds If you received a refund of income tax from another state or local government that is included in your fed­ eral income, and you deducted those taxes on a prior year’s Oregon return, include the refund in your Oregon income. This refund isn’t taxable to Oregon if you didn’t deduct the taxes on an Oregon return. See “Subtractions” for information on the Oregon income tax refund subtraction. Unemployment insurance (UI) benefits and other taxable income Up to $10,200 in UI benefits that you or your spouse received in 2020 may be excluded on your federal return if your modified AGI (AGI before excluding UI benefits) is less than $150,000. Income

150-101-431 (Rev. 04-01-22) 47 Full-year residents. Oregon taxes UI benefits and any other taxable income you received during the year. Exclusion: Your federal exclusion flows through to your Oregon return. Part-year residents. Oregon taxes UI benefits and any other taxable income you received while an Ore­ gon resident. Oregon also taxes any UI benefits and other taxable income from Oregon sources or based on Oregon sources received while a nonresident. Exclusion: Subtract your Oregon exclusion amount from your Oregon-source UI benefits. Use the for­ mula under Nonresidents to determine your Oregon exclusion amount. Your Oregon exclusion can’t be more than your federal exclusion. Nonresidents. Oregon taxes any UI benefits and any other taxable income included in federal AGI received from Oregon sources or based on Oregon sources. Exclu­ sion. Subtract your Oregon exclusion amount from your Oregon-source UI benefits. Your Oregon exclusion can’t be more than your federal exclusion. Use this formula to determine your Oregon exclusion amount: Oregon-source UI benefits × Benefits excluded on federal return = Oregon exclusion amount Total UI benefits Wages, salaries, and other pay for work Full-year residents. Oregon taxes all of your earnings for services you performed inside and outside Oregon. Part-year residents. *Oregon taxes all of your earn­ ings while an Oregon resident. Oregon also taxes the amount you earned working in Oregon while you were a nonresident. If your Oregon wages aren’t stated separately on your W-2, compute your Oregon-source income using the formula at the end of this section. Nonresidents. *Oregon taxes the income you earned while working in Oregon. Oregon doesn’t tax any amount you earned while you were working outside Oregon. Nonresident telecommuters who work for an Oregon employer are taxed only on the income earned from work performed in Oregon, including sick pay or other benefits. *Nonresident exceptions: To see if you qualify to exclude certain income, see “Air carrier employees,“ “Interstate transportation wages (Amtrak Act),“ or “Hydroelectric dam workers“ above, or “Waterway workers“ below. If the amount you earned working in Oregon differs from the Oregon wages shown on your Form W-2, compute your Oregon-source income using the for­ mula at the end of this section. You should ask your employer to provide you with a signed explanation of the wage difference, written on company letterhead. Keep the explanation with your tax records, as we may ask for it at a later date. Important information for using this formula: When you count the number of days you actually worked in Oregon and the number of days you actually worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. Use this formula to determine total wages taxable by Oregon: Days actually worked in Oregon × Total wages = Oregon wages Total days actually worked everywhere If you only worked in Oregon, don’t use the formula above. All your earnings are taxable by Oregon, and you must report them on your Oregon return. Waterway workers (ORS 316.127) Full-year residents. Oregon taxes all the income you earned while working on a watercraft in interstate waters. Part-year residents. Oregon taxes all the income you earned while working on a watercraft in inter­ state waters during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, see the following guidelines. Nonresidents. Certain nonresident employees serv­ ing on watercraft who have regularly assigned duties in interstate navigable waters aren’t subject to Oregon income tax. To qualify you must: • Be engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. Section 7101 or licensed or authorized under the laws of the state; or • Perform regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating in navigable waters in two or more states. If you qualify, Oregon won’t tax these wages. File Form OR-40-N (or Form OR-40-P if a part-year resident) and show this income is exempt by entering a zero in the Oregon column for these wages. Mark the “Employment exception” box on your return. See “Interstate Trans­ portation Wages (Amtrak Act)” for more information. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instruc­ tions to declare that you’re exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re exempt. Income

150-101-431 (Rev. 04-01-22) 48 Adjustments Adjustments are deductions from your gross income. They result in “adjusted gross income,” or AGI, on your federal return. For full-year residents, these items flow through to your Oregon return. Part-year residents and nonresidents report most of these items directly on Form OR-40-P or OR-40-N. Enter the fed­ eral amount in the federal column and the Oregon amount, if any, in the Oregon column. If the item has an adjustment code, enter the federal and Oregon amounts in section 1 of Schedule OR-ASC-NP, then enter the totals from section 1 on your return. Your Oregon adjustment can’t be more than the adjust­ ment on your federal return. Alimony paid Oregon allows a deduction for alimony paid under a divorce decree or separation agreement if the deduc­ tion is allowed on your federal return. The alimony you paid must be taxable income to your former spouse. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the alimony you paid while an Oregon resident with a partial deduction for alimony paid while a nonresi­ dent if you had Oregon-source income and the deduc­ tion was allowed on your federal return. Use the for­ mula under Nonresidents to determine the nonresi­ dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for alimony you paid while a nonresident if you had Ore­ gon-source income and the deduction was allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Alimony you paid while a nonresident = Nonresident deduction Total income received while a nonresident Certain business expenses of reservists, performing artists, and fee-basis government officials [Adjustment code 002] Reservists If you were a National Guard or reserve member of the U.S. Armed Forces who traveled more than 100 miles from your home to perform services, you may be able to deduct certain business expenses you paid or incurred in connection with that service. For more information, see the instructions for federal Form 2106, Employee Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Oregon doesn’t tax the reservist income of nonresidents, so you can’t deduct expenses you incurred while you were a nonresident. You may deduct only the expenses you incurred while you were an Oregon resident. Your Oregon deduction while you were a nonresident is $0. Performing artists If you were a qualified performing artist, you may be able to deduct business expenses you paid or incurred in connection with your services in the per­ forming arts as an employee. For qualifications and other information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the expenses you paid while you were an Oregon resident, along with a partial deduction for the expenses you paid while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for these business expenses while you were a non­ resident if you had income from an Oregon source. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Performing artist employee business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Fee-basis government officials If you are a government official who is paid on a fee basis instead of wages or salary, you may be able to deduct certain business expenses you paid or incurred Adjustments

150-101-431 (Rev. 04-01-22) 49 in connection with services you performed. For more information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the expenses you paid while you were an Oregon res­ ident with a partial deduction for the expenses you paid while you were a nonresident if you had Ore­ gon-source income. Use the formula under Nonresi­ dents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the expenses you paid while you were a nonresi­ dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Official business expenses paid while a nonresident = Non­ resident deduction Total income from all sources while a nonresident Charitable deduction [Adjustment code 007] This federal deduction is for taxpayers who made cash charitable contributions of up to $300 and they’re not claiming federal itemized deductions for tax year 2020. Note: If you’re itemizing deductions for Oregon, you must omit this deduction from the charitable contri­ butions you claim on Schedule OR-A. See the instruc­ tions for Schedule OR-A. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the contributions you made while you were an Oregon resident with a partial deduction for con­ tributions you made while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduc­ tion allowed on your federal return. Nonresidents. Oregon allows a partial deduction for contributions you made while you were a nonresi­ dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Cash contributions made while a nonresident = Nonresident deduction Total income from all sources while a nonresident

Educator expenses If you were an eligible educator in 2020, you can deduct up to $250 of qualified expenses you paid in 2020. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. For information about eligibility and qualified expenses, see the instructions for your federal return or IRS Publication 529, Miscellaneous Deductions. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the qualified educator expenses you paid while you were an Oregon resident with the expenses you paid while working in an Oregon elementary or sec­ ondary school while you were a nonresident. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for the expenses you paid while working in an Oregon ele­ mentary or secondary school. Your Oregon deduction can’t be more than the deduction allowed on your fed­ eral return. If you didn’t work in an Oregon elemen­ tary or secondary school, your Oregon deduction is $0. Health savings account (HSA) deduction [Adjustment code 003] You may be able to take this federal deduction if you made contributions to an HSA during 2020. For more information about this deduction, see the instruc­ tions for federal Form 8889 or IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Adjustments

150-101-431 (Rev. 04-01-22) 50 Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the HSA contributions you made while you were an Oregon resident with a partial deduction for contributions you made while you were a non­ resident if you had Oregon-source income. Use the formula under Nonresidents to determine the non­ resident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for HSA contributions you made while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × HSA contribution made while a nonresident = Nonresident deduction Total income from all sources while a nonresident IRA or self-employed SEP and SIMPLE contributions These federal deductions are for contributions made to an IRA, SEP (simplified employee pension), SIM­ PLE (savings incentive match plan for employees), or other qualified retirement plan for yourself or, if you’re a sole proprietor or partner in a small busi­ ness, your employees. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. For more informa­ tion about these deductions, see these IRS publications: • Publication 590-A, Contributions to Individual Retire­ ment Arrangements (IRAs). • Publication 560, Retirement Plans for Small Business. • Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Note: If any part of your contribution deduction came from the rollover of an individual develop­ ment account (IDA), you must add back the amount already subtracted as an IDA contribution. See “Indi­ vidual development account” under “Additions” for more information. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. You may be limited in the amount of IRA or other retirement plan contributions you can deduct for Oregon. Use these formulas to figure your deduction: IRA formula. For the part of the year you were a non­ resident, use this formula to determine your Oregon deduction: Oregon compensation while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Self-employed SEPs, SIMPLEs, and other qualified plans. Use this formula to determine your Oregon deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × Contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Moving expenses (ORS 316.048) This deduction is only allowed for active-duty mem­ bers of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or their spouses, who are ordered to relocate to or within Oregon due to a permanent change in duty station (known as a PCS move), if the deduction is allowed on the federal return. See “Military personnel filing information” for more information. Penalty on early withdrawal of savings [Adjustment code 004] This federal deduction is for taxpayers who paid a penalty to a financial institution for early withdrawal of funds from a time savings account, certificate of deposit, or similar type of deposit. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Adjustments

150-101-431 (Rev. 04-01-22) 51 Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction is the portion of the penalty amount you claimed on your federal return that is related to interest income that is taxed by Oregon. If the penalty isn’t related to interest income taxed by Oregon, your Oregon deduction is $0. Example: Liam claimed a deduction of $1,795 on his federal return for an early withdrawal penalty. Only 30 percent of the interest income related to this pen­ alty is taxable by Oregon and reportable in the Oregon column. Liam’s Oregon deduction is also limited to 30 percent of the penalty, so his deduction will be $539. Nonresidents. Because Oregon generally doesn’t tax interest income of a nonresident, your Oregon deduc­ tion is 0. Enter the full amount in the federal column on Schedule OR-ASC-NP and $0 in the Oregon column. Self-employed health insurance If you’re self-employed, you may be able to claim this federal deduction for the amount you paid for health insurance for yourself, your spouse, and your dependents. This deduction is limited to earned income from your trade or business for which the insurance plan was established. For more information about this deduc­ tion, see IRS Publication 535, Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is 100 percent of your health insurance premiums related to your self-employment for the part of the year you were an Oregon resident com­ bined with the health insurance premiums paid by an Oregon business from which you received self- employment income while a nonresident. Your total Oregon deduction is limited to the earnings from self-employment reported in the Oregon column. Self-employment tax If you were self-employed, you may deduct up to one-half of your self-employment tax on your federal return. For more information about this deduction, see the instructions for federal Schedule SE, Self- Employment Tax. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Ore­ gon deduction is the proportional amount of self-employment tax that is related to earnings taxed by Oregon. Your Oregon deduction can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Self-employment earnings taxed by Oregon × Federal deduction for self-employment tax = Oregon deduction Total self-employment earnings Student loan interest You may be able to take this federal deduction if you paid interest in 2020 on a qualified student loan, your filing status isn’t married filing separately, your AGI is less than the federal threshold, and you (or your spouse, if filing jointly) aren’t claimed as a dependent on someone else’s return. For more information, see the instructions for your federal return or IRS Publi­ cation 970, Tax Benefits for Education. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the student loan interest you paid while you were an Oregon resident with a partial deduction for interest you paid while you were a nonresident if you had Oregon- source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the student loan interest you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Your Oregon deduc­ tion can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Tuition and fees You may be able to take this federal deduction if you, your spouse, or a dependent you claim on your return was a student enrolled at or attending an eli­ gible educational institution. The deduction is based on the amount of qualified education expenses you paid for the student in 2020 or beginning in the first three months of 2021. For more information, see the instructions for federal Form 8917, Tuition and Fees Deduction, or IRS Publication 970. Adjustments

150-101-431 (Rev. 04-01-22) 52 Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the tuition and fees you paid while you were an Oregon resident with a partial deduction for the tuition and fees you paid while you were a nonresi­ dent if you had Oregon-source income. Use the for­ mula under Nonresidents to determine the nonresi­ dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than your fed­ eral deduction. Nonresidents. Oregon allows a partial deduction for the tuition and fees you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than your federal deduction. Use this formula to determine your Ore­ gon deduction: Oregon-source income while a nonresident × Qualified tuition and fees paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Write-in adjustments on federal Form 1040, Schedule 1, line 22 [Adjustment code 005] These deductions from federal income are written on Form 1040, Schedule 1, line 22: • Archer MSA deduction. • Jury duty pay you gave your employer because your employer paid your salary while you served on the jury. • Deductible expenses related to income from the rental of personal property for profit. • Nontaxable amount of Olympic, Paralympic, and U.S. Olympic Committee income. • Reforestation amortization and expenses. • Repayment of supplemental unemployment ben­ efits under the Trade Act of 1974. • Contributions to Section 501(c)(18)(D) pension plans. • Contributions by certain chaplains to Section 403(b) plans. • Attorney fees and court costs for actions involv­ ing certain unlawful discrimination claims to the extent of gross income from such actions. • Attorney fees and court costs you paid in connec­ tion with an award from the IRS for helping them detect tax law violations, up to the amount of the award includible in your gross income. Also include any scholarship and fellowship grants excluded on Form 1040-NR, line 10c. Full-year residents. These write-in adjustments flow through to your Oregon return via your federal AGI. Don’t claim any additional deductions on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the amount of any write-in adjustment(s) you incurred while you were an Oregon resident with any adjustment that is deductible from Oregon- source income while you were a nonresident. Com­ bine these amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for write-in adjustments that are deductible from Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. If none of your write-in adjustments are deductible from Ore­ gon-source income, your Oregon deduction is $0. Adjustments

150-101-431 (Rev. 04-01-22) 53 Additions Generally, additions are items the federal govern­ ment doesn’t tax but Oregon does. Additions increase your income taxed by Oregon. Numeric codes are provided with the explanation for most additions. A modification code is provided if an addition must be reported as a “negative modifica­ tion” by a part-year resident or nonresident. Enter the numeric code and the dollar amount of each addition or modification on Schedule OR-ASC or OR-ASC- NP. Your total additions and modifications are then reported on your return. If a numeric code isn’t provided for an addition or modification, the amount is reported directly on your return. Itemized deduction add backs. The items listed below are related to itemized deductions. If you’re claiming any of these as itemized deductions on Schedule OR-A, you may have to report an addition on Schedule OR-ASC or a negative modification on Schedule OR-ASC-NP. • Child Care Fund contributions. • Claim of right income repayments. • College Opportunity Grant contributions. • Donations to disqualified charitable organizations. • Federal estate tax on income in respect of a decedent. • Gambling losses related to tax-exempt lottery winnings. • Oregon IDA Initiative Fund donations. • Oregon Production Investment Fund contributions. • University Venture Development Fund contributions. • Medical expenses claimed for the WFHDC credit. Fiduciary additions. If the instructions for reporting an addition on a fiduciary return are different from the instructions for reporting an addition on a per­ sonal income tax return, they are noted within each section. Accumulation distribution from certain domestic trusts (ORS 316.737) [Addition code 132] If you used federal Form 4970 to figure the partial tax on a distribution of accumulated income from a domestic trust created before March 1, 1984, contact us or email the Fiduciary Unit at estate.help.dor@ore­ gon.gov for information about this addition. Achieving a Better Life Experience (ABLE) Account nonqualified withdrawal [ORS 316.680(2)(k)] [Addition code 164] Did you withdraw funds from an Oregon ABLE account for a purpose other than paying for quali­ fied disability expenses? If the withdrawn funds were from contributions previously subtracted on your Ore­ gon return, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. Qualified disability expenses are defined in IRC Sec­ tion 529A. For more information about Oregon ABLE accounts and examples of qualified withdrawals, see “ABLE Account deposit” in “Subtractions.“ Capital loss carryover difference [Addition code 162] This addition affects few taxpayers. You'll have an addition on your Oregon return only if you're carry­ ing over a capital loss from last year’s return and last year’s federal AGI was within the limits in Table 6. If so, use the Capital Loss Carryover Worksheet in the Appendix to calculate your addition. Table 6. Capital loss carryover difference If line 8b on your 2019 Form 1040 was less than line 9, and— you filed: and: was more than: Form OR-40 Line 7 Line 14 plus line 18 minus the larger of line 8 or Form 1040, line 6*. Form OR-40-P Line 29S Line 33S plus (line 42 times line 35) minus the larger of lines 13S* or 30S. Form OR-40-N Line 29S Line 33S plus line 44 minus the larger of lines 13S* or 30S. you may have an addition on your 2020 Oregon return. * As a positive amount. Child Care Fund contributions (ORS 315.213) [Addition code 142] [Modification code 642] If you claimed a deduction on Schedule OR-A for the amount you paid for your Child Care Fund contribu­ tion tax credit, you will have an Oregon addition for the portion of your deduction included in your credit. Additions

150-101-431 (Rev. 04-01-22) 54 Example: Fern made a contribution to the Child Care Fund in the amount of $10,000. On her Oregon return she will claim a credit of $5,000 for her contribution (she is limited to 50 percent of her contribution, or her tax liability, in any given year). If Fern claims the $10,000 contribution as an itemized deduction on her Schedule OR-A, she must add back $5,000 to her income on Schedule OR-ASC. For more information on the Child Care Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Claim of right income repayments [ORS 316.680(2)(i)] [Addition code 103] [Modification code 649] Are you taking a deduction on your federal return under IRC Section 1341(a) for a repayment of more than $3,000 of income that was included in a prior year’s taxable income under a claim of right? If so, and you’re claiming the Oregon credit for the same repayment, you can’t deduct the repayment on your Oregon return. If you claimed the repayment deduction on Sched­ ule OR-A, you must add back the itemized deduc­ tion amount. Use addition code 103 or report a nega­ tive modification using code 649. If you claimed the repayment deduction on a federal form or schedule other than Schedule A, you must add back the deduc­ tion as an addition on Schedule OR-ASC, section 1 or Schedule OR-ASC-NP, section 3. See the instructions for Worksheet OR-CRC, Claim of Right Income Repayments, for more information. You can download the worksheet and instructions from our website or contact us to order it. Note: If you’re claiming a deduction on your federal return for repaid income that wasn’t taxed by Ore­ gon, see “Federal law disconnect” in “Other items.” Fiduciary addition. If the repayment is allowed as a deduction on Form 1041 and the Oregon credit is claimed on Form OR-41, report the deducted amount as an addition on Schedule OR-ASC-FID. College Opportunity Grant contributions (ORS 315.643) [Addition code 165] [Modification code 652] If you claimed an itemized deduction on Sched­ ule OR-A for the amount you paid for your College Opportunity Grant tax credit, and you are claiming the credit on your return, you will have an Oregon addition for the amount of your deduction. Example: John bid on $4,000 worth of College Oppor­ tunity Grant credits during this year’s auction. He won all the credits that he bid on and paid $3,950 for them. On his Oregon return, John claims the $4,000 credit, and includes the same amount as an itemized deduction on Schedule OR-A. He must add back that amount to his income. He reports both the addition and the credit on Schedule OR-ASC. For more information on the College Opportunity Grant credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Depletion in excess of property basis [ORS 316.680(2)(d)] [Addition code 151] Depletion is using up natural resources by mining, quarrying, drilling, or felling. The depletion deduc­ tion allows an owner or operator to account for the reduction of a product’s reserves. If you claim percentage depletion on your federal return, you must add to your Oregon income any deple­ tion that is more than your adjusted basis in the prop­ erty. The addition includes any depletion in excess of basis taken by an S corporation or partnership of which you are a shareholder or partner. Usually you need to add to Oregon income any depletion that is a preference item subject to the federal alternative minimum tax. Disposition of inherited Oregon farmland or forestland (ORS 316.844) [Addition code 106] You may have an addition on your return if: • You dispose of farmland you inherited from some­ one who died on or after October 5, 1973, and before January 1, 1987; or • You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987. You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax purposes. Generally, the federal valuation is the fair Additions

150-101-431 (Rev. 04-01-22) 55 market value of the property at the date of the previ­ ous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheri­ tance tax purposes the property may have been val­ ued as farm-use or forestland. Farm-use value. If the previous owner died on or after October 5, 1973, but before September 12, 1975, use the farm-use value for the year preceding death. If death occurred on or after September 13, 1975, use the farm- use value for the year of death. You won’t have this addition if the carryover basis was elected for a death after December 31, 1976, but before November 7, 1978. Forest-use value. Use the forest-use value for the year of death. How to figure the addition. This addition is equal to the difference between: • The taxable gain or loss, using the Oregon valua­ tion as your basis, and • The taxable gain or loss, using the federal valuation as your basis. This addition will increase the gain or reduce the loss you reported on your federal return. Transfers of property. An addition is required when the beneficiary sells the inherited property. It’s also required when: • You recognize gain or loss on property that acquired the inherited property’s basis due to a nontaxable exchange or involuntary conversion. • You recognize gain or loss on property you received as a gift from a donor who inherited it. Example: Anne inherited farmland from a rela­ tive who died on March 1, 1986. She sold the land on May 1, 2020, for $1,100,000. The fair market value at the date of the relative’s death was $180,000. The farm-use value of the land on the 1986–87 prop­ erty tax statement was $50,000. Anne must show a $130,000 addition on Schedule OR-ASC. Here is how she figures her addition: Oregon valuation: Selling price $ 1,100,000 Less: Farm-use value – 50,000 Gain

$ 1,050,000 Federal valuation: Selling price $ 1,100,000 Less: Fair market value

on March 1, 1986 – 180,000 Gain

– 920,000 Difference in total gain

Addition amount

$ 130,000 Disqualified charitable donations (ORS 128.760, 128.763) [Addition code 160] [Modification code 650] The Oregon Department of Justice (DOJ) issues disqual­ ification orders to charitable organizations that fail to spend at least 30% of their annual functional expenses for program services. Names of disqualified organiza­ tions can be found by contacting DOJ. For more infor­ mation, visit the DOJ website, www.doj.state.or.us. The organization is required to notify you that your dona­ tion may not be deducted on your Oregon return. If you made such a donation, you must report an addition on Schedule OR-ASC for the amount of the donation that you deducted on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Federal business income deduction (ORS 316.859) [Schedule OR-ASC-FID only: Addition code 185] Oregon is disconnected from the federal deduction for qualified business income in IRC Section 199A. Personal income tax returns. This deduction doesn’t flow through to the Oregon return. No addition is required. Fiduciary returns. Report the amount from federal Form 1041, line 20, as an addition on Schedule OR- ASC-FID using code 185. See “Qualified business income reduced tax rate” in “Other items” for information about Oregon’s reduced tax rate for sole proprietorships and pass- through entities. Federal election on interest and dividends of a minor child (ORS 316.372) [Addition code 107] Did you report the interest or dividends of your minor child on your federal return? If so, you must add the amount subject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or political subdivision of another state that you didn’t include on your federal return. Full-year residents. Oregon taxes the smaller of line 13 or 14 from federal Form 8814. Oregon also taxes any interest or dividends your child received from state and local governments outside Oregon. Additions

150-101-431 (Rev. 04-01-22) 56 Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident. Nonresidents. Oregon generally doesn’t tax interest or dividends received while you were a nonresident. Federal estate tax [ORS 316.680(2)(c)] [Addition code 157] [Modification code 605] Federal estate tax on income in respect of a decedent (IRD) is allowed as a deduction on your federal return. If any of this tax is on income not taxed by Oregon, you must show an addition on your Oregon return. Use this formula to figure the Oregon addition: IRD not taxable by Oregon × Federal estate tax deducted on the federal return = Oregon addition IRD included in federal taxable income Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Fiduciary returns. Federal estate tax on IRD is allowed as a deduction on federal Form 1041 when the tax on that income will be paid by the recipient. An addition is required if the deducted tax is on income not taxed by Oregon. See the instructions for Form OR-41, Schedule 2, line 16. Federal income tax refunds (ORS 316.685) [Addition code 109] [Modification code 601] Did you get a federal tax refund because of a federal audit or amended return? If so, you may need to add part or all of that refund to your Oregon income. An explanation of the federal tax liability subtraction can be found in “Subtractions.” Tax benefit doctrine. You need to add back only refunds of federal tax for which you received a ben­ efit in a prior year. Example 1: Rosa subtracted her entire federal tax lia­ bility of $2,800 on her 2018 Oregon return. This year, she amended her 2018 federal return. Rosa reduced her federal tax to $2,300 and received a federal refund of $500. She received a $500 tax benefit because she subtracted $500 more on her 2018 Oregon return than her corrected federal tax liability. Rosa will have an addition of $500 on her 2020 return. When to report the refund. As a general rule, report the refund in the year you get it. The rules for fig­ uring the addition are explained here, but first, note these exceptions: Exception 1 If there is an error on your federal return, we may correct your federal tax liability when your Oregon return is pro­ cessed. This may decrease your federal tax subtraction. When the IRS later refunds the difference between your correct federal liability and the liability on your original return, don’t report the refund as an addition. Because the tax subtraction on your original Oregon return was corrected, you didn’t receive a tax benefit from the total federal tax subtracted on your original return. Example 2: The Jacksons showed a $3,700 federal tax lia­ bility on their federal return. They claimed a federal tax subtraction for that same amount on their Oregon return. When their Oregon return was processed, we discov­ ered a math error on their federal return. We figured the Jacksons’ correct federal tax as $2,400 and reduced their Oregon federal tax subtraction to that amount. The Jack­ sons received the IRS refund of $1,300. They won’t report the refund as an addition on their current year Oregon return because they didn’t receive a tax benefit for it. Exception 2 If you file an amended return before the filing due date for that tax year, your amended return is treated as your original return for that year. In this case, the federal tax subtraction on your amended return is your corrected federal tax liability. Example 3: Heather filed this year's federal and Oregon returns in February. Her federal tax liability was $4,800, which she subtracted in full on her Oregon return. In March, she amended her federal return to claim addi­ tional deductions. She refigured her federal tax as $3,000. She also amended her Oregon return to claim the same additional deductions and reduce her federal tax subtrac­ tion by $1,800 (from $4,800 to $3,000). The $1,800 federal refund she receives won’t be reported as income on her Oregon return. Because Heather filed the amended Ore­ gon return before the original due date, her amended return is treated as her original return this year. Figuring the addition. You must report as an addi­ tion the amount of the federal refund from which you received a tax benefit. The tax benefit is the amount of federal tax you deducted in a prior year and received as a refund in a later year, if the amount you received reduced your Oregon taxable income in the prior year. Use this worksheet to figure your tax benefit. 1. Fill in your original federal tax liability from the prior year (2019 limit $6,800, 2018 limit $6,650, 2017 limit $6,550). 1._________ 2. Fill in your corrected federal tax liability from the prior year (2019 limit $6,800, 2018 limit $6,650, 2017 limit $6,550). 2. ________ Additions

150-101-431 (Rev. 04-01-22) 57 3. Line 1 minus line 2. This is the tax benefit you received from your refund. 3. ________ Example 4: Jill’s 2018 federal tax liability was $9,000. Her subtraction was limited to $6,650, which she sub­ tracted on her Oregon return. Jill amended her 2018 federal return and received a refund of $4,000 in 2020. The addition on Jill’s 2020 return will be $1,650, fig­ ured as follows: 1. Federal tax subtracted on Jill’s 2018 Oregon return (limit $6,650). $ 6,650 2. Less: Corrected federal tax ($9,000 – $4,000) (limit $6,650). -5,000 3. Tax benefit received and Jill’s Oregon addition. $ 1,650 Example 5: Ella’s 2018 original federal tax liability was $8,200. She amended her 2018 federal return and part- year Oregon return in January 2020. She received a $1,000 federal refund in 2020. Ella doesn’t change the federal tax amount on her amended Oregon return. Her 2018 corrected federal tax is $7,200. Ella figures her tax benefit as follows: 1. Original 2018 federal tax liability (limit $6,650). $ 6,650 2. Less: Corrected federal tax liability ($8,200 - $1,000) (limit $6,650). – 6,650 3. Tax benefit received and Ella’s Oregon addition. $ 0 Ella didn’t receive a tax benefit from the federal refund, so she doesn’t have an addition to report on her 2020 Oregon return. Nonresidents. A nonresident’s tax benefit from fed­ eral tax refunds is the difference between the tax actually subtracted on the prior year’s return and the tax that would have been subtracted had the federal return been correct. If the amounts on your federal return changed because you amended your federal return or because it was audited, your Oregon per­ centage may also change. Use the corrected percent­ age to figure the tax benefit. Example 6: Brokston was a nonresident with Oregon- source income in 2018. His original federal tax was $8,600. His Oregon percentage was 40 percent. In March 2020, he amended his 2018 federal and Ore­ gon returns. Brokston doesn’t change the federal tax amount on his amended Oregon return. He received a $4,500 federal refund in 2020. His revised Oregon percentage for 2018 was 50 percent. He received a tax benefit of $610 from the refund. He figures his tax benefit as follows: 1. Original federal tax liability (limit $6,650) $ 6,650 × original Oregon percentage. × 0.40

$ 2,660 2. Less: Corrected federal tax ($8,600 - $4,500) (limit $6,650) $ 4,100 × revised Oregon percentage. × 0.50

– 2,050 3. Tax benefit received and Brokston’s Oregon addition. $ 610 Full-year residents. Enter the tax benefit as an addi­ tion on Schedule OR-ASC, section 1, using addition code 109. Part-year residents and nonresidents. Use a minus sign to enter the tax benefit as a negative modification on Schedule OR-ASC-NP, section 4, using modifica­ tion code 601. Federal subsidies for employer prescription drug plans (ORS 316.837) [Addition code 123] Employers who provide a prescription drug plan for their retired employees may receive a federal sub­ sidy if they meet the requirements in 42 U.S.C. Sec­ tion 1395w-132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return. Full-year residents. Enter the full amount of the sub­ sidy on Schedule OR-ASC. Part-year residents and nonresidents. Enter the full amount of the subsidy in the federal column of Schedule OR-ASC-NP. In the Oregon column, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. First-time home buyer savings account nonqualified withdrawal (ORS 316.801, OAR 150-316-0607) [Addition code 166] Funds that are withdrawn from a first-time home buyer savings account (FTHBSA) but aren’t used to pay eligible costs must be added back to Oregon income if: Additions

150-101-431 (Rev. 04-01-22) 58 • The withdrawn funds were previously subtracted on an Oregon return, and • The funds weren’t redeposited within 60 days into another FTHBSA held by the taxpayer. For more information about the FTHBSA subtraction, eligible costs, and other requirements, see this topic in “Subtractions.” Penalty. Nonqualified withdrawals that require an add back are also subject to a 5 percent penalty. See this topic in “Interest and penalties” and in the return instructions. Gambling losses claimed as an itemized deduction (ORS 461.560) [Addition code 134] [Modification code 604] If you claimed gambling losses as an itemized deduc­ tion on Schedule OR-A, you may have an addition on your Oregon return. Your gambling losses are limited to the amount of your gambling winnings taxed by Oregon. Oregon doesn’t tax Oregon Lottery winnings of $600 or less from a single ticket or play. See “Lottery win­ nings“ under “Subtractions” for more information. Example 1: Angela reported total gambling income of $580 on her federal return ($500 from the Oregon Lottery plus $80 from horse races). On Schedule OR-A, Angela deducted $300 of gambling losses. Angela will subtract $500 in Oregon Lottery winnings from her Oregon income. Her net gambling winnings, taxable by Oregon, are reduced to $80. Because Angela may not claim more in gambling losses than her gambling winnings taxable by Oregon, she can’t claim more than $80 in gambling losses on her Oregon return. She is required to reduce her deduction for gambling losses from $300 to $80. The difference of $220 is an Oregon addition. Gambling winnings reported in federal AGI $ 580 Less subtraction for Oregon Lottery winnings (500 ) Net gambling winnings taxable by Oregon $ 80 Gambling losses claimed on Schedule OR-A $ 300 Net gambling winnings included in Oregon income -80 Reduction in gambling losses— Oregon addition $ 220 Example 2. Satish won $100 from playing video poker and $400 from Oregon lottery tickets. He included all $500 in gambling winnings on his federal return, and he’s deducting $300 in gambling losses on Schedule OR-A. Satish is subtracting the $400 in lottery win­ nings on his Oregon return because they’re exempt from Oregon tax. Because only $100 of his gambling winnings are taxed by Oregon, Satish must add back $200 ($300 - $100) of the gambling losses he’s deduct­ ing on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Income taxes paid to another state by a pass-through entity (ORS 316.082) [Addition code 148] If you claim a credit for income taxes paid to another state by a pass-through entity (PTE) of which you're an owner, and the PTE is deducting the tax on its own return, you'll have an addition on your return for the amount of tax paid or deducted by the PTE. Note: See the instructions for fiduciary returns at the end of this section if a credit is claimed on Form OR-41. Example 1: Chad owns 5 percent of West Group, LLP, a limited partnership doing business in Utah. The LLP paid or withheld $10,000 of Utah income tax on Chad’s behalf in 2020 and deducted that amount on the LLP’s 2020 federal return. Chad filed his own Utah nonresident return for 2020. His Utah tax liabil­ ity was $9,000. He’ll receive a $1,000 refund in 2021. On his 2020 Oregon return, Chad calculates his 2020 credit based on his $9,000 Utah tax liability. The income from the LLP that flowed through to Chad’s return was reduced by the amount of tax that the LLP paid and deducted. For this reason, Chad must add the lesser of the tax paid ($10,000) or deducted ($9,000) to his income. Chad adds $9,000 to his income on Schedule OR-ASC. Example 2: Susan owns 50 percent of Painter, Inc., an Oregon S corporation. Painter, Inc. pays California income tax. It deducts the tax on its corporate return. It paid California $30,000 of 2020 tax for her in 2020, and $10,000 of 2020 tax in January 2021. The corporation paid $2,000 of tax for her with its 2020 tax return filed in 2021. Susan elects to be included in the group nonresident return that Painter, Inc. files with California. She calcu­ lates her credit for 2020 using $42,000: $30,000 in pay­ ments made in 2020, and the $12,000 in 2020 tax paid in 2021. She claims the full credit on her 2020 return. Because Painter, Inc. is deducting the tax on its own return, Susan must add the lesser of the total tax paid or deducted to her income. This is true whether Susan’s share of the tax was paid when the composite return was filed or was paid or withheld by Painter, Inc. during the tax year. For 2020, she adds $30,000 to her Oregon income on Schedule OR-ASC. She'll add the remaining $12,000 to her Oregon taxable income on her 2021 return. Additions

150-101-431 (Rev. 04-01-22) 59 Credit claimed on fiduciary return. If a credit is claimed on Form OR-41 for income taxes paid to another state, and the taxes on which the credit is based are deducted on federal Form 1041, line 11, the taxes must be restored to income on the Oregon return. Report the smaller of: • The other state’s 2020 tax liability, or • The other state’s 2020 tax claimed as a deduction on Form 1041, as an addition on Schedule OR-ASC- FID, section 1. For more information and examples, see the instructions for Schedule OR-A. Individual development account (IDA) (ORS 315.271, 316.848) [Addition code 137, 138, or 159] [Modification code 648] For more information about IDAs, see this topic under "Subtractions." Donation credit. If you’re claiming an itemized deduc­ tion for donations you made to the Oregon IDA Initia­ tive Fund and you’re claiming a credit based on those donations, you must report the amount you’re deducting as an addition on Schedule OR-ASC using addition code 138 or as a negative modification on Schedule OR-ASC- NP using modification code 648. Nonqualified withdrawal. Did you make a nonquali­ fied withdrawal from your IDA during the year? If so, you must report the amount as an addition on Sched­ ule OR-ASC or OR-ASC-NP. Use addition code 137. Rollover to retirement account. Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account as a deduction on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP. Use addition code 159. Interest and dividends on government bonds of other states [ORS 316.680 (2)(b)] [Addition code 158] Full-year residents. Oregon taxes interest and divi­ dends on bonds and notes of another state or political subdivision of another state that you didn’t include on your federal return. This income is an addition using Schedule OR-ASC. Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC. See “Federal election on interest and dividends of a minor child.” Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the inter­ est and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident. Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation. Fiduciary returns. Report the addition on Form OR-41, Schedule 2, line 14. No addition code is needed. Related expenses You may reduce your addition by the amount of investment expenses that: • Aren’t deducted elsewhere on your return, and • Could be deducted if the income were included on your federal return. Other federally-exempt obligations You will have an Oregon addition for interest or dividends on obligations of any authority, commis­ sion, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax. Oregon doesn’t tax interest or dividends on obliga­ tions that states can’t tax under federal law. Examples of such obligations are bonds issued by: • Territory of Guam. • Commonwealth of Puerto Rico. • Territory of Puerto Rico. • Territory of Samoa. • Territory of Virgin Islands. Lump-sum distributions (ORS 316.737) [Addition code 139] Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution wasn't included in your federal AGI. The excluded portion of your distribution must be included as an addition to your Oregon income. Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options, you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R. Additions

150-101-431 (Rev. 04-01-22) 60 Example 1: Gary got a $20,000 lump-sum distribution from his employer. Of this, $12,000 was capital gain income, and $8,000 was ordinary income. Using federal Form 4972, he chose to use the 10-year averaging method only on the $8,000 of ordinary income. He chose the 20 percent capital gain election on the $12,000 capital gain income. Gary will add all of his $20,000 lump-sum dis­ tribution to his Oregon income on Schedule OR-ASC. Election to treat the entire distribution as ordinary income and average it. Did you average all of your lump-sum distribution (ordinary income and capital gain portions) on federal Form 4972? If so, you will have an addition for the entire lump-sum distribu­ tion to report on Schedule OR-ASC or OR-ASC-NP. Example 2: John received a $40,000 lump-sum distribu­ tion from his employer; $30,000 was capital gain income and $10,000 was ordinary income. He chose to average the entire distribution of $40,000 as ordinary income on his federal Form 4972. John will add all of his $40,000 lump-sum distribution to his Oregon income. Election not to average any of your lump-sum distri­ bution. Did you choose not to average any of your lump-sum distribution? If you included it in federal AGI, there is no addition on your Oregon return. Nonresident capital losses and loss carryforwards (OAR 150-316-0006) [Addition code 161] Capital losses and losses carried forward from prior years may be claimed on an Oregon return only if: • The capital loss was incurred while you were an Oregon resident; or • If you were a nonresident when the capital loss was incurred, the loss was attributable to Oregon sources. If you have a capital loss or are carrying forward a loss from a prior year on this year’s return (or are using the loss to offset capital gain), and the loss doesn’t meet these requirements, you will have an addition on your Oregon return. Full-year residents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to offset capital gain on your return, report the loss amount as an addition on Schedule OR-ASC. Part-year residents and nonresidents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to reduce Oregon capital gain on your return, report the loss amount to the extent that it reduces the Oregon gain as an addition on Sched­ ule OR-ASC-NP. Example 1. Louise moved to Oregon and became a resident on June 1. Before she became a resident, Louise incurred a $50,000 capital loss from non-Oregon sources. After she became a resident, Louise recognized a capi­ tal gain of $70,000. On her federal return, she’s offsetting the $70,000 gain with the $50,000 loss, for a net gain of $20,000. Because she wasn’t a resident when she incurred the loss, and the loss wasn’t from Oregon sources, Louise must report a $50,000 addition on Schedule OR-ASC-NP. Example 2. Eric is a Missouri resident who recognizes a $25,000 capital gain from Oregon sources. On his fed­ eral return, Eric offsets the capital gain with $10,000 in capital losses from Missouri sources, for a net gain of $15,000. He reports the $15,000 capital gain in the Ore­ gon column on his nonresident return. Eric must report the $10,000 loss as an addition on Schedule OR-ASC-NP. Oregon College and MFS 529 Savings Plan nonqualified withdrawal [ORS 316.680(2)(j)] [Addition code 117] Did you withdraw funds from an Oregon College or MFS 529 Savings Plan account for nonqualified purposes, where the funds were subtracted on a prior year’s Oregon return? Nonqualified purposes include using funds in the account to pay tuition at a K-12 school. If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Section 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reason­ able method to determine the amount of the addi­ tion. Keep a copy of this determination with your tax records. For more information about these plans see this topic under “Subtractions.” Oregon Production Investment Fund (auction) (ORS 315.514) [Addition code 144] [Modification code 644] If you claimed an itemized deduction on Sched­ ule OR-A or a business expense deduction for the amount you or your business paid for your Oregon Production Investment Fund tax credit, you will have an addition for the amount of your deduction. Example: Beth bid on $2,000 worth of Oregon Produc­ tion Investment Fund credits during this year’s auc­ tion. She won all the credits she bid on and paid $1,900 for them. On her Oregon return Beth will claim an Oregon Production Investment Fund credit of $2,000. If she claims the $1,900 she paid for the credits as an itemized deduction on Schedule OR-A, she must add Additions

150-101-431 (Rev. 04-01-22) 61 back that amount to her income. She reports both the credit and the addition on Schedule OR-ASC. For more information on the Oregon Production Investment Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Refund of Oregon-only itemized deductions [Addition code 136] You may have an addition if you: • Claimed itemized deductions for Oregon but not for federal on a previous year’s return; • Received a refund this year of an item you deducted on the previous year’s Schedule OR-A; and • Don’t have to include the refund as income on this year’s federal return because you didn’t itemize deductions on the previous year’s federal return. You must add back the refunded item only to the extent that you received a tax benefit from the amount refunded. For an explanation of tax benefit with examples, see “Tax benefit doctrine” under “Federal income tax refunds.” Part-year residents and nonresidents. Enter the addi­ tion amount in both the federal and Oregon columns of Schedule OR-ASC-NP, Section 3. University Venture Development Fund contributions (ORS 315.640) [Addition code 146] [Modification code 646] If you claimed a deduction on Schedule OR-A for the amount of your University Venture Development Fund contribution, you will have an Oregon addition for the amount of your deduction. Example: Amelia made a contribution to a Univer­ sity Venture Development Fund in the amount of $100,000. She may claim a total credit of 60% of her contribution, or $60,000, limited to her tax liabil­ ity for the year. This year, Amelia’s tax liability is $23,000. On her Oregon return she will claim a credit of $23,000 for her contribution. The rest of her credit is carried forward to a later year. If Amelia claims the $100,000 contribution as an itemized deduction on Schedule OR-A, she must add back the $100,000 to her income on Schedule OR-ASC in the tax year the itemized deduction was claimed. For more information on the University Venture Development Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Unused business credits [ORS 316.680(2)(f)] [Addition code 122] Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon doesn’t allow this deduction. Full-year residents. You must report your federal UBC deduction as an Oregon addition. Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident. Nonresidents. You will have an addition for your fed­ eral UBC deduction related to Oregon credits earned from Oregon sources. WFHDC medical expenses [Addition code 163] [Modification code 651] Some expenses for the care of qualifying persons who aren’t able to care for themselves may qualify as expenses for purposes of claiming the WFHDC credit and also as medical expenses for purposes of claiming itemized deductions. You can use these expenses for either the WFHDC credit or as a medical expense deduction, but they can’t be used for both. If you choose to use them for both, you’ll have an addi­ tion on your Oregon return. Use the WFHDC medi­ cal expense worksheet in the Appendix to figure the Oregon addition. Full-year residents. Report any required add back amount on Schedule OR-ASC. Part-year residents and nonresidents. Use a minus sign to report any required add back amount as a negative modification on Schedule OR-ASC-NP. For more information about the WFHDC credit, see this topic under “Refundable credits” or the instruc­ tions for Schedule OR-WFHDC. Additions

150-101-431 (Rev. 04-01-22) 62 Subtractions Generally, subtractions are items the federal govern­ ment taxes but Oregon doesn’t. Subtractions reduce your income taxed by Oregon. Numeric codes are provided with the explanation for most subtractions. For part-year residents and nonresidents, some subtractions will be reported as modifications. This is required when an amount you are subtracting must be adjusted for Oregon tax pur­ poses. When this is the case, a modification code is provided with the explanation for that subtraction. Enter the numeric code and the dollar amount of each subtraction or modification on Schedule OR-ASC or Schedule OR-ASC-NP. The total dollar amount of subtractions and modifications is then reported on your return. If a numeric code isn’t provided for a subtraction or modification, the amount is reported directly on your return. ABLE Account deposit carryforward (ORS 316.699) [Subtraction code 360] Contributions you made to an Oregon or contract­ ing state’s Achieving a Better Life Experience (ABLE) account after December 31, 2019 no longer qualify for a subtraction, but they may qualify for a credit. See “ABLE account contributions” in “Credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2020 return is $4,960 if you file a joint return ($2,480 for all others). This maximum applies to the com­ bined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Addition. You may need to add back funds with­ drawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. See this topic under “Additions” for more information. American Indian (ORS 316.777) [Subtraction code 300] Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true: • You are an enrolled member of a federally recog­ nized American Indian tribe, and • Your income is derived from sources within feder­ ally recognized Indian country in Oregon, and • You lived in federally recognized Indian country in Oregon at the time the income is earned. “Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the U.S. government for a tribe. For enrolled members of federally recognized American Indian tribes who live in Indian country in Oregon, income exempt from Oregon income tax includes: • Wages earned for work performed in Indian coun­ try in Oregon. • Income from business or real estate located in Indian country in Oregon. • Retirement income if the contributions to the plan came from or were connected with services per­ formed in Indian country. • Unemployment insurance benefits if the benefits were received as a result of work performed in Indian country. • Interest, dividends, and capital gains from the sale of stocks and other intangibles, regardless of where the accounts are located. • Gambling winnings from Indian gaming centers (casinos). • Indian tribal disbursements from casino earnings. You must live on and have income derived from sources within Indian country in Oregon and be an enrolled member of a federally recognized tribe to subtract the income listed above. You don’t have to live in and have income from the same Indian coun­ try. The areas where you live and derive income must both be Indian country to qualify for the subtraction. To claim the subtraction, you must report your total income on both the federal and Oregon tax returns. You must file a completed copy of Schedule OR-EIS, Exempt Income Schedule for Enrolled Members of a Feder­ ally Recognized Indian Tribe, with your Oregon return. Go to our website to download the schedule or call us. You must include the following information on the schedule: • The street address of the place you worked, and • The street address of the place you lived, and • The tribe you are enrolled with and your member­ ship number. Subtractions

150-101-431 (Rev. 04-01-22) 63 You must use the street address of your residence on the schedule so we can verify that you lived in Indian country when you earned your income. However, you may use your post office box address on your tax return. If you meet all of the requirements for exemption from Oregon withholding, use Form OR-W-4 to declare that your income is exempt using the appro­ priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re exempt. Income earned in Oregon but outside of Indian coun­ try will be taxed by Oregon. Also, any Oregon income earned by a member not living in Indian country will be taxed by Oregon. Each member of a household with income must meet these qualifications in order to claim the subtraction of their income. If you are an enrolled member of a federally recog­ nized tribe and a member of the U.S. Armed Forces stationed in Oregon, you may be entitled to an addi­ tional subtraction. For more information, see “Mili­ tary personnel filing information.” Artist’s charitable contribution (ORS 316.838) [Subtraction code 301] [Modification code 600] Oregon allows a subtraction to artists who contribute art objects they’ve created to a recognized charitable organization or governmental unit. What qualifies as an “art object?” The art object must be a painting, sculpture, photo­ graph, graphic or craft art, industrial design, costume or fashion design, tape or sound recording, or film that qualifies for a charitable contribution deduction under IRC Section 170. The charitable organization isn’t required to use the art object for the same purpose or function that quali­ fies it for its federal tax exemption. You may deduct your charitable contribution even if the charitable organization sells the art object. You must have an appraisal report showing the fair market value of the art object at the time of the con­ tribution. Submit the appraisal report with your tax return. How to calculate the subtraction The subtraction is equal to the difference between: 1. The amount that would have been allowed as an itemized deduction if you could deduct the fair market value of the art (subject to the federal con­ tribution limit)*, and 2. The actual allowable amount as an itemized deduc­ tion under federal tax law. *Federal law limits charitable contributions. Contributions to some organizations are limited to 50 percent of your federal AGI. Contributions to others are limited to 30 per­ cent of your AGI. Use these limits when you figure your deduction. Example: Ronda’s AGI is $10,000. She donated one of her paintings to an organization for display in a building. The painting has a basis (cost) of $300 and a FMV of $6,000. Here is how she computes her subtraction: 1. Amount allowed as a

charitable contribution

if computed using FMV. $ 6,000 2. Amount allowed as a charitable contribution limited to 50% of AGI. $ 5,000 3. Lesser of line 1 or line 2. $ 5,000 4. Amount allowed as a charitable contribution on Schedule OR-A (basis). ($300) 5. Ronda’s subtraction (line 3 minus 4). $ 4,700 Part-year residents and nonresidents. Follow the same rules as a full-year resident. You don’t have to prorate this subtraction. Part-year residents: Enter your subtraction in section 4 of Schedule OR-ASC-NP using modification code 600. Nonresidents: Enter your subtraction amount on the “Charitable art dona­ tion“ line on Form OR-40-N. Capital construction fund (ORS 316.048) [Subtraction code 339] If you subtracted your contributions to your qualify­ ing capital construction fund on your federal return, you may also subtract that amount on your Oregon return. See IRS Publication 595, Capital Construction Fund for Commercial Fishermen, for more information. The subtraction for Oregon is the same as the amount you identified as “CCF” and subtracted on your fed­ eral return. Part-year residents and nonresidents. Enter the full subtraction amount in the federal column of Sched­ ule OR-ASC-NP, section 3. The amount allowed in the Oregon column is the Oregon percentage of your fishing trade or business that qualifies you for a CCF account. Example: Greg moved out of Oregon in May and con­ tinued his fishing business in California. His Oregon Subtractions

150-101-431 (Rev. 04-01-22) 64 net fishing income is $10,000 and his California net fishing income is $30,000. He put $15,000 into his CCF account during the past year. On Schedule OR-ASC- NP, Greg will enter $40,000 for his fishing income in the federal column and $10,000 in the Oregon column. Greg’s CCF subtraction in the federal column is the full $15,000. Since 25 percent of his eligible income was Oregon source, he is allowed a CCF subtraction of $3,750 ($15,000 x 25%) in the Oregon column. Construction worker and logger commuting expenses (ORS 316.812, 316.824, 316.832) [Subtraction code 303] If you are a qualified construction worker or logger, you may deduct certain commuting expenses from your Oregon taxable income. To claim these expenses, you must have worked at one or more construction projects or logging operation sites more than 50 miles from your home. A construction project is construction, alteration, repair, improvement, moving, or demolition of a structure. A logging operation is the commercial harvesting of forest products. People in other occupa­ tions aren’t eligible for this subtraction. Management personnel aren’t eligible for this subtraction either. Qualifying workers. Loggers must be fallers or buck­ ers who maintain their own equipment and are paid on a per-unit-cut basis. Construction workers must be members of a recognized trade, craft, or union. Qualifying expenses. You may claim only the actual cost of gas, oil, repairs, and maintenance for your vehicle for getting to and from work sites that are more than 50 miles from your home. You can’t use a standard mileage rate to figure expenses. If you use your vehicle both for business and personal purposes, you must determine your portion of busi­ ness use. Keep a mileage log book during the year to track your business use and record all business trip miles. You should also record your starting and ending odometer reading for your vehicle each year. You may claim only the business portion of your repairs and maintenance as commuting expenses. You can’t claim depreciation. To claim the actual business expenses for your qualified commute miles, you will need to keep your vehicle records during the year. Keep receipts for all your fuel (such as gas, diesel), oil change, repair, and maintenance costs in your permanent tax records. Example: Ewan is a construction worker. He uses his truck for both personal and business purposes. He worked on three construction jobs during the year. Two of the jobs were located more than 50 miles away from his home. Ewan kept a log book in his truck and recorded each trip to and from the construction sites. He also kept a record of all his truck expenses—his receipts for diesel fuel, oil changes, repairs, and main­ tenance for the year. These receipts totaled $4,215. Ewan’s odometer readings were: Year end: December 31 38,306 Year beginning: January 1 26,327 Total miles driven 11,979 Ewan’s mileage log book showed that his mileage to and from qualified construction job sites totaled 4,716 miles. He will use this formula to determine the business use of his truck and the amount of truck expenses which will qualify for this subtraction: Qualified construction miles × actual expenses = Subtraction Total miles driven 4,716 × $4,215 = $1,659 11,979 Ewan will claim a subtraction of $1,659 on Schedule OR-ASC. Duration of project. If you are a construction worker, claim only your expenses for the first year of continu­ ous employment at any one construction site. If your employment continues beyond one year, the job site is considered permanent. You may not subtract any addi­ tional commuting costs for going to and from that site after the first year at that worksite. If your employment at that job site is temporarily interrupted, don’t count the interruption when you figure the one-year limit. If you are a logger, there is no limit on how long you can work at the same job site and still claim expenses. How to claim the subtraction. Claim your commut­ ing expenses on Schedule OR-ASC or OR-ASC-NP. Part-year residents and nonresidents. You can claim only expenses related to income that you included in the Oregon column of your Oregon return. Conversions and exchanged property [ORS 314.290 (repealed), 316.716] [Subtraction code 306] Oregon law used to require an addition for gain on the sale or exchange of certain property deferred on the fed­ eral return. This statute was repealed in 2001. If you were required to make this addition before 2001, you have already been taxed by Oregon for the gain on the sale or exchange of your property. If this gain is now included in your federal income, you may claim a subtraction for the amount of the gain previously taxed by Oregon. Subtractions

150-101-431 (Rev. 04-01-22) 65 Domestic international sales corporation (DISC) dividend payments (ORS 316.749) [Subtraction code 352] Oregon allows a subtraction for the dividend pay­ ments you received from a DISC. You can claim the subtraction if all of the following are true: • The DISC dividend payments are included in your federal AGI, and • The DISC was formed by January 1, 2014, and • The DISC is subject to the 2.5% tax. Federal income tax liability (ORS 316.680, 316.685, 316.695) Part A: Federal tax liability subtraction [Form OR-40, line 10] [Form OR-40-N or OR-40-P, line 40] Part B: Federal tax paid in a prior year [Subtraction code 309] [Modification code 602] Part C: Foreign tax subtraction [Subtraction code 311] [Modification code 603] Current year’s federal tax liability. Oregon allows a subtraction for your current year’s federal income tax liability after credits. The subtraction for 2020 is lim­ ited to $6,950 ($3,475 if your filing status is married filing separately). It may be limited further based on your AGI; see Table 7. The subtraction is based on the accrual method of accounting. This means you subtract the total amount of your federal tax liability after credits for the cur­ rent tax year (not less than zero) as shown on your original return, regardless of when you pay it. The subtraction is limited to income tax. This includes alternative minimum tax, tax on an IRA, and recap­ ture taxes. You can’t include self-employment tax or Social Security (FICA) tax. You also can’t include penalties, interest, or any shared responsibility pay­ ment required by the federal Affordable Care Act. Federal income tax credits, except for the EITC, reduce your federal tax subtraction. The credits for federal tax on special fuels, special oils, and a regu­ lated investment company won’t reduce your federal tax subtraction. You can deduct your federal income tax liability after credits, up to $6,950 ($3,475 if your filing status is married filing separately) based on your income and filing status. Don’t enter less than $0 or more than $6,950. Use the federal tax worksheet, in the next sec­ tion, to figure your federal income tax liability. RDPs: Use amounts from your actual federal return(s), not your “as if” return. Additional federal income tax paid or determined. If you paid additional federal tax because your federal return was amended or audited, you may be able to claim an additional subtraction or modification for it in the year the tax was paid or determined, which­ ever is later. Your additional prior year’s federal tax plus your current year’s federal tax can't be more than your current year federal tax subtraction limit. This subtraction applies only to additional federal income tax paid because your return was amended or audited. It doesn’t include withholding tax, advance tax payments, interest, penalties, or paying the tax due on your original federal return. Use the federal Tax Worksheet, Part B, to figure your federal tax from a prior year. If you're a resident, report the amount using subtrac­ tion code 309; if you're a part-year resident or nonresi­ dent, report the amount using modification code 602. Amended returns. If your federal tax liability for a prior year is changed, see “Amended returns” to determine whether you should change the amount of the subtraction on your amended Oregon return. Federal tax worksheet Note: All references to federal Form 1040 in this worksheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. Part A: Federal tax liability subtraction 1. Enter your federal tax liability after nonrefundable credits (Form 1040, line 22). 1. _________ 2. Enter your excess advance premium tax credit (Form 1040, Schedule 2, line 2). 2. _________ 3. Line 1 minus line 2. (If less than $0, enter $0.) 3. _________ 4. Enter your additional tax on retirement plans (Form 1040, Schedule 2, line 6); your first-time homebuyer credit recapture (Form 1040, Schedule 2, line 7b); *any recapture taxes you included as “other taxes” (Form 1040, Schedule 2, line 8); and tax on income not effectively connected with a U.S. trade or business (Form 1040-NR, line 23a). 4. _________ 5. Add lines 3 and 4. 5. _________ Subtractions

150-101-431 (Rev. 04-01-22) 66 6. Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. 6. _________ 7. Enter your total premium tax credit from Form 8962, line 24. 7. _________ 8. Enter any 2020 federal economic stimulus payments you received in 2020 or early 2021 plus your recovery rebate credit, if any (Form 1040 or 1040-SR, line 30). 8. _________ 9. Add lines 6, 7, and 8. 9. _________ 10. Line 5 minus line 9. (If less than $0, enter $0). 10. _________ 11. Enter your maximum allowable tax liability subtraction from Table 7. Don’t enter less than $0 or more than $6,950 ($3,475 if your filing status is married filing separately). 11. _________ 12. Enter the smaller of line 10 or line 11. This is your federal tax liability subtraction. 12. _________ *Did you file federal Form 5405? If you are required to repay your 2008, 2009, or 2010 first-time homebuyer credit because you disposed of your home or stopped using it as your main home, you may subtract your federal tax recapture. Add the amount reported on your federal form 1040, Schedule 2, line 7b to the amount included on line 4 of the worksheet above. Don’t add this amount if you are repaying your 2008 credit and still live in your qualifying home as your main residence. Part B: Federal tax paid for a prior year [Subtraction code 309] [Modification code 602] 1. Enter maximum amount from Table 7 (Part A, line 11). 1. _________ 2. Enter federal tax liability subtraction (Part A, line 12). 2. _________ 3. Line 1 minus line 2. If the result is 0, Stop—you can’t deduct your federal tax from a prior year. If greater than $0, continue to line 4. 3. _________ 4. Enter the amount of federal tax you paid in 2020 for a prior year. 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC, section 2 (subtraction code 309) or Schedule OR-ASC-NP, section 4 (modification code 602). 5. _________ Part C: Foreign tax subtraction [Subtraction code 311] [Modification code 603] If your total federal tax subtraction (Part A, line 12 plus Part B, line 5) is $6,950 ($3,475 if your filing status is married filing separately), Stop—you can’t subtract your foreign tax (ORS 316.690). Otherwise, continue to Step 1. 1. Enter $6,950 ($3,475 if your filing status is married filing separately). 1. _________ 2. Enter your total federal tax liability subtraction (Part A, line 12 plus Part B, line 5). 2. _________ 3. Line 1 minus line 2. 3. _________ 4. Enter the amount paid in foreign tax, but not more than $3,000 ($1,500 if your filing status is married filing separately). 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC section 2 (subtraction code 311) or Schedule OR-ASC-NP section 4 (modification code 603). 5. _________ Table 7. Federal tax liability subtraction AGI phase-out If your filing status is: and your federal AGI is: then your maximum allowable tax liability subtraction is: at least— but less than— Single 0 $125,000 $6,950 $125,000 $130,000 $5,550 $130,000 $135,000 $4,150 $135,000 $140,000 $2,750 $140,000 $145,000 $1,350 $145,000 or more 0 Married filing separately 0 $125,000 $3,475 $125,000 $130,000 $2,775 $130,000 $135,000 $2,075 $135,000 $140,000 $1,375 $140,000 $145,000 $675 $145,000 or more 0 Married filing jointly or Head of household or Qualifying widow(er) 0 $250,000 $6,950 $250,000 $260,000 $5,550 $260,000 $270,000 $4,150 $270,000 $280,000 $2,750 $280,000 $290,000 $1,350 $290,000 or more 0 Subtractions

150-101-431 (Rev. 04-01-22) 67 Federal pension income [ORS 316.680(1)(e)] [Subtraction code 307] You may be able to subtract some or all of your tax­ able federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It doesn’t include disability payments if you haven’t attained the minimum retirement age. The subtrac­ tion amount is based on the number of months of federal service or points earned for retirement before and after October 1, 1991: • If all of your months of federal service occurred or points were earned before October 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return. • If you have no months of service or points earned before October 1, 1991, you can’t subtract any fed­ eral pension. • If your service occurred or points were earned both before and after October 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service or points earned before October 1, 1991, by your total months of service or points earned. Round your percentage to three places (example: 0.4576 = 45.8%). Once you determine the percentage, it will remain the same from year to year. Federal Thrift Savings Plan (TSP). Once a taxpayer is a retiree, withdrawals from federal TSP accounts are eligible for the subtraction based on dates of ser­ vice. Withdrawals prior to retirement aren’t eligible because the taxpayer must be a retiree at the time of withdrawal to be eligible for the subtraction. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no lon­ ger a federal pension. In this case, future withdraw­ als wouldn't be eligible for the subtraction. Full-year residents. If you're eligible for the federal pension income subtraction, enter the amount on Schedule OR-ASC. Part-year residents. If you received the federal pen­ sion income during the part of the year when you were a resident and you're eligible for the subtrac­ tion, enter the amount in both the federal and Oregon columns of Schedule OR-ASC-NP. Include your fed­ eral pension income received during the part of the year when you were a nonresident only if you were domiciled in Oregon during that time. If you were not domiciled in Oregon during the part of the year that you were a nonresident, exclude the income you received during that time from the Oregon column of your part-year return, and don't claim a subtraction for any portion of that income. Nonresidents. Claim a subtraction for federal pen­ sion income only if you reported it on your Oregon return. Oregon doesn’t tax your retirement income unless you have kept Oregon as your domicile. For more information, see “Income.” Use this worksheet to determine your federal pension income subtraction amount: 1. Federal pension income included in federal AGI. 1. $ ___________ 2. a. Months of service or points earned from _______ (fill in

federal service start date) to October 1, 1991. a. ____ months*/points

b. Months of service or points earned from _______ (fill in

federal service start date) to _______ (fill in federal

service retirement date). b. ____ months**/points

Divide the number of months or points on line a by the total number of months or points on line b. This is your federal pension subtraction percentage. Round the decimal three places and enter it here. 2. ___________ 3. Multiply line 1 by the decimal on line 2. This is your federal pension subtraction. 3. $ ___________ * Federal service start date: If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service.

If your federal service start date was the 16th through the end of a month, don’t include the first partial month of service. Start counting the months of federal service with the first full month.

** Federal service retirement date: If your federal service retirement date was the 1st through the 15th of a month, don’t count this final partial month when counting the total months of federal service.

If your retirement date was the 16th through the end of the month, include the entire month when counting the total months of federal service.

Subtractions

150-101-431 (Rev. 04-01-22) 68 Keep a copy of this worksheet with your permanent tax records. Use the same percentage from line 2 to determine your federal pension subtraction in future years. Example 1: Jared worked for the U.S. Department of Agriculture from May 1, 1977, until July 31, 2012. He worked a total of 423 months—173 months before October 1, 1991. In 2020, he received federal pension income of $65,000. He can subtract 40.9 percent (173 ÷ 423) or $26,585 (0.409 × $65,000) of his federal pension. Jared will continue to subtract 40.9 percent of his federal pension from Oregon income in future years. Example 2: Robin served in the U.S. Army Reserves from June 20, 1987 through May 18, 2012. As a retired mem­ ber of the reserves, Robin’s service is easier measured by the retirement points she earned. Her Chronological Statement of Retirement Points shows that she earned 1,917 retirement points before October 1, 1991, out of a total 3,510. Robin received $25,000 in pension benefits in 2020. This worksheet shows how she will determine her federal pension subtraction. 1. Federal pension income included in federal AGI. 1. $ 25,000 2. a. Points earned before October 1, 1991. a. 1,917 points

b. Total points earned. b. 3,510 points

Divide the number of points on line a by the total number of points on line b. Round the decimal three places. This is Robin’s federal pension subtraction percentage. 2. 0.546 3. Multiply line 1 by the decimal on line 2. This is Robin’s federal pension subtraction. 3. $ 13,650 Federal tax credits (ORS 316.716) [Subtraction code 340] [Modification code 609] These credits are not related to individual health insurance premium credits allowed by the federal Affordable Care Act. To claim certain federal tax credits, such as the mort­ gage interest credit or the employer credit for paid family leave allowed by IRC Section 45S, you must reduce your business expenses or itemized deduc­ tions on your federal return by the amount of the credit you figured for the year. Oregon allows a subtraction for the amount reduced on your federal return. Subtract the entire reduction amount in the year you first claimed the federal credit, even if the federal credit is carried over. Part-year residents and nonresidents: Report the reduction amount as a subtraction if the item you reduced was reported on a federal form or sched­ ule other than Schedule A. If you were required to reduce an itemized deduction, report the reduction amount as a modification, not as a subtraction. Education credits. If you weren’t able to claim the tuition and fees deduction on your federal return because you claimed an education credit, you may qualify to claim a subtraction on your Oregon return. See “Tuition and fees” for more information. Mortgage interest credit. Were you required to reduce your mortgage interest deduction because you claimed the federal mortgage interest credit? See “Mortgage interest credit” for detailed information about this subtraction. Health Coverage Tax Credit (HCTC). If you claimed this credit on your federal return, you might be allowed a subtraction on your Oregon return. This credit isn’t related to the premium credit allowed by the federal Affordable Care Act. Oregon allows a subtraction or modification for the self-employed health insurance deduction or itemized deductions you couldn’t claim on your federal return because you claimed the HCTC. Part-year residents and nonresidents doing business in Oregon. If your federal credit is related to a business operated entirely in Oregon, don’t prorate your sub­ traction. If the credit is related to a business not oper­ ated solely in Oregon, you must prorate your subtrac­ tion. Use this formula to determine the amount to sub­ tract in the Oregon column of Schedule OR-ASC-NP: Sales in Oregon × Expenses not allowed on your federal return Sales everywhere Enter the expenses not allowed on your federal return in the federal column of the schedule. Partnerships and S corporations. If your federal credit is from a partnership or S corporation, you may subtract a percentage of the expenses not deductible on your federal partnership or S corporation return. This amount will usually be the same as the percent­ age of total partnership or S corporation income you report on your return. Nonresidents or part-year resi­ dents must use the percentage explained in the previ­ ous paragraph to further prorate the expenses. Subtractions

150-101-431 (Rev. 04-01-22) 69 First-time home buyer savings account (FTHBSA) contributions and earnings (ORS 316.798, 316.800) [Subtraction code 361] Oregon allows a subtraction for amounts you depos­ ited during the tax year into a designated FTHBSA, along with any earnings on your deposits. Who may claim the subtraction? Any Oregon resident who hasn’t purchased or owned a single-family home, either individually or jointly, in the three years prior to the date they purchase a new home in Oregon and makes deposits into their desig­ nated FTHBSA may qualify for this subtraction. What are the requirements? A FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of open­ ing the account. What costs will qualify? You must use your FTHBSA funds to pay costs asso­ ciated with buying a home, such as: • Down payment. • Title insurance and other closing costs. • Realtor commissions. • Appraisal and inspection fees. • Loan origination fees. What’s the tax benefit of my FTHBSA? Up to $5,000 in deposits and earnings for the year may be subtracted by an individual filer each year— up to $10,000 each year if you’re filing a joint return— for up to ten years or an aggregate total of $50,000. The maximum subtraction amount is limited by your federal AGI as shown in Table 8. Note: Deposits or earnings that exceed the subtraction limit for the year can’t be carried forward to a later year. Only those amounts that were deposited or earned during the tax year may be subtracted from that year’s Oregon taxable income. Table 8. FTHBSA subtraction limits If your filing status is: and your federal AGI is: then your maximum allowable FTHBSA subtraction is: at least— but less than— Married filing jointly 0 $149,000 $10,000 $149,000 $158,000 $8,000 $158,000 $167,000 $6,000 $167,000 $176,000 $4,000 $176,000 $187,000 $2,000 $187,000 or more 0 All others 0 $104,000 $5,000 $104,000 $111,000 $4,000 $111,000 $117,000 $3,000 $117,000 $123,000 $2,000 $123,000 $131,000 $1,000 $131,000 or more 0 Penalty and add back for nonqualified withdrawal. If the funds in your FTHBSA are withdrawn within 10 years of opening the account, but aren’t used to pur­ chase a home, a 5 percent penalty may be imposed on the amount withdrawn. See this topic in “Interest and penalties.” You will also be required to add back any withdrawn amounts you previously subtracted. See this topic in “Additions.” Note: You may trans­ fer funds from your FTHBSA and deposit them into another FTHBSA that you hold at the same or a dif­ ferent financial institution; to avoid the penalty and the add back requirement, the transfer (or the home purchase) must be completed within 60 calendar days of the withdrawal. For more information about the FTHBSA program, contact a participating Oregon financial institution. For help locating a participating institution, visit the Oregon Association of Realtors’ website at www.ore­ gonrealtors.org. Foreign income tax (ORS 316.690) [Subtraction code 311] [Modification code 603] You can subtract taxes paid to a foreign country if on your federal return: • You claimed a credit for taxes you paid to a foreign country; or • You didn’t claim a credit for tax you paid to a for­ eign country and you didn’t claim foreign taxes as an itemized deduction. Subtractions

150-101-431 (Rev. 04-01-22) 70 Your foreign tax subtraction plus the subtraction for your current federal tax liability plus any additional federal tax paid for a prior year can’t be more than $6,950 ($3,475 if your filing status is married filing separately). The foreign tax portion of your federal tax subtrac­ tion can’t be more than $3,000 ($1,500 if your filing status is married filing separately). Itemized deduction. If you claimed foreign income taxes as an itemized deduction on your federal return, you may claim them in full on Schedule OR-A. The amount you may deduct on your Schedule OR-A isn’t subject to the same limit as the subtraction. See the instructions for Schedule OR-A for more information. If you claim the foreign taxes as an itemized deduc­ tion, you may not also claim them as a subtraction. Use part C of the “Federal tax worksheet” to figure your foreign tax subtraction. Income on a composite return (OAR 150-314-0515) [Form OR-40-N/OR-40-P only: Subtraction code 341] If you are an electing owner of a pass-through entity (PTE), you may need to file a personal income tax return in addition to the Oregon composite return, Form OR-OC, that is filed on your behalf by the PTE. This is necessary when you have other Oregon- source income to report. Follow the instructions for filing Form OR-40-N if you have income not already reported on a Form OR-OC. Enter all PTE income (including income reported on the Form OR-OC) in the federal column, line 17F, and all Oregon-source PTE income (includ­ ing Oregon-source income reported on Form OR-OC) in the Oregon column, line 17S, of your Form OR- 40-N. Because the income reported on Form OR-OC has already been taxed, subtract that income in both the federal and Oregon columns on Schedule OR- ASC-NP, section 3. Note: Don’t claim the tax paid on your behalf by the PTE as a payment on your Form OR-40-N. That pay­ ment was already used to pay the tax on the income reported on Form OR-OC. For more information, see the Form OR-OC instructions. Individual development account (IDA) (ORS 316.848) [Subtraction code 314] An IDA is a matched savings account that builds the financial management skills of qualifying Oregonians while they save toward a defined goal. An IDA allows an individual in a lower-income household to accumulate assets tax-free. As the account holder, you make deposits to your own account. Your depos­ its are matched with private donations. Withdrawals made for a qualified purpose are tax free. Qualified purposes include: • Paying higher education expenses or medical expenses; or • Purchasing a primary residence; or • Saving for retirement; or • Starting your own business. Oregon allows a subtraction on your tax return for deposits you make to your IDA through the Neigh­ borhood Partnership Fund. Your subtraction includes the interest earned on your IDA funds if the interest is included in your federal taxable income. Subtract the amount of the deposits made during the year, plus taxable interest earned, on Schedule OR-ASC or OR-ASC-NP. For more information about establishing an IDA, contact The Neighborhood Partnership Fund at 503- 226-3001 or visit their website at: www.neighborhoodpartnerships.org. Interest and dividends on U.S. bonds and notes [ORS 316.680(1)(a)] [Subtraction code 315] Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest. You may also subtract U.S. government interest (called state exempt-interest dividends) from regu­ lated investment companies and asset pools man­ aged by a fiduciary. These include, but aren’t limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or asset pool must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The sub­ traction is limited to your share of the amount of interest actually earned from qualifying U.S. govern­ ment securities. You can’t subtract amounts when the U.S. govern­ ment only guarantees the security. If you receive dis­ tributions from a retirement plan, you may not sub­ tract pension income received from funds invested in U.S. government securities. Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Subtractions

150-101-431 (Rev. 04-01-22) 71 Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon. Following is a detailed list of bonds and notes that may or may not qualify for this subtraction. For a list of obligations that are exempt from both state and federal taxation, see “Interest and dividends on gov­ ernment bonds of other states“ in “Additions.“ Qualifies Bond/note Yes Banks for Cooperatives District of Columbia. Yes Commodity Credit Corporation. No* Export-Import Bank. No Farmers Home Administration. Yes Federal Deposit Insurance Corporation. Yes Federal Farm Credit Bank. Yes Federal Financing Bank. No Federal Home Loan Mortgage Corpora- tion (Freddie Mac). Yes Federal Home Loan Bank. Yes Federal Intermediate Credit Bank. Yes Federal Land Bank and Federal Land Bank Association. No Federal National Mortgage Association (Fannie Mae). Yes Federal Savings and Loan Insurance Corporation. No Federal tax refunds. Yes Financing Corporation (FICO). Yes General Insurance Fund. No* Government National Mortgage Asso- ciation (Ginnie Mae). Yes Government Services Administration (GSA Public Building Trust Participation Certificate). No International Bank for Reconstruction and Development. Yes Production Credit Association (PCA). Yes Resolution Funding Corporation (REFCO). No Repurchase agreements (Repos). Yes Series EE, HH, and I Bonds. No* Small Business Administration. Yes Student Loan Marketing Association (Sallie Mae). Yes Tennessee Valley Authority. Yes Treasury bills and notes—interest. No Treasury bills and notes—gain on sale. No U.S. Merchant Marine bonds. Yes U.S. Postal Service bonds. No* Washington (D.C.) Metropolitan Transit Authority. Yes Zero coupon obligations of the U.S. (for example, “CATs,” “STRIPS,” “TIGRs,” etc.). *If the creditor has defaulted and the U.S. government/ Export-Import Bank is paying the interest, it’s nontaxable. Related expenses You must reduce your subtraction for expenses con­ nected with U.S. bonds and notes if the expenses are included in your Oregon itemized deductions on Schedule OR-A. These expenses include interest paid on money borrowed to buy the bonds and notes and costs incurred in the production of income from the bonds and notes. Land donations to educational institutions carryforward (ORS 316.852) [Subtraction code 316] This provision expired December 31, 2007. However, if you had a qualifying donation or sale prior to that date, you may still have contribution amounts to carryforward. The subtraction allowed in any tax year is limited to a specific percentage of your contribution base. Your contribution base is federal AGI computed without any NOL carryback. If you donated land to a qualified entity, your Ore­ gon subtraction can’t be more than 50 percent of your contribution base. If you sold land to a qualified entity for less than its fair market value, the Oregon subtraction can’t be more than 25 percent of the contribution base. Carryforward. You can carry forward for a maxi­ mum of 15 years any contribution you don’t subtract because it’s more than the specified percentage of the contribution base. Any contributions not subtracted by 2022 will be lost. Example. In tax year 2007, Marykate sold land with a fair market value of $500,000 to a local school district for $200,000 cash. Her contribution base that year was $100,000. Marykate’s subtraction for her contribution of $300,000 ($500,000 – $200,000) was limited to 25 percent of her contribution base, or $25,000 ($100,000 x 0.25). Marykate can carry forward the remaining $275,000 ($300,000 – $25,000) to the next tax year until she has subtracted all of it or tax year 2022, whichever is first. Her subtraction will be limited by her contri­ bution base each year. Subtractions

150-101-431 (Rev. 04-01-22) 72 Legislative Assembly salary and expenses (ORS 171.072) [Subtraction code 335] Oregon law exempts legislators' compensation for the performance of official duties (legislative salary and expense allowance) from Oregon income tax. This subtraction is available only to members of the Oregon Legislative Assembly who served during the tax year. Local government bond interest (ORS 286A.140) [Subtraction code 317] You can subtract interest or dividends on obligations of counties, cities, districts, ports, or other public or municipal corporations or political subdivisions of Oregon to the extent included for federal income tax purposes. Related expenses You must reduce your subtraction if you’re including interest you paid on debt incurred to carry the obliga­ tions or securities or other expenses incurred in the production of income from these obligations in your Oregon itemized deductions on Schedule OR-A. Lottery winnings (ORS 461.560) [Subtraction code 322] Oregon won’t tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and aren’t eligible for the subtraction. “Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery doesn’t include gambling winnings from other sources, such as tribal gaming centers. If you’re a Native American, see the “American Indian” sub­ traction for more information. Winnings of more than $600 from a single ticket or play are fully taxable and may be reported by the Oregon State Lottery on Form W-2G. Lottery win­ nings that are more than $1,500 must have 8 percent withheld for Oregon taxes. If state income tax wasn't withheld from your gambling winnings consider making estimated tax payments or increasing your withholding from your wages. To increase your Ore­ gon wage withholding, complete Form OR-W-4. Give the form to your employer. Example 1: Margaret purchased two Oregon Lot­ tery tickets and won $1,000 on one ticket and $500 on the other. She also won $300 from a lottery ticket she bought in Idaho, and $150 on a slot machine at an Oregon casino. Margaret included all $1,950 in winnings on her federal return. Margaret can sub­ tract $500 of her Oregon Lottery ticket winnings on Schedule OR-ASC. Nonresidents: Oregon Lottery winnings are taxable to nonresidents. Oregon Lottery winnings included in federal taxable income are eligible for the subtrac­ tion when winnings per ticket or play are $600 or less. Exception for pre-1998 tickets: You may subtract all Oregon Lottery winnings included in your federal income from tickets purchased prior to January 1, 1998. Did you assign your lottery winnings to a pri­ vate company and receive a lump-sum settlement? If so, your settlement isn’t taxable by Oregon if your winning ticket was purchased before January 1, 1998. Winnings from tickets purchased on or after January 1, 1998 are fully taxable. Gambling loss deduction. If you’re deducting gam­ bling losses related to your tax-exempt lottery win­ nings on Schedule OR-A, you must add back the amount that exceeds the winnings that are taxed by Oregon. See this topic under “Additions” for more information. Manufactured dwelling park capital gain exclusion (Notes following ORS 316.792) [Subtraction code 338] Amounts received from the sale of a manufactured dwelling park to certain organizations are exempt from Oregon income tax. If you included this gain in income on your federal return, you may claim a subtraction for the gain amount on your Oregon return. Enter the amount on Schedule OR-ASC or OR-ASC-NP. To qualify, the park must have been sold to a ten­ ants’ association nonprofit organization, community development corporation, or a housing authority. Subtractions

150-101-431 (Rev. 04-01-22) 73 Manufactured dwelling park payments (ORS 316.795) [Subtraction code 344] Payments received from your former landlord because your manufactured dwelling park was closed are exempt from state taxation. These payments must be included in your federal income in order to be sub­ tracted on your Oregon return. If you didn't include them in federal income, don't subtract them. Marijuana business expenses [ORS 316.680(1)(i)] [Subtraction code 359] Did you operate a business as a medical marijuana dispensary or as a producer, processor, wholesaler, or retailer of medical or recreational marijuana with a license issued by the Oregon Health Authority or the Oregon Liquor Control Commission (OLCC) under ORS Chapter 475B? If so, you may subtract certain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Sec­ tion 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cultivation, manufacture, distribution or sale of cer­ tain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and nec­ essary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Controlled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, section 2 or Schedule OR-ASC-NP, section 3. Keep the Oregon-only schedule with your tax records. Example 1: Erin has a business licensed by the OLCC to sell marijuana in Oregon. Her store sold medi­ cal and recreational marijuana products. Her gross sales for the year totaled $750,000. After deducting $350,000 in cost of goods sold, her gross profit was $400,000, which she reported as business income on her federal Schedule C. Along with paying the cost of the goods she sold, Erin had ordinary and necessary retail business expenses. She completed a second Schedule C for Oregon only and determined that her expenses, other than cost of goods sold, totaled $150,000. She claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Matt grows marijuana in his garage and sells it to his coworkers and friends. This year, he made $50,000 from these sales. He spent $15,000 on costs of goods sold during the year, and another $10,000 in other ordinary and necessary business expenses. Matt doesn’t have a license to produce or sell marijuana in Oregon, but he must file federal and Oregon tax returns to report his income. On his fed­ eral return, he must report $50,000 in gross income and can deduct $15,000 for the cost of the goods he sold. He can’t deduct his other business expenses on his federal return. Matt also can’t take an Oregon sub­ traction for those other business expenses because he doesn’t have a license issued by the Oregon Health Authority or OLCC. Mortgage interest credit (ORS 316.716) [Subtraction code 320] [Modification code 607] If all of the following are true for you, you may have a subtraction for mortgage interest on your Oregon return: • You’re claiming a mortgage interest credit on your federal return, • You’re claiming your mortgage interest as an item­ ized deduction on federal Schedule A, • You reduced your mortgage interest deduction by the federal mortgage interest credit, and • You’re claiming the same reduced amount of mort­ gage interest on Schedule OR-A. Claim a subtraction for the amount of mortgage interest credit allowed on your federal return. Take the subtraction in the year of the payment even if the federal credit is carried forward. Example 1: Shawn and Phillip pay $5,000 in mortgage interest this year. They are entitled to a 50 percent credit, limited to $2,000, on their federal return. They claim the credit and reduce their itemized deduc­ tion for mortgage interest to $3,000. They include the same $3,000 deduction on Schedule OR-A, and claim a $2,000 subtraction on Schedule OR-ASC. Example 2: Use the same facts as Example 1, except that Shawn and Phillip’s federal tax liability is $1,500. They claim $1,500 as a credit on their federal return, claim a Subtractions

150-101-431 (Rev. 04-01-22) 74 deduction of $3,000 in mortgage interest on Schedule A, and have a $500 credit to carry over to next year. They include the $3,000 deduction on Schedule OR-A and subtract $2,000 on Schedule OR-ASC. They don’t have a carryforward amount for Oregon. Oregon College and MFS 529 Savings Plan deposits carryforward (ORS 316.699) [Subtraction code 324] Contributions you made to an Oregon College or MFS 529 Savings Plan account after December 31, 2019 no longer qualify for a subtraction, but they may qualify for a credit. See “Oregon 529 College Savings Network account contributions” in “Credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2020 return is $4,960 if you file a joint return ($2,480 for all oth­ ers). This maximum applies to the combined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Example: Korey and Keri contributed $15,000 in 2019 to an Oregon College Savings Plan account for their son. They subtracted the maximum of $4,865 on their 2019 return. They carried the $10,135 balance of their contri­ bution forward and will claim the maximum of $4,960 on their 2020 return. They may carry the remaining balance forward for up to three more years. Nonqualified expenses. You may need to add back funds withdrawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. A nonqualified purpose includes using the funds and earnings to pay K-12 tuition. See “Oregon Col­ lege and MFS 529 Savings Plans nonqualified with­ drawal“ under “Additions.” Oregon income tax refund (ORS 316.695) [Form OR-40-P/Form OR-40-N only: Subtraction code 325] Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon doesn’t allow a subtraction for an income tax refund from any other state. Full-year filers: This subtrac­ tion is claimed on Form OR-40. Part-year and non­ resident filers: Claim this subtraction on Schedule OR-ASC-NP, section 3. Oregon Investment Advantage

(ORS 316.778) [Subtraction code 342] Oregon has an income tax exemption program for business development in Oregon. The program is available to both new and expanding businesses. Who is eligible for the exemption? The exemption is a 10-year waiver of all income and excise taxes relating to qualifying business opera­ tions. Business Oregon (the Oregon Business Devel­ opment Department, or OBDD) administers this program. To qualify, a company must create at least five new full-time, year-round jobs that meet minimum pay requirements. Facility operations must be the first of their kind in Oregon for the company and must not compete with existing area businesses. Areas that qualify for development can change from year to year. Local unemployment rates and per capita income as of the date of application for preliminary certification determine eligibility. For a list of qualifying counties, go to www.oregon4biz.com. How is a facility certified? There are two application forms necessary for this program. A preliminary certification is completed before hiring or any construction work is done. An annual certification is then completed for each of the 10 years that the income tax exemption is claimed. To find out more about this program or download an application form, contact Business Oregon at www.oregon4biz.com. How is the subtraction computed? The exempt income is determined by multiplying the taxpayer’s federal taxable income by the ratio of their federal AGI derived from the business over their total federal AGI. The resulting amount is then multiplied by the ratio of the business’ income derived from the business’ sales at the certified facility over its sales from all business activities. Nonresident and part-year resident taxpayers deter­ mine exempt income by multiplying only Oregon- sourced federal taxable income in the first step of the computation above. See our administrative rule for additional informa­ tion on determining income derived from qualifying activities (OAR 150-316-0600). Subtractions

150-101-431 (Rev. 04-01-22) 75 Previously taxed employee retirement plans (ORS 316.159) [Subtraction code 327] Oregon allows residents to subtract payments from an IRA, Keogh plan, SEP plan, and certain govern­ ment plans if another state has already taxed contri­ butions or a portion of the contributions to the plan. The payments must be included in federal AGI. All of the following conditions must be met for the contri­ butions to qualify: • Contributions were made while a nonresident of Oregon. • No previous state income tax deduction, exclusion, or exemption was allowed or allowable at the time contributions were made. • No previous state income tax deduction, exclusion, credit, subtraction, or other tax benefit has been allowed for the contributions. • Contributions have been taxed by another state. The subtraction continues until all qualifying contri­ butions are recovered. A statement from the payer showing your total con­ tributions and the start date of your benefits will help you figure your subtraction. Keep this statement with your tax records. Example 1: Judith lived in California. From 1980 to 1996 she contributed to an IRA. In 1980 and 1981 she contributed $1,500 each year. From 1982 through 1996 she contributed $2,000 each year. Both federal and California allowed a maximum deduction of $1,500 for 1980 and 1981. For 1982 through 1986, federal allowed a maximum of $2,000, and California allowed a maximum of $1,500. Both federal and California allowed a maximum of $2,000 for 1987 through 1996. Judith contributed $2,500 ($500 × 5 years) from 1982 through 1986 that she was not allowed to deduct on her California returns. Judith retired and moved to Oregon in November of last year. She receives payments of $1,000 a month from the California IRA. These payments are subject to Oregon tax because she is now an Oregon resi­ dent. However, Oregon will allow Judith to subtract the contributions that California has already taxed ($2,500). Judith received two payments of $1,000 last year for a total of $2,000. She can subtract the entire $2,000 on last year’s Oregon return. This year, she’ll be able to subtract the balance of $500 ($2,500 - 2,000) as long as she receives at least that much from her California IRA. From that point on, no subtraction on the Ore­ gon return for recovery of contributions is allowed. Example 2: Use the same facts as in Example 1, except Judith lived and worked in Washington before mov­ ing to Oregon. When she made contributions, she was allowed a federal deduction each year. However, she didn’t get a state tax deduction, because Washington doesn’t have an income tax. After retiring and mov­ ing to Oregon, Judith receives the same payments as above. She doesn’t qualify for the Oregon subtraction because her contributions weren't taxed by another state. Previously taxed IRA conversions [ORS 316.680(1)(f)] [Subtraction code 348] Oregon allows a subtraction for converting a tra­ ditional IRA to a Roth IRA, if the IRA is taxed by another state. You must include the payments in fed­ eral taxable income to claim the subtraction. Example: Susan lived in New York in March of last year, when she converted her $100,000 traditional IRA to a Roth IRA. In September, she moved to Oregon. New York state will tax her IRA when she becomes a nonresident. Susan can subtract the amount included in federal income when she files her Oregon tax return. Public Safety Memorial Fund Awards [ORS 316.680(1)(g)] [Subtraction code 329] Amounts awarded to you by the Public Safety Memo­ rial Fund Board may be subtracted from Oregon income. The award must be included in federal tax­ able income to claim the subtraction. Public Safety Memorial Fund Awards are for public safety officers with certain job-related permanent total disabilities. These awards are also available to family members of a public safety officer who is killed in the line of duty or while interceding in a crime. Railroad Retirement Board benefits (ORS 316.054) [Subtraction code 330] The Railroad Retirement Act of 1974 prohibits states from taxing certain railroad benefits. This act per­ tains to all benefits issued by the Railroad Retire­ ment Board (RRB). Oregon allows a subtraction for Tier 1 RRB benefits (the same as for Social Security Subtractions

150-101-431 (Rev. 04-01-22) 76 benefits). The subtraction has been extended by administrative rule to the other supplemental RRB benefits including Tier 2, windfall, vested dual, sup­ plemental annuities, unemployment, and sickness (OAR 150-316-0065). Tier 1 benefits. Tier 1 benefits are reported like Social Security on your federal return. Subtract these ben­ efits with Social Security on the Oregon return. Tier 2, windfall, vested dual, supplemental annuities, unemployment and sickness paid by the RRB. These benefits are reported as wages or on the private pen­ sion line of your federal return. Subtract these ben­ efits on Schedule OR-ASC, section 2 or Schedule OR- ASC-NP, section 3. Other benefits. A retired railroad employee may receive other retirement benefits from their employer. Benefits paid by private railroad employers are pri­ vate pensions taxed the same on both the federal and Oregon returns. There is no Oregon subtrac­ tion for retirement benefits paid by private railroad employers. Only benefits paid by the RRB qualify for the subtrac­ tion. RRB benefits are reported on Form 1099, except for sickness benefits, which are reported on Form W-2. All 1099s issued by the RRB, other than 1099-G for RRB unemployment benefits, are labeled Form RRB-1099-R. More information on RRB benefits is available on the board’s website at www.rrb.gov. Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claim­ ing the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed. Social Security benefits (ORS 316.054) Oregon doesn’t tax Social Security benefits. Any Social Security benefits included in your federal AGI are subtracted on your Oregon return. Special Oregon medical (ORS 316.693) [Subtraction code 351] You may qualify for the special Oregon medical sub­ traction if: • You or your spouse turned 66 by the end of the tax year; • Your federal AGI doesn’t exceed $200,000 ($100,000 if your filing status is single or married filing sepa­ rately); and • You or your spouse have qualifying medical or dental expenses. Medical or dental expenses qualify if they can be included in itemized deductions. See IRS Publica­ tion 502, Medical and Dental Expenses, to see which expenses qualify. You can’t subtract expenses: • For anyone under age 66; • For dependents, regardless of their age; or • That are deducted elsewhere on your return. Table 9. Special Oregon medical subtraction— maximum amount If your filing status is: And your federal adjusted gross income from Form OR-40, line 7 or Form OR-40-N or OR-40-P, line 29F is: Then your maximum allowable medical subtraction per qualifying taxpayer is: at least— but less than— Married filing Jointly; or Head of household; or Qualifying widow(er) 0 $50,000 $1,800 $50,000 $100,000 $1,400 $100,000 $200,001 $1,000 $200,001 or more 0 Single or Married filing separately 0 $25,000 $1,800 $25,000 $50,000 $1,400 $50,000 $100,001 $1,000 $100,001 or more 0 The maximum amount you can subtract for each qualifying person is shown in Table 9. Use the table Subtractions

150-101-431 (Rev. 04-01-22) 77 and the Special Oregon medical subtraction work­ sheet to determine the amount of your subtraction. Shared expenses. Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy doesn’t affect the price of the pol­ icy, it’s reasonable to count all children on the policy as one individual. For example, the cost of insurance premiums for a policy covering two adults and four children can be divided by three. Example 1: Chloe and Sam were ages 67 and 62 at the end of the tax year. They filed a joint return with one dependent (Sam’s mother), federal AGI of $55,000, and itemized deductions for Oregon. During 2020 they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in pre­ miums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Ore­ gon medical subtraction because Sam doesn’t meet the age requirement and Sam’s mother is a dependent. Example 2: Peter turned 66 during 2020. He’s self- employed and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on Schedule OR-A. He also deducted 100 percent of his self-employed health insurance premiums, totaling $2,500, on his fed­ eral return. Only the $3,200 in medical expenses Peter claimed on Schedule OR-A will be used to calculate his special Oregon medical subtraction because they haven’t been fully deducted. The worksheet will help him calculate the amount of his subtraction. Special Oregon medical subtraction worksheet instructions Line 1: Enter each person’s qualifying medical and den­ tal expenses that you’re claiming as itemized deduc­ tions on Schedule OR-A. Enter your expenses in col­ umn (A) and your spouse’s expenses in column (B). If you’re not including medical expenses in your Oregon itemized deductions or you’re claiming the standard deduction on your Oregon return, skip lines 2–4, enter the amount from line 1 on line 5, and go to line 6. Line 2: Enter the total medical and dental expenses you’re claiming as an itemized deduction (Schedule OR-A, line 1), even if they are for a spouse or depen­ dent whose expenses don’t qualify. Line 3: Line 1 divided by line 2. Round to three deci­ mal places. For example, 0.7308 is rounded to 0.731. Line 4: Enter the lesser of the amount you entered on line 2, above, or the amount on line 3 of your Schedule OR-A. Line 5: Multiply line 3 times line 4 and round to whole dollars. (For example: $101.49 is rounded to $101.) Line 6: Enter the maximum allowable medical sub­ traction for your filing status and federal AGI from Table 9. Don’t enter more than $1,800 in each column. Line 7: Enter the smaller of line 5 or line 6. Line 8: Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. Full-year residents. Enter the amount from line 8 on Schedule OR-ASC, section 2. Part-year residents and nonresidents. Enter the full amount from line 8 in both the federal and Oregon columns of Schedule OR-ASC-NP, section 3. Special Oregon medical subtraction worksheet:

Column Column

(A) (B)

You Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ $ 6. Maximum allowable medical subtraction from Table 9. 6. $ $ 7. Enter the smaller of line 5 or line 6. 7. $ $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ Subtractions

150-101-431 (Rev. 04-01-22) 78 Example 3: Leah and Tyler are ages 67 and 61 at the end of the tax year. They file a joint return with fed­ eral AGI of $45,000 and itemize their deductions for Oregon. During the year, they paid $4,700 in medi­ cal and dental expenses claimed on Schedule OR-A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medi­ cal insurance policy covering both of them. Only Leah’s expenses qualify for the special Oregon medi­ cal subtraction because only she met the age require­ ment. Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows:

Column Column

(A) (B)

Leah Tyler 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 2,150 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 4,700 $ 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.457

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 3,375 $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,542 $ 6. Maximum allowable medical subtraction from Table 9. 6. $ 1,800 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,542 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,542

Leah and Tyler will claim $1,542 on Schedule OR-ASC. Example 4: Kenneth and Sophia were both age 66 at the end of the tax year. They file a joint return with fed­ eral AGI of $78,000. Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses dur­ ing the year. They are self-employed and claimed $3,400 for self-employed health insurance premiums on their federal return. They claimed the remaining $8,900 on line 1 of Schedule OR-A. Of this amount, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia calculate their special Oregon medical subtraction as follows:

Column Column

(A) (B)

Kenneth Sophia 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 7,700 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 8,900 $ 8,900 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.135 0.865 4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 5,850 $ 5,850 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 790 $ 5,060 6. Maximum allowable medical subtraction from Table 9. 6. $ 1,400 $ 1,400 7. Enter the smaller of line 5 or line 6. 7. $ 790 $ 1,400 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 2,190 Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they don’t include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that haven’t been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that haven’t been previously deducted, and $1,400, the maximum amount allowed Sophia). Example 5: Margaret is age 67 at the end of the tax year. She’s single and has a federal AGI of $27,000. During the year, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret doesn’t itemize her deductions because her standard deduction is greater than her itemized deductions for Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows: Subtractions

150-101-431 (Rev. 04-01-22) 79

Column Column

(A) (B)

Margaret Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2 above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,200 $ 6. Maximum allowable medical subtraction from Table 9. 6. $ 1,400 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,200 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,200 The medical expenses paid by Margaret for her 9-year-old granddaughter don’t qualify for the sub­ traction because she is a dependent. Example 6: Same as Example 5, except that Margaret isn’t an Oregon resident. She enters $1,200 in both the federal column and in the Oregon column of Sched­ ule OR-ASC-NP, section 3. Taxable benefits for former RDPs (ORS 314.023, OAR 150-316-0009) [Subtraction code 347] If you and your RDP were legally married or dis­ solved your partnership during the year, you may be allowed an Oregon subtraction for: • The imputed value of certain fringe benefits pro­ vided by your employer for your RDP for the part of the year you were still registered domestic partners. • The transfer of funds from your former domestic partner upon a dissolution decree. The fringe benefits typically include, but aren’t lim­ ited to, health insurance and tuition payments. You must have included the imputed valued of the ben­ efits in your federal income to claim the Oregon sub­ traction. The imputed value will be included in the total compensation (Box 1) shown on your Form W-2. The transfer of funds typically include, but aren’t limited to, retirement funds. You must have included these amounts in your federal income to claim the Oregon subtraction. Example: Ruth and Jan entered into an RDP on Febru­ ary 1, 2012. They were then legally married on June 16, 2020. Ruth and Jan must file their 2020 tax return as married filing jointly for both federal and Oregon purposes. They won’t file an “as-if” federal return. Instead, they will attach their actual federal return to their Oregon return. Ruth’s employer provides health insurance benefits for Jan, and the imputed value of those benefits were included in Box 1 of Ruth’s W-2 for the portion of the year that Ruth and Jan weren't mar­ ried (January 1st through June 15th). Ruth may claim a subtraction for the value of the imputed benefits included in federal income, as reported on her W-2. Tuition and fees [ORS 316.716(3)] [Subtraction code 308] You may qualify to claim either of the following on your federal return: • A deduction of up to $4,000 for qualified tuition and fees paid; or • The American Opportunity credit or the Lifetime Learning credit. If you claim a federal credit, you must reduce the deduction related to that student’s expenses to $0. Federal deduction. If you qualify for and claim the federal deduction of up to $4,000 for qualified tuition and fees, don’t claim a subtraction on your Oregon return. Your federal deduction flows through to your Oregon return via your federal adjusted gross income. If you’re filing a nonresident or part-year return, see this topic under “Adjustments.” Federal credit. Some, but not all, of the expenses that qualify for a federal credit may also qualify for the federal deduction. If you claimed a credit for edu­ cation expenses, and those expenses would have qualified for the federal deduction, you may be able to claim an Oregon subtraction for the amount you could have claimed as a deduction. However, you can’t claim the subtraction if: • Your filing status is married filing separately; • You can be claimed as a dependent by another person on their return, even if that person doesn’t claim you; or Subtractions

150-101-431 (Rev. 04-01-22) 80 • Your federal modified adjusted gross income (MAGI) exceeds the limitations for the federal tuition and fees deduction as stated on federal Form 8917. Example 1: Tom paid $6,000 in tuition and fees for his son Adam’s higher education this year. Tom elected to claim the American Opportunity credit of $1,500 on his federal return. Tom would have been allowed $4,000 as a deduction on his federal return if he hadn’t elected to claim the American Opportunity credit. On his Oregon return, Tom claims a subtrac­ tion of $4,000 for qualified tuition and fees. Example 2: This year Dawn paid $2,200 college tuition for her daughter Camille and $2,400 college tuition for her daughter Delaney. On her federal return, Dawn deducted the maximum $4,000 tuition and fees. Because Dawn claimed the maximum deduc­ tion on her federal return, she can’t claim a subtrac­ tion on her Oregon return. Example 3: Mr. and Mrs. Wren paid a total of $6,000 in qualified tuition expenses this year. They paid $2,000 of college tuition for each of their sons, Nelson, Jose, and Chester. On the Wrens’ federal return, they claimed a $2,000 deduction for Nelson’s tuition, a $1,500 American Opportunity credit for Jose’s tuition, and a $1,500 American Opportunity credit for Ches­ ter’s tuition. On their Oregon return, the maximum subtraction allowable is $4,000, but they must reduce their allowable subtraction by any amount they already deducted on the federal return. The $2,000 deduction for Nelson’s tuition flows through to their Oregon return. They may subtract the remaining $2,000 on their Oregon return, for a combined deduc­ tion of $4,000. Education credit recapture. If you are required to recapture a federal education credit on a later federal return, you may need to amend your Oregon return to reduce the subtraction you claimed in a prior year. See “Amended returns“ for more information. U.S. government interest in IRA or Keogh distributions (ORS 316.681) [Subtraction code 331] Interest and dividends on U.S. bonds and notes are exempt from state tax. See “Interest and dividends on U.S. bonds and notes.” Answer these questions to see if you have a subtraction on your Oregon return for exempt income related to your retirement distributions: 1. Did you have any distributions from a self- employed retirement plan or an IRA? 2. Was any part of your self-employed retirement plan or your IRA invested in U.S. bonds and notes? 3. Did you include your self-employed retirement plan or IRA distribution in your 2020 federal AGI? If you answered “yes” to all the questions above, you may take a subtraction on Schedule OR-ASC or OR-ASC-NP for the retirement plan exempt earnings included in your distribution. Use a worksheet like the one shown in the example here or in OAR 150-316-0525 to calculate your sub­ traction. Keep the worksheet with your records; we may ask for it later. Example: Donna retired last year and began tak­ ing distributions of $10,000 each year from her IRA. The IRA is invested in U.S. government securities so Donna uses the following information to calculate her subtraction for years 1 and 2:

Year 1 Year 2 Current year earnings $4,000 $5,000 Current year distribution $10,000 $10,000 Account balance at 12/31 $100,000 $95,000 Total exempt earnings on account at 12/31 $ 40,000 $45,000 Worksheet Year 1 Year 2 1. Total account balance at year end. $100,000 $95,000 2. Current year distribution. + 10,000 + 10,000 3. Line 1 plus line 2. $110,000 $105,000 4. Total exempt earnings on account at year end. $ 40,000 $45,000 5. Total exempt part of distributions from all prior years. – 0 – $3,636 6. Line 4 minus line 5, but not less than zero. $40,000 $41,364 7. Line 6 divided by line 3. Oregon exempt ratio. 0.3636 0.3939 8. Line 2 multiplied by line 7. Oregon exempt portion of current year’s distribution. $3,636 $3,939 Subtractions

150-101-431 (Rev. 04-01-22) 81 Other items Net operating losses (NOLs) for Oregon (ORS 316.028) [Addition code 116] [Subtraction code 321] An Oregon NOL is figured the same as in IRC Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Ore­ gon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts. Oregon doesn’t allow an NOL from a non-Oregon source that occurred while you were a nonresident. Prohibited amounts Amounts Oregon is prohibited from directly or indi­ rectly taxing include interest earned from Treasury bonds, Treasury notes, and other obligations of the United States. Federal depreciation disconnect If you had an NOL in 2009 or 2010 and also claimed depreciation or expensing not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. See “Deprecia­ tion and Amortization” for additional information. Computation of the NOL Full-year residents. Generally, the computation of the Oregon NOL for a resident is the same as the federal NOL, except for the prohibited amount modification. (See Prohibited amounts above.) The computation of the Oregon NOL begins with fed­ eral AGI. Reduce AGI by federal exemptions, federal deductions, and the prohibited amount modifica­ tion to arrive at the modified Oregon taxable income (OTI). Then adjust the modified OTI as required by IRC Section 172(d). Required adjustments are: 1. Oregon NOL deduction (NOLD) from prior years included in Oregon income after adjustments. 2. Net Oregon capital loss deduction. 3. Federal personal exemption amount (this will be $0 through tax year 2025). 4. Excess of nonbusiness deductions over nonbusi­ ness income included in modified Oregon taxable income. Example 1: Maria and Jaime filed joint federal and Oregon tax returns for 2020. On their federal return, they reported wages of $56,000, a business loss of $80,000, a gain on the sale of stock of $500, and inter­ est income of $900 from a bank. They reported total itemized deductions of $28,000, which were all non­ business and included $4,000 in Oregon withholding. On their Oregon return, Maria and Jaime reported an addition of $500 of municipal bond interest from California that was exempt from federal income tax. Their Oregon NOL is computed as follows: Federal tax return Wages $ 56,000 Interest income

900 Schedule C loss (80,000) Schedule D stock gain

500 Federal AGI ($ 22,600) Personal exemptions

0 Schedule A deductions (28,000) Federal taxable income ($ 50,600) Computation of Oregon NOL Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions (28,000) Modified Oregon taxable income ($ 50,600 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Nonbusiness deductions in excess of nonbusiness income 26,600 Oregon NOL ($ 24,000 ) Note: The $500 in California municipal bond interest and the $4,000 in Oregon withholding aren't used in this calculation. Compute the Oregon NOL based on federal NOL methods and definitions. Use Oregon sources with­ out Oregon adjustments (modifications, additions, and subtractions), except for prohibited amounts. Example 2: Use the same facts as in Example 1, except the $900 interest is from U.S. government securities (a prohibited amount). The Oregon NOL for Maria and Jaime is computed as follows: Federal tax return Wages $ 56,000 Interest from U.S. government securities

900 Schedule C loss

( 80,000 ) Other items

150-101-431 (Rev. 04-01-22) 82 Schedule D stock gain

500 Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions

(28,000) Federal taxable income ($ 50,600 ) Computation of Oregon NOL Federal AGI ($ 22,600 ) U.S. government interest

(900 ) Personal exemptions

0 Schedule A deductions

(28,000) Modified Oregon taxable income ($ 51,500 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Excess nonbusiness deductions

26,600 Oregon NOL ($ 24,900 ) Note: U.S. government interest, a prohibited amount, isn’t used to compute an Oregon NOL. Part-year residents and nonresidents. You’re allowed an Oregon NOL if it’s generated from Oregon sources. Computing an Oregon NOL begins with “income after adjustments” from the Oregon column. Reduce this amount by federal exemptions and deductions (attributable to Oregon sources) to arrive at the modi­ fied OTI. Then adjust the modified OTI as required by IRC Section 172(d). The required adjustments are the same as those listed for full-year residents. You aren’t allowed an NOL or carryover on an Ore­ gon return if the loss was incurred while you were a nonresident and wasn't attributable to Oregon sources. If your Oregon NOL is less than your federal NOL, report the difference as an addition using code 116 on Schedule OR-ASC or OR-ASC-NP. Oregon NOL carryforward or carryback. Oregon fol­ lows the IRS carryforward and carryback laws in IRC Section 172. • NOLs arising in tax years 2018, 2019, and 2020 may be carried back up to five years. • All NOLs for loss years after 2017 may be carried forward indefinitely. • For NOLs carried forward to tax years after 2020, see next year’s edition of this publication. If you carry an NOL back for federal purposes, you must also carry the Oregon NOL back for Oregon purposes. If you elect to carry the federal NOL for­ ward, you must also carry the Oregon NOL forward. Exception: If you weren’t required to file an Oregon return, carry the Oregon NOL to the year the loss may be first applied. The total number of years an NOL may be carried back or forward is the same for Oregon and federal. Example 1: Joe has an NOL for federal and Oregon purposes for 2020. Joe carried his federal NOL back to his 2015 federal return. Because he carried back his NOL for federal purposes, he must carry his NOL back for Oregon purposes. If he wasn't required to file a 2015 Oregon tax return, he may carry his Ore­ gon NOL back to 2016, 2017, 2018, 2019, or forward to a year after 2020 until it can be applied. If he carries the NOL to a tax year after 2020, he’ll limit the deduction to the lesser of the NOLD or 80 percent of his FTI for the year. Example 2: Bud and Jody incurred losses from farming in 2019. They computed a farming NOL of $12,000 and chose to carry the loss forward for federal purposes, which means they also had to carry it forward for Oregon purposes. In 2020, before the loss is applied, Bud and Jody have federal AGI of $35,800, and reported additions of $8,000 and $3,000 in subtractions. They’re claiming the $24,800 standard deduction on their federal return and will claim $10,000 in Oregon itemized deductions on Schedule OR-A that aren’t affected by AGI limits. Bud and Jody will apply the NOL and compute the amount available for carryforward to 2021, if any, as follows: Allowable NOLD:

($ 12,000) Federal AGI on the Oregon return $ 35,800 Add: Capital loss deductions or 0

Capital gain deduction 0 Federal AGI for Oregon as revised $ 35,800 Less: Prohibited amounts 0

Standard or itemized deductions recomputed for revised federal AGI (24,800) Modified Oregon taxable income $11,000 NOL available for carryforward to the next year

$1,000 Other items

150-101-431 (Rev. 04-01-22) 83 Bud and Jody’s allowable NOL for Oregon is absorbed by their modified Oregon taxable income. Bud and Jody will carry $1,000 forward to 2021 for both federal and Oregon purposes. They have no Oregon addition or sub­ traction because their NOLD will flow through from their federal return. Part-year residents and nonresidents. Use the federal method without modifications, except prohibited amounts aren’t considered. Also, the NOLD, carryback, and carryover are based only on amounts attributable to Oregon sources. Example 3: While residents of California, Robin and Valerie incurred losses from an Oregon partnership creat­ ing an $85,000 Oregon-only NOL. Before the loss year, neither Robin nor Valerie needed to file Oregon returns. The next year, Robin and Valerie move to Oregon and file a part-year Oregon return. They report federal income after adjustments of $385,000, Oregon income after adjustments of $235,000, and federal itemized deductions of $72,000 that aren’t subject to AGI limits. Robin and Valerie calculate their Oregon taxable income as follows:

Federal Oregon Income after adjustments $ 385,000 $ 235,000 NOLD

(85,000 ) (85,000 ) Modified income after adjustments $ 300,000 $ 150,000 Additions per Oregon return

7,000 7,000 Subtractions per Oregon return

(2,000 ) (2,000 ) Modified income after subtractions $ 305,000 $ 155,000 Oregon percentage: 155,000 ÷ 305,000 = 50.8% Less: Standard or itemized deductions recomputed for revised federal AGI

(72,000 )

Federal tax subtraction

-0 -* Oregon taxable income as revised $ 233,000 *The federal tax subtraction is $0 when federal AGI is $290,000 or more for joint filers. Example 4: Leslie and Jill live in Vancouver, Washington. Leslie operates a business in Oregon. Leslie and Jill filed a nonresident Oregon return for 2019 reporting an Oregon-only NOL of $6,000. Leslie and Jill carried the NOL forward to 2020. In 2020, Leslie and Jill report Oregon income after adjustments of $1,600, federal income after adjustments of $32,000, and their Oregon percentage is 5 percent ($1,600 ÷ $32,000). Their income after adjustments for both federal and Oregon includes a $2,000 capital loss on the sale of some Oregon property. They are claiming the federal standard deduction, and have Oregon itemized deductions of $13,200. Leslie and Jill calculate their NOLD and the carryforward to the next year as follows: NOL

($6,000) Oregon income after adjustments $1,600 Add: Oregon capital loss deduction 2,000

Oregon capital gain deduction 0 Modified Oregon income as revised

$3,600 Less: Prohibited amounts

(0 )

Oregon percentage of standard or itemized

deductions recomputed for revised federal AGI (0.05 x $13,200)

(660 ) Modified Oregon taxable income (limit for NOLD)

2,940 Carryforward of NOL available for next year

($3,060 ) NOL as a subtraction. Generally, your NOL carryback and carryforward amounts will be reflected in your fed­ eral AGI. However, if you have an NOL carryback or an NOL carryforward for Oregon only, the loss won’t be reflected in your federal AGI. If your NOL isn’t reflected in federal AGI, report your carryback or carryforward on Schedule OR-ASC or OR-ASC-NP. Example 5: Same facts as Example 4. For federal purposes, Leslie and Jill's NOL will be entirely absorbed in 2020. The $3,060 that is available to be carried forward to their 2021 return won't be reflected in their 2021 federal AGI. They'll compute the NOLD amount for 2021 as they did for 2020, and report the amount as a subtraction using code 321 on Schedule OR-ASC-NP. Other items

150-101-431 (Rev. 04-01-22) 84 Depreciation and amortization (ORS 316.707, 316.716, 316.739) [Addition code 152] [Subtraction code 354] Your Oregon depreciation deduction is generally the same as for federal purposes. It won’t be the same in the following cases: • You transferred property into Oregon’s taxing jurisdiction. • The asset was placed in service in tax years begin­ ning on or after January 1, 1985, and you took a cor­ responding tax credit on your federal return that isn’t available on the Oregon return. • Assets were placed in service between 1981 and 1985 (Accelerated Cost Recovery System [ACRS] assets), and you didn’t make the adjustment align­ ing Oregon basis with federal basis for them. If you made the adjustment on your 1996 tax return, there won’t be a depreciation difference. • The asset was placed in service during tax years 2009 or 2010 and you claimed bonus depreciation or additional expensing under IRC Sections 168(k) or 179. For tax years 2009 and 2010, Oregon gen­ erally allowed the same expensing of qualifying assets under IRC Sections 168(k) and 179 as allowed under 2008 federal law. Because of this disconnect an addition is required, leaving a higher adjusted basis for Oregon to be depreciated over the life of the asset. Most taxpayers with an addition for this disconnect in 2009 or 2010 will have future year subtractions over the remaining life of the asset NOL and federal depreciation disconnect. Your Ore­ gon NOL is the same as your federal NOL. Therefore if you had an NOL in 2009 or 2010 and also claimed depreciation or expenses not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. Example 1: Paula expensed $144,000 in assets under IRC Section 179 in 2010. Because Oregon only allowed expenses of $134,000, she had a $10,000 addition on her 2010 Oregon return. Due to deductions and losses related to her business, Paula had a $15,000 NOL for 2010. Normally, she would have an Oregon basis of $10,000 and could claim Oregon subtractions over the life of those assets. Because Paula’s federal NOL is the same for Oregon purposes, she has already received the benefit in the NOL deduction. When Paula carries the NOL forward or back she isn’t allowed any future year subtractions due to depreciation differences. Example 2: Same as Example 1 except that Paula’s NOL was only $7,000. Paula still had an addition of $10,000 on her 2010 Oregon return. Paula would have been allowed to claim $10,000 in subtractions over the life of the assets bought in 2010 if she didn’t have an NOL. Because Paula had an NOL, the amount claimed in subtractions over the life of the assets bought in 2010 is reduced to $3,000 ($10,000 expens­ ing difference minus $7,000 already allowed as an NOL deduction). She will use a reasonable method to assign the $3,000 in Oregon adjusted basis to one or more of the assets purchased in 2010 to calculate her future years’ differences in depreciation. Oregon Depreciation Schedule. Use Schedule OR- DEPR to determine if your Oregon depreciation is the same as, or different from, your federal depreciation. Oregon depreciation on all property – Federal depreciation on the same property = Oregon difference in depreciation Oregon subtraction. If your Oregon depreciation is more than your federal depreciation on the same property, you’ll have a subtraction (subtraction code 354) for the difference. Oregon addition. If your Oregon depreciation is less than your federal depreciation on the same property, you’ll have an addition (addition code 152) for the difference. Go to our website to download Schedule OR-DEPR, or contact us to order it. Partnership and S corporation modifications for Oregon and Business tax credits from PTE (ORS 314.712-314.752) [Addition code 119] [Subtraction code 323] If you received a Schedule K-1 from a PTE (partner­ ship, S corporation, or LLC filing as either), then you may have Oregon additions, subtractions, or credits that flow through to your Oregon return. Your modi­ fication or credit is based on the total for the business multiplied by your ownership percentage, which should have been calculated by the business. If there is a specific code for the Oregon addition or subtraction, use that code. Otherwise, use the above codes to identify the Oregon addition or subtraction. Part-year residents: Use the nonresident information for the part of the year you were a nonresident and the full amounts for the time you were a resident. Nonresidents: If your business operates both in and out of Oregon, it has an apportionment percent­ age from Schedule OR-AP. This percentage should be provided to you with your Schedule K-1, since it shows you how much of the income from your busi­ ness is Oregon source. The business should have already multiplied your share of Oregon additions and subtractions by the apportionment percentage. Other items

150-101-431 (Rev. 04-01-22) 85 Oregon credits that flow through may be required to be multiplied by your Oregon percentage on your Form OR-40-N. See the instructions for each credit for requirements. CPAR adjustments (ORS 314.733) [Addition code 187] [Subtraction code 384] If you’re an owner of a partnership that was subject to a partnership-level audit by the IRS (or you’re an owner of a tiered partner of such a partnership), you may have to increase or decrease your Oregon income as a result of the audit. Report an increase in income using addition code 187 or report a decrease in income using subtraction code 384, whichever is applicable. Use these codes even if another code is assigned for the specific type of increased or decreased income. Visit our website for more information. Qualified business income reduced tax rate (ORS 316.043) If you have qualifying business income from a sole proprietorship, a partnership, or an S corporation, you may elect to calculate your Oregon income tax using a reduced tax rate for that income. The reduced tax rate can be applied to qualifying business income up to $5 million. The qualified business income reduced tax rate is an irrevocable election for each tax year that must be made on the original return. You can’t amend to revoke or make the election after your original return is filed unless you file an amended return on or before the original due date of May 17, 2021, or if filing on extension, before the extension due date of October 15, 2021. The election is made by submitting the Schedule OR-PTE, Oregon Business Income Reduced Tax Rate Schedule, appropriate for your residency sta­ tus and checking the PTE box on your Oregon income tax return. No additions, subtractions, or deductions other than depreciation are allowed in the calcula­ tion of the tax on qualifying income. The schedule is available for download from our website, or contact us to order it. You can find answers to common questions on our website. Visit www.oregon.gov/dor and click on “FAQ” and search “reduced tax rate”. Qualifications To be eligible for the reduced tax rate: • You must have qualifying income from a sole pro­ prietorship or PTE; • You must have materially participated in the busi­ ness; and • The sole proprietor or PTE must have employed at least one qualifying employee in Oregon. Qualified business income. Qualified business income is income other than from passive activities as that term is defined in IRC Section 469. Income from trusts, estates, qualified joint ventures, and disregarded entities doesn’t qualify. Qualified busi­ ness income passed through to a higher-tier entity from a lower-tier entity will qualify for the reduced tax rate if the lower-tier entity meets the employee requirement. Example 1: Bryant and Marcus are each the sole shareholders of an S corporation. The S corporations are each 50 percent owners in a partnership. Bryant and Marcus both materially participate in the part­ nership, and the partnership employs several full- time employees who perform their work in Oregon all year long. Bryant and Marcus receive a distribu­ tive share of nonpassive income from the partnership that passes through their respective S corporations. Each also receives a salary for work performed for the partnership. The distributive share of nonpas­ sive income they receive from the partnership quali­ fies for the reduced tax rate because the partnership meets the employee requirement. However, the sal­ ary each received from the partnership doesn’t qual­ ify for the reduced rate. Material participation. A taxpayer materially partici­ pates in an activity if the taxpayer works on a regular, continuous, and substantial basis in operations of the business. Under certain circumstances, related enti­ ties may be grouped into a single activity in order to meet this requirement. Refer to IRC Section 469 and the related IRS regulations for more detailed information. Employee requirement. The business must have at least one employee who performed work for the entity in Oregon for at least 1,200 hours during the tax year. The employee must work at least 30 hours in a week for that week’s hours to count. The employee can’t be an owner, a member, a limited partner, or the sole proprietor, but hours worked by an employee who is a spouse or other family member (who isn’t an owner, member, limited partner, or sole proprietor) can be used to meet the hour requirement. Example 2: Alpha Partnership’s employee, Ralph, worked a total of 1,496 hours during the year in Ore­ gon. Ralph worked 32 hours per week for 31 weeks and 24 hours per week for 19 weeks. Alpha can only count the hours for the 31 weeks that Ralph worked at least 30 hours. Alpha’s qualifying hours total 992 (32 hours x 31 weeks). This is less than the 1,200 hours required, so Alpha’s nonpassive income doesn’t qual­ ify for the reduced tax rate. Other items

150-101-431 (Rev. 04-01-22) 86 Example 3: Six employees worked in Oregon for Beta Corp (an S corporation) during the year for a total of 1,760 hours. One employee, Betty, worked 32 hours a week for 30 weeks, for a total of 960 hours (32 x 30). The other five employees each worked 20 hours per week for 40 weeks in a job-share position. Only Betty’s hours can be counted as qualifying hours. Beta Corp’s nonpassive income doesn’t qualify for the reduced tax rate because Betty’s total hours don’t meet the 1,200 hour requirement. Example 4: Charlie, a sole proprietor, had three employees working at his Oregon business during the year. Together these employees worked a total of 2,240 hours. One employee worked 32 hours a week for 20 weeks and the other two employees each worked 40 hours per week during the same 20 weeks. The hours for each employee qualify because each employee worked at least 30 hours a week. Charlie's business meets the employee requirement for the reduced tax rate. Temporary or “leased” employees. If a PTE or sole proprietor contracts with a professional employer organization to employ temporary or “leased” employees, the PTE or sole proprietor can use the hours worked in Oregon by those employees to qual­ ify for the reduced tax rate if weekly hour require­ ments are met. Amended returns Amending to elect or revoke. You can’t amend to revoke or make the election after your 2020 return is filed unless you file an amended return on or before the original due date of May 17, 2021; or if filing on extension, before the extension due date of October 15, 2021. Example 5: Liam filed his original return on March 1, 2021 and didn’t elect the qualified business income reduced tax rate. He files an amended return on May 12, 2021 to make the election to use the reduced tax rate. Liam will be allowed the qualified business income reduced tax rate because the amended return was filed before the original due date. Example 6: Maggie filed her original return with a timely-filed extension on August 12, 2021 and elected the qualified business income reduced tax rate. She files an amended return on October 1, 2021 to revoke the election. Maggie will be allowed to revoke the qualified business income reduced tax rate because the amended return was filed before the extended due date. Amended Schedule OR-PTE. You must amend Sched­ ule OR-PTE if you elected to use the reduced tax rate and: • An IRS or other state audit resulted in a change that affects your Oregon return; • You amended your federal or other state return and the changes you made affect your Oregon return; • You have an NOL; or • You need to correct income or deductions you orig­ inally reported. If you amend Schedule OR-PTE after the due date for the return (May 17, 2021, or October 15, 2021, if fil­ ing on extension), you must report the tax using the reduced rate on the amended tax worksheet even if the amount of tax using the ordinary tax rate is less. This is because the election to use the reduced tax rate is irrevocable and can’t be changed by filing an amended return after the due date for the return. See the instructions for Schedule OR-PTE-FY, Sched­ ule OR-PTE-NR, or Schedule OR-PTE-PY for tax rate charts and additional information. Basis of business assets transferred into Oregon (ORS 316.707) [Addition code 150] [Subtraction code 358] There are several ways that nonresidents can bring assets into Oregon’s taxing jurisdiction. For example: • You become an Oregon resident and transfer busi­ ness assets into Oregon. • You become an Oregon resident and leave the assets in the other state. • You open a business in Oregon and transfer busi­ ness assets into Oregon. Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller. The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Sec­ tion 179. The fair market value and useful life are fig­ ured when you bring the asset into Oregon. Reduce the federal unadjusted basis or the fair mar­ ket value of the asset by any Oregon depreciation previously allowed. Example: Bob was a California resident. He has owned a business in Yreka, California since 1995. Bob bought an office building in Yreka for $800,000. He placed it in service March 1, 1995. For federal purposes, the build­ ing is 31½-year real property and is being depreciated using the applicable percentages. On January 1, 2018, Bob bought a truck for $45,000. For federal purposes, the truck is five-year property and is being depreci­ ated using the applicable percentages. On January 1, 2020, Bob moved to Ashland, but he con­ tinues to operate his business in Yreka. At that time, Other items

150-101-431 (Rev. 04-01-22) 87 the building had a fair market value of $1,473,000, and the truck’s fair market value was $27,000. Because Bob is an Oregon resident, he must determine his Oregon basis to depreciate his assets for Oregon. The Oregon adjusted basis is computed as follows: Building Smaller of: Cost of building (federal unadjusted basis) $ 800,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Net basis $ 800,000

or Fair market value as of January 1, 2020 $ 1,473,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Oregon fair market value $ 1,473,000 Bob will depreciate the building for Oregon using the $800,000 federal unadjusted basis and Modified Accelerated Cost Recovery System (MACRS) depre­ ciation for its original federal applicable recovery period. Truck Smaller of: Cost of truck (federal unadjusted basis) $ 45,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Net basis $ 45,000

or Fair market value as of January 1, 2020 $ 27,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Oregon fair market value $ 27,000 Bob will depreciate the truck for Oregon using the $27,000 Oregon fair market value and MACRS depre­ ciation for its original applicable federal recovery period. Sale of assets (ORS 316.716) [Addition code 154] [Subtraction code 355] Gain or loss on property you began depreciating after 1980 and before 1985. During the tax year, did you sell property you began depreciating after December 31, 1980, and before January 1, 1985? If you did and didn’t make the one-time adjustment on your 1996 Oregon return, your gain or loss for Oregon may differ from your gain or loss for federal purposes. If you sold this property during the year, you must make an adjustment on your return to reconcile your Oregon basis to your federal basis. To figure your gain or loss for Oregon, use the depre­ ciation you claimed on your Oregon return in prior years. Subtract the total amount of gain or loss for Oregon property you began depreciating after 1980 and before 1985 from your gain or loss for federal purposes for the same property. The difference is an Oregon addition or subtraction. Keep a worksheet with your tax records to show how you figured the difference. Addition or subtraction If Oregon depreciation is less than your federal depreciation, you will have an Oregon subtraction. If Oregon depreciation is more than your federal depre­ ciation, you will have an Oregon addition. Partnerships and S corporations Partnerships report differences between federal and Oregon depreciation on the Oregon partner­ ship return. S corporations report the differences on Schedule SM of the Oregon S corporation return. The differences must also be shown on the partner’s or shareholder’s Schedule K-1 or equivalent. The differences will be added to or subtracted from income on the individual partner’s or shareholder’s Oregon income tax return. Gain on the sale of an Oregon residence (ORS 316.048) [Addition code 152] [Subtraction code 354] Generally, Oregon will tax the gain from the sale of your residence only when the federal government taxes it. Oregon won’t tax any gain excluded on your federal return. This is true even if you reinvest in a home outside Oregon. The Oregon basis of your home is generally the same as your federal basis. If your gain is taxed by the fed­ eral government, Oregon will tax the same amount of gain. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may not be the same as the federal basis due to depreciation differences. Note: If you are also taxed by another state or coun­ try on some or all of the gain, see “Mutually-taxed gain on the sale of residential property“ under “Stan­ dard credits.“ Other items

150-101-431 (Rev. 04-01-22) 88 Fiduciary adjustment (ORS 316.697) [Addition code 133] [Subtraction code 310] The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Sched­ ule OR-ASC or OR-ASC-NP as an addition using code 133 or as a subtraction using code 310. Example: Frank reported $5,000 of trust income from R&C Farewell Trust on federal Schedule E. Of this, $2,500 was from interest on U.S. obligations, which isn’t taxable by Oregon. He also received interest income of $1,000 from the trust that wasn't included in his federal income. This interest was from Cali­ fornia bonds and is taxable by Oregon. Frank should claim a $1,500 subtraction, the net of both fiduciary adjustment items, using subtraction code 310. Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year. Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income. Market-based sourcing (ORS 314.665) Oregon has changed from sourcing business income from the place where the cost of performance is incurred to the place where the taxpayer's market is located. This change affects nonresidents who do business in Oregon who are required to apportion their business income among two or more states. Example: Andrew, a tax professional and Washing­ ton state resident, advertises his services in Oregon, Idaho, and Washington and has clients in all three states. He provides services for his clients out of his Washington office. He earned $400,000 from his Oregon clients, $350,000 from his Idaho clients, and $250,000 from his Washington clients. Although his work is performed in Washington state, Andrew would report 40 percent of his sales ($400,000) as Oregon income because 40 percent of his market is in Oregon. Passive activity losses (PALs) (ORS 314.300) [Addition code 155] [Subtraction code 356] Generally, a passive activity is any: • Rental activity including equipment and real estate, regardless of your level of participation; or • Business in which you don’t materially participate on a regular, continuous, and substantial basis. Oregon generally adopted the federal passive loss rules in the federal Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. There are some differences in passive losses for Oregon. How to compute and report passive losses for Oregon 1. Modify the federal passive loss by the applicable additions and subtractions listed under “Oregon modifications to federal passive activity losses.“ 2. Apply the federal passive loss limitations to the Oregon passive loss you computed in step 1 above. This will determine how much is deductible for Oregon. To apply the income limitations, use fed­ eral AGI before modifying for Oregon additions or subtractions. 3. Figure the difference between the passive loss reported on your federal return and the deduct­ ible Oregon loss you figured above. You will claim an addition or subtraction on your Oregon return. 4. Keep a schedule with your tax records showing your computations for steps 1, 2, and 3 above. 5. Also keep a schedule (when applicable) showing the allocation of Oregon modifications between the Oregon passive loss activities and other busi­ ness activities. Example: Depreciation modification. Elijah has deter­ mined that his depreciation for Oregon is more than his federal depreciation by $1,000. Ordinarily, he would report a $1,000 subtraction on his Oregon return for the difference in depreciation. Of the $1,000 difference in depreciation, $600 is allo­ cable to passive activities and $400 is allocable to other business activities. His Oregon passive activity loss is his federal passive activity loss increased by the $600 difference in depreciation. He reports the remaining $400 difference in depreciation allocable to other business activities as a subtraction on his Oregon return. Passive activity credits. You can offset in full the tax credits related to a passive activity against your Ore­ gon tax liability for the taxable year. Other items

150-101-431 (Rev. 04-01-22) 89 Active participants in rental real estate activities. The $25,000 offset for rental real estate activities provided in IRC Section 469(i) applies to deductions allowed under federal and Oregon law. Don’t reduce the off­ set by deduction equivalents defined in IRC 469 Sec­ tion (j)(5). The phaseout amounts ($100,000/$150,000) are based on federal AGI regardless of whether you are a full-year resident, part-year resident, or nonresi­ dent of Oregon. Part-year residents. Compute your passive activity losses from activities carried on while an Oregon resident. Add those connected with Oregon sources while a nonresident. Modify the result by applicable additions and subtractions listed here. Nonresidents. Compute your passive activity losses from activities connected with Oregon sources. Modify the loss by the applicable additions and subtractions listed here. The loss must be connected with Oregon sources even if you later become an Oregon resident. Oregon modifications to federal passive activity losses Listed here are some of the modifications you must make for Oregon: 1. Additions: • Interest or dividends on obligations of another state. • Depletion in excess of the adjusted basis of property. • Gain on voluntary or involuntary conversions or exchanges of Oregon property reinvested outside Oregon when no election is made to defer it. 2. Subtractions: • Gain or loss on the sale of public utility stock where dividends were reinvested. • Interest or dividends on obligations of the U.S. government. • Wages you didn’t deduct from federal taxable income because you claimed the federal work opportunity credit. • Interest or dividends on obligations of Oregon political subdivisions. 3. Additions or subtractions: • Differences in depreciation. • Differences in gain or loss from basis differences in the sale of an asset. Note: Items used to modify the federal passive activ­ ity loss must occur in the ordinary course of a trade or business. See OAR 150-314-0110 for more information. Oregon percentage (ORS 316.117) Part-year residents and nonresidents must compute an Oregon percentage. This determines allowable deduc­ tions, modifications, Oregon tax , and some tax credits. In most cases, you’ll divide your income after sub­ tractions from the Oregon column by your income after subtractions from the federal column. Carry the decimal to three places and enter the figure on the Oregon percentage line. Don’t fill in more than 100 percent or less than 0. Negative income. If the federal column is negative and the Oregon column is positive, your Oregon per­ centage is 100 percent. If the federal column is posi­ tive or negative and the Oregon column is negative, your Oregon percentage is 0 percent. If both columns are negative, treat both columns as if they were posi­ tive and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon number, divide the federal number by the Oregon number. See Table 10 for examples. Example: Lisa reported $30,000 of income after sub­ tractions in the federal column. She reported $10,000 of income after subtractions in the Oregon column. Here’s how she figured her Oregon percentage: $10,000 ÷ $30,000 = 0.333 or 33.3% Table 10. Oregon percentage

Federal column Oregon column Oregon percentage ($20,000) $42,000 100.0% $50,000 ($22,000) 0.0% ($25,000) ($15,000) 100.0% ($12,000) ($15,000) 80.0% Deductions and modifications

(ORS 316.695) You may claim either Oregon itemized deduc­ tions or Oregon’s standard deduction, whichever is larger, but not both. You can claim Oregon item­ ized deductions even if you’re claiming the stan­ dard deduction on your federal return. Oregon itemized deductions Oregon Schedule OR-A. Oregon has its own form for reporting itemized deductions. If you're itemizing your deductions for Oregon, include Schedule OR-A with your Oregon return whether or not you're item­ izing deductions on your federal return. You still use federal definitions and AGI to figure any itemized deduction limitations. For more information, see the instructions for Schedule OR-A. Other items

150-101-431 (Rev. 04-01-22) 90 Itemized deduction add backs Certain items that you may be including on Sched­ ule OR-A must be modified for Oregon purposes. If you’re claiming a deduction that must be modified for Oregon, you may need to add back some (or all) of the amount you deducted. All deductions that must be added back can be found under “Additions.” Follow these instructions for reporting an itemized deduction add back: • Full-year residents: Enter the amount you’re add­ ing back with the indicated addition code on Sched­ ule OR-ASC, section 1. • Part-year residents and nonresidents: Use the indicated modification code and enter the dollar amount with a minus sign to report the add back as a “negative modification” on Schedule OR-ASC- NP, section 4. Other Oregon modifications Part-year residents and nonresidents. Most income items that are modified for Oregon are reported as additions or subtractions. However, a few items must be reported by part-year residents and nonresidents as modifications on Schedule OR-ASC-NP. These are: • Artist’s charitable contribution subtraction (part- year filers only). • Federal income tax refund addition (negative modification). • Subtraction for federal tax from a prior year. • Foreign tax subtraction. See these items under “Additions” or “Subtractions” and the instructions for Schedules OR-ASC and OR- ASC-NP for more information. Oregon standard deduction Use the standard deduction only if it’s larger than your Oregon itemized deductions. If your filing status is married filing separately and your spouse itemizes, your standard deduction is $0. Generally, your standard deduction is based on your filing status: Single …………………………………………… $2,315 Married filing jointly ………………………………$4,630 Married filing separately If spouse claims standard deduction ……… $2,315 If spouse claims itemized deductions …………… $0 Head of household …………………………… $3,725 Qualifying widow(er) ………………………… $4,630 Standard deduction—Nonresident aliens. The stan­ dard deduction for nonresident aliens is $0. Standard deduction—Short-period return. Indi­ viduals filing a short-period return may not claim a standard deduction. Standard deduction—Age 65 or older, blind. If you or your spouse turned 65 on or before January 1, 2021, or if you or your spouse are blind, you’re entitled to an additional deduction amount. If you checked one or more of the boxes on line 17 of your Oregon Form OR-40 or line 38 of your Oregon Form OR-40-N or OR-40-P, multiply the number of boxes checked by: • $1,000 if married or qualifying widow(er). • $1,200 if single or head of household. Add this amount to the standard deduction amount for your filing status from above. Example 1: Matt and Sandy are married and file a joint return. Matt is 67 years old, and Sandy, age 62, is blind. They check boxes 17a and 17d on their Form OR-40. Their total standard deduction is $6,630. They figure their standard deduction as follows:

$4,630 Standard deduction for their filing

status MFJ

$2,000 2 x $1,000

$6,630 Total standard deduction Standard deduction—Single or married filing jointly dependents. If you (or you and your spouse, if fil­ ing jointly) can be claimed as a dependent on another person’s return, use the following worksheets to fig­ ure your standard deduction. Use these worksheets even if the other person doesn’t claim you (or your spouse, if filing jointly). Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually perform, and any part of a scholarship or fellowship grant that you must include in your gross income. Standard deduction worksheet for single dependents 1. Enter your earned income. 1. 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. 6. Basic standard deduction for single. 6. $ 2,315 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2021, enter $1,200; if not, enter $0. 8. Other items

150-101-431 (Rev. 04-01-22) 91 9. If blind, enter $1,200; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 2: Homer is single, age 17, not blind, and claimed as a dependent by his father. He had $1,135 of earned income. Homer’s standard deduction is $1,485, figured as follows: 1. Enter your earned income. 1. $ 1,135 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. $ 1,485 4. Minimum standard deduction, set amount. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. $ 1,485 6. Basic standard deduction for single. 6. $ 2,315 7. Enter the smaller of line 5 or 6. 7. $ 1,485 8. If age 65 by 1/1/2021, enter $1,200; if not, enter $0. 8. $ 0 9. If blind, enter $1,200; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 1,485 Standard deduction worksheet for married filing jointly (MFJ) dependents 1. Enter your earned income. 1. 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. 6. Standard deduction for MFJ. 6. $ 4,630 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2021, enter $1,000; if not, enter $0. 8. 9. If blind, enter $1,000; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 3: Jack and Kris are married and are both full-time college students. Jack is 20 and Kris is 21. Neither is blind. They live in Jack’s parents’ home and are both claimed as dependents by Jack’s par­ ents. Jack and Kris work part-time at the university. Together they had $7,620 of wage income. Jack and Kris will file a joint tax return. They calculate their standard deduction as follows: 1. Enter your earned income. 1. $ 7,620 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. $ 7,970 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. $ 7,970 6. Basic standard deduction for MFJ. 6. $ 4,630 7. Enter the smaller of line 5 or 6. 7. $ 4,630 8. If age 65 by 1/1/2021, enter $1,000; if not, enter $0. 8. $ 0 9. If blind, enter $1,000; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 4,630 Interest on certain installment sales (ORS 314.302) Do you have installment sales for which you had to pay interest on the deferred tax liability for fed­ eral purposes? If so, you must also pay interest for Oregon. The amount due is computed the same way as for federal. The interest rate for 2020 is 6 percent per year, or 0.5 percent (0.005) per month. The inter­ est rate for 2021 is 4 percent per year, or 0.33 percent (0.0033) per month. Part-year residents. For the part of the year you were a nonresident, include only those installment obliga­ tions that were from dispositions of property in this state. For the part of the year you were a resident, consider all installment obligations. Nonresidents. Include only those installment obliga­ tions from dispositions of Oregon property. Farm liquidation long-term capital gain tax rate (ORS 316.045) If you sold or exchanged capital assets used in farm­ ing activities during the tax year, you may be able to apply a reduced tax rate to your net long-term capital gain. Farming activities include: • Raising, harvesting, and selling crops. • Feeding, breeding, managing, or selling: livestock, poultry, fur-bearing animals, or honeybees or the product thereof. • Dairying and selling of dairy products. • Stabling or training horses, including provid­ ing riding lessons, training clinics, and schooling shows. • Propagating, cultivating, maintaining, or har­ vesting: aquatic species, birds, and other animal species. Other items

150-101-431 (Rev. 04-01-22) 92 • Growing and harvesting cultured Christmas trees or certain hardwood timber. • On-site construction and maintenance of equip­ ment and facilities used in farming activities. • Preparing, storing, or disposing of products or by- products raised for human or animal use on land employed in farming activities. Farming activities don’t include growing and har­ vesting trees of a marketable species, other than growing and harvesting cultured Christmas trees or certain hardwood timber. General rules. The sale or exchange must end all of your ownership interests in a farming business or in property that is used in a farming business. You may not claim the special tax rate on a sale or exchange to a relative, as that term is defined by IRC Section 267. A farm dwelling or farm homesite isn’t considered to be property used in the trade or business of farm­ ing. If you have a net loss from all the assets you sold or exchanged during the year, you don't qualify for the reduced rate on the sale or exchange of your farm assets. Partnerships or S corporations. The sale of owner­ ship interests in a farming corporation, partnership, or other entity qualifies for the special tax rate. The taxpayer must have had at least a 10 percent owner­ ship interest in the entity before the sale or exchange. Computing the tax. Use Publication OR-FCG, Farm Liquidation Long-Term Capital Gain Tax, to figure your tax using the reduced rate. Download the publication from our website or contact us to order it. Check the box labeled “Worksheet FCG” on your Oregon tax return. Don't include the worksheet with your return; keep it with your tax records. Farm income averaging (ORS 314.297) You can figure your Oregon income tax by averag­ ing this year's farm income using your farm income from the previous three (base) years. This may result in less tax if this year's farm income is higher than your taxable income for one or more of the three prior years. A farming business is the trade or business of cul­ tivating land or raising or harvesting any agricul­ tural or horticultural commodity. Your elected farm income is the amount of your taxable income from farming that you elect to include in the calculation. You don’t have to include all of your taxable income from farming. It may be to your advantage to include less than the full amount. Forms. Use our farm income averaging forms, worksheets, and instructions to figure your Oregon income tax. They can be downloaded from our web­ site or ordered by contacting us. Be sure to mark the box on your return to indicate that you figured your tax using farm income averag­ ing. Don't include the form, worksheets, or schedules with your return; keep them with your tax records. Federal law disconnect [Addition code 131] Use this addition code to report items that were excluded or deducted from your federal taxable income and should be added back for Oregon pur­ poses, where those items don’t already have an assigned addition code. Contact us if you have ques­ tions about a situation involving a disconnect from federal taxable income that isn’t described elsewhere in this publication. Other items

150-101-431 (Rev. 04-01-22) 93 Credits Types of credits There are three types of Oregon tax credits: standard, carryforward, and refundable. In addition, some of these credits require certification from another state agency. Certain credits must be prorated on part-year and nonresident returns. Refer to the instructions for the credit you are claiming for specific details. Standard credits. These credits aren’t refundable. They can’t exceed your tax liability for the current tax year. Unused credit in excess of your tax liability can’t be carried forward to a later tax year. Carryforward credits. These credits aren’t refund­ able. They can’t exceed your tax liability for the cur­ rent tax year, but you may carry forward the unused amount to a later tax year. Refundable credits. Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability will be refunded to you. Certified credits. For certain credits, you must qual­ ify, apply, and be certified before you can claim them on your return. Other agencies, not the Department of Revenue, are responsible for certifying these cred­ its. Contact information can be found in the instruc­ tions for each certified credit in this section. Full-year residents. All credits you qualify for are allowed on Form OR-40. Part-year residents and nonresidents. You must pro­ rate certain Oregon credits by multiplying your total credit by your Oregon percentage from Form OR- 40-N or OR-40-P to figure the amount you can claim on your Oregon return. You must prorate the follow­ ing credits: • ABLE account contributions. • Agriculture workforce housing. • Bovine manure production/collection. • Crop donation. • Earned income. • Employer scholarship. • Fish screening devices. • Oregon 529 College Savings Network contributions. • Oregon Cultural Trust. • Oregon Veterans’ Home physicians. • Personal exemption. • Reservation enterprise zone. • Residential energy. • Rural emergency medical technicians. • Rural medical practitioners. • Rural technology workforce development. • Short line railroad rehabilitation. • University Venture Development Fund contributions. • Working family household and dependent care. S corporation shareholders. Certain carryforward credits earned by S corporations pass through to shareholders, who then claim these credits on their personal income tax returns. Each of these credits may only be claimed on an Oregon personal income tax return by shareholders of an S corporation that qualifies for the credit or, if the credit is transferable, is a qualified transferee of the credit from another corporation that earned the credit. Except as noted, each credit is limited to the shareholder’s income tax liability for the year, although the carryforward pro­ visions may vary. For more information about credits available to S corporations, visit our website. Claiming credits. The exemption credit, political con­ tribution credit (full-year filers), and earned income credit are claimed on specific lines on the return. All other credits are reported on Schedule OR-ASC or Schedule OR-ASC-NP. The schedule contains sec­ tions that are specific for each of the three types of credits. Enter the credit code and the amount you are claiming in the applicable section. The total dol­ lar amount of the credits entered in each section is reported on your return. See the explanation for the specific credit on the following pages to find its code number and more detailed instructions. A list of all credits and their code numbers is included in the Appendix. If you claim any credits on Schedule OR-ASC or OR-ASC- NP, include the schedule when you file your return. Credits

150-101-431 (Rev. 04-01-22) 94 Standard credits Exemption credit (ORS 316.085) This year’s maximum credit is $210 for each quali­ fying personal exemption. The exemption amount is indexed for inflation. A personal exemption credit isn’t allowed if your fed­ eral AGI on line 7 of Form OR-40, or line 29F of Form OR-40-N or Form OR-40-P exceeds: • $200,000 for married filing jointly, head of house­ hold, or qualifying widow(er) filers; or • $100,000 if your filing status is single or married filing separately. Part-year residents and nonresidents. Multiply your personal exemption credit by your Oregon percentage. Personal exemption The term “personal exemption” refers to an individ­ ual who qualifies for a personal exemption deduction on the federal return under IRC Section 151. Through tax year 2025, the amount of the federal deduction is $0; however, the qualifications for the deduction under IRC Sections 151 and 152 haven’t changed, and neither have the qualifications for claiming the Ore­ gon personal exemption credit. An individual who qualifies for a personal exemption deduction under IRC Sections 151 and 152 includes: • The taxpayer (including both the primary and sec­ ondary taxpayers who file a joint return); • The taxpayer’s spouse, if the taxpayer is filing a separate return and the spouse has no gross income and doesn’t qualify for an exemption deduction on another taxpayer’s return; and • The taxpayer’s qualifying child or qualifying relative. Qualifying child. A qualifying child is an individual who is the taxpayer’s: • Child or the child’s descendant, or • Brother, sister, stepbrother, stepsister; or their descendant. The term “child” includes a son, daughter, stepson, or stepdaughter; and includes legally-adopted children and foster children who have been placed with the taxpayer by an authorized placement agency or by court order. At the end of the calendar year, the child must be: • Under the age of 19; or • A student under the age of 24; or • Permanently and totally disabled, regardless of age. A “student” is an individual who attended an edu­ cational organization on a full-time basis during each of five calendar months during the tax year. The educational organization must have a regular faculty and curriculum, with a regularly-enrolled student body who attend where the organization’s educa­ tional activities normally take place. An individual who is a “permanently and totally dis­ abled” child is one who is unable to engage in any “sub­ stantial gainful activity,” as that term is defined under federal law, due to a physical or mental impairment that is medically determinable and can be expected to result in death, or which has lasted, or can be expected to last, for at least 12 continuous months. Qualifying relative. A qualifying relative is an indi­ vidual for whom the taxpayer pays over one-half of the individual’s support for the year, and who is the taxpayer’s: • Child, brother, sister, stepbrother, or stepsister, or their descendant, who isn’t also a qualifying child of the taxpayer; • Father or mother, or their ancestor; • Stepfather, stepmother, father-in-law, or mother-in-law; • Brother-in-law or sister-in-law; • Uncle or aunt; • Nephew or niece; or • An individual who isn’t listed above but is a mem­ ber of the taxpayer’s household and has the same principal place of abode as the taxpayer. The qualifying relative can’t have gross income for 2020 that exceeds $4,300, and can’t be claimed on another tax­ payer’s return. They must also be a U.S. citizen or national, or a resident of the United States, Mexico, or Canada. Special rule for custodial parents. If a qualifying child receives over one-half of their support from parents who are divorced, legally separated, or living apart for the last six months of the year, and the child is in the custody of one or both parents for more than half of the year, the personal exemption credit for the child may be claimed by the noncustodial parent if the custodial parent (the parent who has custody for the greater part of the year) makes a written statement releasing the exemption to the noncustodial parent for the tax year. The custodial parent’s written statement should be kept with the taxpayer’s records; we may ask for it later. For additional information about requirements for the personal exemption deduction, including details about certain exceptions and support limitations, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information. Credits–Standard

150-101-431 (Rev. 04-01-22) 95 You and your spouse You are allowed one personal exemption credit for yourself if no one else can claim you as a dependent. You are allowed one personal exemption credit for your spouse if no one else can claim your spouse as a dependent and: • You’re filing a joint return, or • Your filing status is married filing separately and your spouse has no income. If someone else can claim you as a dependent, you can’t claim an exemption for yourself. If someone else can claim your spouse as a dependent, you can’t claim their exemption. This is true even if the other person doesn’t claim you (or your spouse) as a dependent. Severely disabled (ORS 316.752 , 316.758) Did you have a severe disability at the end of the tax year? If so, you can claim an additional personal exemption credit if your federal AGI doesn’t exceed $100,000, regardless of your filing status. You may qualify for the severely disabled exemption even if someone else can claim you as a dependent. You’re considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet or legs; or • You permanently lost the use of both hands; or • You’re permanently blind; or • You have a permanent condition or an impairment of indefinite duration that limits your ability to:

— Earn a living, or

— Maintain a household, or

— Transport yourself. Deafness or hearing impairment alone don’t qualify as a severe disability for purposes of this additional exemption credit. This is true regardless of any special equipment you may use in your home or workplace. You don’t qualify for this exemption if: • You have a temporary disability from an injury or illness and are expected to recover; or • Your condition keeps you from doing your former work but not from doing other kinds of work with­ out special equipment; or • Your federal AGI is more than $100,000, regardless of your filing status. If you have a permanent severe disability, your physi­ cian must write a letter describing it. Keep the letter with your permanent health records. If you qualify, check the “Severely disabled” exemp­ tion box on your return. If your spouse qualifies, they may also claim this additional exemption credit. All dependents You are allowed one personal exemption credit for: • Each qualifying child you're able to claim as a dependent, and • Each of your other qualifying relatives. On your Oregon return, you must include the fol­ lowing information for all dependents: first and last name, relationship to you, Social Security number, and date of birth. Child with a disability (ORS 316.099) You may be entitled to an additional exemption credit for your dependent child who has a qualifying dis­ ability. To qualify, all of the following must be true. Your federal AGI must not be more than $100,000, regardless of your filing status, and your child: • Qualified as your dependent for the year, and • Was eligible for early intervention or special edu­ cation services, as defined by the Department of Education, and • Was considered to have a disability as of Decem­ ber 31, 2020, under the federal Individuals with Disabilities Education Act, and • Was age 21 or younger at the end of the tax year. Eligible disabilities and their Oregon Department of Education code numbers include:

— Autism spectrum disorder (82).

— Communication disorder (50).

— Deafblindness (43).

— Developmental delay (98).

— Emotional disturbance (60).

— Hearing impairment (20).

— Intellectual disability (10).

— Orthopedic impairment (70).

— Other health impairment (80).

— Specific learning disability (90).

— Traumatic brain injury (74).

— Visual impairment (40). Each year, you must be able to provide an eligibility statement that confirms one of the disabilities listed above from the child’s Individualized Education Pro­ gram (IEP) or Individualized Family Service Plan (IFSP). Keep the eligibility statement with your per­ manent health records. If your dependent qualifies, mark the “Child with qualifying disability” box by your dependent’s name on your return. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 04-01-22) 96 Income taxes paid to another state (ORS 316.082, 316.131) [Credit code 802] If you pay tax to Oregon and another state on the same income, you have “mutually-taxed income.” In certain circumstances, you may be able to claim a credit on your Oregon return for income taxes paid to another state. Only take a credit for tax paid to another state if Oregon taxed the income and the other state also had a right to tax the same income. For instance, if you live in Oregon, other states can’t tax your pension income. Only the state you live in can tax your pension income. If you pay tax to another state on your pension income, you can’t take a credit for that tax. You can’t take a credit for paying tax you don’t owe. This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, alternative minimum tax (AMT), prop­ erty tax, or other state taxes that aren’t based on income. For example, the Idaho Permanent Building Fund Tax and the Washington Business and Occu­ pation (B & O) Tax don’t qualify because they aren’t based on income. When can this credit be claimed? You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit. If Oregon and another state tax you on the same income, but in different tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information. If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either the credit for taxes paid to another state or the credit for mutually-taxed gain on the sale of residential property. You can't claim both credits. See “Mutually-taxed gain on the sale of residential property“ for more information about this credit. Definitions Modified AGI • Full-year residents. Your modified AGI is your fed­ eral AGI modified by certain Oregon additions and subtractions. • Part-year residents and nonresidents. Your modi­ fied AGI is the part of your federal AGI that is tax­ able to Oregon, modified by certain Oregon addi­ tions and subtractions. Formula I Modified AGI taxed by both states Modified AGI x Your Oregon tax after all other credits Formula II Modified AGI taxed by both states Total income on the other state’s return x Other state’s tax after all other credits Oregon additions. These are generally items of income that are taxed by Oregon but not by the federal government. See “Additions” for more information. Oregon subtractions. These are generally items of income that are taxed by the federal government but not by Oregon. For example, U.S. bond interest is an Oregon subtraction because it’s income reported on your federal return that isn’t taxed by Oregon. Note: Don’t subtract the federal tax you paid, because it isn’t an income item. See “Subtractions” for more information. Who may claim this credit? Full-year residents. You may claim the credit on your Oregon return only if you pay tax on the same income to both Oregon and a state other than Ari­ zona, California, Indiana, or Virginia. If you are a full-year Oregon resident with income that is taxed by Arizona, California, Indiana, or Virginia, you must claim the credit on the nonresident return that you file with that state; don’t claim the credit on your Oregon return. See “Note for full-year residents” and “Exception for Oregon resident partners and S corporation shareholders.” Example 1. Roy is a full-year Oregon resident. He has wages from a job in Idaho and income from rental property he owns in California. His Idaho wages and California rental income are taxed by Oregon as well as those states. Roy may claim a credit on his Oregon return for taxes paid to Idaho. He must claim a credit on his California nonresident return for taxes paid to Oregon. Note for full-year residents. If one of the listed states doesn’t allow the credit on your nonresident return, you may amend your Oregon return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to Arizona, California, Indiana, or Virginia on income that was also taxed by Oregon; 2. You paid that state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the nonresident return you filed with that state; and 4. That state didn’t allow your credit. Credits–Standard

150-101-431 (Rev. 04-01-22) 97 Part-year residents. Your credit is based on your mutually-taxed income during the part of the year that you were a nonresident and your mutually- taxed income during the part of the year that you were a resident. • You may claim the credit on your Oregon return for the part of the year you were a nonresident of Oregon only if you pay taxes on the same income that is taxed by both Oregon and one or more of the following states: Arizona, California, Indiana, or Virginia. If the income was taxed by Oregon and a state other than those listed, you must claim a credit for taxes paid to Oregon on the return you file with the other state. See “Note for nonresidents.” • You may claim the credit on your Oregon return for the part of the year you were a resident of Oregon if you pay Oregon tax on income that was also taxed by a state other than Arizona, California, Indiana, or Virginia (or you meet the “Exception for Oregon resident partners and S corporation shareholders”). See “Note for full-year residents“ above. Example 2: Charlotte operates a business in Oregon. She moved from Oregon to Virginia in May, but con­ tinues to have income from her Oregon business after she moves. She also has income during the year from rental properties she owns in Oregon, Virginia, and Georgia. She files a part-year Oregon return, a part-year Virginia return, and a nonresident Geor­ gia return. She will claim a credit for taxes paid to another state on each kind of income as follows: • Oregon business income. Charlotte will pay tax to Oregon for the part of the year she was a resident, and to both Oregon and Virginia for the part of the year she was a nonresident. She may claim a credit on her Oregon return for taxes paid to Virginia for the part of the year that she was a nonresident of Oregon. • Georgia rental income. Charlotte will pay tax to both Oregon and Georgia on this income only dur­ ing the part of the year that she was a resident of Oregon. Once she moves to Virginia and is no lon­ ger an Oregon resident, Oregon doesn’t have the right to tax this income. She may claim a credit on her Oregon return for tax paid to Georgia only for the part of the year that she was an Oregon resi­ dent. (She will claim a credit on her Virginia return for tax paid to Georgia for the part of the year that she was a Virginia resident.) • Virginia rental income. Charlotte will pay tax to both Oregon and Virginia for the part of the year that she was a resident of Oregon, and only to Vir­ ginia after she moves. She can’t claim a credit on her Oregon return for taxes paid to Virginia on this income when she was an Oregon resident. Instead, she must claim a credit for taxes paid to Oregon on her Virginia return for the part of the year that she was a nonresident of Virginia. Nonresidents. You may claim a credit on your Oregon return if you pay taxes on the same income to both Oregon and one or more of the following states— Arizona, California, Indiana, or Virginia. If you pay Oregon tax on income that is also taxed by a state other than those listed, you must claim the credit for taxes you paid to Oregon on the return you file with the other state. See “Note for nonresidents.“ Example 3: Elisa, a calendar-year taxpayer, is a resi­ dent of Indiana who receives income from an upscale boutique she owns in Oregon. Elisa may claim a credit for taxes paid to Indiana on the income from the boutique on her Oregon nonresident return. Example 4: On January 1, Elisa moves away from Indiana and becomes a resident of Hawaii. She still receives income from the boutique in Oregon. Because Hawaii isn’t one of the states listed above, Elisa must claim a credit for taxes paid to Oregon on the return she files with Hawaii. Note for nonresidents. If a state (other than those listed above) doesn’t allow your credit, you may amend your Oregon nonresident return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to a state (other than Arizona, Cali- fornia, Indiana, or Virginia) on income that was also taxed by Oregon; and 2. You paid the other state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the other state’s return; and 4. The other state didn’t allow your credit. How do I calculate the credit amount? Calculate the credit for each state separately. The pro­ cedure for calculating the credit depends on whether you are a full-year resident, a part-year resident, or a nonresident of Oregon. Full-year residents Remember, you may claim the credit on your Oregon return only if you pay tax to Oregon and a state other than Arizona, California, Indiana, or Virginia on the same income. The credit for a full-year resident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to the other state; or • The amount calculated with Formula I. Note: Full-year residents don't use Formula II. Credits–Standard

150-101-431 (Rev. 04-01-22) 98 Example 5: Manar's AGI is $44,000. This includes $10,000 of rental income taxed by both Oregon and Idaho and $5,000 of U.S. bond interest. She received $1,000 in interest from municipal bonds from another state. She has a federal tax liability of $3,000. Her Idaho income tax is $300. Her net Oregon tax is $2,000 (before her credit for income taxes paid to another state). Here’s how she calculates her credit: Federal AGI $ 44,000 Modifications

Add municipal bond interest + 1,000

$ 45,000

Less U.S. bond interest – (5,000 )

Modified AGI $ 40,000 Note: The federal tax subtraction isn’t used in this computation. Formula I: ($10,000 ÷ $40,000) × $2,000 = $500. Manar’s credit is $300, the smallest of: • Her Oregon tax after all other credits ($2,000); or • The tax actually paid to Idaho ($300); or • The amount from Formula I ($500). Part-year residents Your credit is based on your mutually-taxed income, and the tax on that income, during the part of the year that you were a nonresident and your mutually- taxed income, and the tax on that income, during the part of the year that you were a resident. Your credit for the part of the year that you were a nonresident is the smallest of: • Your Oregon tax on mutually-taxed income from the nonresident period after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia on that same income; or • The amount figured using Formula I; or • The amount figured using Formula II. For the part of the year that you were a resident, your credit is the smallest of: • Your Oregon tax on mutually-taxed income while you were a resident after all other credits; or • The tax on that same income you actually paid to a state other than Arizona, California, Indiana, or Virginia; or • The amount calculated with Formula I. Important—Don't use Formula II to calculate the credit for the part of the year that you were a resident. Example 6: Ezra moved from Idaho to Oregon on September 1. He sold Oregon property on June 10, and sold Idaho property on October 18. He worked in Idaho all year. His Idaho income tax after credits is $2,000; of this amount, $700 is on income he received when he was an Oregon resident. His Oregon income tax liability after other credits is $400; of this amount, $150 is on income received during the part of the year when he wasn't an Oregon resident. His income on his Oregon and Idaho returns is: Oregon income Sale of Oregon property June 10 $ 13,500 Wages September 1 to December 31

9,000 Interest September 1 to December 31

500 Sale of Idaho property October 18: Idaho capital gain reported + 6,000* Total AGI taxable to Oregon $ 29,000 Idaho income Sale of Oregon property June 10 $ 13,500 Wages January 1 to December 31

27,000 Interest January 1 to August 31

1,000 Sale of Idaho property October 18: Idaho capital gain reported. 6,000 Less Idaho capital gain exclusion* ($3,600) Net capital gain taxed by Idaho 2,400 Total AGI taxable to Idaho $ 43,900 *If the other state has any income exclusion that applies to the mutually-taxed income, you must adjust the mutually- taxed income by the exclusion amount. In this example, Ezra’s federal capital gain is $19,500. Idaho allows Ezra to exclude 60 percent, or $3,600, of his $6,000 capital gain from the sale of the Idaho property. Ezra’s mutually-taxed income is $24,900 [($6,000 – $3,600) + 13,500 + 9,000]. Nonresident period. Ezra had $13,500 in mutually- taxed income while he was a nonresident. However, because Idaho isn’t one of the four listed states, Ezra must claim his credit for the tax paid to Oregon while he was an Idaho resident on his Idaho part-year return. Residency period. Ezra had $11,400 in mutually- taxed income when he was an Oregon resident: the $9,000 in wages earned from working in Idaho, and the $2,400 portion of the capital gain taxed by Idaho. His total income while he was a resident was $16,000: the $9,000 in wages, $1,000 in interest, and $6,000 cap­ ital gain from the Idaho property. Here’s how Ezra figures his Oregon credit for income taxes paid to Idaho on income received while he was an Oregon resident: Credits–Standard

150-101-431 (Rev. 04-01-22) 99 Formula I: ($11,400 ÷ $16,000) × $250 = $178 His credit for the resident part of the year is $178, the smallest of: • His Oregon tax after all other credits ($250); • The tax actually paid to Idaho ($700); or • The amount from Formula I ($178). Nonresidents Remember, you may claim a credit on your Oregon return only if you pay taxes on the same income to both Oregon and one or more of the following states—Arizona, California, Indiana, or Virginia. The credit for a nonresident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia; or • The amount figured using Formula I; or • The amount figured using Formula II. Example 7: Mary is a full-year resident of California. She lived in Oregon for 10 years prior to retiring to California. While living in Oregon, she acquired and maintained rental property there. She now receives installment payments from the sale of the property and pays tax to California on the gain and inter­ est. Her California income tax after credits is $100. Because she is an Oregon nonresident, only the gain is taxed on her Oregon nonresident return. Her Ore­ gon tax after credits is $350. Her income is as follows: Oregon income Capital gain on installment sale of real property $ 10,000 Total AGI taxable to Oregon $ 10,000 California income Capital gain on installment sale of real property $ 10,000 Interest on installment sale 5,000 Other interest 8,000 Business loss (20,000) Total AGI taxable to California $3,000 Her income taxed by both states is $10,000. • Formula I: ($10,000 ÷ $10,000) × $350 ($350). • Formula II: ($10,000 ÷ $3,000) × $100 ($333). Her Oregon credit is $100, the smallest of: • Her Oregon tax after all other credits ($350); or • The tax actually paid to California ($100); or • The amount from Formula I ($350); or • The amount from Formula II ($333). Where do I report the credit? A credit for taxes paid to another state is reported on Schedule OR-ASC, section 3 or Schedule OR-ASC- NP, section 5. Use credit code 802. Enter the dollar amount of the credit and the two-letter postal abbre­ viation for the other state. If you are claiming a credit for taxes paid to more than one state, list each state separately. Include Schedule OR-ASC or OR-ASC-NP when you file your Oregon return, and keep the fol­ lowing with your tax records: 1. A complete copy of the other state’s income tax return; and 2. Proof of payment of the tax, such as:

— A copy of the check written to pay the tax at the time the other state’s return is filed;

— Copies of W-2 statements verifying withhold­ ing paid to the other state;

— A copy of a cashier’s check or other negotiable instrument;

— A copy of a canceled check showing payment of tax or estimated tax payments; or

— A receipt of tax payment. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Itemized deduction You can’t take a credit and a deduction for the same item on your return. If you're claiming a credit for taxes paid to another state on your Oregon return, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Fiduciary returns. See the note under “Income taxes paid to another state by a pass-through entity” in “Additions” if the tax on which the credit is based is deducted on federal Form 1041. Exception for Oregon resident partners and S corporation shareholders [Credit code 815] Owners of companies taxed in Oregon as partner­ ships or S corporations may be able to claim a credit on their resident Oregon return for their proportion­ ate share of income taxes paid to another state by the entity. The tax must be an income tax, not a mini­ mum tax. For example, Washington state's B & O tax doesn't qualify for this credit. Claim the credit on your resident return, if: Credits–Standard

150-101-431 (Rev. 04-01-22) 100 • You elected to be included in the entity’s group/ composite filing for the other state and the entity paid your tax liability; or • The entity was taxed directly by the other state. You’re considered to have paid a pro rata share of the income tax imposed on the entity by the other state. For an Oregon resident partner or S corporation shareholder, the allowable credit is the smallest of the following: • Oregon tax on the individual’s return; or • The individual’s pro rata share of the other state’s tax; or • The individual’s pro rata share of the mutually- taxed income from an S corporation or partnership return:

— Divided by the individual’s modified Oregon income, and

— Multiplied by the Oregon tax liability from the individual return. Example 1: Oliver is a full-year Oregon resident with modified Oregon income of $30,400 and Oregon tax (after all other credits) of $1,538. Oliver is a 10 per­ cent shareholder of My Corp., an electing S corpora­ tion in California. California has a corporate tax of 1.5 percent of income, with a minimum corporate tax of $800. For this tax year, My Corp. earned $10,000 in ordinary business income, so Oliver’s share is $1,000. The corporation must pay California $800 of tax, and only $150 is attributable to income ($10,000 × 1.5%). Oliver’s share of this tax is $15. The $650 balance paid by My Corp is a minimum tax and doesn’t qualify for this credit. Oliver’s Oregon credit for income taxes paid to another state is $15, the smallest of: • Oregon tax after all other credit: $1,538, • Pro rata share of California’s tax: $15, • ($1,000 ÷ $30,400) × $1,538 = $51. Oliver claims the credit on Schedule OR-ASC using credit code 815. Example 2: Monte, an Oregon resident, receives part­ nership income from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia doesn’t allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Monte can claim a credit on his Oregon resident return. Example 3: Kate, an Oregon resident, receives income from a partnership doing business in Hawaii. She reports AGI of $21,000, including gain on the sale of partnership property in Hawaii of $5,000. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Kate’s modified AGI is $20,000 ($21,000 of AGI minus the $1,000 basis adjustment). The mutually-taxed income is $4,000 ($5,000 gain minus the $1,000 basis adjustment). Her Oregon tax after all other credits is $1,100. Her pro rata share of Hawaii tax is $360. Kate’s Oregon credit for income taxes paid to Hawaii is $220, the smallest of: • Oregon tax after all other credits: $1,100. • Pro rata share of Hawaii’s tax: $360. • Formula I: ($4,000 ÷ $20,000) x $1,100 = $220. Note: Because Kate is an Oregon resident, she doesn’t use Formula II. Addition. If the PTE paid income tax to another state for itself or on your behalf and is deducting the tax on its own return, you’ll need to add the tax payment on your return. See “Income taxes paid to another state by a pass-through entity” in “Additions.” Mutually-taxed gain on the sale of residential property (ORS 316.109) [Credit code 806] If you sell your personal residence, your Oregon taxable gain will be the same as your federal tax­ able gain. Generally, any gain you excluded on your federal return will also be excluded on your Oregon return. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may be different from the federal basis due to depreciation differences. You may qualify for this credit only if the gain on the sale of your residential property is taxed by both Oregon and another state or country. You may claim either this credit or the credit for income taxes paid to another state, but not both. You aren’t eligible to claim this credit if you qualify for a credit for income taxes paid to another state on the other state’s tax return. How much is the credit? The credit is the smaller of: • Mutually-taxed gain × Other state’s/coun­ try’s tax after all other credits Total income on the return of the other state/country or • Eight percent of the gain taxed by the other state/ country. Mutually-taxed gain. Your mutually-taxed gain is the total gain from the sale of your personal residence, reduced by any deductions or exclusions allowed by either the other state/country or Oregon. Credits–Standard

150-101-431 (Rev. 04-01-22) 101 No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Itemized deduction If you claim this credit, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Oregon Cultural Trust contributions (ORS 315.675) [Credit code 807] Did you make a donation to an Oregon nonprofit cul­ tural organization during the tax year? If so, you can make a matching donation to the Trust for Cultural Development Account and get an Oregon tax credit. How much is the credit? You may get a credit of up to 100 percent of the amount of the matching contribution, to a maximum credit of $500 per taxpayer ($1,000 on jointly filed returns). For spouses who file separate returns, each may claim a share that would have been allowed on a joint return in proportion to the contribution each spouse made. Be sure to keep receipts from both organizations with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. For more information, contact the Oregon Cul­ tural Trust at 503-986-0088 or visit their website at www.culturaltrust.org. Oregon Veterans’ Home physicians (ORS 315.624) [Credit code 808] Physicians who provide medical care to residents of an Oregon Veterans’ Home (OVH) may be eligible for a credit of up to $5,000 per year. Who can claim the credit? Any resident or nonresident individual physician may qualify for the credit. The physician must be licensed to practice in Oregon (ORS chapter 677). They must pro­ vide care to a minimum of at least eight residents at an OVH. S corporation shareholders and partnership members may only claim a credit based on the care they provided. The full amount of the credit shall be allowed to each taxpayer who qualifies in an individual capacity. How much is the credit? The credit is equal to the lesser of: • $1,000 for every eight residents for whom the physi­ cian provides care at an OVH; or • $5,000. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required You must obtain a letter from the OVH where you provided care. The letter must state that you missed no more than 5 percent of your scheduled visits dur­ ing the tax year. Keep the letter with your tax records; we may request it at a later date. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Political contributions (ORS 316.102) [Credit code 809—Schedule OR-ASC-NP only] Oregon law allows a tax credit for political contribu­ tions. You may not claim this credit if your federal AGI exceeds $150,000 on a jointly filed return, or $75,000 on all other returns. To qualify, you must have contributed money in the tax year you claim the credit. You must reduce the amount of your contribution by the fair market value (FMV) of any items or services you receive in exchange for your contribution. Contributions of goods or services don’t qualify. Keep receipts from the candidate or organization with your tax records. You can use copies of canceled checks as your receipt. How much is the credit? Your credit is equal to your contribution, limited to $100 on a joint return or $50 on a single or separate return. The $3 check-off on the Oregon tax return doesn’t qualify for this credit. Partners or S corporation shareholders can claim a credit for their share of political contributions made by the partnership or S corporation. The contribu­ tion must meet all statutory requirements. The $50 and $100 limits apply individually to each partner’s or shareholder’s return. Credits–Standard

150-101-431 (Rev. 04-01-22) 102 Which contributions qualify? Candidates and their principal campaign commit­ tees. You can claim a credit for a contribution to a candidate for federal, state, or local elective office, or to the candidate’s principal campaign committee. To qualify, at least one of the following must occur in Oregon in the same calendar year in which you made your contribution: • The candidate’s name must be listed on a primary, general, or special election ballot, • A prospective petition of nomination must be filed by or for the candidate, • A declaration of candidacy must be filed by or for the candidate, • A certificate of nomination must be filed by or for the candidate, • A designation of a principal campaign committee must be filed with the Oregon Secretary of State’s Office. Note: The designation must be made in each year that a contribution is made in order to qualify under this provision. Political action committees. You can claim a credit for contributions to political action committees (PACs). The PAC must have certified the name of its politi­ cal treasurer with the appropriate filing officer, usu­ ally the Secretary of State for statewide or regional elections, your county clerk for county elections, or your city recorder for city elections. PACs registered with the Federal Elections Commission may not be required to register in Oregon. Political parties. Political parties can be national, state, or local committees of major political parties. Oregon also allows a tax credit for contributions made to minor political parties that qualify under state law. Contact the Oregon Secretary of State’s Office in Salem at 503-986-1518 to see if a particular party qualifies. Newsletter fund–credit not allowed. Oregon doesn’t allow a credit for contributions made to a newsletter fund. Example 1: Holly contributes $275 for a fund-raising dinner for a presidential candidate. The FMV of the dinner was $35. Holly’s political contribution is $240, because she must reduce her $275 contribution by the $35 FMV of the dinner she received. Being single, Holly’s political contribution credit is limited to $50. Example 2: Burt donated a desk, chair, and a four- drawer file cabinet to his favorite PAC headquarters. The FMV of the furniture is $410. Burt has a written receipt from the PAC. He can’t claim a political contri­ bution credit because he didn’t contribute money to the PAC. His contribution of office furniture doesn’t qualify for the credit. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Reservation enterprise zone (ORS 315.506) [Credit code 810] Businesses in an Oregon reservation enterprise zone that pay tax to tribal governments can claim a credit against their Oregon income tax. The credit is equal to either: • The tribal property tax on a business facility that is paid or incurred during the tax year; or • Any tribal tax paid or incurred during the tax year the business first begins to operate in the reserva­ tion enterprise zone. The credit is allowed only if the tax is imposed uni­ formly in the territory. Contact the Oregon Economic and Community Development Department for the location of reserva­ tion enterprise zones at: www.oregon4biz.com. Who can claim the credit? The credit is available to individuals, partnerships, and corporations. Any business activity qualifies, except property leasing. The business must have begun in 2002 or later. To compute your credit, fill out Schedule OR-REZT, Reservation Enterprise Zone Tax Credit. Download the schedule from our website or call us to order it. Keep the completed schedule with your tax records. Part-year residents and nonresidents. Multiply the credit allowable to a full-year resident by your Ore­ gon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Retirement income (ORS 316.157) [Credit code 811] Who can claim the credit? If you were age 62 or older at the end of the year, and receive taxable retirement income, you may qualify for this credit. Retirement income includes payments in Oregon taxable income from: • State or local government public pensions. • Employee pensions. • Individual retirement plans. • Employee annuity plans. • Deferred compensation plans including defined benefits, profit sharing, and 401(k)s. Credits–Standard

150-101-431 (Rev. 04-01-22) 103 • Federal pensions (includes military) not subtracted from Oregon taxable income. How do you qualify for the credit? • Your household income is less than $22,500 ($45,000 if married filing jointly); and • Your Social Security and/or Tier 1 Railroad Retire­ ment Board (RRB) benefits are less than $7,500 ($15,000 if married filing jointly), and • Your household income plus your Social Security and Tier 1 RRB benefits is less than $22,500 ($45,000 if married filing jointly). What’s included in household income? Household income generally includes all income (both taxable and nontaxable) each spouse received during the year. Household income includes gross income reduced by adjustments as reported in your federal AGI. You also need to include items not in your federal AGI. These items include but aren’t limited to: • Veteran’s and military benefits. • Gifts and grants (total amount minus $500). • Disability pay. • Nontaxable dividends (other than “return of capital”). • Inheritance. • Insurance proceeds. • Nontaxable interest. • Lottery winnings. • RRB benefits (Tier 2 only). • Scholarships. • IRA conversions included in AGI. See the household income checklist in the Appendix for more help. Don’t include: • Social Security and Tier 1 RRB benefits. • Your state tax refund. • Pension income excluded from federal AGI that is a return of your contributions. • Pensions that are rolled over into an IRA that aren’t included in AGI. To determine household income, you must separate income (or loss) from businesses, farms, rentals or roy­ alties, and dispositions of tangible or intangible prop­ erty. Combine all income from similar sources for net income or loss. Any net loss from the source is lim­ ited to $1,000. NOL carrybacks or carryforwards aren’t allowed. Capital loss carryforwards aren’t allowed. If the combined total of your depreciation, depletion, and amortization deductions is more than $5,000, you must add the excess back into household income.You must also increase your household income by the Oregon income tax modification for depletion in excess of basis. How much is the credit? Use this worksheet to calculate your credit: 1. Enter the retirement income of the eligible individual(s) included on Form OR-40, line 7; or Form OR-40-N or OR-40-P Oregon column, lines 15S and 16S. (Don’t include Social Security/RRB benefits). 1. 2. Enter any federal pension income subtracted from Oregon income. See “Federal pension income.“ 2. 3. Net Oregon taxable pension. Line 1 minus line 2. 3. 4. Enter $7,500 ($15,000 if married filing jointly). 4. 5. Enter both spouses’ total Social Security and Tier 1 RRB benefits. 5. 6. Line 4 minus line 5, but not less than $0. 6. 7. Enter your household income. See the next section to determine household income. 7. 8. Household income base. Enter $15,000 ($30,000 if married filing a joint return). 8. 9. Line 7 minus line 8, but not less than $0. 9. 10. Line 6 minus line 9, but not less than $0. 10. 11. Enter the smaller of line 3 or line 10. 11. 12. Multiply line 11 by 9% (0.09). This is your credit. 12. Example 1: Jack owns a farm and has a $4,000 loss. He is also in a partnership whose main activity is farming. Jack has income from the partnership of $1,500. His net farm loss is $2,500. He may claim only $1,000 of this loss to compute his household income. Any net loss Jack has from other sources is also limited to $1,000 each. If Jack is claiming more than a $1,000 loss on any line, he must include a worksheet showing his computations. Example 2: Callie has a business with gross income of $32,000 for the year. She has an $11,000 depreciation deduction. Other business expenses are $24,500. She reports a business loss for federal purposes of $3,500. She recomputed her business income for household income purposes. The allowable depreciation deduc­ tion is limited to $5,000. She reports $2,500 business income, computed as follows: $32,000 – ($5,000 + $24,500) = $2,500. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 04-01-22) 104 Rural emergency medical service providers (ORS 315.622) [Credit code 812] A tax credit is available for emergency medical ser­ vice providers in qualifying rural areas of Oregon. The credit is based solely on determination of eligi­ bility by the Office of Rural Health. Who can claim the credit? Emergency medical service providers who provide volunteer services in a qualifying rural area may be eligible to claim this tax credit. However, the volun­ teer services must comprise at least 20 percent of the total services provided by the individual in the tax year. A qualifying rural area is an area in Oregon that is located at least 25 miles from any city with a population of 30,000 or more. How much is the credit? The credit is the lesser of $250 or your tax liability for the year. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Forms are available on their website at www.ohsu.edu/oregonruralhealth. Contact Rural Health in Portland at 503-494-4450 if you have questions or need assistance. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Rural health practitioners (ORS 315.613) [Credit code 813] A tax credit is available for health practitioners in certain rural areas of Oregon. The credit is based on eligibility requirements determined by the Office of Rural Health. Who can claim the credit? Physicians, dentists, podiatrists, optometrists, physi­ cian assistants, certified registered nurse anesthetists, and nurse practitioners can qualify for the credit. You qualify for the credit if during the tax year you: • Engage in a rural practice for at least 20 hours per week, averaged over the month. • Remain willing to serve patients with Medicare coverage and medical assistance. • Have adjusted gross income (AGI) of $300,000 or less (unless you meet an exception). The AGI limitation doesn’t apply to a physician who does one of the following:

— Practices as a general surgeon.

— Specializes in obstetrics.

— Specializes in family or general practice and provides obstetrical services. The percentage of your patients who have Medicare coverage or receive medical assistance must bear the same or greater proportion to the ratio of such persons in need of care in the county served by your practice. This ratio is determined by the Office of Rural Health and may not exceed 20 percent Medicare patients or 15 percent medical assistance patients. S corporations and partnerships don’t qualify for the credit. However, shareholders and partners can take the credit on their individual Oregon income tax returns if they meet the eligibility requirements. Beginning with the 2018 tax year, the credit may be claimed each year for up to a maximum of ten years. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Visit their website at www. ohsu.edu/oregonruralhealth for more information. Con­ tact Rural Health in Portland at 503-494-4450 to request an application. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. How much is the credit? The credit is based on the distance from your prac­ tice or hospital where you have a membership and a major population center in a metropolitan statistical area. The credit is the lesser of the amount shown in Table 11 and certified by the Office of Rural Health, or your tax liability for the year. You can claim the credit as long as you have a qualifying practice. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Table 11. Rural health practitioner credit Distance between practice/hospital and major population center, in miles Credit amount At least 10, but less than 20 $3,000 At least 20, but less than 50 $4,000 50 or more $5,000 Credits–Standard

150-101-431 (Rev. 04-01-22) 105 Carryforward credits These credits aren’t refundable. They can’t exceed your tax liability for the current tax year, but you may carry forward the unused amount to a later tax year. For each credit you claim, you’ll report on Schedule OR-ASC or OR-ASC-NP: • Any unused amount of the credit that was avail­ able to use (“awarded”) from a prior year and car­ ried forward to this year; • Any amount awarded for the first time this year; and • The total amount you’re using this year. Report any amounts carried forward from a prior year or awarded for the first time in 2020 even if you’re not using the credit this year. Use credits that expire soonest first. Note: You can’t claim an amount carried forward from a prior year unless you filed a return and claimed the credit for that year, even if none of the credit was used. Refer to the instructions for the credit you are claiming for specific details. Transferable credits. Certain carryforward credits may be transferred to another taxpayer. If you will be transferring a credit, you and the transferee must complete and submit Form OR-TFR, Transfer Notice for Certain Credits, on or before the earliest of: • Thirty days after the transfer takes place; • The date that the transferee files their return on which they claim the credit; or • The due date of the transferee’s return, including extensions. For more details about credit transfer requirements, see Form OR-TFR Instructions. Download the form and instructions from our website or contact us to order a copy. Agriculture workforce housing (ORS 315.164) [Credit code 835] Who can claim the credit? You may be eligible for a credit if you construct or rehabilitate agriculture workforce housing for sea­ sonal or year-round agricultural workers and their immediate families in Oregon. The housing must be occupied at some time during the year by an agricul­ tural worker to qualify for the credit. Housing can’t be used for any purpose except housing for agri­ cultural workers. Your family members aren’t con­ sidered agricultural workers under this credit. The credit is available for projects that physically began on or after January 1, 1990. The project must be com­ pleted before you can claim the credit. S corporations and partnerships. Individual share­ holders must claim the tax credit based on their percentage of S corporation ownership interest. Indi­ vidual partners must claim the tax credit based on their distributive share of partnership income. Your percentage should be listed on your Oregon K-1. Part-year residents and nonresidents. The credit is available to nonresidents and part-year residents who build or restore agriculture workforce housing located in Oregon. Multiply the credit amount allow­ able to a full-year resident by your Oregon percentage. How much is the credit? The total credit is 50 percent of the eligible costs actu­ ally paid or incurred to complete the agriculture workforce housing project. The credit may be taken in any of the ten consecutive tax years beginning with the tax year the agriculture workforce hous­ ing project is completed. The amount of the credit allowed in any one tax year is 20 percent of the total credit. The amount of credit you can use in any one tax year, however, can’t exceed the lesser of: • Twenty percent of the total credit; or • Your tax liability for the year. Construction and rehabilitation costs include those for financing, construction, excavation, installation, and permits. Construction costs also include acquisi­ tion of new or used prefabricated or manufactured housing. However, rehabilitation costs don’t include the costs of acquiring a building or an interest in a building. In either type of project, construction or rehabilitation, acquisition costs of land and existing improvements on that land used for the project aren’t eligible costs. Depreciation and basis. Depreciation and amortiza­ tion expenses associated with the agriculture work­ force housing project aren’t decreased by the amount of the tax credit. Your adjusted basis in the housing project isn’t decreased by the tax credit. Certification required Oregon Housing and Community Services (OHCS) must inspect the agriculture workforce housing proj­ ect prior to occupancy. For an application, call OHCS in Salem at 503-986-2000 or visit their website at www.oregon.gov/ohcs. If your project qualifies, you’ll get a tax credit approval letter. Keep the letter with your tax records. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 106 Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to nine years after the year it was first allowed (awarded). If you don’t use the carryforward within nine years, it’s lost. Example 1: Ann completes an agricultural workforce housing project in tax year 1 with eligible costs of $1,500,000. She receives a tax credit approval letter certifying a credit of $750,000 ($1,500,000 x 0.50). Ann may choose to claim her credit in any of the 10 con­ secutive tax years beginning with tax year 1. Chart A shows Ann’s tax liabilities for the next 12 years. Because Ann’s tax liability is relatively small for tax years 1 and 2, she chooses to claim her credit in tax year 3. Ann is allowed $150,000 (0.20 x 750,000) of her credit in any given tax year. She reports the allowed amount in the “Amount awarded this year” column on Sched­ ule OR-ASC. Chart A shows the allowed amounts she will report as “awarded” each year on Schedule OR- ASC, and the credit remaining after each year. Chart A: Ann’s allowed and remaining credits per year Year Tax liability Amount awarded this year Remaining credit 1 $500 $0 $750,000 2 $1,000 $0 $750,000 3 $90,000 $150,000 $600,000 4 $127,000 $150,000 $450,000 5 $170,000 $150,000 $300,000 6 $50,000 $0 $300,000 7 $95,000 $150,000 $150,000 8 $40,000 $0 $150,000 9 $32,000 $0 $150,000 10 $60,000 $150,000 $0 11 $0 $0 $0 12 $250,000 $0 $0 Chart B shows Ann’s tax liability and amount allowed each year from Chart A. It also shows the amount she uses each year and any unused amount carried forward as they’d be entered on Schedule OR-ASC. The amount she can use each year is limited to her tax liability for the year or $150,000, whichever is less. For example, in Year 3, Ann uses $90,000 of the $150,000 awarded for the year; for Year 4, she reports $60,000 ($150,000 – $90,000) as the amount carried forward from a prior year. Chart B: Ann’s prior year, awarded, and used credit amounts Year Tax liability Amount from prior year Amount awarded this year Amount used this year 1 $500 N/A $0 $0 2 $1,000 N/A $0 $0 3 $90,000 N/A $150,000 $90,000 4 $127,000 $60,000 $150,000 $127,000 5 $170,000 $83,000 $150,000 $150,000 6 $50,000 $83,000 $0 $50,000 7 $95,000 $33,000 $150,000 $95,000 8 $40,000 $88,000 $0 $40,000 9 $32,000 $48,000 $0 $32,000 10 $60,000 $16,000 $150,000 $60,000 11 $0 $106,000 $0 $0 12 $250,000 $106,000 $0 $106,000 Example 2: Use the same facts as Example 1, except that Ann decides to transfer her credit in tax year 6, when Chart A shows she has $300,000 available to transfer. Chart B shows that if she transfers the remaining credit in tax years 6 and 7, Ann would still have $33,000 carried forward from the credit allowed in tax year 5. She may use this amount until it’s gone or until the carryforward expires in tax year 14 (the ninth year after tax year 5), whichever happens first. Alternative qualified research activities carryforward (ORS 317.154) [Credit code 837] This credit is only available to shareholders of an S corporation that qualified for the credit, and should be listed on the shareholder’s Oregon K-1. This credit, which expired in 2017, was allowed to corpora­ tions that incurred qualified research expenses. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 107 Biomass production/collection carryforward (ORS 315.141) [Credit code 838] This certified credit expired on December 31, 2017. Any unused credit could be carried forward for up to four years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. Bovine manure production/ collection (ORS 315.176, 315.056) [Credit code 869] Who qualifies? If you are a producer or collector of bovine (cattle) manure that is used in Oregon as biofuel or to pro­ duce biofuel, you can claim a credit up to the amount of your tax liability. Certification required This credit is certified by the Oregon Department of Agriculture. You can find out more information, read administrative rules, and download an application form from their website, www.oregon.gov/oda. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to four years after the year it was first awarded. If you don’t use the carryfor­ ward within four years, it’s lost. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Credit transfers. You may transfer your credit to another taxpayer. You and the transferee must jointly file a notice of tax credit transfer with us. Download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Business energy carryforward (ORS 315.354, 315.357) [Credit code 839] The tax year ending December 31, 2012 was the last year this credit was certified. Tax year 2020 is the last year that a carryforward of this credit may be claimed. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Child and dependent care carryforward (ORS 316.078) [Credit code 840] The last year to qualify for this credit was 2015. Tax year 2020 is the last year that a carryforward of this credit may be claimed. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Child Care Fund contributions (ORS 315.213) [Credit code 841] Contributions to the Child Care Fund qualify for a credit on your Oregon income tax return. Your dona­ tion will help address child-care affordability, pro­ vider compensation, and quality assurance issues in Oregon. For details on the program, go to the Ore­ gon Office of Child Care website, www.oregon.ear­ lylearning.com. Certification required The Office of Child Care will compute your allow­ able tax credit and give you a certificate. The credit can’t be more than 50 percent of the amount contrib­ uted. Keep this certificate with your permanent tax records. Part-year residents and nonresidents. You can claim the credit allowed to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to four years after the year it was first awarded. If you don’t use the carryfor­ ward within four years, it’s lost. Oregon itemized deduction If you're claiming your donation to the Child Care Fund as an Oregon itemized deduction, you must add back any portion of the certified credit amount that you’re deducting. See “this topic” in “Additions.” Credits–Carryforward

150-101-431 (Rev. 04-01-22) 108 College Opportunity Grant (auction) (ORS 315.643) [Credit code 871] You may be able to claim a tax credit if you partici­ pated in the College Opportunity Grant tax credit auction conducted by the Department of Revenue, in cooperation with the Higher Education Coor­ dinating Commission (HECC). Proceeds from the auction go to Oregon’s Opportunity Grant Fund. Total credits certified by the HECC each fiscal year are limited to $14 million. Visit the HECC website, www.oregon.gov/highered, for information about the Opportunity Grant Fund, and our website for information about upcoming auctions, auction rules, and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on the certificate issued by the HECC. Keep this certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contributions, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Crop donation (ORS 315.156) [Credit code 843] Oregon allows a tax credit for crops donated to a gleaning cooperative, food bank, or other charitable organization that distributes food without charge. The organization receiving the donation must have a principal or ongoing purpose of distribution of food to children, homeless, unemployed, elderly, or low-income individuals. The organization must be located in Oregon and exempt from federal income taxes under the IRC. To qualify for this credit, you must: • Be in the business of growing a crop to be sold for cash; and • Donate the crop to a tax-exempt organization located in Oregon; and • Complete Form OR-CROP, Crop Donation Tax Credit, which must be signed by the organization receiv­ ing the donation. The crop must be fit for human consumption. The food must meet all quality and labeling standards imposed by federal, state, or local laws, even though the food may not be readily marketable due to appear­ ance, age, freshness, grade, size, surplus, or other condition. Eligible crops include, but aren’t limited to, bedding plants that produce food, orchard stock that produces food, and livestock that may be processed into food for human consumption. How much is the credit? The credit is 15 percent of the value of the quantity of the crop donated, computed at the wholesale market price at the time of donation. The wholesale market price is determined by either: • The amount paid to the grower by the last cash buyer of the particular crop, or • In the event there is no previous cash buyer, a price based on the market price of the nearest regional wholesale buyer or a regional u-pick market price. Example: 5,000 pounds of potatoes at $ 0.10/lb.

5,000 x 0.10 = $500 (market value)

15% (0.15) x $500 = $75 (credit allowed) Certification required Keep the completed Form OR-CROP with your tax records to verify your donation. The organization where you donate the crop may have this form avail­ able, or you may download it from our website. Also, if there was a previous cash buyer, you must keep a copy of an invoice or other statement identifying the price received for crops of comparable grade or quality. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 109 Electronic commerce zone investment carryforward (ORS 315.507) [Credit code 845] This credit, which expired in 2017, was available to individuals and businesses that engage in electronic commerce in an Oregon enterprise zone or city desig­ nated for electronic commerce. Any unused amount could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Employer scholarship (ORS 315.237) [Credit code 847 ] A tax credit is allowed to Oregon employers who have scholarship programs for their employees and their employees’ dependents. How much is the credit? The credit is the smaller of: • Fifty percent of the amount of qualified scholar­ ship funds actually paid to or on behalf of qualified scholarship recipients during the tax year; or • $50,000. Certification required The credit must be certified by the Oregon Student Assistance Commission. Keep the certificate with your tax records. For an application and more information, contact the commission in Eugene at 541-687-7400 or toll-free from an Oregon prefix at 800-452-8807, or go to their website at www.oregonstudentaid.gov. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Energy conservation project (ORS 315.331) [Credit code 849] This tax credit for energy conservation projects cer­ tified by the Oregon Department of Energy is no longer available. No new credits were certified for tax years that began after December 31, 2017. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you have a credit that is claimed over multiple years, enter only the amount for tax year 2020 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP; otherwise, enter $0 in that column, and enter any amount carried forward in the “Amount from prior year” column. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Fish screening devices (ORS 315.138) [Credit code 850] A tax credit is available to taxpayers who pay to install fish screening devices required by the Oregon Department of Fish and Wildlife (ODFW). Who can claim the credit? The credit is available to individuals, partners, sole proprietorships, and S corporation shareholders. Shareholders and partners can claim the credit based on their pro rata share of the certified costs. How much is the credit? Full-year residents. The credit is equal to the smaller of: • Fifty percent of the net costs of installing the device, or • $5,000. You can still claim any depreciation or amortization otherwise allowed. Don’t reduce your basis in the property by the credit amount. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required ODFW will send you a preliminary certificate within 90 days of the receipt of plans, specifications, and other information it requests from you. After you Credits–Carryforward

150-101-431 (Rev. 04-01-22) 110 complete the project, ODFW will send you a final cer­ tificate that includes the verified costs of the installa­ tion. Contact ODFW in Salem at 503-947-6000 or toll- free from an Oregon prefix at 800-720-6339, or go to www.dfw.state.or.us. Keep the final ODFW certificate with your tax records. Also keep a statement showing the computation of the allowed credit, if this isn’t on the certificate. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: affordable housing (ORS 317.097) [Credit code 854] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Oregon K-1. This transferable certified credit is available to lend­ ing institutions making qualifying loans to finance certified housing projects for low-income house­ holds. Annual certification by Oregon Housing and Community Services is required. Part-year residents and nonresidents. You may claim the full amount of the credit, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: energy conservation carryforward (ORS 317.112) [Credit code 848] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit, which expired in 2011, was allowed to commercial lending institutions that made loans to owners of oil- or wood-heated residential property, to finance energy conservation measures. Any unused credit could be carried forward for up to 15 years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within 15 years after it was first awarded, it’s lost. Long-term enterprise zone facilities carryforward (ORS 317.124) [Credit code 853] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Oregon K-1. This certified credit was available to corporations that constructed and operated facilities in a qualified rural enterprise zone, where the facility was eligible for long-term exemption from property tax. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Oregon IDA Initiative Fund donation (ORS 315.271) [Credit code 852] IDAs are matched savings accounts that build the financial management skills of qualifying Orego­ nians with lower incomes while they save toward a defined goal. Oregon allows a tax credit for dona­ tions made to the Oregon IDA Initiative Fund dur­ ing the tax year. The total amount of credits allowed to all taxpayers in any tax year may not exceed $7.5 million. How much is the credit? The credit amount is the percentage determined by the fiduciary agency, but may be no more than 90 percent of the donation made. The maximum credit amount allowed for any taxpayer in any tax year, including amounts carried forward from an earlier tax year, is $500,000. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. You may carry forward any unused credit for three years after the year when you made the donation. If you don’t use the carryfor­ ward within three years, it’s lost. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 111 For information on how to make a donation to the Oregon IDA Initiative Fund, contact The Neighbor­ hood Partnership Fund at 503-226-3001 or visit their website at www.neighborhoodpartnerships.org. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your donation, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Oregon Low-Income Community Jobs Initiative/New Markets (ORS 315.533) [Credit code 855] The New Markets tax credit was available for a quali­ fied equity investment made before July 1, 2016 in a qualified community development entity. For more information on qualifying investments and entities, visit www.oregon4biz.com, or contact the Oregon Business Development Department at 503-986-0123. How much is the credit? The credit is equal to 39 percent of the purchase price of the qualified equity investment. It must be taken over seven years, beginning with the year of investment. The allowable tax credit for each of the seven years is: • Zero percent in the first and second years. • Seven percent of the purchase price in the third year. • Eight percent of the purchase price in each of the fourth through seventh years. Certification required You must have obtained certification from the Ore­ gon Business Development Department indicating the amount of your tax credit. Keep your certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. This credit can’t be trans­ ferred or sold. Oregon Production Investment Fund (auction) (ORS 315.514) [Credit code 856] You may be able to claim a tax credit if you partici­ pated in the Oregon Production Investment Fund tax credit auction we conducted, in cooperation with the Oregon Film and Video Office. Proceeds from the auction go to the Oregon Production Investment Fund. Total credits certified by the Oregon Film and Video Office are limited to $14 million for each fiscal year. Visit the Oregon Film and Video Office website, www.oregonfilm.org, for information about the Ore­ gon Production Investment fund, and our website for information about upcoming auctions, and auction rules and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on your certificate issued by the Oregon Film and Video Office. Keep the certifi­ cate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Pollution control facilities carryforward (ORS 315.304) [Credit code 857] This credit was certified by the Oregon Department of Environmental Quality (DEQ). The last year to apply for certification of a pollution control facility was 2008. The total amount of the certified credit was divided over the remaining useful life of the facility, up to a maximum of ten years. Any unused credit could be carried forward for up to three years after the year it was first awarded. Enter your car­ ryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 112 The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within three years after it was first awarded, it’s lost. Qualified research activities carryforward (ORS 317.152) [Credit code 858] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit, which expired in 2018, was allowed to corporations that increased their qualified research expenses and basic research payments (IRC Section 41). Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Renewable energy development contribution (auction) carryforward (ORS 315.326) [Credit code 859] The last year for this tax credit auction was 2017. Tax year 2020 is the last year that a carryforward of this credit may be claimed. Enter your carryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within three years after the auction year, it’s lost. Renewable energy resource equipment manufacturing facility carryforward (ORS 315.341) [Credit code 860] This tax credit was certified by the Business Devel­ opment Department or Department of Energy. The deadline for filing an application for final certifica­ tion of a facility was December 31, 2013. The credit was claimed over a period of years. Any unused credit could be carried forward for up to eight years after the year it was first awarded. Enter your car­ ryforward amount in the “Amount from prior year” column and $0 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Residential energy (ORS 316.116) [Credit code 861] This certified credit expired on December 31, 2017. The credit was based on an estimate of annual energy savings for a variety of devices. The maximum credit allowed for devices certified before September 1, 2015 was $1,500 per year, limited to your tax liability. The maximum credit allowed for devices certified on or after September 1, 2015 is $1,500 per device per year or your tax liability, whichever is less. For more infor­ mation about this credit, see an earlier edition of this publication. If you have a credit that is claimed over multiple years, enter only the amount for tax year 2020 in the “Amount awarded this year” column on Sched­ ule OR-ASC or OR-ASC-NP; otherwise, enter $0 in that column and any amount carried forward in the “Amount from prior year” column. Keep your cer­ tification, a copy of your application, proof of pay­ ment, and any supporting documentation with your tax records. Don’t include these items with your tax return. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident that was awarded for this year by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Rural technology workforce development (ORS 315.523) [Credit code 868] A tax credit is allowed to Oregon employers located in certain areas of the state who establish and imple­ ment an employee training program in collaboration with a local community college. The employer must be located in a county with these characteristics: • Population between 60,000 and 80,000; • Located outside the urban growth boundary of the Portland metro area or a city with population greater than 30,000; • Unemployment rate at least 1.5 percentage points greater than the statewide rate; Credits–Carryforward

150-101-431 (Rev. 04-01-22) 113 • Has an agreement with an institute of higher edu­ cation to coordinate efforts to promote business enterprise throughout the county; • Is the site of a U.S. military base that employs at least 750 civilian and armed forces personnel; and • Has sufficient internet service to conduct electronic commerce. How much is the credit? The credit is 12 percent of the costs to establish and implement the employee training program. Records sufficient to prove these costs must be kept for at least five years. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can't be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first allowed (awarded). If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Short line railroad rehabilitation (ORS 315.593) [Credit code 872] A transferable tax credit is allowed for short line rail­ roads that pay or incur costs for rehabilitation proj­ ects in Oregon. The project costs must be directly related to the work necessary to maintain, recon­ struct, or replace tracks, switches, sidings, roadbeds, railroad bridges, or industrial leads owned or leased in Oregon. “Short line railroad” refers to a class II or class III railroad as defined in title 49 of the Code of Federal Regulations, part 1201. Costs that are funded by or used to qualify for state or federal grants or to claim a federal tax credit don’t qualify for the credit. The credit doesn’t take the place of any depreciation or amortization deduction allowed for the rehabilita­ tion project or decrease the taxpayer’s adjusted basis for determining gain or loss. How much is the credit? The credit amount depends on whether the short line railroad is in Tier I or Tier II: • Tier I. The total length of short line railroad track owned or leased in Oregon is at least 200 miles. • Tier II: Any short line railroad that isn’t a Tier I short line railroad, or is one that is owned or leased by the state, a city, a county, a port, or any other public or municipal corporation. The credit amount is the smaller of: • $1,000 (Tier I) or $3,500 (Tier II) times the number of miles of track owned or leased in Oregon on the day the project is completed; or • Fifty percent of the rehabilitation project costs paid or incurred by the taxpayer during the tax year in which the credit is claimed. Certification required This credit is certified by the Oregon Department of Transportation (ODOT). Final certification of the rehabilitation project is required before the credit may be claimed. Visit ODOT’s website, www.oregon. gov/odot, for more information. Transfer. If the credit will be transferred, download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If the carryforward isn’t used within five years, it’s lost. The carryforward may not be transferred. Transportation projects (ORS 315.336) [Credit code 863] All transportation project credits certified by the Department of Energy have expired. Any unused credit could be carried forward for up to five years after the year it was first awarded. If you have an alternative fuel vehicle project credit that is claimed over multiple years, enter only the amount for tax year 2020 in the “Amount awarded this year” column on Schedule OR-ASC or OR-ASC- NP; otherwise, enter $0 in that column and any amount carried forward in the “Amount from prior year” column. For more information about these credits, see earlier editions of this publication. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Credits–Carryforward

150-101-431 (Rev. 04-01-22) 114 University Venture Development Fund contributions (ORS 315.640) [Credit code 864] A tax credit is available for contributions to Oregon University Venture Development Funds. Who can claim the credit? Any taxpayer who makes a qualifying charitable contribution to an Oregon University Venture Devel­ opment Fund is eligible for the credit. S corpora­ tions and partnerships may claim a credit for their contributions. How much is the credit? The credit is 60 percent of the amount contributed, as stated on the tax credit certificate, but can’t be more than $600,000. The amount of the credit allowed to be taken on your Oregon tax return may not be more than your tax liability for the year. Certification required The university that established the fund will issue a tax credit certificate to you. Keep this certificate with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Oregon itemized deduction If you're claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Credits–Carryforward

150-101-431 (Rev. 04-01-22) 115 Refundable credits Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability is treated like an overpayment of tax and may be refunded to you. ABLE account contributions (ORS 315.650) [Credit code 897] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contribu­ tions to an Oregon Achieving a Better Life Experi­ ence (ABLE) account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. For tax year 2020, contri­ butions may be made up until the date the return is filed or May 17, 2021 (calendar-year filers) or the 15th day of the fourth month after the end of the tax year (fiscal-year filers), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see this topic in “Subtractions.” What is an ABLE account? An ABLE account is a state-sponsored savings account, established through the Oregon Savings Network, that allows a person with disabilities to save money for disability-related expenses without affect­ ing their eligibility for government or other benefits. ABLE accounts qualify for special tax status under IRC Section 529A. Once you open an account and select an investment option, the Oregon Savings Net­ work board and a private investment company man­ age your investment. The earnings on these accounts aren’t taxed. ABLE account funds don’t affect a ben­ eficiary’s eligibility for government or other benefits. Funds withdrawn to pay qualified expenses related to the beneficiary’s disability won’t be taxed. These include expenses for education, housing, transporta­ tion, assistive technology, personal support services, employment training and support, and fees for legal and financial services, among others. For more information about ABLE accounts, go to www.oregonablesavings.com. Rollovers. Rollovers to an ABLE account don’t qual­ ify for a credit if an Oregon subtraction or credit has already been based on the funds rolled over. Credit recapture for nonqualified withdrawals. If you claim a credit based on your contributions and later use the funds for a nonqualified purpose, you must repay the tax with a credit recapture on your return for the year when the funds are withdrawn. See later editions of this publication for more information about the credit recapture. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an earlier year, see “Additions.” How much is the credit? Your AGI determines the percentage of the contribu­ tions you made during the year that you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 12 to find your percentage. Table 12. Credit percentage If your AGI is at least: But not more than: your percentage is: $0 $30,000 100 $30,001 $70,000 50 $70,001 $100,000 25 $100,001 $250,000 10 $250,001 5 Example. Jesse and Stacey make a $4,000 contribution to an ABLE account they opened for their daughter, who has a disability. Their AGI is $150,000. Their per­ centage from Table 12 is 10 percent. They may claim the lesser of 10 percent of their contribution ($4,000 x 0.10 = $400) or $300. Their credit is $300. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Claim of right income repayment (ORS 315.068) [Credit code 890] Did you repay more than $3,000 of income taxed by Oregon in a prior year and claim a federal claim of right income repayment deduction or credit under IRC Section 1341(a)? If so, you may claim an Oregon credit based on the Oregon tax you paid in that ear­ lier year on the income that you later repaid. Repay­ ments of $3,000 or less don’t qualify for an Oregon credit. See the instructions for Worksheet OR-CRC to cal­ culate your Oregon credit. Worksheet OR-CRC is Credits–Refundable

150-101-431 (Rev. 04-01-22) 116 available from our website or contact us to order it. Claim the credit on Schedule OR-ASC or OR-ASC-NP. Note: If you’re claiming the federal deduction instead of the federal credit, see this topic in “Additions.” Earned income credit (EIC) (ORS 315.266) You’re allowed an Oregon EIC only if you qualify for the EITC on your federal return. Your Oregon EIC is 12 percent of your federal EITC if you have a qualifying dependent who was younger than 3 years old at the end of the tax year; otherwise, your credit is 9 percent of your federal EITC. This credit is claimed on your return. Part-year residents and nonresidents. Multiply your Oregon EIC by your Oregon percentage. Manufactured home park closure (Temporary provisions following ORS 316.116) [Credit code 891] Did you move out of a manufactured home park because the park was closing? If so, you may be eli­ gible for a credit. To qualify, you must meet all of the following requirements: • Owned your manufactured home; and • Rented space in a manufactured home park that closed during the tax year; and • Occupied your manufactured home as your princi­ pal residence; and • Received notice from the landlord that the park was closing, and • Moved out of the manufactured home park (along with all members of your household) because of the park closure notice. If you qualify, you can claim a $5,000 refundable credit on your tax return for the year that your house­ hold moved out of the park. To claim this credit, fol­ low the instructions for Schedule OR-MPC, Oregon Mobile Home Credit, and enter the credit amount on Schedule OR-ASC or OR-ASC-NP. You can download Schedule OR-MPC from our website or contact us to order it. Include Schedule OR-MPC with your tax return. Note: If you qualify for this credit, you may have received a payment from your landlord of $5,000, $7,000, or $9,000 depending on the size of your manu­ factured home. These payments can be subtracted on your Oregon return if they are included in taxable income on your federal return. See this topic under “Subtractions” for more information. Oregon 529 College Savings Network account contributions (ORS 315.650) [Credit code 896] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contri­ butions to an Oregon 529 College Savings Network account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. For tax year 2020, contributions may be made up until the date the return is filed or May 17, 2021 (calendar-year filers) or the 15th day of the fourth month after the end of the tax year (fiscal-year filers), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see “Subtractions.” What is an Oregon 529 College Savings Network account? These state-sponsored plans qualify for special tax status as qualified tuition programs under (IRC Sec­ tion 529). Account holders can save money for college for any designated beneficiary. Once you open an account and select an investment option, the Oregon Savings Network board and a private investment company manage your investment. Qualified withdrawals. Funds that are withdrawn from the account must be used to pay for the des­ ignated beneficiary’s qualified higher education expenses. These include expenses for tuition, fees, books, supplies, equipment, and room and board at an eligible educational institutional anywhere in the United States and certain foreign countries. A list of eligible institutions can be found on the U.S. Depart­ ment of Education’s website at www.fafsa.ed.gov. Qualified withdrawals also include rollovers to an ABLE account for the same designated beneficiary or a member of their family. Rollovers. Rollovers from a 529 college savings plan in another state qualify as a new contribution for purposes of the credit. However, you can’t claim a credit based on any amount rolled over from an IDA or from any rollover funds that have been allowed as an Oregon subtraction or an Oregon credit . Nonqualified withdrawals Credit recapture. If you claim a credit based on your contributions and later use the funds for a nonqualified Credits–Refundable

150-101-431 (Rev. 04-01-22) 117 Credits–Refundable purpose, you must repay the tax with a credit recap­ ture on your return for the year when the funds are withdrawn. See later editions of this publication for more information about the credit recapture. Note: Nonqualified withdrawals include funds with­ drawn from an Oregon 529 savings plan account that are used to pay K-12 tuition if those funds were sub­ tracted or claimed as a credit on an Oregon return. Addition. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an ear­ lier year, see “Additions.” How much is the credit? Your AGI determines the percentage of your contri­ butions made during the year you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 12 under “ABLE account contributions” to find your percentage. Example. Carol is single and contributes $800 to an Oregon 529 College Savings Plan account she opened for her grandson. Her AGI is $72,000. Her percent­ age from Table 12 is 25 percent. Carol may claim the lesser of 25 percent of her contribution ($1,000 x 0.25 = $250) or $150. Her credit is $150. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. For more information about Oregon higher education savings plans, call the Oregon College Savings Plan at 1-866-772-8464 or go to www.oregoncollegesavings.com Working family household and dependent care (WFHDC) (ORS 315.264) [Credit code 895] This refundable credit is available to low- to moder­ ate-income working families who paid for dependent care during the year for one or more qualifying indi­ viduals. For more information, see the instructions for Schedule OR-WFHDC. What are the income limitations for this credit? Your federal AGI or your Oregon AGI, whichever is greater, must be at or below the allowable limit for your household size to be eligible for this credit. Household size AGI limit 2 $51,720 3 $65,160 4 $78,600 5 $92,040 6 $105,480 7 $118,920 8 or more $132,360 How much is the credit? The credit amount is based on your income, care expenses paid, household size, and the age of your youngest qualifying individual. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Oregon itemized deduction for medical expenses Certain medical expenses that can be included in your Oregon itemized deductions are also quali­ fied expenses for this credit. If you claim medical expenses on Schedule OR-WFHDC, you may have to add back some or all of those expenses if you’re including them in your Oregon itemized deductions. See this topic in “Additions.” How do I claim the credit? Download Schedule OR-WFHDC from our website or contact us to order a copy. You’ll also need a copy of your federal Form 2441, Child and Dependent Care Expenses. Figure your federal and Oregon AGI and complete Form 2441 before you calculate your credit. Review the instructions for Schedule OR-WFHDC carefully to see if you qualify for the credit. Make sure all the information you provide on Schedule OR- WFHDC is complete and correct. We may ask you to verify the information you provide. If your informa­ tion is incorrect or incomplete, your credit might be delayed or denied. Claim the credit on Schedule OR-ASC or OR-ASC-NP. Be sure to include this schedule and Schedule OR- WFHDC when you file your Oregon return.

150-101-431 (Rev. 04-01-22) 118 Credits–Refundable Penalty: You may be charged a penalty if you know­ ingly claim or knowingly assist someone in claiming this credit falsely. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjust­ ment or denial of the credit. Oregon surplus credit (ORS 291.349) The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. Every two years, the Oregon Department of Admin­ istrative Services (DAS) determines whether there is a surplus and the amount to be returned to taxpay­ ers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refundable tax credit or donated to the State School Fund. The kicker credit is available only on the return for an odd-numbered year. If there’s no surplus, or if the tax year is even- numbered, no kicker is available. No kicker credit is available for tax year 2020.

150-101-431 (Rev. 04-01-22) 119 Interest on underpayment of estimated tax Interest on underpayment of estimated tax Do I owe underpayment interest? If you were required to make estimated payments but paid less than the required amounts due by each pay­ ment date, you have an underpayment of estimated tax. Oregon charges interest on underpayment of the estimated tax due. If your 2020 tax after all credits and withholding is $1,000 or more, you must com­ plete Oregon Form OR-10, Underpayment of Oregon Estimated Tax, and submit it with your return. The form and instructions for calculating underpayment interest can be found on our website or contact us to order it. Figure your required annual payment Required annual payment To calculate your underpayment interest, you must determine your required annual tax payment. Your required annual payment is the total amount of all tax payments, including estimated tax and withhold­ ing, you must make in order to avoid paying under­ payment interest. Your required annual payment is the lesser of: • Ninety percent of the net tax shown on your 2020 tax return; or • One hundred percent of the tax shown on your 2019 Oregon return (commonly called Safe Harbor). Annual estimated tax payment Your annual estimated tax payment is your required annual payment minus your withholding. Required installment payment Your annual estimated tax payment may be paid all at once or you may pay it in up to four installments. If you make the payment in installments, determine the required installment amount using one of these two methods: • Regular installment: Divide your annual estimated payment by the number of installment periods. • Annualized installment: Your installment is based on your actual income for the installment period. This method may benefit part-year residents and taxpayers whose income isn’t received evenly throughout the year. See the instructions for Form OR-10 to calculate your required installment amount. 2020 required installment due dates If you made one annual estimated payment, the due date was April 15, 2020. If you paid in installments and you’re a calendar-year filer, your 2020 install­ ment payments were due on: April 15, 2020 June 15, 2020 September 15, 2020 January 15, 2021 Underpayment interest calculation Underpayment interest is calculated on estimated tax that is due but isn’t paid by the installment due date. The interest rate is 6 percent per year for 2020 and 4 percent per year for 2021. Interest is calculated daily, based on a 365-day year. Follow the instructions for Form OR-10 to calculate your underpayment interest and report the total amount on your return. Include Form OR-10 when you file your return. Exceptions to paying interest on an underpayment of estimated tax If you qualify for one of the following exceptions, you don’t have to pay interest on an underpayment of estimated tax. See the Form OR-10 instructions for more information about claiming an exception on both Form OR-10 and your return. Exception 1—Farmers and commercial fishermen. If at least two-thirds (66.7 percent)* of your 2019 or 2020 gross income is from farming, oyster farming, or fish­ ing, you won’t have to pay underpayment interest. *Only reported income from specific federal forms and schedules are considered in this calculation. The form or schedule must be included when you file your return. Exception 2—Prior year. You don’t need to pay inter­ est on an underpayment of estimated tax if all of the following were true for you: • You had no Oregon tax liability* for 2019, or you weren't required to file an Oregon return; and • Your 2019 tax year was a full 12-month period; and • You were a full-year Oregon resident for 2019. *Your Oregon tax liability is your liability after tax credits, but before withholding and estimated tax payments.

150-101-431 (Rev. 04-01-22) 120 Exception 3—You retired at age 62 or older or became disabled in 2019 or 2020, and you had a rea­ sonable cause for the underpayment. Include a state­ ment explaining the cause. Exception 4—Underpayment was due to casualty, disaster, or other unusual circumstances, and it would be unfair to impose underpayment interest. Include a statement with your return explaining the unusual circumstance. An unusual circumstance isn’t the same as reasonable cause. Exception 5—First-year S corporation shareholders who are nonresidents or were part-year residents. No interest is due on underpayment of S corporation income as a shareholder if: • The income is for the first year that S corporation status is elected; and • You’re a nonresident for 2020; or • You were a part-year resident for 2019. Interest on underpayment of estimated tax

150-101-431 (Rev. 04-01-22) 121 Estimated tax Should I pay estimated tax? Oregon law requires some taxpayers to pay esti­ mated tax. Oregon’s estimated tax system is similar to the federal system, but when you figure estimated tax for Oregon: • Use Oregon income tax laws and tax rates. • Don’t include Social Security tax (FICA), self-employ­ ment tax, or household employment tax. In most cases, you must make estimated tax payments if your 2021 tax after all credits and withholding will be $1,000 or more when you file your return. Pay estimated tax for tax year 2021 if: You expect your 2021 tax after all credits and with­ holding will be $1,000 or more when you file your return and you estimate that your total withheld tax will be less than: • One hundred percent of the tax shown on your 2020 income tax return that covered all 12 months of the year; or • Ninety percent of the tax to be shown on your 2021 income tax return; or • Ninety percent of the tax on your 2021 annualized income. Even if you expect that your 2021 tax after all cred­ its and withholding will be less than $1,000, you may still make estimated tax payments. For instructions and examples, download Publication OR-ESTIMATE from our website or contact us to order it. Note: Estimated tax payments aren’t a substitute for withholding Oregon income tax from wage income. If you need to increase the amount of Oregon tax withheld from your wages or other income, give an updated Form OR-W-4 to your employer or other payer. You can download Form OR-W-4 from our website or contact us to order it. Exceptions Farmers and commercial fishermen Farmers and fishermen aren’t required to pay esti­ mated tax if at least two-thirds of their 2020 gross income or two-thirds of their 2021 estimated gross income from all sources is from farming or fishing. This includes oyster farming. See “Interest on under­ payment of estimated tax.” Fiduciaries You don’t need to pay estimated tax on behalf of an estate or trust. Special situations Nonresidents and part-year residents Nonresidents figure Oregon estimated tax only on income that is: • Subject to Oregon tax; or • From conducting a trade or business within Oregon; or • Single ticket Oregon lottery winnings greater than $600. S corporation, limited liability company (LLC), or partnership income If you’re a shareholder in an S corporation, a mem­ ber of an LLC, or in a partnership with income from Oregon sources, you may need to make estimated tax payments. Undistributed income should be com­ puted on a per share, per day basis and reported as earned evenly through the year. Part-year residents. For the part of the year you were a nonresident, you are subject to Oregon tax on your share of the Oregon income reported by the S corpo­ ration, LLC, or partnership. Partners must also report guaranteed payments. For the part of the year you were a resident, you’re subject to Oregon tax on your share of all the S corporation, LLC, or partnership income. Nonresidents. You’re subject to Oregon tax on your share of the Oregon income reported by the S corporation, LLC, or partnership. You’re also subject to Oregon tax on any guaranteed payments from the partnership. The payments are apportioned using the partnership’s percentage. Retirees If you’re retired or will soon retire, you may need to make estimated tax payments if you’re unable to have Oregon income tax withheld from your retire­ ment income. Contact the payer of the income to see if withholding is possible. If so, complete Form OR-W-4 and give it to the payer. Retirees who are Oregon residents but not living in Oregon may be subject to tax on their Oregon-source pensions. This law applies to retirees who still have Oregon as their domicile but file as nonresidents. See “Retirement income” under “Income.” Nonresident aliens Estimated tax filing requirements are the same for both U.S. citizens and nonresident aliens. Nonresi­ dent aliens can be either Oregon residents or nonresi­ dents. If you, or your spouse, are a nonresident alien, you must make separate estimated tax payments. Estimated tax

150-101-431 (Rev. 04-01-22) 122 Appendix Contents 2020 Household Income Checklist WFHDC Medical Expense Worksheet Capital Loss Carryover Worksheet 2020 Numeric Codes Appendix

150-101-431 (Rev. 04-01-22) 123 Household income checklist Use this list to decide if an item must be included in total household income. Alimony and separate maintenance Yes Annuities and pensions (reduced by cost recovery) Yes Business income (reduced by expenses) (losses limited to $1,000) Yes Cafeteria plan benefits

No Capital loss carryover

No Capital losses (in year determined) (losses limited to $1,000) Yes Child support Yes Child support included in public assistance Yes Clergy’s rental or housing allowance, in excess of expenses claimed to determine federal AGI Yes Compensation for services performed Back pay Yes Bonuses Yes Clergy fees Yes Commissions Yes Director fees Yes Fees in general (trustee, executor, jury duty) Yes Lodging for convenience of employer

No Meals for convenience of employer

No Salaries Yes Severance pay Yes Tips and gratuities Yes Wages Yes Deferred compensation Contributions made

No Payments received Yes Depletion in excess of basis Yes Depreciation, depletion, and amortization in excess of $5,000 Yes Disability income (entire amount) Yes Dividends, taxable and nontaxable Credit union savings account “dividends” (interest) Yes Insurance policy “dividends” (return of premium)

No Return of capital dividends

No Stock dividends Yes Tax-exempt dividends Yes Earned income credit, advanced

No Estate and trust income (also see “Inheritance”) (losses limited to $1,000) Yes Farm income (reduced by expenses) (losses limited to $1,000) Yes Agricultural program payments Yes Patronage dividends Yes Proceeds from sale of crops and livestock Yes Rents Yes Sale of services Yes Fellowships Yes Foreign income excluded from federal AGI Yes Foster child care (reduced by expenses)

No Funeral expenses received

No Gains on sales (receipts less cost) Yes Excluded gain for Oregon on sale of residence

No Gambling winnings (without reduction for losses) Yes Gifts and grants (totaling more than $500 in value) Cash Yes Gifts from nonspouse in the same household Yes Gifts from spouse in the same household

No Gifts other than cash (report at fair market value) Yes Payment of indebtedness by another person Yes Grants and payments by foreign governments not included in federal AGI Yes Grants by federal government for rehabilitation of home

No Gratuities and tips Yes Hobby income Yes Honoraria Yes IRA Conventional IRA Payments received Yes Payments contributed

No Rollovers or conversions not included

in AGI

No

Rollovers or conversion

included in AGI Yes Roth IRA Payments received

No Payments contributed Yes Rollovers or conversions not included

in AGI

No Rollovers or conversion

included in AGI Yes Inheritance Yes From spouse who resided in the same household

No Household income checklist

150-101-431 (Rev. 04-01-22) 124 Insurance proceeds Accident and health Yes Disability payments Yes Employee death benefits Yes Life insurance Yes Personal injury damages (less attorney fees) Yes Property damage if included in federal income Yes Reimbursement of medical expense

No Sick pay (employer sickness and injury pay) Yes Strike benefits Yes Unemployment insurance benefits Yes Workers’ compensation Yes Interest, taxable and nontaxable Contracts Yes Municipal bonds and other securities Yes Savings accounts Yes Tax-exempt interest Yes U.S. Savings Bonds Yes Losses on sales (to extent used in determining AGI) (losses limited to $1,000) Yes From sales of real or personal property (nonbusiness)

No Lottery winnings Yes Lump-sum distribution (less cost recovery) Yes Military and veteran’s benefits (taxable and nontaxable) Combat pay Yes Disability pensions Yes Educational benefits (GI Bill) Yes Family allowances Yes Pensions Yes NOL carryback and carryover

No Partnership income (reduced by expenses) (losses limited to $1,000) Yes Parsonage (rental value) or housing allowance in excess of expenses used in determining federal AGI Yes Pensions and annuities (taxable and nontaxable) (reduced by cost recovered in the current year) Yes Prizes and awards Yes Public assistance benefits Aid to blind and disabled Yes Child care payments Yes Child support included in public assistance Yes Direct payments to nursing home

No Fuel assistance

No In-home services approved by the Department of Human Services

No Medical mileage reimbursements Yes Medical payments to doctors

No Oregon Supplemental Income Program (OSIP) Yes Payments for medical care, drugs, medical supplies, and services for which no direct payment is received

No Reimbursements of expenses paid or incurred by participants in work or training programs

No Special Shelter Allowance

No Supplemental Nutrition Assistance Program (SNAP) benefits

No Surplus food

No Temporary assistance for needy families (TANF) Yes Women, Infants, and Children program (WIC)

No Railroad Retirement Board benefits Yes Refunds Earned income credit

No Federal tax

No Property tax

No Oregon income tax

No Other states’ income tax (if included in federal AGI) Yes Prior-year rental assistance payment

No Reimbursements in excess of expenses Yes Rental allowances paid to ministers not included in federal AGI Yes Rental and royalty income (reduced by expenses) (losses limited to $1,000) Yes Residence sales (see “Gains on sales”) Yes Retirement benefits (see “Pensions” and “Social Security”) Scholarships (excess more than $500) Yes Sick pay Yes Social Security (taxable and nontaxable) Children’s benefits paid to parent Yes Children’s benefits paid to your child

No Disability pension Yes Medicare payments of medical expenses

No Medicare premiums deducted from Social Security Yes Old-age benefits Yes Social Security Disability Insurance (SSDI) Yes Supplemental Security Income (SSI) Yes Survivor benefits Yes Stipends (excess more than $500) Yes Strike benefits Yes Support from parents who don’t live in your household Yes Trust income Yes Unemployment insurance benefits Yes Wages Yes Household income checklist

150-101-431 (Rev. 04-01-22) 125 WFHDC medical expense worksheet 1. Enter your expense limit (Schedule OR-WFHDC, line 27). 1. $ __________________ 2. Enter the total expenses you paid for care [Schedule OR-WFHDC, line 15(c)] 2. $ __________________ 3. Enter the expenses from step 2 that are also included in your medical expenses

on Schedule OR-A, line 1. 3. $ __________________ 4. Step 2 minus step 3. These are your non-medical WFHDC care expenses. 4. $ __________________ Compare step 4 to step 1. If step 4 is more than step 1, your non-medical expenses are more than your expense limit and you don’t have an add back. If step 4 is less than step 1, continue to step 5. 5. Step 1 minus step 4. 5. $ __________________ 6. Enter your medical and dental expenses from Schedule OR-A, line 1. 6. $ __________________ 7. Enter your medical expense deduction from Schedule OR-A, line 4. 7. $ __________________ 8. Step 7 divided by step 6. Round to three decimal places. 8. ___________________ 9. Step 8 times step 3. This is the portion of your WFHDC medical care expenses

that you included in itemized deductions. 9. $ __________________ 10. Enter the smaller of step 5 or step 9. This is the portion of the medical care

expenses you deducted and on which you based your credit. 10. $ __________________ 11. Enter your Oregon itemized deductions from Schedule OR-A, line 23. 11. $ __________________ 12. Enter the Oregon standard deduction for your filing status plus any

additional standard deduction you could claim if you didn’t itemize

deductions (see “Other items”). 12. $ __________________ 13. Step 11 minus step 12. This is the difference between your itemized

deductions and standard deduction. 13. $ __________________ 14. Enter the smaller of step 10 or step 13. This is the amount you must add back.

Use addition code 163 on Schedule OR-ASC, section 1, or enter this amount

with a minus sign and use modification code 651 on Schedule OR-ASC-NP,

section 4. 14. $ __________________ WFHDC medical expense worksheet

150-101-431 (Rev. 04-01-22) 126 Capital loss carryover difference worksheet Capital loss carryover difference worksheet This worksheet is used to calculate an addition if the tax benefit of a capital loss carryover on your federal return is different from the tax benefit on your Oregon return. Use this worksheet only if all of the following are true: • You filed federal and Oregon returns for 2019; • You deducted a capital loss on your 2019 federal return; • Your AGI was less than your federal standard deduction or itemized deductions; • You carried over some or all of your 2019 capital loss deduction to 2020; • If you filed a part-year or nonresident return for tax year 2019, at least some of your 2019 capital losses were from Oregon sources; and • Your 2019 federal AGI was within the applicable range in Table 6 (see “Additions”). If all of the above are true, you’ll need to have these items in order to complete the worksheet: • Your federal return with Schedule D for 2019 and 2020, and • Your 2019 Oregon return. Part-year or nonresident return filed for tax year 2019. Capital losses may be claimed on an Oregon return only if they are from Oregon sources—that is, from Oregon sources while a nonresident, or from all sources while an Oregon resident. If you filed a part-year or nonresident return for 2019 and your capital losses included Oregon-source losses, complete the following before you start the Oregon worksheet: (a) Enter your net short-term capital loss or gain from your 2019 Schedule D, line 7. (a) $ ____________

(b) Enter the portion of the amount in (a) that is from Oregon sources. (b) $ ____________ (c) Line (b) divided by line (a). Round to three decimal places. (c) ____________ (d) Enter your net long-term capital loss or gain from your 2019 Schedule D, line 15. (d) $ ____________ (e) Enter the portion of the amount in (d) that is from Oregon sources. (e) $ ____________ (f) Line (e) divided by line (d). Round to three decimal places. (f) ____________ Part A. Figure your Oregon loss carryforward amount. 1. Enter your 2019 Oregon taxable income (Form OR-40, line 19; Form OR-40-N, line 45; or Form OR-40-P, line 43 times line 35). If less than $0, enclose in parentheses. 1. $ ____________ 2. Full-year residents: Enter the capital loss deduction from your 2019 Form 1040, line 6, as a positive amount. Part-year residents and nonresidents: Enter the Oregon amount from your 2019 Form OR-40-N or Form OR-40-P, line 13S, as a positive amount. 2. $ ____________ 3. Line 1 plus line 2. If zero or less, enter $0.

3. $ _____________ 4. Enter the smaller of line 2 or line 3. 4. $ ____________ If line 7 of your 2019 Schedule D shows a loss, go to line 5; otherwise, enter $0 on line 5 and go to line 9. 5. Enter the net short-term loss from your 2019 Schedule D, line 7, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above, as a positive amount.

5. $ _____________ 6. Enter the net long-term gain, if any, from your 2019 Schedule D, line 15. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above. If a loss, enter $0. 6. $ ____________

150-101-431 (Rev. 04-01-22) 127 Capital loss carryover difference worksheet 7. Line 4 plus line 6.

7. $ _____________ 8. Oregon short-term capital loss carryover for 2020. Line 5 minus line 7. If zero or less, enter $0.

8. $ _____________ If line 15 of your 2019 Schedule D is a loss, go to line 9; otherwise, skip to Part B. 9. Enter the net long-term loss from your 2019 Schedule D, line 15, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above, as a positive amount.

9. $ _____________ 10. Enter the net short-term gain, if any, from your 2019 Schedule D, line 7. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above. If a loss, enter $0. 10. $___________ 11. Line 4 minus line 5. If zero or less, enter $0. 11. $___________ 12. Line 10 plus line 11.

12. $ _____________ 13. Oregon long-term capital loss carryover for 2020. Line 9 minus line 12. If zero or less, enter $0.

13. $ _____________ Part B. Figure your Oregon addition. 14. Enter your federal short-term capital loss carryover from your 2020 Schedule D, line 6, as a positive amount. 2019 part-year residents and nonresidents: Multiply this amount times the decimal in (c), above; round to the nearest dollar. 14. $___________ 15. Oregon tax benefit from 2019 short-term loss. Line 14 minus line 8.

15. $ _____________ 16. Enter your federal long-term loss carryover from your 2020 Schedule D, line 14, as a positive amount. 2019 part-year residents and nonresidents: Multiply this amount times the decimal in (f), above; round to the nearest dollar. 16. $___________ 17. Oregon tax benefit from 2019 long-term loss. Line 16 minus line 13.

17. $ _____________ 18. Line 15 plus line 17. This is your Oregon addition.

18. $ _____________ Full-year filer for 2020. Enter the amount from line 18 on Schedule OR-ASC, section 1, using code 162. Part-year or nonresident filer for 2020. Enter the amount from line 18 in both the federal and Oregon columns of Schedule OR-ASC-NP, section 2.

150-101-431 (Rev. 04-01-22) 128 Numeric codes Numeric codes Numeric codes are required when you are claiming or reporting an adjustment, addition, subtraction, modifi­ cation, or credit on Schedule OR-ASC or OR-ASC-NP. If you have multiple items that use the same code, other than a credit for income taxes paid to another state, add them together and enter the total as a single item. Modifications marked with + must be entered as a negative number. Credits marked with * must be prorated by part-year residents and nonresidents. Include Schedule OR-ASC or OR-ASC-NP when you file your return. (Note: For page numbers, see the item’s listing in the Index.) Adjustments—Nonresident and part-year resident filers only, Schedule OR-ASC-NP, Section 1 Code Certain business expenses of reservists, performing artists, and fee-basis government officials —Form 1040, Schedule 1, Line 24 ..............................................................................................................................002 Health savings account deduction—Form 1040, Schedule 1, Line 25 .................................................................003 Penalty on early withdrawal of savings—Form 1040, Schedule 1, Line 30 ........................................................004 Write-in adjustment on Form 1040, Schedule 1, Line 22 ........................................................................................005 Charitable contribution adjustment—Form 1040, Line 10b ..................................................................................007 Additions—Schedule OR-ASC, Section 1 or OR-ASC-NP, Section 2 Code Claim of right income repayments ...........................................................................................................................103 Disposition of inherited Oregon farmland or forestland......................................................................................106 Federal election on interest and dividends of a minor child ................................................................................107 Federal income tax refunds .......................................................................................................................................109 Net operating loss—non-Oregon source .................................................................................................................116 Oregon College & MFS 529 Savings Plan non-qualified withdrawal .................................................................117 Oregon deferral of reinvested capital gain ..............................................................................................................118 Partnership and S corporation modifications for Oregon ....................................................................................119 Business credit—unused............................................................................................................................................122 Federal subsidies for employer prescription drug plans ......................................................................................123 Federal law disconnect ...............................................................................................................................................131 Accumulation distribution from certain domestic trusts .....................................................................................132 Fiduciary adjustment from Oregon estates and trusts .........................................................................................133 Gambling losses claimed as an itemized deduction..............................................................................................134 Refund of Oregon-only itemized deductions from a prior year ..........................................................................136 Individual development account nonqualified withdrawal .................................................................................137 Oregon IDA Initiative Fund donation credit add back .........................................................................................138 Lump-sum distribution from a qualified retirement plan ...................................................................................139 Passive foreign investment company income .........................................................................................................140 Child Care Fund Contributions ................................................................................................................................142 Oregon Production Investment Fund contributions .............................................................................................144 University Venture Development Fund contributions ..........................................................................................146 Income taxes paid to another state by a pass-through entity ...............................................................................148 Basis of business assets transferred to Oregon ......................................................................................................150 Depletion in excess of property basis ......................................................................................................................151 Depreciation difference for Oregon .........................................................................................................................152 Federal depreciation disconnect ...............................................................................................................................153 Gain or loss on the sale of depreciable property with different basis for Oregon ............................................154 Passive activity losses .................................................................................................................................................155 Suspended losses ........................................................................................................................................................156 Federal estate tax on income in respect of a decedent ...........................................................................................157 Interest on state and local government bonds outside of Oregon .......................................................................158 Federal subtraction for retirement savings rollover from individual development account ..........................159 Charitable donations not allowed for Oregon ........................................................................................................160 Nonresident capital loss carryovers .........................................................................................................................161 Capital loss carryover difference ..............................................................................................................................162 WFHDC medical expenses ........................................................................................................................................163 ABLE account subtraction nonqualified withdrawal ............................................................................................164

150-101-431 (Rev. 04-01-22) 129 Numeric codes College Opportunity Grant Fund contributions ....................................................................................................165 First-time homebuyer savings account nonqualified withdrawal .......................................................................166 CPAR addition .............................................................................................................................................................187 Subtractions—Schedule OR-ASC, Section 2 or OR-ASC-NP, Section 3 Code American Indian .........................................................................................................................................................300 Artist’s charitable contribution .................................................................................................................................301 Construction worker and logger commuting expenses ........................................................................................303 Federal gain previously taxed by Oregon ...............................................................................................................306 Federal pension income .............................................................................................................................................307 Tuition and fees ...........................................................................................................................................................308 Federal income tax from a prior year .......................................................................................................................309 Fiduciary adjustments from Oregon estates and trusts ........................................................................................310 Foreign tax ...................................................................................................................................................................311 Individual development account contributions .....................................................................................................314 Interest and dividends on U S bonds and notes ....................................................................................................315 Land donation to educational institutions ..............................................................................................................316 Interest from state and local government bonds ....................................................................................................317 Military active duty pay .............................................................................................................................................319 Mortgage interest credit .............................................................................................................................................320 Net operating loss for Oregon ...................................................................................................................................321 Oregon lottery winnings ...........................................................................................................................................322 Partnership and S corporation modifications for Oregon ....................................................................................323 Oregon College & MFS 529 Savings Plan deposit subtraction carryforward ....................................................324 Oregon income tax refund .........................................................................................................................................325 Previously taxed employee retirement plans..........................................................................................................327 Public Safety Memorial Fund award .......................................................................................................................329 Railroad Retirement Board benefits: Tier 2, windfall/vested dual, supplemental, and railroad unemployment benefits ......................................................................................................................330 US government interest in IRA or Keogh distributions ........................................................................................331 Scholarship awards used for housing expenses.....................................................................................................333 Legislative Assembly salary and expenses .............................................................................................................335 Film production labor rebate—Greenlight Oregon Labor Rebate Fund ............................................................336 Mobile home park capital gain ..................................................................................................................................338 Capital Construction Fund (CCF) contributions ....................................................................................................339 Federal business and health coverage credits .........................................................................................................340 Income from a composite return ..............................................................................................................................341 Oregon Investment Advantage .................................................................................................................................342 Mobile home tenant payment ...................................................................................................................................344 Taxable benefits for former RDPs .............................................................................................................................347 Previously-taxed IRA conversions ...........................................................................................................................348 Special Oregon medical .............................................................................................................................................351 DISC dividend payments ...........................................................................................................................................352 Depreciation difference for Oregon .........................................................................................................................354 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................355 Passive activity losses .................................................................................................................................................356 Suspended losses ........................................................................................................................................................357 Basis of business assets transferred to Oregon ......................................................................................................358 Marijuana business expenses not allowed on the federal return ........................................................................359 ABLE account deposit carryforward ........................................................................................................................360 First-time home buyer savings account deposits and earnings ...........................................................................361 CPAR subtraction ........................................................................................................................................................384 Modifications—Part-year and nonresident filers only, Schedule OR-ASC-NP, Section 4 Code Artist’s charitable contribution (Part-year filers only) ...........................................................................................600 Federal income tax refunds + ....................................................................................................................................601 Federal tax from a prior year .....................................................................................................................................602

150-101-431 (Rev. 04-01-22) 130 Foreign tax ...................................................................................................................................................................603 Gambling losses claimed as an itemized deduction + ..........................................................................................604 Federal estate tax on income in respect of a decedent + .......................................................................................605 Federal mortgage interest credit ...............................................................................................................................607 Federal business and health coverage credits .........................................................................................................609 Child Care Fund contributions +..............................................................................................................................642 Oregon Production Investment Fund contributions + ..........................................................................................644 University Venture Fund contributions + ...............................................................................................................646 Oregon IDA Initiative Fund donation credit add back + ......................................................................................648 Claim of right income repayment + .........................................................................................................................649 Charitable donations not allowed for Oregon + .....................................................................................................650 WFHDC medical expenses + ....................................................................................................................................651 College Opportunity Grant contributions + ...........................................................................................................652 + Must be entered as a negative number .................................................................................................................... Standard credits—Schedule OR-ASC, Section 3 or OR-ASC-NP, Section 5 Code Income taxes paid to another state ...........................................................................................................................802 Mutually-taxed gain on the sale of residential property ......................................................................................806 Oregon Cultural Trust contributions * .....................................................................................................................807 Oregon Veterans’ Home physicians *.......................................................................................................................808 Political contributions (Part-year and nonresident filers only) ............................................................................809 Reservation enterprise zone * ....................................................................................................................................810 Retirement income ......................................................................................................................................................811 Rural emergency medical technicians * ..................................................................................................................812 Rural health practitioners * ........................................................................................................................................813 Pass-through income taxes paid to another state ...................................................................................................815 Carryforward credits—Schedule OR-ASC, Section 4 or OR-ASC-NP, Section 6 Code Agriculture workforce housing * ..............................................................................................................................835 Biomass production/collection carryforward ........................................................................................................838 Business energy carryforward ..................................................................................................................................839 Child and dependent care carryforward.................................................................................................................840 Child Care Fund contributions .................................................................................................................................841 Crop donation * ...........................................................................................................................................................843 Electronic commerce zone investment ....................................................................................................................845 Employer scholarship * ..............................................................................................................................................847 Employer-provided dependent care assistance carryforward .............................................................................846 Energy conservation projects ....................................................................................................................................849 Fish screening devices * .............................................................................................................................................850 Oregon IDA Initiative Fund donation ......................................................................................................................852 Oregon Low Income Community Jobs Initiative/New Markets .........................................................................855 Oregon Production Investment Fund contributions .............................................................................................856 Pollution control facilities carryforward .................................................................................................................857 Renewable Energy Development Fund contributions carryforward ..................................................................859 Renewable energy resource equipment manufacturing facility carryforward .................................................860 Residential energy * ....................................................................................................................................................861 Transportation projects ..............................................................................................................................................863 University Venture Development Fund contributions ..........................................................................................864 Reforestation of underproductive forestlands ........................................................................................................867 Rural technology workforce development * ...........................................................................................................868 Bovine manure production/collection * ..................................................................................................................869 College Opportunity Grant Fund contributions ....................................................................................................871 Short line railroad rehabilitation * ............................................................................................................................872 Carryforward credits—Available only to S Corporation shareholders Code Agriculture workforce housing loans (S corporation) ...........................................................................................836 Alternative qualified research activities (S corporation).......................................................................................837 Lender’s credit: affordable housing (S corporation) ...............................................................................................854 Numeric codes

150-101-431 (Rev. 04-01-22) 131 Lender’s credit: energy conservation carryforward (S corporation) ...................................................................848 Long-term enterprise zone facilities carryforward (S corporation) .....................................................................853 Qualified research activities carryforward (S corporation) ..................................................................................858 Refundable credits—Schedule OR-ASC, Section 5 or OR-ASC-NP, Section 7 Code Claim of right ...............................................................................................................................................................890 Mobile home park closure .........................................................................................................................................891 Working family household and dependent care (WFHDC) * ..............................................................................895 Oregon 529 College Savings Network account contributions * ............................................................................896 ABLE account contributions * ...................................................................................................................................897 * Credit must be prorated by part-year residents and nonresidents. Numeric codes

150-101-431 (Rev. 04-01-22) 132 Index Symbols 2-D barcode filing for Oregon ............................................ 11 529 plans—see “Oregon 529 College Savings Network” A ABLE Account Contributions—credit ...................................................... 115 Deposit—subtraction ..........................................................62 Nonqualified withdrawal—addition ...............................53 Abusive Tax Avoidance Transactions—penalty ..............33 Accumulation distribution from a trust ...........................53 Additions ABLE account nonqualified withdrawal—addition ......53 Accumulation distribution from a trust ..........................53 Basis of business assets transferred into Oregon ............86 Capital loss carryover difference ......................................53 Child Care Fund contributions .........................................53 Claim of right income repayments ...................................54 College Opportunity Grant contributions .......................54 CPAR adjustment ................................................................85 Depletion ..............................................................................54 Depreciation and amortization .........................................84 Disposition of inherited Oregon farmland or

forestland ....................................................................54 Disqualified charitable donations .....................................55 Federal business income deduction .................................55 Federal depreciation disconnect .................................81, 84 Federal election on interest and dividends of a minor child ..............................................................55 Federal estate tax .................................................................56 Federal income tax refunds ...............................................56 Federal subsidies for employer prescription drug plans ...................................................................57 Fiduciary adjustment ..........................................................88 First-time home buyer savings account nonqualified withdrawal .................................................................57 Gain on the sale of an Oregon residence .........................87 Gambling losses claimed as an itemized deduction ......58 Income taxes paid to another state ...................................58 Individual Development Account Donation to IDA Initiative Fund ....................................59 Nonqualified withdrawal ...............................................59 Rollover to retirement account.......................................59 In general ..............................................................................53 Interest and dividends on government bonds of other states .............................................................59 Lump-sum distributions ....................................................59 Nonresident capital losses .................................................60 Oregon College and MFS 529 Savings Plan nonqualified withdrawal ..........................................60 Oregon Production Investment Fund ..............................61 Partnership and S corporation modifications for Oregon ...................................................................84 Passive activity losses .........................................................88 Refund of Oregon-only itemized deductions .................61 Sale of assets ........................................................................87 University Venture Development Fund contributions ... 61 Unused business credits .....................................................61 WFHDC medical expenses claimed as itemized deduction ....................................................................61 Addresses ..............................................................................137 Adjustments to income Alimony paid .......................................................................48 Charitable contribution ......................................................49 Educator expenses ..............................................................49 Fee-basis government officials, business expenses of ..................................................................48 Health Savings Account deduction ..................................49 In general ..............................................................................48 IRA or self-employed SEP and SIMPLE contributions ..............................................................50 Performing artists, business expenses of .........................48 Reservists, business expenses of .......................................48 Self-employed health insurance ........................................51 Self-employment tax ...........................................................51 Student loan interest ...........................................................51 Tuition and fees deduction ................................................52 Write-in adjustments ..........................................................52 Agriculture workforce housing—credit .........................105 Air carrier employees ...........................................................41 Alimony Paid, deduction—adjustment ............................................48 Received, income ................................................................42 Alternative qualified research activities–credit ............106 Amended returns ..................................................................29 American Indian—subtraction ...........................................62 Amtrak Act .............................................................................43 Appeals Appealing a deficiency based on federal audit reports or audit reports of other states ...................37 Conference ...........................................................................37 Doubtful liability .................................................................38 Interest ............................................................................37, 38 Notice of Assessment..........................................................36 Notice of Deficiency ............................................................36 Oregon Tax Court ................................................................38 Paying your taxes during the appeal ...............................38 Penalty or interest ...............................................................37 Revenue Online .............................................................37, 38 Written objection .................................................................37 Appendix ..............................................................................122 Artist’s charitable contribution—subtraction ..................63 “As if” federal returns ..........................................................17 Audit ......................................................................................35 B Basis of business assets transferred into Oregon ...........86 Bona fide residence test .......................................................14 Bond interest ..............................................................59, 70, 72 Business energy—credit ....................................................107 Business income or loss .......................................................42 Business income reduced tax rate ......................................85 Business tax credits from pass-through entity ................84 C Capital Construction Fund—subtraction .........................63 Capital gain ................................................................42, 59, 91 Capital loss carryover difference—addition ....................53 Centralized Partnership Audit Regime (CPAR) adjustments Addition .................................................................................85 Amended returns .................................................................29 Reporting requirement ........................................................35 Subtraction ............................................................................85 Charitable contribution—adjustment ...............................49 Child Care Fund contributions Addition ...............................................................................53 Index

150-101-431 (Rev. 04-01-22) 133 Credit ..................................................................................107 Claim of right income repayments Addition ...............................................................................53 Credit .................................................................................. 115 Commercial fishers Estimated tax .....................................................................121 Underpayment interest .................................................... 119 Community property income .......................................18, 41 Commuting expenses, construction worker/logger—subtraction ....................................64 Composite return, filing ......................................................16 Income on, subtraction .......................................................70 Conversions and exchanged property—subtraction ......64 Credits, carryforward Agriculture workforce housing ......................................105 Alternative qualified research activities ........................106 Biomass production/collection .......................................107 Bovine manure production/collection ..........................107 Business energy .................................................................107 Child and dependent care................................................107 Child Care Fund contribution .........................................107 College Opportunity Grant .............................................108 Crop donation ....................................................................108 Electronic commerce zone investment ...........................109 Employer scholarship .......................................................109 Energy conservation project ............................................109 Fish screening devices ......................................................109 Lender’s credit: affordable housing ............................... 110 Lender’s credit: energy conservation ............................. 110 Long-term enterprise zone facilities ............................... 110 New Markets ......................................................................111 Oregon IDA Initiative Fund donation ........................... 110 Oregon Low-Income Community Jobs Initiative ..........111 Oregon Production Investment Fund .............................111 Pollution control facilities .................................................111 Qualified research activities ............................................ 112 Renewable energy development contribution .............. 112 Renewable energy resource equipment manufacturing facility ............................................. 112 Residential energy ............................................................. 112 Rural technology ............................................................... 112 Rural technology workforce development .................... 113 Short line railroad rehabilitation ..................................... 113 Transportation projects ..................................................... 113 University Venture Development Fund contributions ............................................................ 114 Credits, refundable ABLE account contributions ............................................ 115 Claim of right income repayment ................................... 115 Earned income ................................................................... 116 Manufactured home park closure .................................. 116 Oregon 529 College Savings Network account contributions ............................................................ 116 Oregon surplus .................................................................. 118 Working Family Household and Dependent Care (WFHDC) .................................................................. 117 Credits, standard Exemption ............................................................................94 Income taxes paid to another state ...................................96 Mutually-taxed gain on the sale of residential property .....................................................................100 Oregon Cultural Trust contributions ..............................101 Oregon Veterans’ Home Physicians ...............................101 Political contributions ......................................................101 Reservation enterprise zone ............................................102 Retirement income ............................................................102 Rural emergency medical service providers .................104 Rural health practitioners ................................................104 Credit types ............................................................................93 Crop donation—credit ........................................................108 D Dam workers; hydroelectric ................................................42 Deceased person’s return .......................................................8 Deductions and modifications ...........................................89 Itemized deductions ...........................................................89 Standard deduction ............................................................90 Age 65 or older, blind ......................................................90 Single or married filing jointly dependents .................90 Dependent ..........................................................................9, 90 Depletion—addition .............................................................54 Depreciation and amortization ...........................................84 Direct deposit of refund ......................................................25 DISC dividend payments—subtraction ...........................65 Disposition of inherited Oregon farmland or forestland—addition ................................................54 Dividend income .............................................................43, 70 Domicile ..................................................................................13 E Earned income—credit ....................................................... 116 Educator expenses—adjustment ........................................49 Electronic commerce zone investment—credit .............109 Electronic filing for Oregon ................................................ 11 Employee retirement plans, previously taxed— subtraction .................................................................75 Employer scholarship—credit ..........................................109 Energy conservation project—credit ...............................109 Estimated tax ........................................................................121 Exempt income Air carrier employees, nonresident ..................................41 Amtrak Act ...........................................................................43 Hydroelectric dam workers ...............................................42 Interstate transportation wages Amtrak Act........................................................................43 Railroad Retirement Board benefits .................................46 Social Security benefits .......................................................46 Waterway workers, nonresident .......................................47 Extensions of time to file .....................................................15 F Failure to file ..........................................................................39 Appeal procedure ...............................................................39 Assessment of tax ................................................................39 Failure to file, 25 percent, additional ................................32 Penalty, 25 percent ..............................................................32 Penalty, 100 percent ............................................................33 Farmers and commercial fishers Estimated tax .....................................................................121 Underpayment interest .................................................... 119 Farm income averaging ........................................................92 Farm liquidation long-term capital gain tax rate ............91 Federal depreciation disconnect .........................................84 Federal election on interest and dividends of a minor child—addition ..........55 Federal estate tax—addition ................................................56 Federal income tax refunds—addition ..............................56 Federal income tax—subtraction Additional tax paid .............................................................65 Index

150-101-431 (Rev. 04-01-22) 134 Amended returns—how to report ....................................65 Current year .........................................................................65 Federal law connection ..........................................................7 Federal pension income—subtraction ..............................67 Federal return “As if” ...................................................................................17 Audit of ................................................................................36 Extensions of time to file ....................................................15 Filing status ..........................................................................16 Form references .....................................................................7 Need for ................................................................................ 11 RDPs ......................................................................................19 Federal subsidies for employer prescription drug plans—addition .........................................................57 Federal tax law .........................................................................7 Fee-basis government officials, business expenses of—adjustment ........................................48 Fiduciary adjustment ............................................................88 Filing requirements ................................................................9 Nonresidents ........................................................................10 Part-year residents ..............................................................10 Filing status ............................................................................16 Fish screening devices—credit .........................................109 Foreign income tax—subtraction .......................................69 G Gain, loss, and distributions ...............................................42 Gain on the sale of an Oregon residence ..........................87 Gambling losses claimed as an itemized deduction—addition ................................................58 H Health savings account deduction—adjustment ............49 Household income checklist .............................................123 Housing expenses, scholarships used for— subtraction .................................................................76 Hydroelectric dam workers .................................................42 I Important mailing addresses ............................................137 Income Air carrier employees .........................................................41 Alimony received ................................................................42 Amtrak Act ...........................................................................43 Business income or loss ......................................................42 Gain, loss, and distributions ..............................................42 Hydroelectric dam workers ...............................................42 Individual Retirement Account ........................................43 Interest and dividend income ...........................................43 Interstate Transportation Wages .......................................43 Like-kind exchange or conversions of property .............45 Railroad Retirement Board benefits .................................46 Retirement income ..............................................................46 Salaries ..................................................................................47 Social Security benefits .......................................................46 State and local income tax refunds ...................................47 Taxable to Oregon ...............................................................41 Unemployment insurance benefits ..................................47 Wages ....................................................................................47 Waterway workers ..............................................................47 Income averaging, farm .......................................................92 Income on a composite return—subtraction ....................70 Income taxes paid to another state Addition ...............................................................................58 Credit, full-year residents ..................................................97 Credit, generally ..................................................................96 Credit, nonresidents ...........................................................99 Credit, part-year residents .................................................98 Exception for Oregon resident partners and S corporation shareholders ..........................................99 Income tax refund, Oregon—subtraction .........................74 Individual Development Account Addition Rollover to retirement account.......................................59 Initiative Fund donation credit ......................................59 Nonqualified withdrawal ...............................................59 Credit—donation to Initiative Fund .............................. 110 Subtraction ...........................................................................70 Individual Taxpayer Identification Number ...................19 Inherited farmland/forestland—addition ........................54 Interest .....................................................................................31 Refunds .................................................................................31 Underpayment of estimated tax ..................................... 119 Unpaid tax ............................................................................31 Interest/dividends on government bonds of other states—addition ........................................................59 Interest/dividends on U.S. bonds/notes— subtraction .................................................................70 Interest income ..........................................................43, 59, 70 Interstate transportation wages ..........................................43 IRA conversions, previously taxed—subtraction ...........75 IRA or self-employed SEP and SIMPLE contributions—adjustment .....................................50 L Land donations to educational institutions carryforward—subtraction ......................................71 Lender’s credit: affordable housing ................................ 110 Lender’s credit: energy conservation ............................... 110 Like-kind exchange or conversions of property .............45 Local government bond interest—subtraction ................72 Long-term enterprise zone facilities—credit ................. 110 Lottery winnings—subtraction ..........................................72 Lump-sum distributions—addition Capital gains income ..........................................................59 Ordinary income .................................................................60 M Mailing addresses ...............................................................137 Manufactured home park capital gain exclusion ...........72 Manufactured home park closure—credit ..................... 116 Manufactured home park payments .................................73 Marijuana business expenses—subtraction ....................73 Medical subtraction, special Oregon .................................76 Military personnel filing information ..............................20 Minor child, federal election on interest and dividends—addition ................................................55 Minor child’s return ................................................................8 Miscellaneous Oregon income tax information for tax years 2016–2020 ...........................................138 Mortgage interest credit—subtraction ..............................74 Moving expenses—adjustment ..........................................50 Mutually-taxed gain on the sale of residential property—credit ......................................................100 N Net operating losses (NOLs) ...............................................81 New Markets—credit ......................................................... 111 Nonresidents Adjustments .........................................................................48 Index

150-101-431 (Rev. 04-01-22) 135 Index Composite return filed by pass-through entity ..............16 Earned income credit ........................................................ 116 Estimated tax .....................................................................121 Exemption credit .................................................................94 Filing requirements .............................................................10 Form OR-40-N .....................................................................15 Income taxes paid to another state ...................................96 Married taxpayers with different residency status ........16 Nonresident aliens ............................................................121 Oregon percentage ..............................................................89 Rental property in Oregon .................................................10 Residency .............................................................................14 O Open estimated tax account ................................................26 Oregon 529 College Savings Network Addition, non-qualified withdrawal ................................60 Credit .................................................................................. 116 Subtraction, carryforward..................................................74 Oregon Cultural Trust contributions—credit ................101 Oregon IDA Initiative Fund donation Addition .............................................................................159 Credits, carryforward ....................................................... 110 Oregon income tax refund—subtraction ..........................74 Oregon Low-Income Community Jobs Initiative—credit ..................................................... 111 Oregon percentage ................................................................89 Oregon Production Investment Fund (auction) Addition ...............................................................................61 Credit ...................................................................................111 Oregon Veterans’ Home Physicians—credit ..................101 Oyster farmers Estimated payments .........................................................121 Underpayment interest .................................................... 119 P Partnership and S corporation modifications for Oregon ..................................................................84 Part-year residents Adjustments .........................................................................48 Earned income credit ........................................................ 116 Estimated tax .....................................................................121 Exemption credit .................................................................94 Filing requirements .............................................................10 Form OR-40-P ......................................................................15 Income taxes paid to another state ...................................96 Married taxpayers with different residency status ........16 Net operating losses ...........................................................82 Oregon percentage ..............................................................89 Residency .............................................................................14 Passive activity losses ...........................................................88 Computation of Oregon losses ..........................................88 Modifications to federal losses for Oregon .....................89 Pass-through entities Business tax credits .............................................................84 Composite tax return ..........................................................16 Income on a composite return—subtraction ...................70 Income taxes paid to another state—addition ................58 Income taxes paid to another state—credit .....................99 Nonresident withholding ..................................................16 Qualified business income reduced tax rate ...................85 Penalties ..................................................................................32 Abusive Tax Avoidance Transactions ...............................33 Failure to file, 25 percent, additional ................................32 Failure to file, 100 percent ..................................................33 False claim, Working Family Household and Dependent Care credit ............................................ 118 First-time home buyer savings account, nonqualified withdrawal ..........................................33 Frivolous return...................................................................33 Intent to evade tax...............................................................33 Substantial understatement of tax ....................................33 Performing artists, business expenses of— adjustment .................................................................48 Political contributions—credit .........................................101 Pollution control facilities—credit .................................. 111 Prescription drug plans, employer subsidies— addition .......................................................................57 Previously taxed employee retirement plans— subtraction .................................................................75 Previously taxed IRA conversions—subtraction ............75 Prohibited amounts ..............................................................81 Protective claim for refund ..................................................29 Public Safety Memorial Fund Awards—subtraction .....75 Q Qualified business income reduced tax rate ....................85 Qualified research activities—credit ............................... 112 R Railroad Retirement Board benefits—subtraction .........75 Record-keeping requirements ............................................ 11 Refund of Oregon-only itemized deductions —addition ...................................................................61 Refunds Amended returns ................................................................29 Application to open estimated tax account .....................26 Delays ...................................................................................27 Direct deposit .......................................................................25 Injured spouse refund claims ............................................27 Interest ..................................................................................31 Minimum................................................................................8 Oregon statute of limitations .............................................27 Processing.............................................................................27 Protective claim ...................................................................29 Registered domestic partners .............................................19 Renewable energy development contribution (auction)—credit ..................................................... 112 Renewable energy resource equipment manufacturing facility carryforward—credit .... 112 Reservation enterprise zone—credit ...............................102 Reservists, business expenses of—adjustment ...............48 Residency Bona fide residence test ......................................................14 Domicile ...............................................................................13 Foreign country ...................................................................13 Military personnel...............................................................20 Military spouses ..................................................................23 Nonresidents ........................................................................14 Part-year residents ..............................................................14 Physical presence test .........................................................13 Special-case Oregon residents ...........................................13 Tax treaties ...........................................................................14 Residential energy—credit ................................................ 112 Retirement income ................................................................46 Credit ..................................................................................102 Rural technology workforce development—credit ...... 113

150-101-431 (Rev. 04-01-22) 136 Index S Salary income .........................................................................47 Sale of assets ..........................................................................87 Scholarships used for housing expenses—subtraction ...76 Self-employed health insurance deduction .....................51 Self-employment tax ............................................................51 Short line railroad rehabilitation—credit ...................... 113 Social Security and Railroad Retirement Board .............46 Social Security benefits—subtraction ...............................76 Special Oregon medical—subtraction ..............................76 Standard deduction ..............................................................90 State and local income tax refunds ....................................46 Statute of limitations Generally ..............................................................................12 Net operating loss carryback .............................................30 Notice of deficiency for listed transaction .......................34 Refunds .................................................................................27 Student loan interest—adjustment ....................................51 Subtractions ABLE Account deposit carryforward ...............................62 American Indian .................................................................62 Artist’s charitable contribution .........................................63 Basis of business assets transferred into Oregon ............86 Capital Construction Fund ................................................63 Commuting expenses, construction worker/logger .....64 Conversions and exchanged property .............................64 CPAR adjustment ................................................................85 Depreciation and amortization .........................................84 DISC dividend payments ..................................................65 Federal income tax ..............................................................65 Federal pension income .....................................................67 Fiduciary adjustment ..........................................................88 Foreign income tax ..............................................................69 Gain on the sale of an Oregon residence .........................87 Income on a composite return ...........................................70 Individual Development Account ....................................70 In general ..............................................................................62 Interest and dividends on U.S. bonds and notes ............70 Land donations to educational institutions carryforward ...............................................................71 Local government bond interest .......................................72 Lottery winnings .................................................................72 Manufactured home park capital gain exclusion ...........72 Manufactured home park payments ................................73 Marijuana business expenses ............................................73 Mortgage interest credit .....................................................74 Net operating losses for Oregon .......................................81 Oregon College and MFS 529 Savings Plan deposits carryforward ...............................................................74 Oregon income tax refund .................................................74 Partnership and S corporation modifications for Oregon ...................................................................84 Passive activity losses .........................................................88 Previously taxed employee retirement plans..................75 Previously taxed IRA conversions ....................................75 Public Safety Memorial Fund awards ..............................75 Railroad Retirement Board benefits .................................75 Sale of assets ........................................................................87 Scholarships used for housing expenses .........................76 Social Security benefits .......................................................76 Special Oregon medical ......................................................76 Taxable benefits for former RDPs .....................................79 Tuition and fees ...........................................................................79 U.S. government interest in IRA or Keogh distribution ....80 T Taxable benefits for former RDPs—subtraction .............79 Tax benefit doctrine ..............................................................56 Tax treaties ..............................................................................14 Transportation projects—credit ........................................ 113 U Underpayment of estimated tax, interest on .................. 119 Appeals .................................................................................36 Exceptions .......................................................................... 119 Unemployment compensation Railroad Retirement Board benefits—subtraction .........75 Unemployment insurance benefits ...................................46 University Venture Development Fund contributions Addition ...............................................................................61 Credit .................................................................................. 114 Unused business credits—addition ...................................61 U.S. bonds and notes, interest on—subtraction ..............70 U.S. government interest in IRA or Keogh distribution—subtraction .......................................80 W Wage income ..........................................................................47 Waterway workers.................................................................47 Working Family Household and Dependent Care (WFHDC)—credit ................................................... 117 Medical expenses claimed as itemized deduction .........61 Penalty for false claim ...................................................... 118 Written objection ...................................................................37

150-101-431 (Rev. 04-01-22) 137 Important mailing addresses If you are responding to a specific notice or letter, use the address and contact information listed on that correspondence. Send all returns and forms to the address listed on it or its instructions. See our website for additional mailing addresses. Physical address: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Forms and publications requests: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Federal ITIN information: Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Tax Information Authorization and Power of Attorney for Representation form: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Fax: 503-945-8735 Return after tax has been assessed: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Donations to State School Fund: Oregon Department of Education Attention: OFA Cashier 255 Capitol Street NE Salem OR 97310-1206 Injured spouse refund requests: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Written objections, conference requests, and requests for interest or penalty adjustments: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Appeals to the Oregon tax court: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 Appeals of interest on underpayment of tax: UND Team Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018

Miscellaneous Oregon income tax information for tax years 2017–2020 (Refer to prior year tax booklets before filing delinquent or amended returns) Tax year 2017 2018 2019 2020 Return due date (Calendar year filer) 4/17/18 4/15/19 7/15/20 4/15/21 Standard deduction Single (can be claimed on another’s return) $1,050* $1,050* $1,100* $1,100* Single $2,175 $2,215 $2,270 $2,315 Married filing jointly or qualifying widow(er) $4,350 $4,435 $4,545 $4,630 Married filing separately $2,175† $2,215† $2,270† $2,315† Head of household $3,500 $3,570 $3,655 $3,725 Federal tax subtraction maximum $6,550–$0‡ $6,650–$0‡ $6,800–$0‡ $6,950–$0‡ Exemption credit $197 or $0x% $201 or $0x% $206 or $0x% $210 or $0x% Oregon College and MFS 529 Savings Plans and ABLE account contribution maximum Joint return $4,660 $4,750 $4,865 $4,960# All others $2,330 $2,375 $2,435 $2,480# Marginal tax rates Single Married filing separately 5% First $3,400 First $3,450 First $3,550 4.75% First $3,600 7% $3,401–$8,500 $3,451–$8,700 $3,351–$8,900 6.75% $3,601–$9,050 9% $8,501–$125,000 $8,701–$125,000 $8,901–$125,000 8.75% $9,051–$125,000 9.9% Over $125,000 Over $125,000 Over $125,000 Over $125,000 Married filing jointly Head of household Qualifying widow(er) 5% First $6,800 First $6,900 First $7,100 4.75% First $7,200 7% $6,801–$17,000 $6,901–$17,400 $7,101–$17,800 6.75% $7,201–$18,100 9% $17,001–$250,000 $17,401–$250,000 $17,801–$250,000 8.75% $18,101–$250,000 9.9% Over $250,000 Over $250,000 Over $250,000 Over $250,000 * Greater of amount shown or earned income plus $350, but not more than the standard deduction for a single filer. † If your spouse itemizes deductions, your standard deduction is $0. ‡ If federal AGI is $125,000 or greater, the federal tax subtraction is limited. Use the federal tax subtraction worksheet. x If federal AGI is more than $100,000 ($200,000 for a joint return), the exemption credit amount is $0. % The additional exemption credit for a disabled child or severely disabled taxpayer or spouse is $0 if AGI is over $100,000, regardless of filing status. # Carryforward of pre-2020 contributions only.

150-101-431 (Rev. 04-21-22) 2021 OREGON Publication OR-17 Individual Income Tax Guide

Important updates April 19, 2022 This publication was updated on April 19, 2022 to: • Correct the heading for the Legislative Assembly expense subtraction on page 79. • Reinsert the instructions for the business energy credit carryforward on page 112. Note: For tax year 2021 only, use code 836 for a carryforward of this credit. April 1, 2022 This publication was updated on April 1, 2022 to correct a line reference on page 108 (retirement income credit worksheet). February 17, 2022 This publication was updated on February 17, 2022 to correct typographical errors on page 8 (age requirement for the special medical subtraction) and page 9 (inside Table 1, filing thresholds for residents), and to revise the explanation for the Legislative Assembly expense allowance subtraction on page 79.

This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax For Individuals. This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administra­ tive Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 questions.dor@dor.oregon.gov Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include .txt files in your email, but we are unable to open any other type of attachments. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. • Personal and partnership income tax: prac.revenue@dor.oregon.gov. • Corporate income or excise tax: corp.help.dor@dor.oregon.gov. • Corporate minimum tax: corp.help.dor@dor.oregon.gov. • Corporate nexus and voluntary disclosure: nexus.help.dor@dor.oregon.gov. • Corporate activity tax: cattax.questions@dor.oregon.gov. • Payroll and business tax: payroll.help.dor@dor.oregon.gov. • Fiduciary/estate/inheritance tax: estate.help.dor@dor.oregon.gov. • Transit self-employment taxes: tse.help.dor@dor.oregon.gov. Revenews. To receive emailed information from us, subscribe to Revenews, at www.oregon.gov/dor/preparers and navigate to Revenews.

150-101-431 (Rev. 04-21-22) 4 Contents Federal tax law ....................................................................7 New information .................................................................7 Important reminders ..........................................................7 General information ..................................................9 Do I have to file an Oregon income tax return? .............9 Electronic filing for Oregon ............................................11 2-D barcode filing for Oregon .........................................11 Why Oregon needs a federal return ..............................11 Record-keeping requirements .........................................11 Filing an Oregon return .........................................13 Residency ...........................................................................13 Extensions of time to file .................................................15 Which form do I file? ........................................................15 Filing status........................................................................16 Registered domestic partners (RDPs) ............................19 Individual Taxpayer Identification Number .................19 Military personnel filing information ...........................20 Oregon tax ....................................................................25 Personal income tax rates ................................................25 Qualified business income reduced tax rate ................26 Farm liquidation long-term capital gain tax rate .........28 Farm income averaging ....................................................29 Interest on certain installment sales ..............................29 ABLE account or Oregon 529 College Savings Network account tax credit recapture ......................29 Other individual taxes .....................................................29 Payments and refunds ...........................................31 Payment options ................................................................31 Direct deposit of refund ...................................................31 Application of refund .......................................................32 Refund processing ............................................................33 Injured spouse refund claims .........................................33 Oregon statute of limitations on refunds .....................33 Amended returns .....................................................35 How do I amend my Oregon return? ............................35 Interest and penalties.............................................37 Interest ................................................................................37 Penalties ..............................................................................38 Audits and appeals ...................................................41 What to do if your return is audited ..............................41 Appeals ...............................................................................42 Failure to file an Oregon income tax return ...45 Filing a return after tax is assessed ................................45 Income ............................................................................47 What income is taxable to Oregon? ................................47 Air carrier employees .......................................................47 Alimony received ..............................................................48 Business income or loss ....................................................48 Federal Schedule E and F income ...................................48 Gain, loss, and distributions ...........................................48 Global intangible low-taxed income (GILTI) ................48 Hydroelectric dam workers .............................................48 Individual Retirement Account (IRA) distributions ...49 Interest and dividend income .........................................49 Interstate transportation wages (Amtrak Act ) ............49 Like-kind exchange or involuntary conversion ...........51 Retirement income ............................................................52 Social Security and Railroad Retirement Board benefits ...52 State and local income tax refunds ................................52 Unemployment insurance (UI) benefits and other taxable income ..............................................................52 Wages, salaries, and other pay for work ........................53 Waterway workers ............................................................53 Adjustments .................................................................54 Alimony paid .....................................................................54 Certain business expenses of reservists, performing artists, and fee-basis government officials ...............54 Educator expenses ............................................................55 Health savings account (HSA) deduction .....................55 IRA or self-employed SEP and SIMPLE contributions ...55 Moving expenses ..............................................................56 Penalty on early withdrawal of savings ........................56 Self-employed health insurance ....................................56 Self-employment tax ........................................................57 Student loan interest ........................................................57 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 .............................................................57 Additions ........................................................................59 Accumulation distribution from certain domestic trusts ..............................................................................59 ABLE account nonqualified withdrawal .......................59 Capital loss carryover difference ....................................59 Child Care Fund contributions .......................................59 Claim of right income repayments .................................60 College Opportunity Grant Fund contributions ..........60 Depletion in excess of property basis ............................60 Disposition of inherited Oregon farmland or forestland ..................................................................60 Disqualified charitable donations ..................................61 Federal business income deduction ...............................61 Federal election on interest and dividends of a minor child ...................................................................61 Federal estate tax ...............................................................62 Federal income tax refunds .............................................62 Federal subsidies for employer prescription drug plans ....................................................................63 First-time home buyer savings account nonqualified withdrawal ............................................63 Gambling losses claimed as an itemized deduction ...64 Income taxes paid to another state by a pass-through entity .....................................................64 Individual development account (IDA) .........................65 Interest and dividends on government bonds of other states ................................................................65 Lump-sum distributions ..................................................65 Nonresident capital losses and loss carryovers ............66 Oregon College and MFS 529 Savings Plan nonqualified withdrawal ............................................66 Oregon Production Investment Fund contributions ...66 Refund of Oregon-only itemized deductions from a prior year ....................................................................67 University Venture Development Fund contributions ...67 Unused business credits ..................................................67

150-101-431 (Rev. 04-21-22) 5 WFHDC medical expenses..............................................67 Subtractions .................................................................68 ABLE account deposit carryforward .............................68 American Indian ...............................................................68 AmeriCorps educational award .....................................69 Artist’s charitable contribution .......................................69 Capital Construction Fund (CCF) contributions ..........70 Charitable contribution non-itemized deduction ........70 Construction worker and logger commuting expenses ...70 Conversions and exchanged property ...........................71 Domestic international sales corporation (DISC) dividend payments ......................................................71 Federal income tax liability .............................................71 Federal tax worksheet ......................................................72 Federal pension income ...................................................74 Federal tax credits .............................................................75 First-time home buyer savings account (FTHBSA) contributions and earnings ........................................76 Foreign income tax ...........................................................76 Income on a composite return ........................................77 IDA contributions .............................................................77 Interest and dividends on U.S. bonds and notes ..........77 Land donation to educational institutions carryforward.................................................................78 Legislative Assembly expenses ......................................79 Local government bond interest .....................................79 Lottery winnings ..............................................................79 Manufactured dwelling park capital gain exclusion ...79 Manufactured dwelling park closure payments ..........80 Marijuana business expenses .........................................80 Mortgage interest credit ...................................................80 Oregon College and MFS 529 Savings Plan deposits carryforward.................................................................81 Oregon income tax refund ..............................................81 Oregon Investment Advantage .......................................81 Previously taxed employee retirement plans ...............82 Previously taxed IRA conversions .................................82 Public Safety Memorial Fund award .............................82 Railroad Retirement Board benefits ...............................83 Scholarship awards used for housing expenses ..........83 Social Security benefits ....................................................83 Special Oregon medical ...................................................83 Taxable benefits for former RDPs ...................................86 Tuition and fees .................................................................86 U.S. government interest in IRAor Keogh distributions .................................................................86 Other items ...................................................................88 Net operating losses (NOLs) for Oregon .......................88 Depreciation and amortization .......................................91 Partnership and S corporation modifications for Oregon and Business tax credits from PTE .............91 CPAR adjustments ............................................................92 Basis of business assets transferred into Oregon .........92 Sale of assets ......................................................................92 Gain on the sale of an Oregon residence .......................93 Fiduciary adjustment from Oregon estates and trusts ....93 Market-based sourcing ....................................................93 Passive activity losses (PALs) ..........................................94 Oregon percentage ............................................................94 Deductions and modifications ........................................95 Federal law disconnect .....................................................97 Credits ............................................................................98 Types of credits ..................................................................98 Standard credits ........................................................99 Exemption credit ...............................................................99 Income taxes paid to another state ...............................101 Exception for Oregon resident partners and S corporation shareholders ..........................................104 Mutually-taxed gain on the sale of residential property .......................................................................105 Oregon Cultural Trust contributions ...........................106 Oregon Veterans’ Home physicians .............................106 Political contributions ....................................................106 Reservation enterprise zone ..........................................107 Retirement income ..........................................................107 Rural emergency medical service providers ..............109 Rural health practitioners ..............................................109 Carryforward credits .............................................110 Agriculture workforce housing ....................................110 Alternative qualified research activities carryforward ...111 Biomass production/collection carryforward ............112 Bovine manure production/collection ........................112 Business energy carryforward .....................................112 Child Care Fund contributions .....................................112 College Opportunity Grant Fund contributions (auction) .......................................................................112 Crop donation ..................................................................113 Electronic commerce zone investment carryforward ...113 Employer scholarship .....................................................113 Energy conservation project ......................................... 114 Fish screening devices .................................................... 114 Lender’s credit: affordable housing .............................. 114 Lender’s credit: energy conservation carryforward ....115 Long-term enterprise zone facilities carryforward ...115 Oregon IDA Initiative Fund donation .........................115 Oregon Low-Income Community Jobs Initiative/New Markets ............................................115 Oregon Production Investment Fund contributions (auction) ..............................................116 Pollution control facilities carryforward .....................116 Qualified research activities carryforward ................116 Renewable energy resource equipment manufacturing facility carryforward .....................116 Residential energy carryforward .................................117 Rural technology workforce development ..................117 Short line railroad rehabilitation ..................................117 Transportation projects ..................................................118 University Venture Development Fund contributions ...118 Refundable credits .................................................119 ABLE account contributions ..........................................119 Claim of right income repayment ................................119 Earned income credit (EIC) ...........................................120 Manufactured dwelling park closure ..........................120 Oregon 529 College Savings Network account contributions ..............................................................120 Working family household and dependent care (WFHDC) ....................................................................121 Oregon surplus credit ....................................................122 Interest on underpayment of estimated tax ...123 Do I owe underpayment interest? ................................123 Figure your required annual payment ........................123

Exceptions to paying interest on an underpayment of estimated tax ...............................123 Estimated tax .............................................................125 Should I pay estimated tax?...........................................125 Exceptions ........................................................................125 Special situations ............................................................125 Appendix ......................................................................126

150-101-431 (Rev. 04-21-22) 7 Federal tax law No extension to pay. Oregon doesn’t allow an extension of time to pay your tax, even if the IRS is allowing an extension. Your 2021 Oregon tax is due April 18, 2022. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on April 1, 2021. Oregon exceptions to federal tax law: • Internal Revenue Code (IRC) Section 139A tax exemp­ tion for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. • IRC Section 529 tax exemption for earnings on col­ lege savings plan funds used for K-12 tuition. Ore­ gon College & MFS 529 Savings Plans may be used for higher education expenses only. • IRC Section 199A deduction for noncorporate quali­ fied business income (QBID). Oregon is discon­ nected from the QBID. This deduction doesn’t flow through to the Oregon personal income tax return, so there is no addition to report; however, the deduc­ tion must be added back on fiduciary returns. References to federal return forms. In this publica­ tion, references to the federal return or to Form 1040 also include a reference to Forms 1040-SR, 1040-NR, and 1040-X, unless otherwise indicated. New information Kicker refund. Oregon’s surplus credit, known as the “kicker,” will be claimed as a credit on your 2021 tax return. The credit is a percentage of your 2020 tax liability. You may donate your kicker credit to the Oregon State School Fund. Our instruction booklets contain more information and instructions for calcu­ lating your credit. New look for Oregon returns. Oregon’s individual income tax returns and many supporting schedules and forms have been redesigned for tax year 2021. We are in the process of modernizing our scanning equipment, and we have changed the layout of our forms to make them easier for machine reading. Our remaining forms and schedules will be redesigned within the next few years. Oregon tax rate information. This publication now includes information about Oregon’s personal income tax rates. All sections describing special tax rates and additions to tax, such as the reduced tax rate for qualified business income and interest on installment sales, can now be found after “Filing an Oregon return” under the heading “Oregon tax.” Federal tax liability subtraction. The federal tax subtraction limit is $7,050 ($3,525 if married filing separately) for 2021. It may be limited further based on your adjusted gross income (AGI). See “Federal income tax liability” in “Subtractions.” Subtraction for AmeriCorps educational awards. A new subtraction is available for AmeriCorps volun­ teers who receive educational awards after complet­ ing a term of national service. See “AmeriCorps edu­ cational award” in “Subtractions.” Changes to qualified withdrawals from Oregon 529 College Savings Network accounts. Qualified with­ drawals now include expenses related to apprentice­ ship programs and certain student loan payments. See “Oregon 529 College Savings Network account contributions” in “Refundable credits.” Credit recaptures for Oregon 529 College Savings Network and ABLE account contributions. If you claimed a tax credit based on your contributions to an Oregon College or MFS 529 Savings Plan account or an ABLE account and later made a nonqualifed withdrawal of those contributions, your credit(s) may have to be recaptured. See “Additions to tax” in “Ore­ gon tax.” Data security breaches. Tax professionals suffering a data security breach associated with tax return preparation must report the breach promptly to the department. See our website for additional details. Important reminders Revenue Online. Revenue Online provides conve­ nient, secure access to tools for managing your Ore­ gon tax account. With Revenue Online, you can: • Check the status of this year’s refund. • View and print letters from us. • Make or schedule payments. • Securely communicate with us. • Check balances and view your tax account history. • Submit your requests (such as penalty waivers or appeals) or information we’ve requested from you. • View your Form 1099-G, if applicable. Tax professionals with third party access have addi­ tional benefits, such as viewing clients’ accounts. For more information and instructions on setting up your personal Revenue Online account, go to www. oregon.gov/dor and click on “Revenue Online.” Military pay. Oregon doesn’t tax your military pay if you aren’t an Oregon resident. For more information about residency and the Oregon military pay subtrac­ tions, see “Military personnel filing information.” Federal centralized partnership audit regime (CPAR). Oregon recognizes CPAR, the federal regime for Federal tax law

150-101-431 (Rev. 04-21-22) 8 auditing partnerships. See “Oregon tax” and “Audits and appeals.” Special Oregon medical subtraction. You or your spouse must be age 66 or older on December 31, 2021 to qualify for the subtraction. See “Special Oregon medical subtraction.” Fiduciary returns. This publication includes infor­ mation for Oregon fiduciary return filers, where the treatment of an item may differ from the treatment on personal income tax returns. Also, see the instruc­ tions for Form OR-41, Oregon Fiduciary Income Tax Return. Statewide transit tax (STT). This income tax funds public transportation services and improvements within Oregon. See “Oregon tax” for filing require­ ments and other details. Market-based sourcing. Nonresident taxpayers must apportion their business income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See ORS 314.665, ORS 314.666, and OAR 150-314-0435. Payment options. We accept tax payments by check, money order, debit card, and credit card. See “Pay­ ments and refunds.” Direct deposit. Instead of receiving your refund check in the mail, you may have your refund depos­ ited directly into your account that accepts electronic deposits. See “Direct deposit of refund” in “Pay­ ments and refunds.” You can also have your refund deposited directly into an Oregon College or MFS 529 Savings Plan account. You may choose up to four accounts. See our full-year and part-year/nonresident booklets for more information. Minimum refund. Under Oregon law, the minimum refund that can be issued is $1. Minor child’s return and signature. If your child must file a tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By (your signature), parent (or legal guardian) for minor child.” Deceased person’s return. A final return for a person who died during the calendar year must be filed if a return would normally be required. If a return must be filed, check the “Deceased” box after the person’s name on the return. If you filed a final return with a refund and are unable to cash the refund check, you will need to return the check to us along with Form OR-243, Claim to Refund Due a Deceased Person. Go to our website to download the form or contact us to order it. If you are a court appointed personal representative or have filed a small estate affidavit and you need more information about trusts or estates, contact our Estate Unit at estate.help.dor@dor.oregon.gov. Additional exemption credits. Additional exemption credits for severely disabled taxpayers and for dis­ abled children aren’t available for taxpayers whose AGI is more than $100,000, regardless of filing sta­ tus. For more information, see “Exemption credit” in “Standard credits.“ Registered domestic partners (RDPs). For Oregon tax purposes, same-sex RDPs are treated the same as married couples. References to “spouse” within this publication include RDPs. Nonresident disaster relief workers. You don’t need to file a return if you worked in Oregon solely to pro­ vide relief during a declared disaster or emergency. See “General information” for more details. Important reminders

150-101-431 (Rev. 04-21-22) 9 General information Do I have to file an Oregon income tax return? Use the following charts and examples to determine whether you are required to file an Oregon personal income tax return. See the explanations in this publi­ cation if you are unsure about: • Residency status—see “Residency.“ • Filing status—see “Filing status.“ • Taxable income—see “What income is taxable to Oregon?” • Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Oregon income tax withheld, even if you aren’t oth­ erwise required to file a return. Note: You don’t have to file an Oregon return if you are an out-of-state employee or the operator of an out-of-state business and you were in Oregon solely for purposes of performing disaster or emergency- related work (ORS 401.690). Full-year residents You need to file if your gross income is more than the amount shown for your filing status in Table 1. Note: The amounts in Table 1 apply to gross income from all taxable sources. Table 1. Filing thresholds for full-year residents Your filing status is: Number of boxes checked below line 17 of Form OR-40: And your gross income is more than: Single, can be claimed on another’s return Any See “Dependents” Single 0 $6,590 1 $7,790 2 $8,990 Married filing jointly 0 $13,175 1 $14,175 2 $15,175 3 $16,175 4 $17,175 Married filing separately 0 $6,590 1 $7,590 2 $8,590 Head of household 0 $8,265 1 $9,465 2 $10,665 Qualifying widow(er) 0 $9,185 1 $10,185 2 $11,185 In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages. Dependents. If you can be claimed as a dependent on another person’s return, you must file your own return if your income is more than the lesser of: • The standard deduction allowed on your federal return, or • The Oregon standard deduction for a single filer. You can use this worksheet, which has the federal amounts, to help you figure out if you need to file your own return. 1. Enter gross income from all 1. $ ________ taxable sources.

2. Earned income $_____ plus $350. 2. $ ________ Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ ________ 5. Enter the Oregon standard 5. $ ________ deduction for a single person: • Basic standard deduction: $2,350. • Age 65 or older, or blind: $3,550. • Age 65 or older and blind: $4,750. 6. Enter the smaller of line 4 or 5. 6. $ ________ If line 1 is more than line 6, you must file an Ore­ gon return. If line 6 is more than line 1, you aren’t required to file an Oregon return. Example 1: Emily is single, age 20, and a full-time college student. Her parents claim her as a depen­ dent. Emily has earned income of $800 from her job. She also has $29 of interest income from her savings account. 1. Enter gross income from all 1. $ 829 taxable sources. 2. Earned income $800 plus $350. 2. $ 1,150 Enter total. General information

150-101-431 (Rev. 04-21-22) 10 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,150 5. Enter the Oregon standard 5. $ 2,350 deduction for a single person: • Basic standard deduction: $2,350. • Age 65 or older, or blind: $3,550. • Age 65 or older and blind: $4,750. 6. Enter the smaller of line 4 or 5. 6. $ 1,150 Because line 6 ($1,150) is more than line 1 ($829), Emily isn’t required to file an Oregon return. Note: If Emily had any Oregon income tax withheld from her income, she must file an Oregon return to claim a refund. Example 2: Norman, age 77, is claimed as a depen­ dent by his son. Norman has income of $3,015 from a pension and interest. He doesn’t have any other tax­ able income. 1. Enter gross income from all 1. $ 3,015 taxable sources. 2. Earned income $0 plus $350. 2. $ 350 Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,100 5. Enter the Oregon standard 5. $ 3,550 deduction for a single person: • Basic standard deduction: $2,350. • Age 65 or older, or blind: $3,550. • Age 65 or older and blind: $4,750. 6. Enter the smaller of line 4 or 5. 6. $ 1,100 Because line 1 ($3,015) is more than line 6 ($1,100), Norman is required to file an Oregon return. Example 3: Katrina is single, age 19, a full-time stu­ dent, and claimed as a dependent by her mother. Katrina didn’t work but had $1,200 of unearned inter­ est income from her certificate of deposit. 1. Enter gross income from all 1. $ 1,200 taxable sources. 2. Earned income $0 plus $350. 2. $ 350 Enter total. 3. Set federal amount. 3. $ 1,100 4. Enter the larger of line 2 or 3. 4. $ 1,100 5. Enter the Oregon standard 5. $ 2,350 deduction for a single person: • Basic standard deduction: $2,350. • Age 65 or older, or blind: $3,550. • Age 65 or older and blind: $4,750. 6. Enter the smaller of line 4 or 5. 6. $ 1,100 Because line 1 ($1,200) is more than line 6 ($1,100), Katrina is required to file an Oregon return. Part-year residents and nonresidents You need to file an Oregon return if your gross income is more than the amount shown for your fil­ ing status in Table 2. Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident and gross income from all taxable sources while an Oregon resident. Table 2. Filing thresholds for part-year residents and nonresidents Your filing status is: And your Oregon gross income is more than: Single, can be claimed on another’s return $1,100* Single $2,350 Married filing jointly $4,700 Married filing separately If spouse claims standard deduction $2,350 If spouse itemizes deductions 0 Head of household $3,780 Qualifying widow(er) $4,700 * The larger of $1,100 or your earned income plus $350, up to your standard deduction amount. If your Oregon income is less than the amount in Table 2, you aren’t required to file a return unless you had $1 or more of Oregon tax withheld from your wages. Nonresidents with rental property in Oregon You don’t have to file an Oregon return if: • Your only Oregon-source income is from rental property, and • You have a loss from the rental activity for the year. However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-tax­ able transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return. General information

150-101-431 (Rev. 04-21-22) 11 Electronic filing for Oregon Electronic filing is a fast, efficient, and accurate way to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Practitioners are automatically approved for Oregon electronic filing after the IRS accepts your online application to become an authorized e-file provider. There is no separate registration required for Oregon. Paid preparers who meet the requirements of the fed­ eral e-file mandate must also e-file Oregon personal income tax returns. For information on waivers of this requirement, see the information for tax profes­ sionals on our website. The copy of a tax return provided to a client must be an exact copy of the tax return submitted to us. 2-D barcode filing for Oregon 2-D barcode filing is an alternative way to file a paper Oregon return. Oregon-approved tax software pack­ ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on the tax return is a “picture” of the information on the return, which is printed on the top right-hand cor­ ner of the return’s front page. A machine reads the barcode information so it doesn’t have to be entered manually into our computer system. If changes are made to the return after it has been printed, the entire return must be re-printed so that the barcode will reflect the correct information. The copy of a 2-D barcode return provided to a tax­ payer must be an exact copy of the tax return you submit to us. Why Oregon needs a federal return Most information to support the amounts on your Oregon return comes from your federal return. Even when Oregon law differs from federal law (such as additions, subtractions, and credits), we still need information from your federal return (ORS 314.380). If you file an electronic return, we will receive your federal return with your Oregon return. If you are filing a paper return, you must include a copy of the front and back of your federal return with Schedules 1 through 3 (if applicable). Also include any “as if” federal returns. If you’re not required to file a federal return, prepare a federal return as if you were actually filing it and include it with your Oregon return. Don’t include extension requests or federal schedules other than those listed above, but keep a copy of those with your tax records. We may ask for copies later. Record-keeping requirements Why is record-keeping important? • Keeping records of your income and deductions will help you prepare an accurate tax return and pay the correct tax. • You must be able to prove all items on your return with adequate records and sufficient evidence. Keep records that verify the income, deductions, credits, and other items reported on your tax return. Estimates or approximations don’t qualify as proof. • Accurate records will help you if we select your tax return for audit. Usually, an audit will occur one to three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from various sources. You may also have to pay more tax if you can’t prove the figures you used. How should I keep my records? You must keep accurate records, but no particular system is required for keeping them. Your records should contain all the information you used to fig­ ure your income, deductions, credits, and other items shown on your income tax return. What records should I keep? If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list of records you should keep: • Receipts and sales documents for deductible busi­ ness expenses, self-employment, farm, rentals, sale of assets, etc. • Dated and signed receipts for any cash payments that might be deductible. • Income statements, including Form W-2 for your wages and Form 1099 for interest, dividends, rents, and nonemployee compensation. • All payroll records, including copies of W-2 and 1099 forms you’ve issued. • Pay statements if you have deductible expenses withheld from your paycheck. • Receipts and certificates to verify Oregon tax cred­ its claimed. • Copies of your tax returns, including complete federal returns with all required schedules, or an “as if” return if you don't have a federal filing requirement. General information

150-101-431 (Rev. 04-21-22) 12 • Copies of your “as if” returns if you were required to prepare them to claim a special filing status. • Worksheets, summary statements, calendars, log books, journals, etc. • Canceled checks, substitute checks or carbon cop­ ies of checks, bank deposit slips, and receipts. • Checking and savings account statements for both personal and business accounts. • If you deduct alimony payments, keep copies of canceled checks and the divorce, separate main­ tenance, or support decree or a written separation agreement. • For property you own, keep proof of the purchase price, any purchase expenses, the cost of any improvements, and any other basis adjustments, such as depreciation and deductible casualty losses. If you received property as a gift, you must have records that show the donor’s adjusted basis just before the property was given to you, its fair market value on the date of the gift, and any gift tax paid on it. • The sale of a capital asset (and certain other assets). This type of sale is reported as a capital gain or loss. Your records must show when and how the asset was acquired, how it was used, and when and how you disposed of it. Records must also show your cost or other basis, the gross selling price, and the expenses of the sale. • Year-end statements showing total interest paid on loans, mortgages, or notes. • Statements and canceled checks, mortgage state­ ments, and other documents for your real estate and personal property taxes paid. • Proof of payment to your care provider if you are claiming the Oregon WFHDC credit. How do I document deductible expenses? A receipt is the best evidence to prove the amount of an expense. A canceled check, together with a bill or invoice from the payee, ordinarily establishes the cost. A canceled check might not prove a business expense without other evidence to show that it was for a business purpose. All records should show: • The date, • The amount, and • The purpose of the expense. To be deductible, a business expense must be both ordinary and necessary. How do I document car or truck expenses? You must have written records to verify your vehicle expenses. To deduct car or truck expenses, you must be able to prove: • The amount of each separate expense for a vehicle, such as the cost of purchase, capital improvements, lease payments, maintenance, and repairs. • The mileage for each business or investment use of the vehicle and the total miles for the tax year. • The date of the expense or use. Keep a trip log at the time of use, showing the date and mileage for each business use, including odometer readings. • The business or investment reason for the expense or use of the vehicle. Keep the proof you need for these items in an account book, diary, log, statement of expense, trip sheet, etc. Include all documents needed to verify the item. How long should I save my records? Keep records that support an item of income or a deduction on your return at least until the statute of limitations expires for that return. A statute of limita­ tions is the period of time after which no legal action can be brought. Usually this is three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. Returns filed before the due date are treated as if they were filed on the due date. Exceptions: There are times you should keep records longer, including the following: • Keep records that support your basis in property for at least four years after you sell or dispose of the property (including all capital improvements). • If you’re depreciating property, keep records related to each item’s depreciation expenses for its entire recovery period plus three years. • If your return was audited by the federal govern­ ment, Oregon has two years from the date we receive the federal audit report to review your Ore­ gon return for adjustments. • If you have employees, we recommend you keep all of your employment tax records for at least five years after the date the tax becomes due or is paid, whichever is later. This includes copies of Form W-2 for each employee, and all payroll records. • If you didn’t report some income and it’s more than 25 percent of the income shown on your return, the return may be audited within five years after it was filed. If a return is false or fraudulent or if no return is filed, there is no time limit. What if I don’t have all of my records? If records have been destroyed and your return is selected for audit, the auditor will advise you about reconstructing your records. General information

150-101-431 (Rev. 04-21-22) 13 Filing an Oregon return In order to correctly file an Oregon personal income tax return, you must know: • Your residency status. • Which form to file. • Your filing status. Residency (ORS 316.027) General rule. Oregon taxes residents on all sources of income. Oregon taxes nonresidents on income from Oregon sources. Residents An Oregon resident is someone who is domiciled in this state. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan to return after an absence. Domicile isn’t the same as home, abode, or residence. Intent is the deciding factor when you determine your domicile. The law assumes you have a domicile somewhere. It also assumes you have only one domicile. Home. If you have one home, your domicile is gen­ erally where that home is located. If you have two homes, your domicile follows your center of activity. To determine your center of activity and your domi­ cile, consider: • Physical characteristics of the place. • Time you spend there. • Things you do there. • People and property there. • Your attitude toward the place. • Your intent to return to the place when you are away. Family relations. Generally, spouses living together have the same domicile. The domicile of minor chil­ dren is determined by the domicile of the person who has legal custody of them. When living apart, spouses each may establish their own domicile if they meet the requirements for a change of domicile. Change of domicile. Intent is the most important factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your domicile. Once domicile is established, it’s never lost until all of the following happen: • You intend to abandon the old domicile, and • You intend to acquire a specific new domicile, and • You are physically present in the new domicile. The important points are physical presence at a new dwelling and the intent to make the new dwelling a home. Non-domiciled residents. An Oregon resident may also be someone who isn’t domiciled in Oregon, but: • Maintains a residence in Oregon, and • Spends a total of more than 200 days in Oregon during the taxable year. A fraction of a day is considered to be a whole day when figuring the 200 days. We won’t consider you to be a resident if you are in Oregon for a temporary purpose. The burden of proof is on you to show your stay here is only temporary. Consider both your domicile and the place where you live to determine how you are taxed. Special-case Oregon residents (Oregon residents liv­ ing in another US state). Even if you are domiciled in Oregon, you will be taxed as a nonresident if you meet all of the following requirements: • You don’t maintain a permanent residence in Ore­ gon for yourself or your family during any part of the year, and • You maintain a permanent residence outside Ore­ gon during the entire year, and • You spend less than 31 days of the year in Oregon. Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be taxed as foreign nonresidents. In general, you’re considered to be a foreign non­ resident if you meet the residency requirements for foreign earned income or housing exclusion under federal law. To qualify as a foreign nonresident, you must meet one of these two federal tests: • The “physical presence” test; or • The “bona fide residence” test. Note: You may be treated as an Oregon nonresident for tax purposes if you are in the civil service or mili­ tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel filing information” for more details. Physical presence test. To meet the requirements of the physical presence test: • Your tax home must be in a foreign country, and • You must be present in a foreign country or coun­ tries for 330 full days out of any consecutive 12-month period. “Tax home” is generally your regular place of busi­ ness or the location where you work, regardless of Filing an Oregon return

150-101-431 (Rev. 04-21-22) 14 where you live. For more information on tax home, refer to IRS Publication 17, Your Federal Income Tax for Individuals. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may begin on any date in the calendar year. The period ends the day before that same date, one year later. For example, a 12-month period beginning October 10 would end October 9 of the following year. The 330 full days must fall within that 12-month period. Example 1: Juan arrives in England on April 24, 2020, at noon. He establishes his tax home in England and remains there until 2 p.m. on March 21, 2022, when he leaves England to return to the United States. Juan is physically present in a foreign country for 330 full days during at least one 12-month period: • One 12-month period starts on his first full day in England, April 25, 2020, and ends April 24, 2021. • Another 12-month period starts on March 21, 2021, and ends March 20, 2022, his last full day in England. Juan may use any 12-month period that begins after his arrival in England and ends before he returned to the United States to meet the physical presence test. Juan qualifies for nonresident treatment for the months he was out of the country during 2020, 2021, and 2022. He should file Oregon part-year returns for 2020 and 2022, and a nonresident return for 2021. Example 2: Use the facts in Example 1, but change Juan’s arrival date to June 23, 2021. In this case, Juan won’t qualify for nonresident treatment because he wasn't physically present in a foreign country for 330 days. He must file a full-year resident return for 2021 and 2022 as well as 2020. Bona fide residence test. To meet the requirements of the bona fide residence test, you must: • Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country, and • Maintain a bona fide residence for an uninter­ rupted period that includes a full tax year. Example 3: Sandra is a calendar-year taxpayer. She establishes a bona fide residence in Russia on August 12, 2020. On June 10, 2021, she moves out of her residence and spends six weeks at a hotel in Alaska. On July 22, 2021, she establishes a bona fide residence in South Korea. She is transferred back to the United States on May 8, 2022. She doesn’t meet the requirements of the bona fide residence test because she doesn’t maintain a bona fide residence for an uninterrupted period that includes a full tax year. She also doesn’t qualify for the physical presence test because she isn’t physically present in a foreign coun­ try for 330 full days out of a consecutive 12-month period. Example 4: Use example 3, but instead of going to South Korea, Sandra continues to work in Russia until February 2022. She would now qualify under the bona fide residence test. Her residence was estab­ lished for a full tax year. Sandra should file a nonresi­ dent return for 2021. Sandra also qualifies for non­ resident treatment for the months in 2020 and 2022 that she maintained the bona fide foreign residence. She should file Oregon part-year returns for 2020 and 2022. For more information about physical presence or bona fide residence, see IRS Publication 54, A Tax Guide for U.S. Citizens and Resident Aliens Abroad. Tax treaties. If a U.S. tax treaty changes the meaning of terms used in determining federal taxable income, Oregon accepts the changed meaning as it applies to affected taxpayers. We may ask you to provide records showing how a particular treaty affects your taxable income. Nonresidents If you were domiciled outside Oregon and lived out­ side Oregon for the entire year, you were a nonresi­ dent of Oregon. If you are a nonresident, Oregon taxes only income you earned in Oregon and received from Oregon sources. In some cases, however, a taxpayer domiciled in Oregon can be treated as a nonresident. See “Special-case Oregon residents.“ Example 1: Misha was a permanent California resi­ dent in 2021. She temporarily worked in Medford as a computer consultant for two months in 2021. Misha is a nonresident of Oregon. She will pay Oregon tax on the income she earned in Oregon. California will also tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax her income, Misha may claim a credit for taxes paid to another state. For information about this credit, see “Income taxes paid to another state.” Example 2: Nash is a permanent Nevada resident. He has rental property in Oregon. Nash is a nonresident of Oregon. He will pay Oregon tax on the income from his Oregon rental property. Part-year residents If you were domiciled in Oregon for part of the year and in another state for part of the year, you were a part-year Oregon resident. Oregon taxes all of your income for the part of the year you were an Oregon resident. Oregon also taxes any income earned in Filing an Oregon return

150-101-431 (Rev. 04-21-22) 15 Oregon or received from Oregon sources for the part of the year you were a nonresident. Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and established a new domicile here. Gustav is considered to be a part-year Oregon resident for the tax year. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because she doesn’t abandon her Oregon domicile when she works in Alaska. Extensions of time to file If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For 2021 returns, this means you have until October 15, 2022 to file. An extension of time to file your return doesn’t mean you have more time to pay your taxes. You must pay any tax you expect to owe by April 18, 2022. If you don’t, you will owe interest on the unpaid balance from April 19, 2022 until the date it’s paid, and will be subject to a minimum penalty of 5 percent of the unpaid tax. To avoid penalty and interest charges, include enough payment with your extension to cover your tax liability. Once you file your return, if you have overpaid, we'll refund the overpayment. See “Interest and penalties” for more information. Were you stationed in a designated combat zone? If you were in the military and stationed in a desig­ nated combat zone, you may qualify for an automatic extension of time to file your return. See “Military personnel filing information.” Was your home or business located in a presidentially-declared disaster area? Did you receive additional time to file your federal tax return and pay your federal tax? If so, you may qualify for additional time to file your Oregon return and pay your Oregon tax. Check the “Federal disas­ ter relief” box on your return. Extension for filing returns Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to file your Oregon return and you owe tax, see the instructions for making an extension payment in Pub­ lication OR-40-EXT. Your extension payment must be received by April 18, 2022, to avoid penalties and inter­ est. Download Publication OR-40-EXT from our web­ site or contact us to order it. Whether you owe tax or are expecting a refund, mark the “Extension filed” box on your Oregon return and file your return by October 17, 2022. Which form do I file? Oregon has three types of personal income tax forms. The form you use depends on your residency status. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Part-year resident—Form OR-40-P Use Form OR-40-P if any one of the following is true: • You are a part-year resident; or • You are filing jointly and one spouse is a full-year Oregon resident and one is a part-year resident; or • You qualified as an Oregon resident living abroad for part of the year. Nonresident—Form OR-40-N Use Form OR-40-N if any one of the following is true: • You are a nonresident; or • You are a special-case Oregon resident (see “Resi­ dency”); or • You and your spouse are filing jointly and one (or both) of you is a nonresident; or • You meet the military personnel nonresident requirements (see “Military personnel filing infor­ mation”); or • You qualified as an Oregon resident living in a for­ eign country for the entire year (see “Residency”). You may need to file supplemental schedules or forms, depending on your circumstances. Nonresident trusts. If you file a federal Form 1040- NR and you’re filing an Oregon return for a nonresi­ dent trust, you must file using Form OR-41. Don’t file using Oregon Form OR-40-N. Sales of Oregon real property by nonresidents Withholding on real property sales. Authorized escrow agents may be required to withhold taxes due when a nonresident sells real property located in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: • Four percent of the consideration; • The net proceeds from the sale; or • Eight percent of the gain includible in Oregon tax­ able income. Filing an Oregon return

150-101-431 (Rev. 04-21-22) 16 For more information about this requirement and its exceptions, see the instructions for Form OR-18-WC, Report of Tax Payment or Written Affirmation for Oregon Real Property Conveyance, available on our website. If required, the nonresident transferor uses Form OR- 18-WC to calculate their gain or claim an exemption from withholding, then gives the form to the escrow agent. The escrow agent completes the rest of the form and submits it and any required payment to the department. Keep a copy of this form for your own records. Pass-through entities (PTEs) Partnerships. Except for publicly-traded partnerships taxed as corporations, every partnership with one or more Oregon resident partners, and every partner­ ship having income or loss derived from or connected with Oregon sources, must file Form OR-65, Oregon Partnership Return of Income. Partnership income is generally taxable to the partners rather than the part­ nership. See the Form OR-65 instructions for further details. Note: Oregon follows federal filing guide­ lines including the due date for filing a partner­ ship return. If you aren’t required to file a federal partnership return, you don't need to file one for Oregon. S corporations. S corporations doing business in Oregon or receiving income from Oregon sources are required to file Form OR-20-S, Oregon S Corporation Tax Return. S corporation income is generally tax­ able to the shareholders rather than the corporation. However, S corporations do pay Oregon tax on cer­ tain kinds of income. For more information, see the instructions for Form OR-20-S on our website. LLCs. Oregon LLCs and foreign LLCs doing business in Oregon are taxed and classified the same as for federal income tax purposes. • An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax Return, or Form OR-20-INC, Oregon Corporation Income Tax Return. • A multiple-member LLC that chooses to be taxed as a partnership files Form OR-65. • A single-member LLC that chooses to be taxed as a sole proprietorship and files Schedule C, Sched­ ule E, or Schedule F with their federal individual income tax return files the same way for Oregon. PTEs with nonresident owners (ORS 314.778, 314.784) Composite tax return. A PTE must file Form OR-OC, Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For forms and instructions, see our website. Nonresident withholding. A PTE must withhold tax on a nonresident owner’s share of Oregon-source income if the nonresident owner elects not to be included on Form OR-OC, unless the nonresident owner’s share of Oregon-source income is less than $1,000 or other exceptions listed in ORS 314.784 apply. For more information, see the instructions for Form OR-19, Annual Report of Nonresident Owner Tax Payments. Filing status General rule The filing status on your Oregon return must be the same as your filing status on your federal return, unless you’re married and have a different residency status than your spouse or you’re an RDP who isn’t married. Example 1: Minerva filed her federal return using the filing status of single. She must use the single filing status on her Oregon return. Example 2: Peter and Della are married and both are full-year Oregon residents. They filed a joint federal return. Peter and Della must use the married filing jointly filing status on their Oregon return. Example 3: Tia and Colin are married and choose the married filing separately filing status on their federal returns. They must use the married filing separately filing status on each of their separate Oregon returns. Exception: Filing status for married taxpayers with different residency status If you and your spouse file a joint federal return but only one of you was an Oregon resident (either full- year or part-year), you have a choice of two different filing statuses to use for Oregon: • You and your spouse may file one Oregon return using the married filing jointly status; or • You and your spouse may each file a separate Oregon return using the married filing separately status. You may not file as head of household (ORS 316.122). Note: This exception doesn’t apply to unmarried RDPs or married nonresident aliens because these taxpayers may not file joint federal returns. For information on RDP filing, see “Registered domestic partners.” Which forms do we file? Use Table 3 to determine which return form to use if you file a joint return or separate returns for Oregon. Filing an Oregon return

150-101-431 (Rev. 04-21-22) 17 Table 3. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns, use: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P Note: If you file separate federal returns, you must file separate Oregon returns. If you are a married nonresident without Oregon income, and you and your spouse are filing separate returns, you aren’t required to file an Oregon return. What information goes on each return? On each spouse’s separate Oregon return, enter the filer’s name and Social Security number first, then the spouse’s name and Social Security number. Mark the “Married filing separately” box. “As if” federal returns. You must include an “as if” federal return showing how the return would have appeared if you had filed a separate federal return, along with a copy of the joint federal return that you actually filed. Label the “as if” federal returns and mark the “Calculated using ‘as if’ federal return” box on each Oregon return. If you are filing paper returns, mail both Oregon returns, the “as if” federal returns, and the actual federal return in the same envelope, but don’t staple them together. Income and deductions. You and your spouse each report your own share of income and deductions. Also, report your share of any Oregon additions, sub­ tractions, modifications, or adjustments, including the federal tax subtraction. Use the following guidelines when preparing your return: Your percentage. Use this formula to compute your share of certain deductions: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI If your share is less than $0, your percentage is 0. Federal tax subtraction. Each spouse may subtract their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (after all credits except the EIC) by your percentage to determine your federal tax subtraction, with the applicable AGI limitation. Itemized deductions. Multiply each itemized deduc­ tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Itemized Deductions, if you can't clearly determine each spouse’s deductions. For more information about itemized deductions, see the instructions for Schedule OR-A. • Standard deduction. The Oregon standard deduc­ tion is $2,350 for each spouse. • Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or before January 1, 2022 or if they’re blind. The addi­ tional deduction is $1,000 for married taxpayers filing separately. A taxpayer who is both age 65 or older and blind may claim two additional deduc­ tions plus the basic standard deduction. • Exception: If one spouse claims itemized deduc­ tions, the other spouse can’t claim the standard deduction. The other spouse may only claim item­ ized deductions. Exemption credits. You can’t prorate exemptions. You may claim exemptions for yourself and any dependents allowed on your federal return. You can’t claim an exemption for the same dependent claimed on your spouse’s return. Example: Jim worked and lived in Oregon all year. Mary moved from Idaho to Oregon in July and mar­ ried Jim. They filed a joint federal return and are fil­ ing separate returns for Oregon. Mary earned $30,000 in Oregon and $22,000 in Idaho. Jim earned $41,000 in Oregon. Their total federal AGI was $93,000. Jim and Mary claimed the standard deduction on their joint federal return. They had $12,200 in Oregon itemized deductions, including $4,000 in property tax and $6,400 in mortgage interest on their Oregon home, and $1,800 in charitable contributions. Their joint fed­ eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his income of $41,000. On the return, he enters his own name and Social Security number (SSN) first, then enters Mary’s information, and marks the “Married filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal return” box on the Oregon return, and claims the fol­ lowing federal tax liability and deductions: His share: $41,000 ÷ $93,000 = 0.44 (44%) Federal tax: 0.44 × $14,400 = $6,336 (His subtraction is limited to $3,475; see “Federal income tax liability” in “Subtractions.”) Filing an Oregon return

150-101-431 (Rev. 04-21-22) 18 Oregon itemized deductions:

Property tax: 0.44 × $4,000 = $1,760 Mortgage interest: 0.44 × $6,400 = $2,816 Charitable contributions: 0.44 × $1,800 = $792 Total Oregon itemized deductions:

$5,368 Jim will have Oregon itemized deductions of $5,368. He follows the line instructions for Oregon Form OR-40 and Schedule OR-A to complete his return. Mary, a part-year resident, files Form OR-40-P and reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and SSN first, then enters Jim’s information, and marks the “Married filing separately” box. She creates an “as if” federal return, marks the ”Calculated using 'as if' federal return” box on the Oregon return, and claims the following federal tax liability and deductions: Her share: $52,000 ÷ $93,000 = 0.56 (56%) Federal tax: 0.56 × $14,400 = $8,064 (Her subtraction is also limited to $3,475.) Oregon itemized deductions:

Property tax: 0.56 × $4,000 = $2,240 Mortgage interest: 0.56 × $6,400 = $3,584 Charitable contributions: 0.56 × $1,800 = $1,008 Total Oregon itemized deductions:

$6,832 Mary will have Oregon itemized deductions of $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. Married filing separately with community property income An Oregon resident whose spouse lives in a commu­ nity property state may have community property income that is taxable by Oregon. There are nine com­ munity property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Some residents of community property states aren’t subject to community property laws for various rea­ sons. You will need to check with your community property state for details. IRS Publication 555, Com­ munity Property, also contains information that may be helpful to you. Here are examples of how to file for Oregon: Example 1: Paul and Marie are married, but they are legally separated. Paul is an Oregon resident. Marie is a resident of California, a community property state. They maintain separate households, don’t combine funds, and have no plans to get back together. They file a joint return with the IRS. When Paul files his separate return for Oregon on Form OR-40, he doesn’t have to include any community property income because California’s community property laws don’t apply to him and Marie. Example 2: Renton is an Idaho resident. His wife, Julie, lives in Oregon. Julie plans to move to Idaho next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap­ ital gain, and $100 in interest. Because Renton is domiciled in Idaho, he and Julie are subject to Idaho’s community property laws. His income for the year is $60,000 in wages and $500 in interest. They plan to file a joint return with the IRS, but aren’t sure whether they want to file jointly for Oregon. If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain all of Julie’s income, because Oregon taxes all of her income from all sources. In addition to Julie’s sepa­ rate income, she has $30,250 of community property income for the year—half of Renton’s wages and bank interest. Line 34F (federal column) of their joint Form OR-40-N is $103,600, which is equal to their federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community property income ($40,000 + $3,000 + $100 + $30,250). They are also eligible for a credit for taxes paid to Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state“ for more information on this credit.) If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal return as if she had filed separately. She will include $73,350 in separate income and community property income. This amount flows through to Line 7 of her Oregon Form OR-40. She is eligible for a credit for taxes paid to Idaho, because she must also file a non­ resident Idaho return to report her community prop­ erty income of $30,250. Example 3: Kevin lives and works in California and is subject to California’s community property laws. Lori, his wife, moved to Oregon with their kids two years ago. Kevin supports them and will be ready to transfer to Oregon within the next two years. Kevin has $110,000 in wages. Kevin and Lori have joint income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. They decide to file separate federal returns. Lori’s federal AGI is $63,000: half of Kevin’s wages, half of their joint income, and all of her business income. Filing an Oregon return

150-101-431 (Rev. 04-21-22) 19 Kevin’s federal AGI is $58,000; half of his wages and half of their joint income. Lori must file using the married filing separately filing status for Oregon on Form OR-40 because she did so on her federal return. She is eligible for a credit for taxes paid to another state, but must claim it on her California nonresident return. Kevin isn’t required to file for Oregon. Important: You must check the laws of the commu­ nity property state to see if you, or your spouse, are subject to those laws even if your situation is similar to one of the examples. Registered domestic partners (RDPs) (ORS 314.023) Filing your Oregon income tax return The following section applies only to Oregon same-sex RDPs who haven’t been legally married. If you were legally married at the end of the tax year, you are considered mar­ ried for federal and Oregon purposes. You don’t need to complete an “as-if” federal return. Instead, attach your actual federal return to your Oregon return and follow the instructions for married individuals. In Oregon, a domestic partnership is a civil contract entered into between two individuals of the same sex, where at least one of the individuals is an Oregon res­ ident. RDPs are subject to the same tax statutes and regulations that apply to married filers. As an RDP, you are no longer eligible to use the single filing sta­ tus on your Oregon return; generally, you must use the married filing jointly or married filing separately status. See IRS Publication 17 for information about other filing status requirements. To correctly figure your Oregon tax liability, you need to complete an “as if” federal income tax return as if you are filing as married filing jointly or married filing separately for federal purposes. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return. You won't submit your “as if” fed­ eral return to the IRS, but you must include a copy with your Oregon tax return. Mark the “Calculated using ‘as if’ federal return” box on the Oregon return. General filing instructions for RDPs If you were an Oregon RDP on December 31, or if you were an RDP during the year and your partner died and you didn’t enter into a new registered domestic partnership or marry before the end of the year, fol­ low these directions for filing your income tax return: 1. Complete your federal return forms for each part- ner, using the appropriate federal filing status, such as single or head of household. File these returns with the IRS. 2. Use another federal form to complete an “as if” federal return. Use all the same IRS rules and procedures that apply to married couples, except for the federal tax liability. Important: Don’t file this “as if” federal return with the IRS. Note: If your wage statement includes the imputed value of health or education benefits you received from your employer for your partner or qualifying dependents, subtract the amount included in your wages as “other income” on Schedule 1 of your “as if” federal return. 3. Complete your Oregon return using the same fil- ing status you used on the “as if” federal return. Information used to fill out the Oregon return must be taken from the “as if” federal return and not the individual federal return that you actually filed with the IRS, except for the federal income tax liability subtraction. Use the amount each partner actually paid in federal tax to compute the correct federal tax subtraction. 4. Submit both of your actual federal returns, your “as if” federal return, and your Oregon return to us. If you and your partner file separate Oregon returns, send the returns in the same envelope, but don’t staple your separate returns together. It’s very important to keep copies of all “as if” fed­ eral returns with your tax records for future refer­ ence. For more information on filing your tax return as an Oregon RDP, visit our website and search for RDP information. Individual Taxpayer Identification Number The IRS issues individual taxpayer identification numbers (ITINs) to taxpayers and their dependents who don’t have SSNs. If you have your own SSN, don't apply for an ITIN; use your SSN. If you already have an ITIN, enter your ITIN wherever a SSN is requested. Requesting an ITIN from the IRS If you don’t have an ITIN, you must file your fed­ eral return and attach Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS will issue an ITIN, associate the ITIN with your return, and process your return. For Form W-7, go to the IRS website at www.irs.gov or call 800-829-3676. Filing your Oregon return before receiving your ITIN You may file your Oregon return without an SSN or ITIN. Follow these instructions if you, your spouse, or your dependents don’t have an ITIN when you file your Oregon return: Filing an Oregon return

150-101-431 (Rev. 04-21-22) 20 1. Complete and file each ITIN application (federal Form W-7) according to IRS instructions. 2. On your Oregon tax return, mark the “Applied for ITIN” box wherever the SSN is required for you or your family members who have applied for an ITIN. You don’t need the ITIN(s) to file your Ore- gon tax return. Don’t attach your ITIN application to your Oregon tax return. 3. File your 2021 Oregon tax return by April 18, 2022. 4. The IRS will send you a letter with your ITIN information. We need this information to issue your refund and correctly apply your future tax payments to your account. Refunds won’t be issued without a valid SSN or ITIN. Send us your: • Name (and the name of your spouse and dependents if they applied for an ITIN). • Current address. • Previous SSNs or ITINs used when filing an Oregon return (if any); and • A copy of each of the letters you receive from the IRS with the ITINs for you, your spouse, or your dependents. Send this information to:

Oregon Department of Revenue

PO Box 14999

Salem OR 97309-0990 Military personnel filing information Oregon follows federal law, including the Service- member’s Civil Relief Act (SCRA). Under the SCRA, military pay of a nonresident for service within Oregon isn’t considered to be income from Oregon sources. As a member of the military, if you are sta­ tioned in Oregon, but you aren’t domiciled in Ore­ gon, your military pay isn’t taxed by Oregon. If you are domiciled in Oregon, but stationed outside of the state, you could be treated as a nonresident for tax purposes if you meet the “special-case nonresi­ dent” exception requirements. If you are domiciled in Oregon, and performing military service in Ore­ gon, your military pay is subject to tax, although the pay could qualify for certain subtractions. Military personnel performing active service within Oregon are treated as nonresidents for tax purposes, if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, no matter where they are domiciled (ORS 316.027). Moving expense deduction Your unreimbursed moving expenses may be deducted on your Oregon return only if: • You are on active duty in the U.S. Army, Navy, Air Force, Marines, or Coast Guard, • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move), • Your new duty station is in Oregon, and • You have taxable income from employment (mili­ tary pay or other employment, including self- employment) performed in Oregon. Note: Are you the spouse of a military member? See “Military spouses.“ Residency of military personnel Domicile. Generally, you are considered to be an Ore­ gon resident if your domicile is in Oregon. Your domi­ cile is the place that you consider to be your home. It’s the place where you are from, and where you plan to return when you are away. Your domicile doesn’t change if you are assigned to perform military ser­ vice in another state, unless you take other actions to establish a new domicile there. Domicile and resi­ dency are explained in more detail in “Residency.“ Exceptions to Oregon residency Even if you are domiciled in Oregon, you may be treated as a nonresident for tax purposes if you meet the requirements listed in A or B: A. Special-case nonresident. You are treated as a “special-case” nonresident of Oregon if you are stationed outside of Oregon and all three of the following are true: 1. You didn’t have a permanent residence in Ore- gon for yourself or your family during any part of the tax year, and 2. Your permanent residence was outside Oregon during the entire tax year, and 3. You spent less than 31 days in Oregon during the tax year. B. DFAS address outside of Oregon. You are treated as a nonresident of Oregon, no matter where you are stationed, if both of the following are true: 1. You are performing “active service,” as defined in 10 United States Code (U.S.C.) Section 101(d) (3), other than annual training duty or inactive- duty training, and 2. You are a resident of another state according to DFAS payroll records. If you meet the requirements in either A or B above, you are treated as a nonresident for Oregon tax pur­ poses and Oregon won’t tax your military pay. You Filing an Oregon return

150-101-431 (Rev. 04-21-22) 21 will owe Oregon tax only if you had income from another Oregon source. This income may be from an Oregon property sale, a business, or rental property located in Oregon. If you have had Oregon income tax withheld from your military pay, you should file an Oregon nonresident tax return to get a refund of the withheld tax. If you continue to be a nonresident, file an Oregon-only withholding certificate with your pay clerk as described in “Withholding exemption.” Oregon residents Stationed in Oregon. If you are domiciled in Oregon and stationed in Oregon, you are taxed on income from all sources, both inside and outside Oregon. This includes your military pay for service in Oregon if either of the following is true for you: • Your address in the DFAS payroll records is in Ore­ gon; or • Your military pay is from annual training duty, inactive-duty training, or other service in Oregon that isn’t “active service” as defined in 10 U.S.C. Section 101(d)(3). If neither of these are true, see the Exceptions to Ore­ gon residency, above, to see if you qualify for treat­ ment as a nonresident for tax purposes. Stationed outside Oregon. If you are domiciled in Oregon, but you are stationed outside of the state, see the Exceptions to Oregon residency, above, to find out whether you can be treated as a nonresident of Oregon for tax purposes. If you don’t qualify as a nonresident, you will be taxed as a resident on your income from all sources, both inside and outside Oregon. Military pay subtractions [Subtraction code 319] You may qualify for more than one subtraction for military pay. To be eligible for the subtractions, the military pay must be included in federal AGI. Mili­ tary pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual train­ ing, weekend drills, and inactive duty training. The Oregon military pay subtractions are: • Stationed outside Oregon. As of August 1, 1990, you can subtract military pay earned while sta­ tioned anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. The date wasn't set when this material was last revised. You aren’t required to be stationed in a designated com­ bat zone to be eligible for this subtraction. • Guard and reserve away from home. National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time. • Other military pay. You can subtract any remain­ ing taxable military pay after taking the above sub­ tractions, up to $6,000. Total subtraction. You may qualify for more than one military pay subtraction. However, your total subtraction can’t be more than the total military pay included in federal AGI. Note: Certain forms of military pay that aren’t included in federal AGI, such as combat pay, aren’t taxed in Oregon. They aren’t subtracted on your return because they aren’t included in your federal taxable income. The following examples show the military pay sub­ tractions described above. Example 1: Seth, an Oregon resident, enlisted in the Navy. He earned $10,000 of active duty pay in Spain and $8,000 of military pay inside Oregon during the year. His address in the DFAS payroll records is in Oregon. He included the $18,000 in his federal AGI. Seth’s total military pay subtraction is $16,000. Seth can subtract the $10,000 earned outside Oregon, and $6,000 of his military pay earned in Oregon. Seth files Oregon Form OR-40 and claims his military pay sub­ traction on Schedule OR-ASC. Example 2: Brett is an Oregon resident and files jointly with his wife, who lives and maintains a resi­ dence in Oregon. Brett served in a designated combat zone for five months this year and earned $8,000 in combat pay. He served in Germany for the rest of the year and earned $15,000 of military pay. The presi­ dent didn’t declare an end to combat zone activities this year. Because Brett excluded his combat pay on his federal return, he doesn’t have to subtract it on his Oregon return. Therefore, Brett’s Oregon subtraction is the $15,000 of military pay earned outside Oregon and included in federal AGI. Brett and his wife will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Example 3: Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a com­ bat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and again for two weeks in November. He served in Oregon when away from home. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and Merlin will include $31,500 of military pay in their Filing an Oregon return

150-101-431 (Rev. 04-21-22) 22 federal AGI. Then they will determine their Oregon subtraction. • Stationed outside Oregon: All $21,000 of Ger­ trude’s active duty pay is eligible for this subtrac­ tion because she was stationed outside Oregon. • Guard and reserve away from home: $8,000 of Merlin’s pay is eligible for this subtraction because he was away from home for more than 21 consecu­ tive days from April to July. The pay he received for the two weeks he was away from home in Novem­ ber doesn’t qualify. • Other military pay: Gertrude doesn’t have any other military pay not already eligible for the other subtractions. Merlin’s remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500. Combined, Gertrude and Merlin have a military pay subtraction of $31,500, because all of their military pay is eligible for at least one of Oregon’s military pay subtractions. They will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Nonresidents stationed in Oregon Oregon doesn’t tax your military pay if you are domi­ ciled in another state. You don’t need to file an Oregon return unless you had other income from an Oregon source or had Oregon tax withheld from your pay. Examples of Oregon-source income include: • Wages from a job held on off-duty hours. • Earnings from an Oregon business or rental property. Note: Nonresidents’ interest income from an Oregon bank account generally isn’t taxable by Oregon. If you had Oregon tax withheld from your military pay, you should file a return to claim a refund. You should also contact your payroll clerk to stop with­ holding Oregon taxes if Oregon isn’t your state of domicile. Example 1: Selina is a nonresident of Oregon in the U.S. Navy stationed in Portland. She has no other Oregon-source income and doesn’t have Oregon income tax withheld from her military pay. Selina isn’t required to file an Oregon return. Example 2: Jared is a nonresident of Oregon in the U.S. Coast Guard stationed in Astoria. In his off-duty hours he works part-time for an Oregon employer. Because Jared has Oregon income other than his mil­ itary wages, he will file Oregon Form OR-40-N as a nonresident. Example 3: Caitlyn was domiciled in Oregon when she joined the U.S. Army in 2016, and she hasn’t established a new domicile in another state. Since July 2020 she has been stationed at the Army’s chemi­ cal depot in Umatilla, and her DFAS address is her apartment in Kennewick, Washington. Along with her military pay, in 2021 she earned interest from a savings account in an Oregon bank and has wages from an off-duty job in Kennewick. Since Caitlyn is treated as a nonresident for tax purposes, her military pay isn’t taxed by Oregon. The interest she earned from the Oregon bank isn't taxed because she is con­ sidered to be a nonresident. She also isn't taxed on the wages from her Kennewick job. Caitlyn isn’t required to file an Oregon return for 2021 unless Oregon tax was withheld from her military pay. Filing your nonresident return If you have other income from Oregon sources, use Form OR-40-N. Enter your military income on line 7 in the federal column only. Don’t enter your mili­ tary pay in the Oregon column. Report other income taxable by Oregon in the Oregon column. On Sched­ ule OR-ASC-NP, enter the military wage income you reported in the federal column on line 7, but only in the federal column. In the Oregon column, enter $0. It’s important to enter your military pay this way because it affects the amount of deductions and cred­ its you’re entitled to claim. Mark the “Military” box on the return. If you and your spouse file a joint federal return, and you are both nonresidents of Oregon, you must file a joint Oregon return as well. Use Form OR-40-N. If your spouse is an Oregon resident, you have the option of using the married filing separately status for Oregon. Your spouse would file Form OR-40, or Form OR-40-P if a part-year Oregon resident, and you would file Form OR-40-N. If you file a joint return, use Form OR-40-N. Filing and payment date The due date for filing a calendar year return and payment of the tax is usually April 15. If the 15th falls on a Saturday, Sunday, or legal holiday, the due date is the next working day of the month. If you are out­ side the United States for military duty on the due date, the due date is extended by two months. Mark the “Extension filed” box on your return. See “Exten­ sions of time to file” for more information. If you owe tax on your Oregon income tax return, you must pay the entire amount by the due date. Interest and penalty will be added to all unpaid balances. Extension for filing your return You can get an extension to file your return, but you can’t get an extension to pay your tax. More informa­ tion can be found under “Extensions of time to file.” Filing an Oregon return

150-101-431 (Rev. 04-21-22) 23 Combat zone/Contingency area. Were you sta­ tioned in a combat zone or contingency area? Did you receive additional time from the IRS to file your federal return and pay your tax? If both are true, Oregon allows the same additional time to file and pay your Oregon tax. Mark the “Extension filed” and “Military” boxes on your return. Keep your payroll records or other proof of your combat zone/contin­ gency area service and the IRS extension with your tax records; we may request a copy at a later date. Note: Oregon follows federal law regarding the treatment of combat pay and related remedies. If you served in the Sinai Peninsula of Egypt at any time after June 9, 2015 and you’re amending your federal return to exclude this military pay, you may also amend your Oregon return if Oregon taxed this income. If you were assessed related penalties or interest, contact us for further instructions. Interest and collections If your active duty service (Title 10) has materially affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity while on active duty and up to 180 days thereafter. The interest rate on tax debt owed by mili­ tary members is limited to 6 percent annually. File a claim for relief by writing to us within 180 days after your active duty service has ended. Relief may not be available for the period prior to receiving your request. Include a copy of orders showing your active duty status and dates. You may qualify for relief of interest and collection activity under Oregon law if you meet all of the fol­ lowing requirements: • You have a tax liability that came due while on active duty under Title 10, • You have been on active duty for more than 90 con­ secutive days, • Your active duty service (Title 10) occurred on or after September 11, 2001, and • You notify us within 180 days after your active duty service has ended. Guard members called into active state service by the governor under Title 32 may qualify for relief of inter­ est and collection activities on any tax owed prior to active state service. Send a written request for relief to us within 180 days after the active state service has ended. Include a copy of your orders. Relief may not be available for the period prior to receiving your notification. Withholding exemption You have the option to stop Oregon withholding from your military pay if all of the following are true: • You had a right to a refund of all 2021 Oregon income tax withheld because you had no tax liabil­ ity, and • You expect a refund of all 2022 Oregon income tax withheld because you reasonably believe you won’t have any tax liability, and • For all of 2022, you expect to be stationed outside of Oregon or continue to have an address outside of Oregon in the DFAS payroll records. If all of the above are true and you don’t want Oregon tax withheld from your military pay, you must file an additional withholding certificate with your payroll office. Use Form OR-W-4, Oregon Withholding State­ ment and Exemption Certificate, and follow the instruc­ tions to declare that your military pay is exempt using the appropriate code. Give Form OR-W-4 to your pay clerk, and submit a new form by February 15 each year that you’re claiming the exemption. Military spouses If you’re a military spouse, the state where you live may be different from the state where you are domi­ ciled. See “Residency” for more information about determining your domicile. Oregon follows federal law, including the SCRA and the Military Spouse Residency Relief Act (MSRRA). Under the SCRA, for tax purposes you may elect to be treated as a resident of the same state as the mili­ tary member. Under MSRRA, your income may not be taxable to Oregon if your spouse is stationed in Oregon, you are living in Oregon to be with your spouse, and you are domiciled outside of Oregon. In addition, your income may not be taxable if you are domiciled in Oregon, but you are living in another state where your spouse is stationed. See “Special- case Oregon residents” in “Residency” for details. Nonresident spouse of military member stationed in Oregon MSRRA prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you’re living in Oregon only to be with your spouse who is sta­ tioned here, and you’re domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and aren’t considered to be Oregon-source income. Note: This exemption doesn’t apply to spouses who are also members of the military. You aren’t required to file an Oregon return unless you had other income from an Oregon source or Ore­ gon taxes were withheld from your pay. Examples of Oregon-source income include: • Non-military wages earned by your spouse (the military member) in Oregon. • Income from a business you operate in Oregon. Filing an Oregon return

150-101-431 (Rev. 04-21-22) 24 • Rental income from Oregon property. If you file an Oregon return, use Form OR-40-N. Include all of your wages on line 7 in the federal col­ umn only. Don’t include your exempt income (or your spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the subtraction for your spouse’s military pay, see “Filing your nonresident return”, above. Example: Staff Sergeant Wilson, USAF, and his spouse, Tracy, are Arizona residents living in Klam­ ath Falls where SSgt Wilson is stationed. In addition to his military duty, SSgt Wilson works part-time at a local car dealership where Tracy works as the finance manager. They must file an Oregon nonresi­ dent return to report SSgt Wilson's wages from the car dealership. They report his military pay and all of their wages in the federal column of Form OR-40-N, and only his wages from the car dealership in the Oregon column. To stop withholding of Oregon income tax from your exempt wages, complete an additional withholding certificate. Use Form OR-W-4 and follow the instruc­ tions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re claiming the exemption. Your employer may require proof that you qualify for the exemption. Oregon resident spouse of military member stationed outside Oregon If your spouse is stationed outside of Oregon, but you are an Oregon resident living in Oregon, your income is taxable for Oregon purposes. If you file a joint return with your spouse, use Form OR-40-N, and include all of your income in the Oregon column. If you and your spouse file a joint federal return, and your spouse isn’t a resident of Oregon, you have the option to file joint or separate returns. If you file a joint return, use Form OR-40-N; if you use the mar­ ried filing separately status, use Form OR-40 (or Form OR-40-P if you’re a part-year resident) and your spouse with Oregon-source income uses Form OR- 40-N. If your spouse doesn’t have income taxable to Oregon, they aren’t required to file a separate Oregon return. Use the general instructions for all taxpayers. Do you qualify to be treated as a nonresident because you meet the “special-case resident” requirements or you’re making the election under the SCRA? If so, you aren’t taxed on your out-of-state wages or self- employment income. This is the case even if the other state can’t tax you because of MSRRA. You don’t have to file an Oregon return unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. See “Special-case Oregon residents” in “Residency” for details. If you file an Oregon return, use Form OR-40-N. Moving expenses of military spouses As the spouse of an active duty member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, your unreimbursed moving expenses may be deducted on your Oregon return only if: • Your expenses are deductible on your federal return, • You relocate to, or within, Oregon when the mili­ tary member is ordered to relocate due to a perma­ nent change of duty station (known as a PCS move), and • You have taxable income from employment, includ­ ing self-employment, performed in Oregon. Filing an Oregon return

150-101-431 (Rev. 04-21-22) 25 Oregon tax Your Oregon income tax is based on your taxable income. Oregon taxable income is your federal taxable income with the additions, subtractions, and modifica­ tions described in Oregon’s tax laws and this publica­ tion. For Oregon residents, your income tax is based on your taxable income from all sources. The income tax for nonresidents is based on taxable income from Oregon sources. If you’re a part-year resident, your tax is figured the same way as a resident’s, and then your Oregon percentage is applied to the tax. Personal income tax rates (ORS 316.037) For individuals, the Oregon tax rate that applies to your taxable income increases as your income increases from one bracket to the next. The tax rates and bracket amounts for 2018 through 2021 are shown on the last page of this publication. This section provides a general outline of how to figure your tax. You can find detailed examples in the instruc­ tions for your Oregon personal income tax return. Full- year residents use either the tax tables or the tax rate charts published inside Form OR-40 Instructions. Non­ residents and part-year residents use the tax rate charts published inside Form OR-40-N and Form OR-40-P Instructions. Alternative tax rates. Most taxpayers use either the tax tables or rate charts in the return instructions to figure their Oregon income tax. However, there are special methods if your income includes any of these items: • Qualified business income. • Income from farming. • Capital gain from the sale of farming property. These items are described in more detail later. Additions to tax You may have the following additions to your Ore­ gon income tax to report on your return: • Interest on installment sales. • Recapture of tax credit for contributions to Oregon 529 college savings network accounts. • Recapture of tax credit for contributions to ABLE accounts. These items are described in more detail later. Credits and payments Credits. After you figure your income tax and any addi­ tions to tax, determine if you are eligible for any tax credits. A few of Oregon’s tax credits are refundable, meaning you may receive a refund of any amount that is more than your tax for the year. Most are nonrefund­ able and can’t be more than your tax liability for the year. Some nonrefundable credits allow any unused amount to be carried forward to a later year. Qualifica­ tions and other detailed information for Oregon’s tax credits can be found in “Credits,” in the Schedule OR- ASC and OR-ASC-NP Instructions, and in the instruc­ tions for your Oregon income tax return. Payments. After you determine your total tax, includ­ ing any additions to tax, and subtract your tax cred­ its, figure the total payments you have already made for the year. Payments may include the following: • Income tax withheld from your wages by your employer. • Tax withheld from lottery winnings, annuities, and pensions. • Estimated tax payments. • Refund from a prior year applied to this year’s esti­ mated tax. • Payment made with an extension request. • Tax payments made on your behalf by a PTE. • Tax withheld from the sale of Oregon real property by a nonresident seller. Refundable credits are also considered to be tax payments. For more information about these different types of payments, see the instructions for your Oregon per­ sonal income tax return and the following forms and publications: • Form OR-W-4 and Form OR-W-4 Instructions for information about withholding. • Publication OR-ESTIMATE and the “Estimated tax payments” section of this publication. • Publication OR-40-EXT for information about request­ ing an Oregon extension to file your return. • Schedule OR-K-1 and Schedule OR-K-1 Instructions for owner taxes paid by a partnership. • Form OR-19 Instructions for tax withheld by a PTE on behalf of a nonresident owner. • Publication OR-OC for tax paid by a partnership following a CPAR adjustment. • Form OR-18-WC and Form OR-18-WC Instructions for tax withheld from the sale of Oregon real prop­ erty by a nonresident seller. Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment when you file your Oregon return, com­ pare your total payments with your total tax. If you are entitled to a refund, see the instructions for your Oregon return and the “Refunds” section of this Oregon tax

150-101-431 (Rev. 04-21-22) 26 publication for your options. If you have a balance due, see “Payment options” for information about ways to pay your Oregon income tax. Interest and penalties You may owe penalties and interest if you don’t make your tax payments on time. If you are required to make estimated tax payments, you may owe under­ payment interest if your installment payments aren’t made by the due dates, even if you are receiving a refund. See “Interest and penalties” and “Interest on underpayment of estimated tax” in this publication and Form OR-10 Instructions for details. Qualified business income reduced tax rate (ORS 316.043) If you have qualifying business income from a sole proprietorship, a partnership, or an S corporation, you may elect to calculate your Oregon income tax using a reduced tax rate for that income. The tax rate on the qualifying business income is: • Seven percent of the first $500,000; • Seven and one-half percent of the amount above $500,000 but not more than $1 million; • Eight percent of the amount above $1 million but not more than $2.5 million; and • Nine percent of the amount above $2.5 million but not more than $5 million. Qualifying business income that is more than $5 mil­ lion is taxed at the maximum personal income tax rate of nine and nine-tenths percent. The qualified business income reduced tax rate is an irrevocable election for each tax year that must be made on the original return. You can’t amend to revoke or make the election after your original return is filed unless you file an amended return on or before the original due date of April 18, 2022, or if filing on extension, before the extension due date of October 17, 2022. The election is made by submitting the Schedule OR-PTE, Oregon Business Income Reduced Tax Rate Schedule, appropriate for your residency sta­ tus and checking the PTE box on your Oregon income tax return. No additions, subtractions, or deductions other than depreciation are allowed in the calcula­ tion of the tax on qualifying income. The schedule and instructions are available for download from our website, or you can contact us to order them. You can find answers to common questions on our website. Visit www.oregon.gov/dor and click on “FAQ” and search “reduced tax rate”. Qualifications Generally To be eligible for the reduced tax rate, you must mate­ rially participate in the business, have at least the minimum number of qualifying Oregon employees, and meet any specific requirements for a sole propri­ etorship or for a partnership or S corporation. Sole proprietorship To be eligible for the reduced tax rate, a sole propri­ etor must: • Have qualified business income from the sole proprietorship; • Materially participate in the business; and • Employ one or more employees in Oregon who meet the employee requirements explained below. Partnership or S corporation To be eligible for the reduced tax rate, a partner or S corporation shareholder must: • Have qualified business income from the partner­ ship or S corporation; • Materially participate in the business; • Have ordinary business income that doesn’t exceed $5 million; • Employ one or more employees in Oregon who meet the employee requirements explained below; and • If ordinary business income is more than $250,000, comply with the employee-to-owner ratio require­ ment shown in Table 4 or meet the income distribu­ tion requirement described below. Employee-to-owner ratio requirement. Unless the income distribution requirement is met, partnerships and S corporations with more than $250,000 in ordinary business income must have, at a minimum, the number of qualifying employees in Oregon per owner as shown in Table 4. The combined total of hours worked by the qualifying employees, up to 1,200 hours per employee, must be at least the number shown in Table 4. Table 4. Partnership and S corporation employee requirements Ordinary business income is at least But not more than Employees required Aggregate hours worked by employees $0 $250,000 One 1,200 $250,001 $500,000 One per owner 1,200 $500,001 $1,000,000 Two per owner 2,400 $1,000,001 $2,500,000 Four per owner 4,800 $2,500,001 $5,000,000 Ten per owner 12,000 Oregon tax

150-101-431 (Rev. 04-21-22) 27 Income distribution requirement. A partnership or S corporation with more than $250,000 in ordinary busi­ ness income may still qualify for the reduced tax rate even if the employee-to-owner ratio shown in Table 4 isn’t met, so long as income distributions don’t exceed 25 percent of ordinary business income. Calculate the percentage using the total distributions and total ordi­ nary business income for the current tax year and up to two of the most recent tax years. Treat an annual amount of less than zero as zero for that year. Qualified business income. Qualified business income is income other than from passive activities as that term is defined in IRC Section 469. Income from trusts, estates, qualified joint ventures, and disre­ garded entities doesn’t qualify. Note for tiered enti­ ties: Qualified business income passed through to a higher-tier entity from a lower-tier entity will qualify for the reduced tax rate if the lower-tier entity meets the ordinary business income and the employee or distribution requirements. Material participation. A taxpayer materially partici­ pates in an activity if the taxpayer works on a regular, continuous, and substantial basis in operations of the business. Under certain circumstances, related entities may be grouped into a single activity in order to meet this requirement. Refer to IRC Section 469 and the related IRS regulations for more detailed information. Example 1: Bryant and Marcus are each the sole share­ holders of an S corporation. The S corporations are each 50 percent owners in a partnership. Bryant and Marcus both materially participate in the partnership, which has ordinary business income of $2 million. The partnership employs seven full-time employees who perform their work in Oregon all year long. Bryant and Marcus receive a distributive share of nonpassive income from the partnership that passes through their respective S corporations. Each also receives a salary for work performed for the partnership. The distribu­ tive share of nonpassive income they receive from the partnership qualifies for the reduced tax rate because the partnership meets the ordinary business income and employee requirements. However, the salary each received from the partnership doesn’t qualify for the reduced rate. Employee requirement. The business must have the required number of employees who performed work for the entity in Oregon for the required number of hours during the tax year. An employee must work at least 30 hours in a week for that week’s hours to count. An employee can’t be an owner, a member, a limited partner, or the sole proprietor, but hours worked by an employee who is a spouse or other family member (who isn’t an owner, member, limited partner, or sole proprietor) can be used to meet the hour requirement. Example 2: Alpha Partnership has $200,000 in ordi­ nary business income for the year. Alpha’s employee, Ralph, worked a total of 1,496 hours during the year in Oregon. Ralph worked 32 hours per week for 31 weeks and 24 hours per week for 19 weeks. Alpha can only count the hours for the 31 weeks that Ralph worked at least 30 hours. Alpha’s qualifying hours total 992 (32 hours x 31 weeks). This is less than the 1,200 hours required, so Alpha’s nonpassive income doesn’t qualify for the reduced tax rate. Example 3: Beta Corp, an S corporation, has three shareholders. Beta Corp has ordinary business income of $900,000, of which $300,000 is included in annual income distributions. Six employees (who aren’t share­ holders) worked in Oregon for Beta Corp during the year for a total of 6,160 hours. One employee, Alfreda, worked 40 hours a week for 50 weeks, for a total of 2,000 hours (40 x 50). Another employee, Betty, worked 32 hours a week for 30 weeks, for a total of 960 hours (32 x 30). The other four employees each worked 20 hours per week for 40 weeks in a job-share position. Only Alfreda and Betty’s hours can be counted as qualify­ ing hours for purposes of the employee requirement and the employee-to-owner ratio. Unless the income distribution requirement is met, Beta Corp’s nonpas­ sive income doesn’t qualify for the reduced tax rate because only 1,200 of Alfreda’s hours can be counted toward the 2,400 minimum hours required. Alfreda’s 1,200 hours plus Betty’s 960 hours total 2,160 hours, which doesn’t meet the 2,400 hour requirement. Example 4: Charlie, a sole proprietor, had three employ­ ees working at his Oregon business during the year. One employee worked 32 hours a week for 20 weeks (total 640 hours) and the other two employees each worked 40 hours per week during the same 20 weeks (total 800 hours each). The hours for each employee qualify because each employee worked at least 30 hours a week. The aggregate number of hours worked by all three employees (2,240 hours) meets the 1,200-hour requirement. Therefore, Charlie’s business meets the employee requirement for the reduced tax rate. Example 5: Delta Inc. is an S corporation with two shareholders and annual ordinary business income of $800,000. It has three employees, all of whom work 35-hour weeks. The office manager and the two share­ holders each work 50 weeks a year, a sales clerk works for 30 weeks a year, and a delivery driver works 20 weeks a year, for a total of 3,500 hours worked by non- owner employees. Annual income distributions to the shareholders include $150,000 in ordinary business income. With only three employees, Delta Inc. doesn’t meet the employee ratio requirement; however, because it distributes less than 25 percent of its ordinary busi­ ness income to the shareholders each year, Delta’s non­ passive income still qualifies for the reduced tax rate. Oregon tax

150-101-431 (Rev. 04-21-22) 28 Temporary or “leased” employees. If the business contracts with a professional employer organiza­ tion to employ temporary or “leased” employees, the business can use the hours worked in Oregon by those employees to qualify for the reduced tax rate if the employee requirements are otherwise met. Amended returns Amending to elect or revoke. You can’t amend to revoke or make the election after your 2021 return is filed unless you file an amended return on or before the original due date of April 18, 2022; or if filing on extension, before the extension due date of October 17, 2022. Example 6: Liam filed his original return on March 1, 2022 and didn’t elect the qualified business income reduced tax rate. He files an amended return on April 12, 2022 to make the election to use the reduced tax rate. Liam will be allowed the qualified business income reduced tax rate because the amended return was filed before the original due date. Example 7: Maggie filed her original return with a timely-filed extension on August 12, 2022 and elected the qualified business income reduced tax rate. She files an amended return on October 10, 2022 to revoke the election. Maggie will be allowed to revoke the qualified business income reduced tax rate because the amended return was filed before the extended due date. Amended Schedule OR-PTE. You must amend Sched­ ule OR-PTE if you elected to use the reduced tax rate and: • An IRS or other state audit resulted in a change that affects your Oregon return; • You amended your federal or other state return and the changes you made affect your Oregon return; • You have an NOL; or • You need to correct income or deductions you orig­ inally reported. If you amend Schedule OR-PTE after the due date for the return (April 18, 2022, or October 17, 2022, if fil­ ing on extension), you must report the tax using the reduced rate on the amended tax worksheet even if the amount of tax using the ordinary tax rate is less. This is because the election to use the reduced tax rate is irrevocable and can’t be changed by filing an amended return after the due date for the return. See the instructions for Schedule OR-PTE-FY, Sched­ ule OR-PTE-NR, or Schedule OR-PTE-PY for tax rate charts and additional information. Farm liquidation long-term capital gain tax rate (ORS 316.045) If you sold or exchanged capital assets used in farming activities during the tax year, you may be able to apply a reduced tax rate to your net long-term capital gain. Farming activities include: • Raising, harvesting, and selling crops. • Feeding, breeding, managing, or selling: livestock, poultry, fur-bearing animals, or honeybees or the product thereof. • Dairying and selling of dairy products. • Stabling or training horses, including providing rid­ ing lessons, training clinics, and schooling shows. • Propagating, cultivating, maintaining, or harvest­ ing: aquatic species, birds, and other animal species. • Growing and harvesting cultured Christmas trees or certain hardwood timber. • On-site construction and maintenance of equip­ ment and facilities used in farming activities. • Preparing, storing, or disposing of products or by- products raised for human or animal use on land employed in farming activities. Farming activities don’t include growing and har­ vesting trees of a marketable species, other than growing and harvesting cultured Christmas trees or certain hardwood timber. General rules. The sale or exchange must end all of your ownership interests in a farming business or in property that is used in a farming business. You may not claim the special tax rate on a sale or exchange to a relative, as that term is defined by IRC Section 267. A farm dwelling or farm homesite isn’t considered to be property used in the trade or business of farming. If you have a net loss from all the assets you sold or exchanged during the year, you don’t qualify for the reduced rate on the sale or exchange of your farm assets. Partnerships or S corporations. The sale of owner­ ship interests in a farming corporation, partnership, or other entity qualifies for the special tax rate. The taxpayer must have had at least a 10 percent owner­ ship interest in the entity before the sale or exchange. Computing the tax. Use Publication OR-FCG, Farm Liquidation Long-Term Capital Gain Tax, to figure your tax using the reduced rate. Download the publica­ tion from our website or contact us to order it. Check the box labeled “Worksheet FCG” on your Oregon tax return. Don’t include the worksheet with your return; keep it with your tax records. Oregon tax

150-101-431 (Rev. 04-21-22) 29 Farm income averaging (ORS 314.297) You can figure your Oregon income tax by averaging this year’s farm income using your farm income from the previous three (base) years. This may result in less tax if this year’s farm income is higher than your tax­ able income for one or more of the three prior years. A farming business is the trade or business of cultivat­ ing land or raising or harvesting any agricultural or horticultural commodity. Your elected farm income is the amount of your taxable income from farming that you elect to include in the calculation. You don’t have to include all of your taxable income from farming. It may be to your advantage to include less than the full amount. Forms. Use our farm income averaging (FIA) forms, worksheets, and instructions to figure your Oregon income tax. They can be downloaded from our web­ site or ordered by contacting us. Be sure to mark the FIA box on your return to indi­ cate that you figured your tax by averaging your farm income. Don’t include the form, worksheets, or sched­ ules with your return; keep them with your tax records. Interest on certain installment sales (ORS 314.302) Do you have installment sales for which you had to pay interest on the deferred tax liability for fed­ eral purposes? If so, you must also pay interest for Oregon. The interest is reported as an addition to tax on your Oregon return, just as it is on your federal return. The amount due is computed the same way as for federal. The interest rate for 2021 and 2022 is 4 percent per year, or 0.33 percent (0.0033) per month. Part-year residents. For the part of the year you were a nonresident, include only those installment obligations that were from dispositions of property in this state. For the part of the year you were a resident, consider all installment obligations. Nonresidents. Include only those installment obliga­ tions from dispositions of Oregon property. ABLE account or Oregon 529 College Savings Network account tax credit recapture (ORS 315.653) [Recapture code 950 or 951] If you claimed a tax credit for contributions made to an ABLE account or an Oregon 529 College Sav­ ings Network account and later made a nonqualified withdrawal of funds from the account, you may have to recapture your tax credit. Types of nonqualified withdrawals include: • Spending the funds for a purpose that is unrelated to the purpose of the account. • Using college savings plan funds to pay tuition or other expenses for elementary or secondary school. Tax benefit. To determine whether you must recap­ ture your tax credit, you must find out if you received a tax benefit from the contributed funds that were used for a nonqualified purpose. You received a tax benefit if the contribution made a difference in the amount of credit you received. Due to the fact that Oregon has also offered a subtraction for these con­ tributions for tax years before 2020, figuring your tax benefit could be complex. For a detailed expla­ nation and examples, see OAR 150-315-0065. Keep a statement showing how you calculated the recapture amount with your tax records. Reporting the recapture. Report the recapture on Schedule OR-ASC, Section E or Schedule OR-ASC- NP, Section G. If the recapture is due to a nonquali­ fied withdrawal of contributions to an ABLE account, use code 950. If the recapture is due to a nonqualified withdrawal of contributions to an Oregon 529 Col­ lege Savings Network account, use code 951. Other individual taxes Statewide transit tax (STT) (ORS 320.550) This tax on wages funds public transportation services and improvements within Oregon. It’s not reported on your Oregon income tax return. The tax is equal to one-tenth of one percent (0.1% or 0.001) of the wages received by an employee who is an Oregon resident or a nonresident employee who performs services in Oregon. Oregon employers are required to automatically withhold the STT from your wages. If you’re an Oregon resident who earns wages from an employer outside of Oregon, your employer isn’t required to withhold the STT on your behalf, but they may choose to do so voluntarily. If your out-of-state employer doesn’t withhold the STT from your wages, you must file Form OR-STI, State­ wide Transit Individual Tax Return, and pay the tax. If your employer withheld too much STT from your wages because you were working outside Oregon, you must file Form OR-STI to claim a refund. The due date for your return and payment is the same as the due date for your Oregon income tax return and payment. See Form OR-STI Instructions for more information. Oregon tax

150-101-431 (Rev. 04-21-22) 30 Transit self-employment tax The department collects self-employment taxes owed to TriMet Transportation District (TriMet) and Lane Transit District (LTD). This tax is on the self-employ­ ment earnings of taxpayers doing business or provid­ ing services to a location within the transit districts. It is not reported on your personal income tax return. See Publication OR-TRAN-SE, Oregon Transit Self- employment Taxes, for more information. Fiduciary tax Oregon personal income tax is imposed on the tax­ able income of estates and trusts, except for trusts taxed as corporations. See Form OR-41 Instructions for more information. CPAR tax Partnerships with income adjustments resulting from a federal CPAR audit and that elect to pay the Oregon tax at the partnership level must follow the instructions in Publication OR-OC. Oregon tax

150-101-431 (Rev. 04-21-22) 31 Payments and refunds Payment options Payment is due on April 18, 2022, regardless of any extension you may have to file your return. If pay­ ment isn’t made by the due date, interest and penal­ ties may be charged. See “Interest and penalties” for more information. Electronic payments from your checking or savings account You can pay your prior year income taxes, current year income taxes, and 2022 estimated income taxes directly from your checking or savings account. You also have the option to pay by direct debit when you file your return. There is no fee for this. Visit our website for more information. Credit card payments You can pay your current year balance due, make estimated tax payments for 2022, and pay prior year taxes with your Discover, MasterCard, or Visa credit card. To make an online payment, go to Revenue Online on our website. A convenience fee may be charged for this service. Keep the payment confirmation number for your records. Payment by check or money order • Make your check or money order payable to Oregon Department of Revenue. • Write the tax year, the form number or type of pay­ ment you’re making, and the last four digits of your SSN or ITIN on your check. • Use blue or black ballpoint pen. Don’t use red or purple ink or gel pens. • Don’t send cash or a postdated check. • If you’re mailing a payment with your return, send your payment in the same envelope with your return. Don’t use a payment voucher. • If you’re mailing a payment separate from your return, include the payment voucher, Form OR- 40-V, with your payment. Form OR-40-V is avail­ able in our tax booklets and on our website. Direct deposit of refund We can deposit your income tax refund directly into an account you designate, such as a checking, sav­ ings, or certain type of retirement account. Requirements for direct deposit: • The account must have routing and account num­ bers and be able to accept Automated Clearing House (ACH) payments. • The final destination for the deposit can’t be out­ side the United States. Payments and refunds Direct deposit—necessary numbersDirect deposit—necessary numbers

150-101-431 (Rev. 04-21-22) 32 • If you are filing a joint return, both you and your spouse must sign the return. Note: Some accounts may not accept direct deposits. Also, some institutions don’t permit the deposit of a joint refund into an individual account. Contact your financial institution to verify your rout­ ing and account numbers and to make sure your deposit will be accepted. • Routing numbers are nine digits and must begin with 01 through 12, 21 through 32, or 61 through 72. • Account numbers can be up to 17 characters, both numbers and letters. Include hyphens, but don’t include spaces or special symbols. If your account number is fewer than 17 characters, leave the unused boxes (on your return) blank. See the sample check diagram for help with identify­ ing these numbers. Caution: It’s your responsibility to make sure your information is correct. These numbers can’t be changed after your return is filed, and we can’t undo a deposit that was made to the wrong account. We aren’t responsible when an institution rejects a direct deposit. If your direct deposit is rejected, we will issue a check and send it to the mailing address shown on your return. Application of refund If your original or amended return shows a refund, you may apply some or all of it to: • Make an estimated tax payment for a later tax year. • Donate to a charitable organization. • Make a deposit to one or more Oregon College or MFS 529 Savings Plan accounts. • Contribute to a political party (Form OR-40 filers only). Estimated tax payment. If you apply your refund as an estimated tax payment for a later tax year, the payment will be credited to your open estimated tax account as of the date shown in Table 5. Table 5. Refund applied as estimated tax payment If you file: The payment will be credited as of: An original return on or before the due date, without extension The date that the first estimated payment of the open tax period is due (usually April 15). An original return on extension, on or before the extension due date The later of: • The due date for the first estimated payment of the open tax period (usually April 15), or • The date of the pay­ ment that resulted in the refund. An original or amended return: • After the due date, without extension; or • On extension, after the extension due date The later of: • The date the return was filed, or • The date of the payment that resulted in the refund. The election to apply your refund as an estimated tax payment is irrevocable. Example 1: Beth made four estimated tax payments for tax year 2021; her last payment was made on Jan­ uary 18, 2022. On September 8, 2022, Beth filed her 2021 return on extension. Beth claimed a $500 refund and elected to have the refund applied as an esti­ mated payment. The $500 refund will be credited to Beth’s 2022 tax account as of April 18, 2022 (the first estimated payment due date for the open tax period). Example 2: Ray filed his 2020 return on May 13, 2022. Ray overpaid his 2020 tax by $2,500 and elected to apply $2,000 of the refund as an estimated tax pay­ ment. Because Ray’s 2020 return was filed after the due date, the $2,000 will be applied as an estimated tax payment as of May 13, 2022, the date he filed his return. Ray will claim $2,000 as an estimated pay­ ment when he files his 2022 return. Two open tax accounts. An estimated tax account is “open” for accepting payments from the first day of the tax year until 15 days after the last day of the tax year. For most taxpayers, this means they will have two “open” accounts from January 1 through January 15, one account for the later year that opens on Janu­ ary 1, and one account for the earlier year that closes on January 15. If a payment from an applied refund is credited at a time when two accounts are open, the payment will be automatically applied to the later year. If you want your payment to be applied to the earlier year instead, you must contact us in writing before the account for the earlier year closes (usually January 15). Example 3: Sally filed her 2019 Oregon return in April 2020 with tax to pay. On January 10, 2022, Sally filed an amended 2019 return showing a $1,500 refund. She elected to apply the refund as an estimated pay­ ment. Sally’s refund is automatically applied to her Payments and refunds

150-101-431 (Rev. 04-21-22) 33 2022 estimated tax account as of January 10, 2022, the date she filed her amended return. Sally can contact us in writing no later than January 15, 2022 and ask that the $1,500 payment be applied to tax year 2021 instead. Other refund applications. See your return instruc­ tions for details on using your refund to donate to a charitable organization, contribute to the politi­ cal party of your choice (Form OR-40 filers only), or make a deposit in up to four Oregon College or MFS 529 Savings Plan accounts. Refund processing How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of the return. Electronically- filed returns generally process faster. Paper returns must have all supporting documentation included to ensure smooth processing. Paper returns can also take longer as the due date approaches, when the largest number of returns are received. To check the status of your refund, go to www.oregon.gov/dor, click on “Revenue Online,” and click on “Where’s my refund?”. Refund delays Several things might delay processing of your tax return or your refund: • Failure to respond timely to requests for informa­ tion. If we send you a letter requesting informa­ tion to process your return, it’s important that you respond by the due date on the letter. Otherwise, we may adjust or invalidate your return. Contact us if you have questions about our letter. You may view most of the letters we send by logging into Revenue Online. Note: If we’re requesting infor­ mation about your WFHDC credit, replying to our request for information via Revenue Online allows us to respond faster. • Change in name. If you have a different name in our records from a previous filing, special han­ dling will be required. • If you notified us about identity theft, special han­ dling will be required. • Change in SSN. • Application for an ITIN. • Failure to attach proof of Oregon withholding (such as Form W-2 or 1099). • Failure to attach a copy of your federal return (with Schedules 1 through 3, if applicable). • Failure to include Schedule OR-A if you’re claiming itemized deductions. • Claiming the WFHDC or manufactured dwelling park closure credit. These refundable tax credit claims are reviewed manually and take additional time to process. • Failure to identify additions, subtractions, adjust­ ments, modifications, or credits. Numeric codes for identifying these are shown in the Appendix. • Debt to other agencies. If you, or your spouse, owe money to state or federal agencies (for such things as student loans, unpaid parking tickets, or back child support), your refund might be delayed or used to offset your debt. • Incorrect bank account information. Verify your bank account information for direct deposit refunds. If your bank information is incorrect, we must wait for the bank to return the funds before issuing a refund check. Injured spouse refund claims [ORS 314.415(7)] Are you filing a joint return with a spouse who is sep­ arately liable for a debt to a state or federal agency? If so, you may request that your joint refund be apportioned. When your return is processed, we will notify you of our intent to apply the joint refund to any debts owed. Within 30 days of the date of our notice, send us your request to apportion the refund. You may use federal Form 8379, Injured Spouse Alloca­ tion, and fill in the Oregon refund numbers, or create your own worksheet. Separate your withholding, tax payments, and items of income. Income from jointly held property must be split evenly, including interest earned on joint bank accounts. You may submit an apportionment request through Revenue Online or mail it to this address: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Visit www.oregon.gov/dor for answers to common questions. Click on “FAQ” under “Get Help,” then enter “injured spouse” in the search bar. Oregon statute of limitations on refunds Oregon law limits the time you have to claim a refund of Oregon tax. The allowable time depends on your circumstances. Payments and refunds

150-101-431 (Rev. 04-21-22) 34 Withholding and estimated tax refunds You must file your original return within three years of the due date to claim a refund of tax withheld or estimated tax payments. The due date doesn’t include extensions. If you file more than three years after the due date, the excess tax withheld or estimated tax payments can’t be refunded or applied to tax you owe for another year. Amended returns If your original return was filed within three years of the due date, you may amend (change) your return and file for a refund of an overpayment of tax by the date which is the latest of: • Three years from the due date of your original return; or • Three years from the date you filed your original return; or • Two years from the date you paid your tax or paid any part of your tax. If you file your amended return after three years, but within two years of the date you paid tax, your refund can’t be more than the amount of tax you paid during that two-year period. Note: If we adjusted items on your return and your right to appeal has expired, you can’t use the above rules. You can't claim a refund for those items. Example: Bob filed his 2018 Oregon return and paid $300 tax due on time. In March 2021, he discovered he had forgotten to report some interest income. He amended his return. He paid $220 additional tax on April 1, 2021. On August 4, 2022, Bob discovers he failed to claim a large charitable contribution he made in 2018. Bob must amend his 2018 return by April 1, 2023. His refund will be limited to $220, the additional tax he paid within the last two years. Federal or other state corrections to tax returns Sometimes the IRS or another state corrects your return with changes that could affect your Oregon return, resulting in a refund. You have two years from the date of the correction to amend your Oregon return and claim a refund, even if the three-year stat­ ute of limitations has expired. Payments and refunds

150-101-431 (Rev. 04-21-22) 35 Amended returns Reasons to file an amended return • An IRS audit (or other state audit) resulted in a change to your original return that affects your Oregon return. • You amended your federal (or other state) return and the changes you made affect your Oregon return. • You made an election on federal Form 4684, Casual­ ties and Thefts, to carry back a casualty loss result­ ing from a federally-declared disaster. • You have a net operating loss (NOL) to carry back, so you need to amend your return for the carry­ back year. • You need to correct the income, deductions, or credits you originally reported. How do I amend my Oregon return? You will need the following items: • The tax form and instruction booklet for the year that you are amending. This will usually be the same form type as your original return, unless you filed the incorrect form for your residency status. Use the correct form type to amend. • A copy of the Oregon tax return that you originally filed for the year being amended; this will provide the guidance needed for completing your amended return. • A copy of any previously amended returns you filed for the year being amended. • A copy of all notices from us, another state, or the IRS for the tax year being amended. Follow these steps to amend your return: 1. Read through these instructions before filling out your form. 2. Mark the “Amended” box on the return. 3. If we sent you a notice with corrections to your return, use the figures from that notice when amending your return. 4. Use the worksheet for amended returns in the instruction booklet to determine your amended refund or tax to pay. Complete the entire work- sheet using the corrected information. 5. If the amended return shows a refund, you can elect to apply it as a payment of estimated tax or make other refund applications, but you can’t change any election you made on your original return. See “Application of refund“ in “Payments and refunds.“ 6. Use the “Amended statement” section of the return to explain why you are amending your tax return. 7. Mail or drop off your amended tax return or, if your software allows it, you may file your amended return electronically. Be sure to include a copy of the federal or other state’s corrected return or audit report. If you’re amending your Oregon return only, include a copy of your origi- nal federal return. If you don’t have a copy of your original Oregon tax return, you may request a transcript or a copy of the return from us. A transcript is free but contains less information than your return. A copy of your tax return costs $5 for each tax year. You can request the transcript or copy through Revenue Online or mail the request (with any payment) to our main office in Salem. Partnership returns. Our website has information for partnerships that need to: • File an amended Form OR-OC, • Report audit adjustments made under CPAR, or • Make tax payments on behalf of partners due to CPAR adjustments. Also see “Audits and appeals.” How long do I have to file for a refund? In most cases, you must file for a refund within three years from the due date of your original return, or the date you filed your original return, whichever is later. For more information about time limits for filing a return to claim a refund, see “Oregon statute of limi­ tations on refunds.” When should I file and pay if I owe additional tax? File your amended return as soon as you know that a change needs to be made. Interest is calculated from the day after the due date of the original return up to the date the tax is paid. Pay any tax and interest due as soon as possible to avoid additional interest. There may also be a penalty. How do I file a protective claim for refund? You can file a protective claim for refund when the outcome of a court case or legislative action is expected to be known after the time for requesting a refund has expired. Use Form OR-PCR, Protective Claim for Refund, when your claim to a refund is con­ tingent on a pending court decision or legislative action. Notify us every six months on the status of the claim. If the court decision or legislative action changes your Oregon income tax, file an amended return within 90 days of the determination. Amended returns

150-101-431 (Rev. 04-21-22) 36 How long will it take to process my amended return? Processing time for amended returns varies. It may take six months or longer to process your amended return. How do I amend for an NOL? You may claim a refund from an NOL carryback within three years after the due date (including extensions) of the return that showed the NOL. Mark the “Amended return” box and enter the year of the NOL. See “NOLs for Oregon” in “Other items“ for more instructions. Do I change my federal tax liability on my amended return? Usually not, but there are a few exceptions to this general rule. Change allowed Changing the federal tax liability amount on your amended return is allowed only if one of these excep­ tions applies: • Failure to claim on original return. You qualified for this subtraction on your original Oregon return but failed to claim it. If so, you may claim the sub­ traction based on your original federal income tax liability or the amount allowed by one of the other exceptions. • Correction notice from us. Did we correct the fed­ eral tax subtraction on your original return? If so, change the amount on your amended return. Use the corrected amount from our notice. • Federal return amended before due date. Did you amend your federal return before the due date of the original return? If so, change the amount on your amended return. The federal tax on your amended federal return filed before the due date is the amount you will use for your amended Oregon return. • Different AGI phase-out limit. Does a different phase-out limit apply to your amended AGI? The amount of federal tax liability you may subtract on your return is limited if your AGI is within a cer­ tain range. These ranges and limitation amounts can be found in Table 8 under “Federal income tax liability“ in “Subtractions.“ If your amended AGI is now within a different range, change the amount on your amended return only if the taxes you are deducting were paid or accrued during the tax year you are amending. Increase or decrease the subtraction to match the limitation amount that applies to your amended AGI. Change not allowed Unless one of the above exceptions applies, you can’t change the amount of your federal tax liability on your amended return. However, you might have a subtraction or addition on your return for the year in which you file the amended return. • More federal tax paid. Did you pay additional federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Claim the additional federal tax as a subtraction on your Oregon return in the year you paid the additional tax. • Federal tax refund. Did you get a refund of federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Show the federal tax refund as an addition on your Oregon return in the year you received the refund, but only if you received a tax benefit. See “Federal income tax refunds“ in “Additions” for more information about the tax benefit doctrine. Example 1: Sergei received a notice from us in May and is filling out an amended return in July. The notice stated that his federal tax subtraction was reduced from $3,500 to $3,000. He will use the corrected fed­ eral tax subtraction of $3,000 on his amended return. Example 2: Alicia paid additional federal tax in 2021 for an audit adjustment on her 2018 federal tax return. She will include the adjusted items when she com­ pletes her amended 2018 Oregon tax return, but won’t change the 2018 federal tax subtraction. Because she paid the additional tax in 2021, she will subtract this amount, up to the annual limit, on her 2021 Oregon return. See “Federal income tax liability” in “Subtrac­ tions“ for the federal tax subtraction limits. Example 3: Tonya, a single taxpayer, timely filed her original 2020 return, with an AGI of $138,000. She paid $35,000 in federal taxes during 2020. Her federal tax subtraction was limited to $2,750 because of her AGI. In 2021, she amended her 2020 federal return to claim expenses she had left off of her original return. Her amended AGI is now $133,000. Tonya may change her federal tax liability on her amended return to $4,150, the amount she could have claimed on her original return, because her limitation amount has changed. Amended returns

150-101-431 (Rev. 04-21-22) 37 Interest and penalties Interest Interest rates are the same for taxes owed and for refunds. Interest is charged and paid on tax only. Interest isn’t charged on penalties. We don’t charge compound interest. Table 6 shows interest rates since 2018. For previous interest rates, see prior versions of this publication or contact us. Table 6. Interest percentage rates Interest as of: Annual Daily January 1, 2018 5% 0.0137% January 1, 2019 6% 0.0164% January 1, 2021 4% 0.0110% As of January 1, 2018, interest is figured daily, based on a 365-day year. The annual interest rate is 4 per­ cent for 2021 and 2022. The interest rate may be changed once per calendar year. Additional interest of 4 percent per year is charged as described under “Two-tiered interest on deficien­ cies and delinquencies.“ How to figure interest on tax you owe Your 2021 tax must be paid by April 18, 2022, even if you requested an extension to file your return. Inter­ est starts accruing on April 19 and continues to accrue every day, including the date of your payment. To figure your interest for 2022, count the number of days starting with April 19, 2022 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply by 0.000110 (the daily rate converted to a decimal). If you’re entering the interest amount on your return, round the total to the nearest whole dollar. Amended return. If you file an amended return, or if your taxable income changed because of a federal or state audit, and you have tax to pay, you will be charged interest starting the day after the due date of the original return until the date of your payment. Calculate interest based on the additional amount of tax you must pay. Example: Nick filed an amended income tax return for tax year 2019 on March 12, 2022. His original 2019 return was due on July 15, 2020. He paid additional tax of $500 with his amended return. Here is how Nick figures the interest that he owes: July 16, 2020 to December 31, 2020 169 days at 0.0164% 0.000164 x $500 x 169 days ...........................= $ 13.86 January 1, 2021 to March 12, 2022 436 days at a daily rate of 0.0110% 0.000110 x $500 x 436 days ............................= $ 23.98 Total interest $37.84 Two-tiered interest on deficiencies and delinquencies Additional interest of 4 percent per year will be charged on deficiencies or delinquencies if: • You have filed a return showing tax due (a self- assessed tax liability) and don’t pay the tax due within 60 days after the date of our Notice of Assess­ ment, or • We have assessed an existing deficiency, and you don’t pay the assessment within 60 days after the date on the Notice of Assessment. If you appeal to us (or, in a hardship situation, to the Oregon Tax Court) without paying the tax, the increased interest rate will start 61 days after: • The date of our written objection decision; or • The date of our conference decision letter (CDL); or • The date the Magistrate Division enters its final decision; or • The date the Tax Court or the Oregon Supreme Court enters its final judgment. How to figure interest on refunds of personal income tax Generally, interest is paid on refunds issued more than 45 days after the later of: • The due date of the original return (without exten­ sions), or • The date you file your original return. Note: If your refund results from a payment you made after the due date of your return (without extensions), interest will be paid if the refund is issued more than 45 days from the date of that payment. Example 1: Irina filed her original 2019 income tax return on February 15, 2022, to claim a $1,900 refund of withheld tax. The return was due on July 15, 2020. We issued the refund on May 6, 2022, more than 45 days after Irina filed the return. The interest on the refund is calculated as follows: February 16, 2022 to April 1, 2022 45 days, no interest paid April 2, 2022 to May 6, 2022 0.000110 x $1,900 x 35 days $ 7.32 Interest and penalties

150-101-431 (Rev. 04-21-22) 38 Example 2: Jean filed her original 2019 return on July 15, 2020. She then filed an amended 2019 return on February 3, 2022, which shows a $1,000 refund of esti­ mated tax. Here is how we figure the interest due on Jean’s refund, as of the date she filed the amended return: July 16, 2020 to August 29, 2020 45 days, no interest paid August 30, 2020 to December 31, 2020 0.000164 x $1,000 x 124 days .........................= $ 20.34 January 1, 2021 to February 3, 2022 0.000110 x $1,000 x 399 days .........................= $ 43.89 Total interest $ 64.23 Note: Interest is calculated on the amount that is a refund of tax paid, including any refund amount that you choose to donate by charitable check-off, contrib­ ute to a political party, or deposit into an Oregon Col­ lege or MFS 529 Savings Plan account. Refunds that don’t accrue interest. Interest isn’t paid on the portion of a refund attributable to the EIC or the WFHDC credit. Also, interest doesn’t accrue on refunds applied as an estimated payment to a later year’s tax. See “Application of refund” in “Payments and refunds.“ Tax credit auction bid payments that are returned to the bidder don’t accrue interest. Two-tiered interest on refunds The interest rate will increase if we are unable to issue a refund within 60 days from the date of a Tax Court or Supreme Court judgment. The annual rate will increase by 4 percent beginning 61 days after the date the final judgment is entered. Penalties Penalties for filing or paying late Your 2021 return must be filed by April 18, 2022. If you requested an extension, your return must be filed by October 17, 2022. Your 2021 tax must be paid by April 18, 2022, even if you requested an extension to file your return. If you’re entering a penalty amount on your return, round the total to the nearest whole dollar. Five percent failure to pay penalty. You must pay a penalty if you don’t pay your tax by the original due date of the return, even if you have an extension of time to file. The failure-to-pay penalty is 5 percent of the tax (after all credits, withholding, and payments) that wasn't paid by the original due date. You won’t be charged the 5 percent failure-to-pay penalty if you do all of the following: • File federal Form 4868, Extension of Time to File U.S. Individual Income Tax Return (the automatic exten­ sion of time to file), or send us a payment according to the instructions in Publication OR-40-EXT; and • Pay at least 90 percent of your tax after credits (including recaptures) by the original due date*; and • File your return within the extension period; and • Pay the balance of tax due when you file your return; and • Pay the interest on the balance of tax due when you file your return or within 30 days of the date of the bill you receive from us. *To find your tax after credits, start with your tax after credit recaptures, then subtract refundable credit amounts. If you file with a valid extension but didn’t pay 90 percent of your tax by the original due date, you will be charged the 5 percent failure-to-pay penalty. Twenty percent failure-to-file penalty. You must pay a penalty if you don’t file your return within three months after the due date (including extensions). The penalty is 20 percent of the tax (after all credits, credit recaptures, withholding, and payments) that wasn’t paid by the original due date. You won’t be charged the 20 percent failure-to-file penalty if you: • File federal Form 4868 (the automatic extension of time to file); or • Make a payment according to the instructions in Publication OR-40-EXT, and • File the return within three months after the due date (including extensions). Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax (after all credits, credit recaptures, withholding, and pay­ ments) that wasn’t paid by April 18, 2022. Example. Emir filed his 2021 return on November 17, 2022. His return was due April 18, 2022 and he didn’t have an extension. Emir paid the tax due of $2,000 with the late-filed return. His penalties total 25 per­ cent of the $2,000 tax: Failure-to-pay penalty: 0.05 x $2,000 ..................... $100 Failure-to-file penalty: 0.20 x $2,000 ......................$400 Total penalties: 0.25 x $2,000 $500 Note: Emir will also owe interest on the $2,000 tax. Additional 25 percent failure-to-file penalty If you fail to file a return within three months of the due date (including extensions), we may send you a notice with a demand that you file. If you don't file a return within 30 days of the date the demand letter Interest and penalties

150-101-431 (Rev. 04-21-22) 39 was mailed, we will figure the tax for you and an additional penalty of 25 percent of the unpaid tax will be assessed for a total penalty of 50 percent. One hundred percent failure–to–file penalty If you don’t file returns for three consecutive years by the due date of the third year’s return, including extensions, you must pay a 100 percent failure-to-file penalty on the tax due for each year. Penalty for intent to evade tax Filing a falsely prepared return with the intent to avoid tax will result in a penalty equal to 100 percent of the tax deficiency determined by the Department of Revenue. In addition, you could be charged with tax evasion, a class C felony. You could be fined up to $125,000, serve a jail sentence, or both. Total penalties The total of these penalties can’t be more than 100 percent of the tax due. Exceptions: Penalties for sub­ stantial understatement of net tax, filing a frivolous return, falsely claiming the WFHDC credit, making a non-qualified withdrawal from a first-time home buyer savings account, and abusive tax avoidance transactions may be imposed in addition to other penalties. Substantial understatement of net tax penalty If we determine that you have substantially under­ stated your net tax on your return, you must pay a penalty equal to 20 percent of the understated tax. A penalty will be assessed if net tax for 2021 has been understated by more than $2,550 ($3,750 for a C corporation). Substantially understated net tax also includes net tax on income attributable to an abusive tax shelter, even if fully disclosed. This penalty is in addition to all other penalties pro­ vided by law. $250 frivolous return penalty If you file a frivolous return that is meant to deliber­ ately delay or block the administration of tax laws, you must pay a $250 penalty. “Frivolous” includes, but isn’t limited to: • An argument, without any good basis, that there has been a violation of your constitutional rights. • Reliance on a “gold standard” or “war tax” deduction. • An argument that wages or salary aren’t taxable income. • An argument that the 16th Amendment to the U.S. Constitution wasn't properly adopted. • An argument that “unenfranchised, sovereign, free­ men, or natural persons” aren’t subject to tax laws. This penalty is in addition to all other penalties pro­ vided by law. Working family household and dependent care (WFHDC) credit false claim penalty You may be charged a penalty if you knowingly falsely claim (or knowingly assist someone else in falsely claiming) the WFHDC credit. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjustment or denial of the credit. This penalty can be charged to each person involved with the false claim. This penalty is in addition to all other penalties pro­ vided by law. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal A penalty of 5 percent of the funds withdrawn from your FTHBSA may be imposed if you withdraw the funds from the account for a purpose other than pur­ chasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties provided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions.” Abusive tax avoidance transaction (ATAT) penalties Penalties can be imposed on income items identified by the IRS as ATATs, including listed transactions, reportable transactions, and promotion of tax shel­ ters, as follows: • A penalty of 60 percent of the understated net income from a listed transaction understatement. This penalty is in addition to and not in lieu of any other penalties. • Failure to report a reportable transaction will result in a penalty of $3,300 for an individual taxpayer or $16,700 for a corporation. Interest and penalties

150-101-431 (Rev. 04-21-22) 40 • If the reportable transaction is also a listed transac­ tion, the penalty is $33,000 for an individual tax­ payer and $66,000 for a corporation. • A promoter of tax shelters will be assessed a pen­ alty of 100 percent of the gross income derived from promoting the shelter. This penalty is in addition to and not in lieu of any other penalties. The ATAT penalties are in addition to all other penal­ ties provided by law. In addition to these penalties, if we find there is a deficiency in tax paid as a result of the use of a listed transaction reported or reflected by the return, the statute of limitations for issuing a notice of that deficiency is increased from three years to nine years from the date the return was filed. Interest and penalties

150-101-431 (Rev. 04-21-22) 41 Audits and appeals What to do if your return is audited General information We audit returns for several reasons. Many audits are based on adjustments made by the IRS, with whom we share information. Other returns are selected because there are sections of tax law that require additional focus due to difficulties or frequent errors in tax law application. An audit is the process of reviewing a return to make sure it was prepared correctly. If your return is cho­ sen for an audit, it doesn’t mean you made an error or are dishonest. By law, we must keep your tax information private. In rare situations involving returns filed after Decem­ ber 31, 2017, we may share information between tax­ payers who have claimed the same item on their indi­ vidual returns in order to efficiently resolve the mat­ ter—for example, divorced taxpayers who both claim an exemption credit for the same dependent. Other­ wise, we are prohibited from sharing your informa­ tion with anyone without your consent. People who prepare your return or represent you must also keep your information confidential. You have the right to know why we are asking for information, exactly how we will use any information you provide, and what might happen if you don’t provide the information. Our goal is to treat taxpayers fairly. We strive to be responsive to the issues and reasonable in our deci­ sions and actions. We will explain any changes we make to your return. We encourage you to ask about anything you don’t understand. For more information, read our publication Your Rights as an Oregon Taxpayer. You can find the publica­ tion at www.oregon.gov/dor/forms or contact us to order a copy. Types of reviews Processing adjustments. Processing adjustments are corrections we make to a return while we process it. We make some adjustments without the need for additional information, such as math errors. If we need additional information, we’ll send a letter. It’s important that we get a response by the date speci­ fied in the letter. Federal audits. These audits are based on informa­ tion from the IRS. This information includes their CP2000 program and federal Revenue Agent Reports. The CP2000 program matches Form W-2 and 1099 information reported by payers to what is shown on a return. A Revenue Agent Report is a federal audit report showing adjustments the IRS made to a return. If you received either of these reports from the IRS, you need to determine if the changes made by the IRS affect your Oregon return. If they do, you should amend your Oregon return as soon as possible. Inter­ est charges accrue until all tax is paid. If you don’t amend your Oregon return, you may receive a notice from us showing adjustments we have made to your return. Correspondence audits. These are written requests asking you to confirm items on a return. The letter will explain what items we are reviewing and what we need to verify them. You will be asked to send copies of the documents to the auditor who will review the information and notify you of the results. Correspondence audits usually don’t require a meet­ ing with the auditor. Field audits. These audits are more in-depth. They include the review of income and expenses from businesses, farms, partnerships, corporations, or rentals. Field audits usually require a meeting with the auditor. The time and place of the meeting will be arranged between you and the auditor. Partnership audits. Prior to tax year 2018, federal and state partnership tax collection and audit adjustments were conducted at the individual partner level. For tax years after 2017, the IRS will make audit adjust­ ments and collect taxes at the partnership level for partnerships subject to CPAR, IRC Sections 6225 to 6227. Oregon’s CPAR provisions can be found in ORS 314.731 to 314.739. If an IRS audit under CPAR results in adjustments that affect any partner’s Oregon tax, the partnership must follow certain procedures and timelines for reporting the adjustments to Oregon. The partnership may elect to pay any Oregon tax resulting from the adjustments on behalf of the part­ ners. See “Oregon tax” or visit our website for more information. What records will I need for the audit? You’ll get a letter from us asking questions and requesting copies of specific documents. Answer the questions completely and send copies of the requested documents by the deadline in the letter. It’s important that you have a complete copy of your state and federal tax records and provide copies, as requested. See “Record-keeping requirements” in “General information” for additional tips. You should also keep a copy of your response to the audit letter. If you get a letter asking you to make an appoint­ ment, contact the auditor who sent the letter. We try to schedule audit appointments at your convenience. Audits and appeals

150-101-431 (Rev. 04-21-22) 42 It may be held at your home or office, at your repre­ sentative’s office, or at one of our field offices. The letter will explain the records needed for the audit. Organize the information for the appoint­ ment. The auditor may ask you to leave the records while the audit is being conducted. You may ask for a receipt for the records you leave. Generally, your return is examined in the district where you live. If your return can be examined more quickly and easily in another district (such as where the books and records are located), you may ask to have the audit transferred. Who can represent me? Throughout any audit, you can represent yourself, have someone accompany you, or designate some­ one to represent you. You may represent yourself in all stages of your audit and appeal. However, if your case is hard to understand or involves many issues, you may want someone to help you. Also, if some­ one else prepared the return, you may want their help. You may authorize someone to receive your confidential information (tax information authoriza­ tion), or you may designate someone to represent you (power of attorney for representation) who would be able to make decisions for you. People who can repre­ sent you are Oregon-licensed: • Lawyers. • Public accountants or certified public accountants. • Tax consultants. • Enrolled agents. Out-of-state CPAs may practice in Oregon if they meet the substantial equivalency requirements (ORS 673.010): 1. Licensed in another state; and 2. Have an accredited baccalaureate degree with at least 150 semester hours; and 3. Passed the Uniform CPA exam; and 4. Have a minimum of one year of experience. If you own a business and have an employee who regularly does your tax work, that employee can also represent you. You must give written authorization to a person you want to represent you. Use our Tax Information Autho­ rization and Power of Attorney for Representation form. The auditor handling the case can provide a copy of this form, or you can download it from our website or call us to order a copy. What if I disagree with the audit results? When we propose changes to your return, we will explain the reasons for them. It’s important that you understand why we propose changes before they become final. Ask about anything that is unclear to you. If you disagree with the final changes, you can appeal. Appeal rights will be included with the notice you receive. What if the IRS or another state has audited my return? We have an agreement with the IRS to exchange tax return information. If the IRS audits an Oregon tax­ payer's return, we may receive a copy of that infor­ mation. If your federal return or the return you filed with another state is adjusted, you should amend your Oregon tax return if that adjustment also affects your Oregon return. If your return was previously audited by the IRS and the notice you receive from us has a different adjust­ ment, send a copy of the final audit adjustments or cancellation from the IRS to us. If you filed an appeal with the IRS or the other state and you get a notice from us, send a copy of the IRS or other state appeal notification. We will suspend further action until your IRS or other state case is resolved. You have two years from the date of the correction to claim a refund of Oregon tax as a result of the audit adjustment. See “Oregon statute of limitations for refunds” in “Payments and refunds” for more information. Appeals If you disagree with an action we've taken, you have the right to appeal. Follow the appeal procedures out­ lined here if you have a disagreement with: • A Notice of Deficiency or Notice of Proposed Refund Adjustment. • Our notice based on a federal audit report or an audit by another state. • Penalties or interest charges shown on our notice. • Interest charged on underpayment of estimated tax. • A Notice of Assessment. You may be able to resolve certain issues without a formal appeal process. Contact us if your disagree­ ment concerns: • The date or amount of payments made to your account. • A withholding adjustment. Appealing a Notice of Deficiency or Notice of Proposed Refund Adjustment within 30 days If you disagree with a Notice of Deficiency or a Notice of Proposed Refund Adjustment, you may submit an Audits and appeals

150-101-431 (Rev. 04-21-22) 43 appeal online by logging in to Revenue Online within 30 days and following the instructions on your notice. Or, you may submit an appeal in writing within 30 days from the date on our notice. To make your appeal, choose just one of these two options: written objection or conference request. Written objection. Write to us explaining why you disagree with the Notice of Deficiency or Notice of Pro­ posed Refund Adjustment. Include any new informa­ tion you have. We will review your explanation, try to resolve the matter, and send you a written deci­ sion. If an auditor adjusted your return, that auditor will review your explanation, along with any infor­ mation you provide, and send you a written decision. Conference. Request a conference by sending us an explanation of why you disagree with our Notice of Deficiency or Notice of Proposed Refund Adjustment. Include any new information you have. Be sure to indicate that you are requesting a conference. A conference officer will discuss the matter with you or with someone you choose to represent you, usu­ ally by phone. The conference officer will send you a written decision. You may choose to receive the deci­ sion by either regular or certified mail. If you disagree with our decision, you may continue your appeal and will receive new appeal instructions. Appealing a Notice of Proposed Refund Adjustment after 30 days have passed If you don’t send us a written objection or conference request, but you still want to appeal a Notice of Pro­ posed Refund Adjustment, you must file a complaint with the Magistrate Division of the Oregon Tax Court no later than 120 days from the date of the notice. If you don’t file a complaint within 120 days, your appeal rights will expire and the adjustment can’t be changed. See “Appealing to the Oregon Tax Court” for more information. Appealing a deficiency based on federal audit reports or audit reports of other states Do you have an appeal in progress with the IRS or another state? If so, you may have extra time to file an appeal with the Magistrate Division of the Oregon Tax Court. To see if the appeal rights apply to you, answer the following questions: 1. Did you receive an Oregon notice of a deficiency on the same item billed by the IRS or another state? 2. Did you file a timely appeal with the IRS or another

state? If you answered “no” to either question, use the appeal procedures included with your Oregon notice. If you answered “yes” to both questions, you need to send us proof of your appeal to the IRS or other state. This should include a copy of the notice from the IRS or other state, plus a copy of your written appeal request. The time allowed for filing your proof of federal or other state’s appeal varies: • Did you receive a Notice of Deficiency from us? If so, send us proof of your IRS or other state appeal within 30 days of the date on the Notice of Deficiency. Your account will be assessed without penalty and held until the appeal with the IRS or other state is resolved. • Did you receive a Notice of Assessment from us before sending us proof of the appeal? If so, send us proof of your IRS or other state appeal as soon as possible. After you file proof of your appeal, we will delay any further action on your account until the appeal process is completed. Note: Interest will continue to accrue on any unpaid tax. You must notify us within 30 days of the final resolu­ tion of your appeal with the IRS or the other state. We will review the information and determine whether any adjustments need to be made to your Oregon tax return. You will receive written notification of our determination. If you disagree with our determina­ tion, you may appeal within 90 days to the Magis­ trate Division of the Oregon Tax Court. Your com­ plete appeal rights will be explained with the written determination. Appealing penalty or interest Do you believe there is reasonable cause for a reduc­ tion of penalties or interest? If so, you may ask for a waiver or reduction of part or all of the penalty and interest charges. However, we generally won’t waive interest charges. Waiver criteria are outlined in Oregon Administrative Rule (OAR) 150-305-0068. You must explain how your situation meets any of the criteria. We will review your waiver request and let you know our decision in writing. You’ll receive further appeal instructions to follow if you disagree with the decision. How to start the appeal process All appeals must be submitted through Revenue Online or sent to us in writing. If you are sending us a written appeal, you may submit it by regular mail, fax, or email. Your written appeal must include: Audits and appeals

150-101-431 (Rev. 04-21-22) 44 • Your full name. • Your current mailing address. • Your SSN or ITIN. • The tax year(s) involved. • A detailed explanation of why you are appealing. • Proof of your IRS or other state appeal, if applicable. • The waiver criteria if you are requesting a reduc­ tion of penalty or interest (OAR 150-305-0068). • Any new information you want us to consider; and • A daytime phone number. Be sure to indicate whether you are making a writ­ ten objection, requesting a conference, or requesting a waiver or reduction of penalties or interest. Keep us informed of any changes to your address or phone. Regular mail. Send your written appeal to: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Email. If you are appealing a determination made by an auditor, you may send a written objection or request for a conference to that auditor by email. You should note, however, that we are unable to guarantee the security of any information sent to us by email. Fax: You may fax your written appeal to 503-945-8738. Revenue Online: You may submit your appeal using your Revenue Online account. After logging in, sim­ ply click on the link for your personal income tax account, then select the “Appeals” link and follow the instructions. Be sure that the type of appeal you select is the one you intend to choose. Go to our web­ site for more information about setting up your Rev­ enue Online account. Appealing to the Oregon Tax Court If you disagree with a Notice of Assessment or a writ­ ten determination following your written objection or conference, you have the right to appeal. You must appeal to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the Notice of Assessment or our written determination. Com­ plaint forms for appealing to the Magistrate Division are available from the Tax Court’s website, www. courts.oregon.gov/courts/tax, or you may contact the Oregon Tax Court by mail or phone: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 Mail the signed complaint form along with the fil­ ing fee and a copy of the Notice of Assessment or other written determination to the above address. Note: You can’t appeal tax that you said you owed when you filed your return. Further appeal rights Tax paid in full. If you pay the tax due in the Notice of Deficiency in full, your deficiency is considered to be assessed either on the date of your payment or 30 days from the date of the notice, whichever is later. If you don’t file a timely appeal, you have two years from the date your liability is paid in full to appeal the assessment. Appeal to the Magistrate Division of the Oregon Tax Court as outlined above. Doubtful liability. In certain situations, we may con­ sider your case even if you didn’t file a timely appeal. Visit our website or contact us to see if you meet the conditions for “doubtful liability” relief. Interest charges Appealing a deficiency or an assessment won’t stop interest from accruing on the taxes owed. Interest is computed from the day after the due date of the original return, without extensions, to the date of payment. Interest is charged even if you have a valid extension. If your appeal results in a reduction of the tax due, the interest charges will also be reduced. Paying your taxes during the appeal You may pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the notice, but it does stop interest from accru­ ing on your liability. If you don’t pay before the tax is assessed, a 5 percent failure-to-pay penalty will be added to your balance due. If your appeal is successful, you will receive a refund of any overpayment, including interest. See “Payments and refunds“ for payment options, and “Interest and penalties“ for more information about the failure-to-pay penalty. Audits and appeals

150-101-431 (Rev. 04-21-22) 45 Failure to file an Oregon income tax return For information about penalties for failing to file an Oregon income tax return, see “Penalties.” Filing a return after tax is assessed When you don’t file a tax return but were required to file, we will “assess” your tax. This means we com­ pute how much tax you owe based on information we have available. You will then receive a Notice of Assessment. Even if we have assessed your tax for one or more years, you may still file returns for those years. Why you should file We compute your tax assessment using the infor­ mation available to us about your income, filing sta­ tus, exemptions, and withholding or estimated tax payments. Because we don’t have all your tax information, we may not be able to give you all the deductions or credits you may be entitled to. Once you file a tax return, we may be able to change the tax we assessed. You may receive a refund If your withholding and/or estimated tax payments add up to more than the tax due, we may be able to refund the excess to you. However, there are time limits. If you paid more tax than you should have, a refund will be allowed only if you file your return within three years of the due date of the original return, not including extensions. For example: • The return for 2019 was due July 15, 2020. Three years after that date is July 15, 2023. To receive a refund of excess tax payments for 2019, your return must be postmarked by July 15, 2023. • The return for 2020 was due on May 17, 2021. Three years after that date is May 17, 2024. To receive a refund of excess tax payments for 2020, your return must be postmarked by May 17, 2024. Where to mail your return after tax is assessed Send paper returns, with a copy of your federal return (including Schedules 1 through 3, if applicable) to: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Reviewing your return After reviewing your return, if we agree with the tax you show, we will change the tax assessed. If the income, deductions, credits, or payments shown on your return don’t match our information, we will notify you. The notice we send will explain our adjustments and what to do if you disagree. Your return must include information about filing status, exemptions, income, deductions, credits, tax, and payments. It must be signed and include a state­ ment that, to the best of your knowledge and belief, it’s true, correct, and complete. The full statement is printed on the forms provided by us and appears directly above the signature lines. If you change this statement on the form, your return may not be accepted. Your return also may not be accepted if: • It contains a frivolous argument concerning the payment of taxes; or • You file a return you know isn’t true or correct. You will receive a Notice of Rejection if your return isn’t accepted. This notice can be appealed to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the notice, but only if your return was sent to us within 90 days of the date on the Notice of Assessment. Appealing the Notice of Assessment to the Oregon Tax Court You may also choose to file an appeal with the Mag­ istrate Division of the Oregon Tax Court. Your appeal must be made within 90 days of the date of the Notice of Assessment or within two years after the tax, pen­ alty, and interest shown on the notice is paid in full. If you file an appeal with the Magistrate Division, you will usually be required to file a tax return before the court will change our assessment. You can get a complaint form for filing an appeal at: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 www.courts.oregon.gov/courts/tax Within 90 days of the date on your notice, mail the following items to the address above: • Your completed and signed complaint form. • Your filing fee, and • A copy of the Notice of Assessment. Failure to file

150-101-431 (Rev. 04-21-22) 46 Appealing doesn’t stop interest from being charged on the tax you owe. If you appeal and your tax assess­ ment is reduced, the penalty and interest charges will also be reduced. Paying your taxes during the appeal process You can pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the assessment, but it does stop interest from accruing on the assessed tax. If you pay, you can still appeal any time within two years of the date you pay the tax, penalty, and interest shown on the Notice of Assessment. See “Payments and refunds” for payment options. Requesting a waiver of penalty or interest You can ask for a discretionary waiver of part or all of the penalty and interest charges (OAR 150-305- 0066, 150-305-0068). We can resolve most penalty and interest charge disagreements. For more information about requesting a discretionary waiver, see “Appeal­ ing penalty or interest” in “Audits and appeals.“ If you believe part or all of the penalty and interest charges should be adjusted, write to: Oregon Department Revenue PO Box 14725 Salem OR 97309-5018 Failure to file

150-101-431 (Rev. 04-21-22) 47 Income What income is taxable to Oregon? Full-year residents (Form OR-40). You are taxed on income from all sources. Part-year residents (Form OR-40-P). You are taxed on income from all sources earned or received while an Oregon resident. For the period of time you were not an Oregon resident, Oregon taxes only certain income from Oregon sources. Nonresidents (Form OR-40-N). You are taxed on income from Oregon sources. This includes income shown on your federal return from Oregon wages or Oregon fees or for services performed in Oregon. Other income from Oregon sources includes: • Businesses, S corporations, partnerships, and lim­ ited liability companies taxed as partnerships located or doing business in Oregon, and in some cases, work that is performed in another state for Oregon customers. • Unemployment insurance benefits received because of an Oregon job. • Severance pay you received because of an Oregon job. • Oregon farms. • Oregon estates and trusts. • Sales of Oregon property. • Rents and royalties for use of Oregon property. • Wages for services performed in Oregon by employ­ ees who also telecommute from outside the state. Note: Community property income. Oregon isn’t a community property state. If you’re a resident of Ore­ gon and your spouse is a resident of a state with com­ munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you are taxed on any of your spouse’s income. See “Filing sta­ tus” for more information about community property. Air carrier employees (OAR 150-316-0173) Nonresidents. You are exempt from Oregon tax on wages earned while working on aircraft in Oregon, if you meet all of the following qualifications: • You are a nonresident of Oregon; and • You perform regularly assigned duties on aircraft in Oregon and at least one other state as an employee of an air carrier; and • Your scheduled flight time in Oregon is 50 percent or less of your total scheduled flight time during the calendar year. Additionally, the air carrier you work for must provide: • Interstate or foreign air transportation of passen­ gers or property by aircraft as a common carrier for compensation; or • Interstate or foreign transportation of mail by aircraft. If you are a federal, state, or local government employee, you may not exclude your income under this section. (U.S. Postal Service employees are considered employ­ ees of the federal government.) If you meet all of these qualifications, file Form OR- 40-N and mark the “Employment exception” box on the return. [For more information about the “Employ­ ment exception” box, see “Interstate transportation wages (Amtrak Act).“] Show that your income is exempt by excluding it from the Oregon column. Example 1: Chantell is a nonresident who works as a pilot for an Oregon-based corporation, transporting the corporation’s executives to various job locations in the United States. Chantell isn’t exempt from Ore­ gon tax because she doesn’t work for an air carrier that provides air transportation for compensation. Her wages are subject to Oregon tax to the extent ser­ vices are performed in Oregon. Example 2: George is a nonresident who works as an office manager for an air carrier. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his pilot’s license. George doesn’t qualify as exempt from Oregon tax because his “reg­ ularly assigned duties” aren’t on an aircraft, but as a manager in an office. Example 3: Allison is a nonresident and works as a flight attendant for Delta Airlines. She regularly works on flights in California, Oregon, and Washing­ ton. Her scheduled flight time in Oregon amounts to 35 percent of her total scheduled flight time this year. Because Allison meets the qualifications mentioned above, she can exclude, from the Oregon column, all of her wages from Delta Airlines on her Oregon non­ resident return. Oregon withholding. To stop withholding of Oregon income tax from your exempt wages, use Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re claiming the exemption. Income

150-101-431 (Rev. 04-21-22) 48 Alimony received Oregon only taxes alimony payments received that must be included on your federal return. Full-year residents. Oregon taxes all alimony you received during the year that is included on your fed­ eral return. Part-year residents. Oregon taxes any alimony you received for the part of the year you were a resident of Oregon that is included on your federal return. Nonresidents. Oregon doesn’t tax any alimony you received while a nonresident of Oregon. Business income or loss Full-year residents. Oregon taxes all of your business income (or allows your business loss) received during the year. Part-year residents. Oregon taxes all of your business income (or allows your business loss) while you’re an Oregon resident. Oregon also taxes income (or allows losses) from an Oregon business while a nonresident. Nonresidents. Oregon taxes your income (or allows your business loss) from an Oregon business. This includes apportioned business income and allocated nonbusiness income from sole proprietorships. Federal Schedule E and F income Full-year residents. Oregon taxes the income reported on federal Schedules E and F, including rent, royalty, Real Estate Mortgage Investment Conduits (REMIC), Real Estate Investment Trust (REIT), partnership, S corporation, estate, trust, and farm income. Part-year residents. Oregon taxes the income reported on federal Schedules E and F that you received while you were an Oregon resident. Oregon also taxes this income if you received or earned it from Oregon sources while a nonresident. Nonresidents. Oregon taxes the income reported on federal Schedules E and F that you received or earned from Oregon sources. Gain, loss, and distributions Capital gain, loss, and distributions Full-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) dur­ ing the year. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Part-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) while you were an Oregon resident. Oregon also taxes gain or distributions received (or allows losses you incurred) from Oregon sources while a nonresident. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Nonresidents. Oregon taxes your gain or distribution (or allows your loss) from Oregon sources. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Note: See “Capital loss carryover difference” under “Additions” for information about an addition to Ore­ gon income for capital losses carried over from last year’s return under certain unusual circumstances. Other gain or loss Full-year residents. Oregon taxes your gain (or allows your loss) received during the year. Part-year residents. Oregon taxes your gain (or allows your loss) while an Oregon resident. Oregon also taxes the amount from Oregon sources while a nonresident. Nonresidents. Oregon taxes your gain (or allows your loss) from Oregon sources. Global intangible low-taxed income (GILTI) This category of foreign income is included as "other income" on the federal return. It must be reported as income when it's deemed received, even if it isn't actually received by the taxpayer during the tax year. Full-year residents. This income flows through to your Oregon return. Part-year residents. Report this income in the Ore­ gon column if you were an Oregon resident on the date you received it (actual or deemed receipt) or if it’s from property employed in a business, trade, pro­ fession, or occupation carried on in Oregon while a nonresident. Nonresidents. Report this income in the Oregon col­ umn if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon. Hydroelectric dam workers [ORS 316.127(8)] Full-year residents. Oregon taxes all of your wages earned while working on the McNary, John Day, The Dalles, or Bonneville dams. Income

150-101-431 (Rev. 04-21-22) 49 Part-year residents. Oregon taxes all the income you earned during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, the wages you earned while working on any of the listed dams are exempt from Oregon tax. Mark the “Employment exception” box on your return and include only the wages you earned while working on any of the listed dams while you were an Oregon resident. Nonresidents. You are exempt from Oregon tax on wages earned while working on any of the listed dams. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. If you have any other income from Oregon sources, you must show that income in the Oregon column. Oregon withholding. To stop withholding of Ore­ gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re claiming the exemption. Individual Retirement Account (IRA) distributions Full-year residents. Oregon taxes any taxable IRA distribution you received during the year and any amounts reported in federal income that you con­ verted from a regular IRA into a Roth IRA. Part-year residents. Oregon taxes any taxable IRA distribution you received while you were an Oregon resident. Oregon also taxes income amounts from IRA conversions if you were an Oregon resident at the time of the conversion. Nonresidents. Oregon doesn’t tax any amount unless you are a nonresident domiciled in Oregon. If you are domiciled in Oregon but otherwise taxed as a non­ resident, your Oregon-source IRA will still be taxed by Oregon. See “Retirement income.“ Interest and dividend income Interest Generally, interest income is only taxed by your state of residence. It includes any interest received or cred­ ited to your account that you could withdraw and any interest you received on tax refunds. See the following exceptions: • Interest and dividends on government bonds of other states. • Interest and dividends on U.S. bonds and notes. Full-year residents. Oregon taxes the interest income you received and reported on your federal return. Part-year residents. Oregon taxes the interest income you received while you were an Oregon resident. Oregon also taxes Oregon business activity interest income received while a nonresident. Nonresidents. Oregon taxes the interest income you received on funds used for business activity in Ore­ gon. Oregon doesn’t tax interest received on install­ ment sales. Dividends Generally, dividend income is only taxed by your state of residence. Include the stock dividends you received under a public utility dividend reinvestment plan in Oregon income. Full-year residents. Oregon taxes the dividends you received during the year. Part-year residents. Oregon taxes all dividends you received while an Oregon resident that are included on your federal return. Oregon also taxes any divi­ dends passed through to you during the part of the year you were a nonresident from an S corporation or partnership that has no business activity outside Oregon. Nonresidents. Oregon taxes dividends passed through to you from an S corporation or partnership that has no business activity outside Oregon. These are divi­ dends your S corporation or partnership received on the stock of another corporation. Interstate transportation wages (Amtrak Act ) (OAR 150-316-0173) Nonresidents. Are you a nonresident of Oregon with regularly assigned duties in Oregon and at least one other state? If you meet certain qualifications (listed below), Oregon won’t tax you on these wages. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. State income tax provisions in the federal Amtrak Reauthorization and Improvement Act of 1990, Pub­ lic Law 101-322, can be found in U.S.C. Sections 11502 and 14503. These provisions, which we refer to as the “Amtrak Act,“ prohibit states and local governments from taxing compensation of certain nonresident employees who have regularly assigned duties in more than one state. If you are a federal, state, or local government employee, you may not exclude your income under these federal laws. (U.S. Postal Service employees are considered employees of the federal government.) Income

150-101-431 (Rev. 04-21-22) 50 Who qualifies? To qualify, you must work for: • An interstate railroad; or • An interstate motor carrier; or • An interstate motor private carrier. In addition, you must: • Be a nonresident of Oregon; and • Have regularly assigned duties in more than one state (that is, you perform duties in each state on a regular basis; duties you perform on an “on-call” or “as-needed” basis or on a sporadic or intermittent basis during the year aren’t considered “regularly assigned”); and • Be subject to the jurisdiction of the U.S. Secretary of Transportation; and • Not be covered under the overtime requirements of the Fair Labor Standards Act. Note: You may receive overtime payment at the dis­ cretion of your employer and be subject to the juris­ diction of the U.S. Secretary of Transportation. Refer to your employer to determine if you are subject to the jurisdiction of the U.S. Secretary of Transporta­ tion or to the Fair Labor Standards Act. You can’t be subject to both. For employees of interstate motor carriers or motor private carriers, you must meet both of the following requirements: • Perform work that directly affects the safety of a commercial motor vehicle. This means you are required by your regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be direct and hands-on, requiring you to physically move, touch, or affect the vehicle or its contents. Super­ visory, managerial, consulting, or other duties that indirectly affect the safety of a motor vehicle don’t meet the definition of “directly affects”. • Work as:

— An operator of a commercial motor vehicle;

— A mechanic;

— A freight handler; or

— Someone, other than an employer, who directly affects the safety of a motor vehicle. A commercial motor vehicle is any self-propelled or towed vehicle used on highways in interstate com­ merce to transport passengers or property if such vehicle: • Has a gross vehicle weight rating of more than 10,000 pounds; or • Is designed or used to transport passengers for compensation, except for vehicles providing taxi cab service when the vehicle has a capacity of eight or fewer passengers and isn’t operated on a regular route or between specified places; or • Is designed to transport more than 15 passengers, including the driver, and isn’t used to transport passengers for compensation; or • Is used and labeled for the transportation of haz­ ardous materials. Example 1: Adam and Natalya are married nonresi­ dents who are filing a joint federal return. Adam works for an Oregon interstate motor carrier as a commercial motor vehicle driver. He has a regular route from Idaho to Oregon, delivering products in Oregon. Because Adam is the driver of a commer­ cial motor vehicle and has regularly assigned duties in more than one state, this income is exempt from Oregon tax. Natalya is a chef at an Oregon restau­ rant. They must file a joint Form OR-40-N, but won't include the exempt income from Adam's wages in the Oregon column. Only Natalya's wages are entered in the Oregon column. Example 2: Brenda is a nonresident who works for an interstate motor carrier as a mechanic directly affect­ ing the safety of commercial motor vehicles engaged in interstate commerce. She has regular duties in a Washington terminal and an Oregon terminal. She works one day a week in Washington and four days a week in Oregon. Because Brenda directly affects the safety of a com­ mercial motor vehicle in interstate commerce and performs regularly assigned duties in two states, she is exempt from Oregon tax. It doesn’t matter that the majority of her work is performed in Oregon. Brenda must file a Form OR-40-N but she won’t include these wages in the Oregon column. Example 3: Jorge is a nonresident who works as a mechanic for an interstate motor carrier, directly affecting the safety of commercial motor vehicles engaged in interstate commerce. He regularly works in Medford but is required to be on-call some week­ ends to perform minor repair work. Several times a year he may travel to California to repair a flat tire, do minor engine work, etc. Jorge doesn’t have regularly assigned duties in more than one state. Duties that are performed on an on- call or as-needed basis aren’t considered to be regu­ larly assigned. Jorge’s wages earned in Oregon are taxable by Oregon. He must file Form OR-40-N and report his wages in the Oregon column. Example 4: Carl is a nonresident who works for an interstate motor carrier as a driver. Carl picks up a lumber delivery truck every morning in Washing­ ton and receives delivery assignments for the day. Depending on where the lumber needs to be deliv­ ered, he may not come to Oregon on a daily basis. Income

150-101-431 (Rev. 04-21-22) 51 Carl may pick up and deliver lumber only within Washington or only within Oregon. Carl drives to Oregon at least once a month. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself doesn’t know what each day’s delivery route will be until customers place orders. Although Carl may not have a regular route in Wash­ ington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have regularly assigned duties in two states, as long as all routes are assigned randomly among all drivers on a regu­ lar basis. Carl’s wages earned in Oregon are exempt from Oregon tax. Carl must file Form OR-40-N but he won’t include these wages in the Oregon column. Example 5: Ed is a nonresident who works for an Ore­ gon wholesaler as a shipping clerk. The company has one terminal in Oregon and one terminal in Washing­ ton. Ed regularly works in both terminals. Although he has regularly assigned duties in two states, Ed’s Oregon wages aren’t considered exempt within the scope of the Amtrak Act. He isn’t a driver, mechanic, or freight handler. His duties don’t directly affect the safety of a vehicle. Ed’s wages earned in Oregon are taxable by Oregon. He must file Form OR- 40-N and include this income in the Oregon column. Example 6: Frieda is a nonresident who works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occa­ sionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda doesn’t have “regularly assigned duties in more than one state” and she doesn’t work for an interstate motor carrier. Her Oregon-source wages are taxable by Oregon. Frieda must file Form OR-40-N and include this income in the Oregon column. Example 7: Butch is a nonresident who works for an Oregon-based interstate trucking carrier as a super­ visor. His regular duties within the state of Oregon include safety training. Also, Butch frequently drives to Washington to conduct safety training. Wages for performing supervisory duties don’t qual­ ify as exempt under the Amtrak Act. The employee’s duties must directly affect the safety of a commercial vehicle. Conducting safety training only indirectly affects the safety of a commercial motor vehicle. Butch’s wages are taxable by Oregon. He must file Form OR-40-N and include his wages in the Oregon column. Example 8: Connie Sue is a nonresident who works for an interstate trucking carrier at her company’s Oregon and Washington yards. She has a variety of duties, including helping load trucks. Connie Sue is allowed overtime as a result of being subject to the Fair Labor Standards Act. Because she is covered under the Fair Labor Stan­ dards Act and isn’t subject to the jurisdiction of the Secretary of Transportation, Connie Sue doesn’t qualify for the Amtrak Act exemption. Her wages are taxable by Oregon. She must file Form OR-40-N and include her wages in the Oregon column. Employer withholding If your wages are exempt from Oregon tax under the Amtrak Act, Oregon tax doesn’t have to be withheld from your pay. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer and attach an explanation of your qualifying duties. Submit a new form and expla­ nation by February 15 each year that you’re claiming the exemption. You must still file an Oregon tax return even if you claim exemption from withholding under the Amtrak Act. Like-kind exchange or involuntary conversion (ORS 316.738, 317.327) You may elect to defer gain on like-kind business or investment property not held primarily for sale that is exchanged, in the case of real property under IRC Section 1031, or involuntarily converted under IRC Section 1033. If Oregon real property is exchanged for real property in another state, or if property located in Oregon is involuntarily converted into similar prop­ erty located outside of Oregon, include Form OR-24 with your Oregon return in the year of the exchange or conversion, or submit it to us through Revenue Online. Submit the form to us each year, until you've disposed of the like-kind property, even if you don't have to file an Oregon income tax return. Download the form from our website or call us to order it. Full-year residents. Report your Oregon gain on the sale or other disposition of the acquired property when it’s reported on your federal return. Part-year residents and nonresidents. If you were an Oregon resident at the time of the exchange or invol­ untary conversion, file an Oregon return and report the Oregon portion of the gain when you report the gain on your federal return. If you were a nonresi­ dent at the time you exchanged or converted your Oregon property or you're a nonresident when the gain is reported on your federal return, you will need to file an Oregon Form OR-40-N to report the gain. Income

150-101-431 (Rev. 04-21-22) 52 Retirement income Full-year and part-year residents. Most retirement income is subject to Oregon tax when received by an Oregon resident. This is true even if you were a non­ resident when you earned the income. However, if you have federal pension income, you may subtract some or all of it from Oregon income. See “Federal pension income” in “Subtractions” for more information. For other exceptions, see “Previously taxed employee retirement plans” and “Previously taxed IRA conver­ sions” in “Subtractions.” Nonresidents. Oregon doesn’t tax your retirement income if you are a nonresident who isn’t domiciled in Oregon. If you are an Oregon nonresident who is still domiciled in Oregon, any Oregon-source retirement income is taxable by Oregon. This applies to most forms of retirement income taxed by Oregon, including public pension plans, corporate retirement plans, Keogh plans, simplified employee pensions (SEPs), and IRAs. For the definition of domicile, see “Residency.” Example: Hiro has always resided and worked in Oregon, which he thinks of as his home. He recently retired and now receives his pension and interest income from Oregon. Earlier this year, he sold his Oregon residence, bought an RV, and went to Ari­ zona, where he rents space year-round in an RV park. He intends to stay in Arizona for a year or two and then return to Oregon. Hiro hasn’t given up his Oregon driver’s license. His RV and vehicles are registered with the state of Ore­ gon. He hasn’t changed his voter registration to any other state. Hiro hasn’t shown an intent to give up Oregon as his home, and he hasn’t maintained a permanent home elsewhere. Based on these facts, Hiro's domicile is in the state of Oregon. Although Hiro may be treated as a nonresident for tax purposes on other forms of income (his interest income isn’t taxed by Oregon), because his domicile is still Oregon, his Oregon- source retirement income is taxable by Oregon. Retirement income means income from: • Qualifying employer pension and profit-sharing plans exempt from federal tax [IRC Section 401(a)]. • Annuity plans [IRC Sections 403(a) and 403(b)]. • Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]. • Simplified employee pension plans [IRC Section 408(k)]. • Individual retirement arrangements [IRC Sections 408(a) and 408(b)]. • Plans for federal, state, or local government employ­ ees [IRC Section 414(d)]. • Pay for uniformed service members under chapter 71 of Title 10 of the United States Code. • Trusts that were created before June 25, 1959 [IRC Section 501(c)(18)]. Payments received after termination of employ­ ment qualify if the payment is made under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described above. Payments received from nonqualified deferred com­ pensation plans [as described in IRC Section 3121(v) (2)(C)] qualify as retirement income if the payments are part of a series of substantially equal periodic payments made for a period of at least ten years or for the life or life expectancy of the recipient. Retirement income doesn’t include income received from: • Social Security, • Stock options, • Restructured stock plans, • Severance plans, or • Unemployment insurance benefits. Social Security and Railroad Retirement Board benefits (ORS 316.054) Oregon doesn’t tax any amount of your Social Security, Railroad Retirement Board, or railroad unemployment benefits. For information on the Railroad Retirement Board and Social Security benefits subtractions, see the related sections under “Subtractions.” State and local income tax refunds If you received a refund of income tax from another state or local government that is included in your fed­ eral income, and you deducted those taxes on a prior year’s Oregon return, include the refund in your Oregon income. This refund isn’t taxable to Oregon if you didn’t deduct the taxes on an Oregon return. See “Subtractions” for information on the Oregon income tax refund subtraction. Unemployment insurance (UI) benefits and other taxable income Full-year residents. Oregon taxes UI benefits and any other taxable income you received during the year. Part-year residents. Oregon taxes UI benefits and any other taxable income you received while an Oregon Income

150-101-431 (Rev. 04-21-22) 53 resident. Oregon also taxes any UI benefits and other taxable income from Oregon sources or based on Oregon sources received while a nonresident. Nonresidents. Oregon taxes any UI benefits and any other taxable income included in federal AGI received from Oregon sources or based on Oregon sources. Wages, salaries, and other pay for work Full-year residents. Oregon taxes all of your earnings for services you performed inside and outside Oregon. Part-year residents. *Oregon taxes all of your earn­ ings while an Oregon resident. Oregon also taxes the amount you earned working in Oregon while you were a nonresident. If your Oregon wages aren’t stated separately on your W-2, compute your Oregon-source income using the formula at the end of this section. Nonresidents. *Oregon taxes the income you earned while working in Oregon. Oregon doesn’t tax any amount you earned while you were working outside Oregon. Nonresident telecommuters who work for an Oregon employer are taxed only on the income earned from work performed in Oregon, including sick pay or other benefits. *Nonresident exceptions: To see if you qualify to exclude certain income, see “Air carrier employees,“ “Interstate transportation wages (Amtrak Act),“ or “Hydroelectric dam workers“ above, or “Waterway workers“ below. If the amount you earned working in Oregon differs from the Oregon wages shown on your Form W-2, compute your Oregon-source income using the for­ mula at the end of this section. You should ask your employer to provide you with a signed explanation of the wage difference, written on company letterhead. Keep the explanation with your tax records, as we may ask for it at a later date. Important information for using this formula: When you count the number of days you actually worked in Oregon and the number of days you actually worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. Use this formula to determine total wages taxable by Oregon: Days actually worked in Oregon × Total wages = Oregon wages Total days actually worked everywhere If you only worked in Oregon, don’t use the formula above. All your earnings are taxable by Oregon, and you must report them on your Oregon return. Waterway workers (ORS 316.127) Full-year residents. Oregon taxes all the income you earned while working on a watercraft in interstate waters. Part-year residents. Oregon taxes all the income you earned while working on a watercraft in inter­ state waters during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, see the following guidelines. Nonresidents. Certain nonresident employees serv­ ing on watercraft who have regularly assigned duties in interstate navigable waters aren’t subject to Oregon income tax. To qualify you must: • Be engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. Section 7101 or licensed or authorized under the laws of the state; or • Perform regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating in navigable waters in two or more states. If you qualify, Oregon won’t tax these wages. File Form OR-40-N (or Form OR-40-P if a part-year resi­ dent) and exclude your wages from your Oregon income. Mark the “Employment exception” box on your return. See “Interstate transportation wages (Amtrak Act)” for more information. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re claiming the exemption. Income

150-101-431 (Rev. 04-21-22) 54 Adjustments Adjustments are deductions from your gross income. They result in “adjusted gross income,” or AGI, on your federal return. For full-year residents, these items flow through to your Oregon return. Part-year residents and nonresidents report most of these items directly on Form OR-40-P or OR-40-N. Enter the fed­ eral amount in the federal column and the Oregon amount, if any, in the Oregon column. If the item has an adjustment code, enter the federal and Oregon amounts in section A of Schedule OR-ASC-NP, then enter the totals from section A on your return. Your Oregon adjustment can’t be more than the adjust­ ment on your federal return. Alimony paid Oregon allows a deduction for alimony paid under a divorce decree or separation agreement if the deduc­ tion is allowed on your federal return. The alimony you paid must be taxable income to your former spouse. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the alimony you paid while an Oregon resident with a partial deduction for alimony paid while a nonresi­ dent if you had Oregon-source income and the deduc­ tion was allowed on your federal return. Use the for­ mula under Nonresidents to determine the nonresi­ dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for alimony you paid while a nonresident if you had Ore­ gon-source income and the deduction was allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Alimony you paid while a nonresident = Nonresident deduction Total income received while a nonresident Certain business expenses of reservists, performing artists, and fee-basis government officials [Adjustment code 002] Reservists If you were a National Guard or reserve member of the U.S. Armed Forces who traveled more than 100 miles from your home to perform services, you may be able to deduct certain business expenses you paid or incurred in connection with that service. For more information, see the instructions for federal Form 2106, Employee Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Oregon doesn’t tax the reservist income of nonresidents, so you can’t deduct expenses you incurred while you were a nonresident. You may deduct only the expenses you incurred while you were an Oregon resident. Your Oregon deduction while you were a nonresident is $0. Performing artists If you were a qualified performing artist, you may be able to deduct business expenses you paid or incurred in connection with your services in the per­ forming arts as an employee. For qualifications and other information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the expenses you paid while you were an Oregon resident, along with a partial deduction for the expenses you paid while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for these business expenses while you were a non­ resident if you had income from an Oregon source. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Performing artist employee business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Fee-basis government officials If you are a government official who is paid on a fee basis instead of wages or salary, you may be able to deduct certain business expenses you paid or incurred Adjustments

150-101-431 (Rev. 04-21-22) 55 in connection with services you performed. For more information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the expenses you paid while you were an Oregon res­ ident with a partial deduction for the expenses you paid while you were a nonresident if you had Ore­ gon-source income. Use the formula under Nonresi­ dents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the expenses you paid while you were a nonresi­ dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Official business expenses paid while a nonresident = Non­ resident deduction Total income from all sources while a nonresident Oregon-source income while a nonresident × Cash contributions made while a nonresident = Nonresident deduction Total income from all sources while a nonresident Educator expenses If you were an eligible educator in 2021, you can deduct up to $250 of qualified expenses you paid in 2021. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. For information about eligibility and qualified expenses, see the instructions for your federal return or IRS Publication 529, Miscellaneous Deductions. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the qualified educator expenses you paid while you were an Oregon resident with the expenses you paid while working in an Oregon elementary or secondary school while you were a nonresident. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for the expenses you paid while working in an Oregon ele­ mentary or secondary school. Your Oregon deduction can’t be more than the deduction allowed on your fed­ eral return. If you didn’t work in an Oregon elemen­ tary or secondary school, your Oregon deduction is $0. Health savings account (HSA) deduction [Adjustment code 003] You may be able to take this federal deduction if you made contributions to an HSA during 2021. For more information about this deduction, see the instruc­ tions for federal Form 8889 or IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the HSA contributions you made while you were an Oregon resident with a partial deduction for contributions you made while you were a non­ resident if you had Oregon-source income. Use the formula under Nonresidents to determine the non­ resident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for HSA contributions you made while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × HSA contribution made while a nonresident = Nonresident deduction Total income from all sources while a nonresident IRA or self-employed SEP and SIMPLE contributions These federal deductions are for contributions made to an IRA, SEP (simplified employee pension), SIM­ PLE (savings incentive match plan for employees), or other qualified retirement plan for yourself or, if Adjustments

150-101-431 (Rev. 04-21-22) 56 you’re a sole proprietor or partner in a small busi­ ness, your employees. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. For more informa­ tion about these deductions, see these IRS publications: • Publication 590-A, Contributions to Individual Retire­ ment Arrangements (IRAs). • Publication 560, Retirement Plans for Small Business. • Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Note: If any part of your contribution deduction came from the rollover of an IDA, you must add back the amount already subtracted as an IDA contribution. See “Individual development account” under “Addi­ tions” for more information. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. You may be limited in the amount of IRA or other retirement plan contributions you can deduct for Oregon. Use these formulas to figure your deduction: IRA formula. For the part of the year you were a non­ resident, use this formula to determine your Oregon deduction: Oregon compensation while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Self-employed SEPs, SIMPLEs, and other qualified plans. Use this formula to determine your Oregon deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × Contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Moving expenses (ORS 316.048) This deduction is only allowed for active-duty mem­ bers of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or their spouses, who are ordered to relocate to or within Oregon due to a permanent change in duty station (known as a PCS move), if the deduction is allowed on the federal return. See “Military personnel filing information” for more information. Penalty on early withdrawal of savings [Adjustment code 004] This federal deduction is for taxpayers who paid a penalty to a financial institution for early withdrawal of funds from a time savings account, certificate of deposit, or similar type of deposit. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction is the portion of the penalty amount you claimed on your federal return that is related to interest income that is taxed by Oregon. If the penalty isn’t related to interest income taxed by Oregon, your Oregon deduction is $0. Example: Liam claimed a deduction of $1,800 on his federal return for an early withdrawal penalty. Only 30 percent of the interest income related to this penalty is taxable by Oregon. Liam’s Oregon deduction is also limited to 30 percent of the penalty, so his deduction will be $600 ($1,800 x 0.30). Nonresidents. Because Oregon generally doesn’t tax interest income of a nonresident, your Oregon deduc­ tion is $0. Enter the full amount on the federal line on Schedule OR-ASC-NP and $0 on the Oregon line. Self-employed health insurance If you’re self-employed, you may be able to claim this federal deduction for the amount you paid for health insurance for yourself, your spouse, and your dependents. This deduction is limited to earned income from your trade or business for which the insurance plan was established. For more information about this deduc­ tion, see IRS Publication 535, Business Expenses. Adjustments

150-101-431 (Rev. 04-21-22) 57 Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is 100 percent of your health insurance premiums related to your self-employment for the part of the year you were an Oregon resident com­ bined with the health insurance premiums paid by an Oregon business from which you received self- employment income while a nonresident. Your total Oregon deduction is limited to the earnings from self-employment reported in the Oregon column. Self-employment tax If you were self-employed, you may deduct up to one-half of your self-employment tax on your federal return. For more information about this deduction, see the instructions for federal Schedule SE, Self- Employment Tax. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is the proportional amount of self-employ­ ment tax that is related to earnings taxed by Oregon. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Self-employment earnings taxed by Oregon × Federal deduction for self-employment tax = Oregon deduction Total self-employment earnings Student loan interest You may be able to take this federal deduction if you paid interest in 2021 on a qualified student loan, your filing status isn’t married filing separately, your AGI is less than the federal threshold, and you (or your spouse, if filing jointly) aren’t claimed as a dependent on someone else’s return. For more information, see the instructions for your federal return or IRS Publi­ cation 970, Tax Benefits for Education. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the student loan interest you paid while you were an Oregon resident with a partial deduction for interest you paid while you were a nonresident if you had Oregon- source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the student loan interest you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Your Oregon deduc­ tion can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 [Adjustment code 005] These deductions from federal income are included on Form 1040, Schedule 1, lines 23 through 25: • Archer MSA deduction. • Jury duty pay you gave your employer because your employer paid your salary while you served on the jury. • Deductible expenses related to income from the rental of personal property for profit. • Nontaxable amount of Olympic, Paralympic, and U.S. Olympic Committee income. • Reforestation amortization and expenses. • Repayment of supplemental unemployment ben­ efits under the Trade Act of 1974. • Contributions to Section 501(c)(18)(D) pension plans. • Contributions by certain chaplains to Section 403(b) plans. • Attorney fees and court costs for actions involv­ ing certain unlawful discrimination claims to the extent of gross income from such actions. • Attorney fees and court costs you paid in connec­ tion with an award from the IRS for helping them detect tax law violations, up to the amount of the award includible in your gross income. • Housing deduction from Form 2555. • Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). • Other write-in adjustments listed on Schedule 1, line 24z. Add together the amounts from Schedule 1, lines 23 and 25. Also include any scholarship and fellowship grants excluded on Form 1040-NR, line 10c. Full-year residents. These adjustments flow through to your Oregon return via your federal AGI. Don’t claim any additional deductions on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the amount of any adjustment(s) you incurred while you were an Oregon resident with any Adjustments

150-101-431 (Rev. 04-21-22) 58 adjustment that is deductible from Oregon-source income while you were a nonresident. Combine these amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deductions allowed on your federal return. Nonresidents. Oregon allows a deduction for adjust­ ments that are deductible from Oregon-source income. Your Oregon deduction can’t be more than the deduc­ tions allowed on your federal return. If none of your adjustments are deductible from Oregon-source income, your Oregon deduction is $0. Adjustments

150-101-431 (Rev. 04-21-22) 59 Additions Generally, additions are items the federal govern­ ment doesn’t tax but Oregon does. Additions increase your income taxed by Oregon. Numeric codes are provided with the explanation for most additions. A modification code is provided if an addition must be reported as a “negative modifica­ tion” by a part-year resident or nonresident. Enter the numeric code and the dollar amount of each addition or modification on Schedule OR-ASC or OR-ASC- NP. Your total additions and modifications are then reported on your return. If a numeric code isn’t provided for an addition or modification, the amount is reported directly on your return. Itemized deduction add backs. The items listed below are related to itemized deductions. If you’re claiming any of these as itemized deductions on Schedule OR-A, you may have to report an addition on Schedule OR-ASC or a negative modification on Schedule OR-ASC-NP. • Child Care Fund contributions. • Claim of right income repayments. • College Opportunity Grant contributions. • Donations to disqualified charitable organizations. • Federal estate tax on income in respect of a decedent. • Gambling losses related to tax-exempt lottery winnings. • Oregon IDA Initiative Fund donations. • Oregon Production Investment Fund contributions. • University Venture Development Fund contributions. • Medical expenses claimed for the WFHDC credit. Fiduciary additions. If the instructions for reporting an addition on a fiduciary return are different from the instructions for reporting an addition on a per­ sonal income tax return, they are noted within each section. Accumulation distribution from certain domestic trusts (ORS 316.737) [Addition code 132] If you used federal Form 4970 to figure the partial tax on a distribution of accumulated income from a domestic trust created before March 1, 1984, contact us or email the Fiduciary Unit at estate.help.dor@dor. oregon.gov for information about this addition. ABLE account nonqualified withdrawal [ORS 316.680(2)(k)] [Addition code 164] Did you withdraw funds from an Oregon ABLE account for a purpose other than paying for quali­ fied disability expenses? If the withdrawn funds were from contributions previously subtracted on your Ore­ gon return, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. Qualified disability expenses are defined in IRC Sec­ tion 529A. For more information about Oregon ABLE accounts and examples of qualified withdrawals, see “ABLE account contributions” in “Refundable credits.“ Capital loss carryover difference [Addition code 162] This addition affects few taxpayers. You'll have an addition on your Oregon return only if you're carry­ ing over a capital loss from last year’s return and last year’s federal AGI was within the limits in Table 7. If so, use the Capital loss carryover difference work­ sheet in the Appendix to calculate your addition. Table 7. Capital loss carryover difference If line 11 on your 2020 Form 1040 was less than line 12, and— you filed: and: was more than: Form OR-40 Line 7 Line 14 plus line 18 minus the larger of line 8 or Form 1040, line 7*. Form OR-40-P Line 29S Line 33S plus (line 42 times line 35) minus the larger of lines 13S* or 30S. Form OR-40-N Line 29S Line 33S plus line 44 minus the larger of lines 13S* or 30S. you may have an addition on your 2021 Oregon return. * As a positive amount. Child Care Fund contributions (ORS 315.213) [Addition code 142] [Modification code 642] If you claimed a deduction on Schedule OR-A for the amount you paid for your Child Care Fund contribu­ tion tax credit, you will have an Oregon addition for the portion of your deduction included in your credit. Example: Fern made a contribution to the Child Care Fund in the amount of $10,000. On her Oregon return Additions

150-101-431 (Rev. 04-21-22) 60 she will claim a credit of $5,000 for her contribution (she is limited to 50 percent of her contribution, or her tax liability, in any given year). If Fern claims the $10,000 contribution as an itemized deduction on her Schedule OR-A, she must add back $5,000 to her income on Schedule OR-ASC. For more information on the Child Care Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Claim of right income repayments [ORS 316.680(2)(i)] [Addition code 103] [Modification code 649] Are you taking a deduction on your federal return under IRC Section 1341(a) for a repayment of more than $3,000 of income that was included in a prior year’s taxable income under a claim of right? If so, and you’re claiming the Oregon credit for the same repayment, you can’t deduct the repayment on your Oregon return. If you claimed the repayment deduction on Sched­ ule OR-A, you must add back the itemized deduc­ tion amount. Use addition code 103 or report a nega­ tive modification using code 649. If you claimed the repayment deduction on a federal form or schedule other than Schedule A, you must add back the deduc­ tion as an addition on Schedule OR-ASC, section A or Schedule OR-ASC-NP, section C. See the instructions for Worksheet OR-CRC, Claim of Right Income Repayments, for more information. You can download the worksheet and instructions from our website or contact us to order it. Note: If you’re claiming a deduction on your federal return for repaid income that wasn’t taxed by Ore­ gon, see “Federal law disconnect” in “Other items.” Fiduciary addition. If the repayment is allowed as a deduction on Form 1041 and the Oregon credit is claimed on Form OR-41, report the deducted amount as an addition on Schedule OR-ASC-FID. College Opportunity Grant Fund contributions (ORS 315.643) [Addition code 165] [Modification code 652] If you claimed an itemized deduction on Sched­ ule OR-A for the amount you paid for your College Opportunity Grant tax credit, and you are claiming the credit on your return, you will have an Oregon addition for the amount of your deduction. Example: John bid on $4,000 worth of College Oppor­ tunity Grant credits during this year’s auction. He won all the credits that he bid on and paid $3,950 for them. On his Oregon return, John claims the $4,000 credit, and includes the same amount as an itemized deduction on Schedule OR-A. He must add back that amount to his income. He reports both the addition and the credit on Schedule OR-ASC. For more information on the College Opportunity Grant credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Depletion in excess of property basis [ORS 316.680(2)(d)] [Addition code 151] Depletion is using up natural resources by mining, quarrying, drilling, or felling. The depletion deduc­ tion allows an owner or operator to account for the reduction of a product’s reserves. If you claim percentage depletion on your federal return, you must add to your Oregon income any deple­ tion that is more than your adjusted basis in the prop­ erty. The addition includes any depletion in excess of basis taken by an S corporation or partnership of which you are a shareholder or partner. Usually you need to add to Oregon income any depletion that is a preference item subject to the federal alternative minimum tax. Disposition of inherited Oregon farmland or forestland (ORS 316.844) [Addition code 106] You may have an addition on your return if: • You dispose of farmland you inherited from some­ one who died on or after October 5, 1973, and before January 1, 1987; or • You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987. You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax pur­ poses. Generally, the federal valuation is the fair mar­ ket value of the property at the date of the previous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheritance Additions

150-101-431 (Rev. 04-21-22) 61 tax purposes the property may have been valued as farm-use or forestland. Farm-use value. If the previous owner died on or after October 5, 1973, but before September 12, 1975, use the farm-use value for the year preceding death. If death occurred on or after September 13, 1975, use the farm- use value for the year of death. You won’t have this addition if the carryover basis was elected for a death after December 31, 1976, but before November 7, 1978. Forest-use value. Use the forest-use value for the year of death. How to figure the addition. This addition is equal to the difference between: • The taxable gain or loss, using the Oregon valua­ tion as your basis, and • The taxable gain or loss, using the federal valuation as your basis. This addition will increase the gain or reduce the loss you reported on your federal return. Transfers of property. An addition is required when the beneficiary sells the inherited property. It’s also required when: • You recognize gain or loss on property that acquired the inherited property’s basis due to a nontaxable exchange or involuntary conversion. • You recognize gain or loss on property you received as a gift from a donor who inherited it. Example: Anne inherited farmland from a rela­ tive who died on March 1, 1986. She sold the land on May 1, 2021, for $1,100,000. The fair market value at the date of the relative’s death was $180,000. The farm-use value of the land on the 1986–87 prop­ erty tax statement was $50,000. Anne must show a $130,000 addition on Schedule OR-ASC. Here is how she figures her addition: Oregon valuation: Selling price $ 1,100,000 Less: Farm-use value – 50,000 Gain

$ 1,050,000 Federal valuation: Selling price $ 1,100,000 Less: Fair market value

on March 1, 1986 – 180,000 Gain

– 920,000 Difference in total gain

Addition amount

$ 130,000 Disqualified charitable donations (ORS 128.760, 128.763) [Addition code 160] [Modification code 650] The Oregon Department of Justice (DOJ) issues disqual­ ification orders to charitable organizations that fail to spend at least 30% of their annual functional expenses for program services. Names of disqualified organiza­ tions can be found by contacting DOJ. For more infor­ mation, visit the DOJ website, www.doj.state.or.us. The organization is required to notify you that your dona­ tion may not be deducted on your Oregon return. If you made such a donation, you must report an addition on Schedule OR-ASC for the amount of the donation that you deducted on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Federal business income deduction (ORS 316.859) [Schedule OR-ASC-FID only: Addition code 185] Oregon is disconnected from the federal deduction for qualified business income in IRC Section 199A. Personal income tax returns. This deduction doesn’t flow through to the Oregon return. No addition is required. Fiduciary returns. Report the amount from federal Form 1041, line 20, as an addition on Schedule OR- ASC-FID using code 185. See “Qualified business income reduced tax rate” in “Oregon tax” for information about Oregon’s reduced tax rate for sole proprietorships and pass-through entities. Federal election on interest and dividends of a minor child (ORS 316.372) [Addition code 107] Did you report the interest or dividends of your minor child on your federal return? If so, you must add the amount subject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or political subdivision of another state that you didn’t include on your federal return. Full-year residents. Oregon taxes the smaller of line 13 or 14 from federal Form 8814. Oregon also taxes Additions

150-101-431 (Rev. 04-21-22) 62 any interest or dividends your child received from state and local governments outside Oregon. Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident. Nonresidents. Oregon generally doesn’t tax interest or dividends received while you were a nonresident. Federal estate tax [ORS 316.680(2)(c)] [Addition code 157] [Modification code 605] Federal estate tax on income in respect of a decedent (IRD) is allowed as a deduction on your federal return. If any of this tax is on income not taxed by Oregon, you must show an addition on your Oregon return. Use this formula to figure the Oregon addition: IRD not taxable by Oregon × Federal estate tax deducted on the federal return = Oregon addition IRD included in federal taxable income Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Fiduciary returns. Federal estate tax on IRD is allowed as a deduction on federal Form 1041 when the tax on that income will be paid by the recipient. An addition is required if the deducted tax is on income not taxed by Oregon. See the instructions for Form OR-41, Schedule 2, line 16. Federal income tax refunds (ORS 316.685) [Addition code 109] [Modification code 601] Did you get a federal tax refund because of a federal audit or amended return? If so, you may need to add part or all of that refund to your Oregon income. An explanation of the federal income tax liability sub­ traction can be found in “Subtractions.” Tax benefit doctrine. You need to add back only refunds of federal tax for which you received a ben­ efit in a prior year. Example 1: Rosa subtracted her entire federal tax lia­ bility of $2,800 on her 2019 Oregon return. This year, she amended her 2019 federal return. Rosa reduced her federal tax to $2,300 and received a federal refund of $500. She received a $500 tax benefit because she subtracted $500 more on her 2019 Oregon return than her corrected federal tax liability. Rosa will have an addition of $500 on her 2021 return. When to report the refund. As a general rule, report the refund in the year you get it. The rules for figuring the addition are explained here, but first, note these exceptions: Exception 1 If there is an error on your federal return, we may correct your federal tax liability when your Oregon return is pro­ cessed. This may decrease your federal tax subtraction. When the IRS later refunds the difference between your correct federal liability and the liability on your original return, don’t report the refund as an addition. Because the tax subtraction on your original Oregon return was corrected, you didn’t receive a tax benefit from the total federal tax subtracted on your original return. Example 2: The Jacksons showed a $3,700 federal tax lia­ bility on their federal return. They claimed a federal tax subtraction for that same amount on their Oregon return. When their Oregon return was processed, we discov­ ered a math error on their federal return. We figured the Jacksons’ correct federal tax as $2,400 and reduced their Oregon federal tax subtraction to that amount. The Jack­ sons received the IRS refund of $1,300. They won’t report the refund as an addition on their current year Oregon return because they didn’t receive a tax benefit for it. Exception 2 If you file an amended return before the filing due date for that tax year, your amended return is treated as your original return for that year. In this case, the federal tax subtraction on your amended return is your corrected federal tax liability. Example 3: Heather filed this year's federal and Oregon returns in February. Her federal tax liability was $4,800, which she subtracted in full on her Oregon return. In March, she amended her federal return to claim addi­ tional deductions. She refigured her federal tax as $3,000. She also amended her Oregon return to claim the same additional deductions and reduce her federal tax subtrac­ tion by $1,800 (from $4,800 to $3,000). The $1,800 federal refund she receives won’t be reported as income on her Oregon return. Because Heather filed the amended Ore­ gon return before the original due date, her amended return is treated as her original return this year. Figuring the addition You must report as an addition the amount of the fed­ eral refund from which you received a tax benefit. The tax benefit is the amount of federal tax you deducted in a prior year and received as a refund in a later year, if the amount you received reduced your Oregon tax­ able income in the prior year. Use the limit that applied to your federal tax liability subtraction for the prior year. The maximum allow­ able subtraction amount for the past few years can be found on the last page of this publication. See “Fed­ eral income tax liability” and Table 8 in “Subtrac­ tions” for more information about annual limits. Use this worksheet to figure your tax benefit. Additions

150-101-431 (Rev. 04-21-22) 63 1. Original federal tax liability from the prior year, up to annual limit. 1._________ 2. Corrected federal tax liability from the prior year, up to annual limit. 2. ________ 3. Line 1 minus line 2. This is the tax benefit you received from your refund. 3. ________ Example 4: Jill’s 2019 federal tax liability was $9,000. Her subtraction was limited to $6,800, which she sub­ tracted on her Oregon return. Jill amended her 2019 federal return and received a refund of $4,000 in 2021. The addition on Jill’s 2021 return will be $1,800, fig­ ured as follows: 1. Federal tax subtracted on Jill’s 2019 Oregon return (limit $6,800). $ 6,800 2. Less: Corrected federal tax ($9,000 – $4,000) (limit $6,800). -5,000 3. Tax benefit received and Jill’s Oregon addition. $ 1,800 Example 5: Ella’s 2018 original federal tax liability was $8,200. She amended her 2018 federal return and part- year Oregon return in January 2021. She received a $1,000 federal refund in 2021. Ella doesn’t change the federal tax amount on her amended Oregon return. Her 2018 corrected federal tax is $7,200. Because Ella’s corrected federal tax is still more than the $6,650 maximum sub­ traction she claimed on her Oregon return, she didn’t receive a tax benefit from the federal refund. Ella doesn’t have an addition to report on her 2021 Oregon return. Nonresidents. A nonresident’s tax benefit from federal tax refunds is the difference between the tax actually subtracted on the prior year’s return and the tax that would have been subtracted had the federal return been correct. If the amounts on your federal return changed because you amended your federal return or because it was audited, your Oregon percentage may also change. Use the corrected percentage to figure the tax benefit. Example 6: Brokston was a nonresident with Oregon- source income in 2019. His original federal tax was $8,600. His Oregon percentage was 40 percent. In March 2021, he amended his 2019 federal and Oregon returns. Brokston doesn’t change the federal tax amount on his amended Oregon return. He received a $4,500 federal refund in 2021. His revised Oregon percentage for 2019 was 50 percent. He received a tax benefit of $670 from the refund. He figures his tax benefit as follows: 1. Original federal tax liability (limit $6,800) $ 6,800 × original Oregon percentage. × 0.40

$ 2,720 2. Less: Corrected federal tax ($8,600 - $4,500) (limit $6,800) $ 4,100 × revised Oregon percentage. × 0.50

– 2,050 3. Tax benefit received and Brokston’s Oregon addition. $ 670 Full-year residents. Enter the tax benefit as an addi­ tion on Schedule OR-ASC, section A, using addition code 109. Part-year residents and nonresidents. Use a minus sign to enter the tax benefit as a negative modifica­ tion on Schedule OR-ASC-NP, section D, using modi­ fication code 601. Federal subsidies for employer prescription drug plans (ORS 316.837) [Addition code 123] Employers who provide a prescription drug plan for their retired employees may receive a federal subsidy if they meet the requirements in 42 U.S.C. Section 1395w- 132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return. Full-year residents. Enter the full amount of the sub­ sidy on Schedule OR-ASC. Part-year residents and nonresidents. Enter the full amount of the subsidy on the federal line on Schedule OR-ASC-NP. On the Oregon line, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. First-time home buyer savings account nonqualified withdrawal (ORS 316.801, OAR 150-316-0607) [Addition code 166] Funds that are withdrawn from a first-time home buyer savings account (FTHBSA) but aren’t used to pay eligible costs must be added back to Oregon income if: • The withdrawn funds were previously subtracted on an Oregon return, and • The funds weren’t redeposited within 60 days into another FTHBSA held by the taxpayer. For more information about the FTHBSA subtraction, eligible costs, and other requirements, see this topic in “Subtractions.” Penalty. Nonqualified withdrawals that require an add back are also subject to a 5 percent penalty. See this topic in “Interest and penalties” and in the return instructions. Additions

150-101-431 (Rev. 04-21-22) 64 Gambling losses claimed as an itemized deduction (ORS 461.560) [Addition code 134] [Modification code 604] If you claimed gambling losses as an itemized deduc­ tion on Schedule OR-A, you may have an addition on your Oregon return. Your gambling losses are limited to the amount of your gambling winnings taxed by Oregon. Oregon doesn’t tax Oregon Lottery winnings of $600 or less from a single ticket or play. See “Lottery win­ nings“ under “Subtractions” for more information. Example 1: Angela reported total gambling income of $580 on her federal return ($500 from the Oregon Lottery plus $80 from horse races). On Schedule OR-A, Angela deducted $300 of gambling losses. Angela will subtract $500 in Oregon Lottery winnings from her Oregon income. Her net gambling winnings, taxable by Oregon, are reduced to $80. Because Angela may not claim more in gambling losses than her gambling winnings taxable by Oregon, she can’t claim more than $80 in gambling losses on her Oregon return. She is required to reduce her deduction for gambling losses from $300 to $80. The difference of $220 is an Oregon addition. Gambling winnings reported in federal AGI $ 580 Less subtraction for Oregon Lottery winnings (500 ) Net gambling winnings taxable by Oregon $ 80 Gambling losses claimed on Schedule OR-A $ 300 Net gambling winnings included in Oregon income -80 Reduction in gambling losses— Oregon addition $ 220 Example 2: Satish won $100 from playing video poker and $400 from Oregon lottery tickets. He included all $500 in gambling winnings on his federal return, and he’s deducting $300 in gambling losses on Schedule OR-A. Satish is subtracting the $400 in lottery win­ nings on his Oregon return because they’re exempt from Oregon tax. Because only $100 of his gambling winnings are taxed by Oregon, Satish must add back $200 ($300 - $100) of the gambling losses he’s deduct­ ing on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Income taxes paid to another state by a pass-through entity (ORS 316.082) [Addition code 148] If you claim a credit for income taxes paid to another state by a pass-through entity (PTE) of which you're an owner, and the PTE is deducting the tax on its own return, you'll have an addition on your return for the amount of tax paid or deducted by the PTE. Note: See the instructions for fiduciary returns at the end of this section if a credit is claimed on Form OR-41. Example 1: Chad owns 5 percent of West Group, LLP, a limited partnership doing business in Utah. The LLP paid or withheld $10,000 of Utah income tax on Chad’s behalf in 2021 and deducted that amount on the LLP’s 2021 federal return. Chad filed his own Utah nonresident return for 2021. His Utah tax liabil­ ity was $9,000. He’ll receive a $1,000 refund in 2022. On his 2021 Oregon return, Chad calculates his 2021 credit based on his $9,000 Utah tax liability. The income from the LLP that flowed through to Chad’s return was reduced by the amount of tax that the LLP paid and deducted. For this reason, Chad must add the lesser of the tax paid ($10,000) or deducted ($9,000) to his income. Chad adds $9,000 to his income on Schedule OR-ASC. Example 2: Susan owns 50 percent of Painter, Inc., an Oregon S corporation. Painter, Inc. pays California income tax. It deducts the tax on its corporate return. It paid California $30,000 of 2021 tax for her in 2021, and $10,000 of 2021 tax in January 2022. The corporation paid $2,000 of tax for her with its 2021 tax return filed in 2022. Susan elects to be included in the group nonresident return that Painter, Inc. files with California. She calcu­ lates her credit for 2021 using $42,000: $30,000 in pay­ ments made in 2021, and the $12,000 in 2021 tax paid in 2022. She claims the full credit on her 2021 return. Because Painter, Inc. is deducting the tax on its own return, Susan must add the lesser of the total tax paid or deducted to her income. This is true whether Susan’s share of the tax was paid when the composite return was filed or was paid or withheld by Painter, Inc. during the tax year. For 2021, she adds $30,000 to her Oregon income on Schedule OR-ASC. She'll add the remaining $12,000 to her Oregon taxable income on her 2022 return. Credit claimed on fiduciary return. If a credit is claimed on Form OR-41 for income taxes paid to another state, and the taxes on which the credit is based are deducted on federal Form 1041, line 11, the taxes must be restored to income on the Oregon return. Report the smaller of the other state’s 2021 tax liability or the tax claimed as a deduction on Form 1041 as an addition on Schedule OR-ASC-FID, Additions

150-101-431 (Rev. 04-21-22) 65 section 1. For more information and examples, see the instructions for Schedule OR-A. Individual development account (IDA) (ORS 315.271, 316.848) [Addition code 137, 138, or 159] [Modification code 648] For more information about IDAs, see this topic under "Subtractions." Donation credit. If you’re claiming an itemized deduc­ tion for donations you made to the Oregon IDA Initia­ tive Fund and you’re claiming a credit based on those donations, you must report the amount you’re deducting as an addition on Schedule OR-ASC using addition code 138 or as a negative modification on Schedule OR-ASC- NP using modification code 648. Nonqualified withdrawal. Did you make a nonquali­ fied withdrawal from your IDA during the year? If so, you must report the amount as an addition on Sched­ ule OR-ASC or OR-ASC-NP. Use addition code 137. Rollover to retirement account. Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP. Use addition code 159. Interest and dividends on government bonds of other states [ORS 316.680 (2)(a)] [Addition code 158] Full-year residents. Oregon taxes interest and divi­ dends on bonds and notes of another state or political subdivision of another state that you didn’t include on your federal return. This income is an addition using Schedule OR-ASC. Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC. See “Federal election on interest and dividends of a minor child.” Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the inter­ est and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident. Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation. Fiduciary returns. Report the addition on Form OR-41, Schedule 2, line 14. No addition code is needed. Related expenses You may reduce your addition by the amount of investment expenses that: • Aren’t deducted elsewhere on your return, and • Could be deducted if the income were included on your federal return. Other federally-exempt obligations You will have an Oregon addition for interest or dividends on obligations of any authority, commis­ sion, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax. [ORS 316.680(2)(b)]. Oregon doesn’t tax interest or dividends on obliga­ tions that states can’t tax under federal law. Examples of such obligations are bonds issued by: • Territory of Guam. • Commonwealth of Puerto Rico. • Territory of Puerto Rico. • Territory of Samoa. • Territory of Virgin Islands. Lump-sum distributions (ORS 316.737) [Addition code 139] Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution wasn't included in your federal AGI. The excluded portion of your distribution must be included as an addition to your Oregon income. Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options, you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R. Example 1: Gary got a $20,000 lump-sum distribution from his employer. Of this, $12,000 was capital gain income, and $8,000 was ordinary income. Using federal Form 4972, he chose to use the 10-year averaging method only on the $8,000 of ordinary income. He chose the 20 percent capital gain election on the $12,000 capital gain income. Gary will add all of his $20,000 lump-sum dis­ tribution to his Oregon income on Schedule OR-ASC. Additions

150-101-431 (Rev. 04-21-22) 66 Election to treat the entire distribution as ordinary income and average it. Did you average all of your lump-sum distribution (ordinary income and capital gain portions) on federal Form 4972? If so, you will have an addition for the entire lump-sum distribu­ tion to report on Schedule OR-ASC or OR-ASC-NP. Example 2: John received a $40,000 lump-sum distribu­ tion from his employer; $30,000 was capital gain income and $10,000 was ordinary income. He chose to average the entire distribution of $40,000 as ordinary income on his federal Form 4972. John will add all of his $40,000 lump-sum distribution to his Oregon income. Election not to average any of your lump-sum distri­ bution. Did you choose not to average any of your lump-sum distribution? If you included it in federal AGI, there is no addition on your Oregon return. Nonresident capital losses and loss carryovers (OAR 150-316-0006) [Addition code 161] Capital losses and losses carried over from prior years may be claimed on an Oregon return only if: • The capital loss was incurred while you were an Oregon resident; or • If you were a nonresident when the capital loss was incurred, the loss was attributable to Oregon sources. If you have a capital loss or are carrying over a loss from a prior year on this year’s return (or are using the loss to offset capital gain), and the loss doesn’t meet these requirements, you will have an addition on your Oregon return. Full-year residents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to offset capital gain on your return, report the loss amount as an addition on Schedule OR-ASC. Part-year residents and nonresidents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to reduce Oregon capital gain on your return, report the loss amount to the extent that it reduces the Oregon gain as an addition on Sched­ ule OR-ASC-NP. Example 1: Louise moved to Oregon and became a resident on June 1. Before she became a resident, Louise incurred a $50,000 capital loss from non-Oregon sources. After she became a resident, Louise recognized a capi­ tal gain of $70,000. On her federal return, she’s offsetting the $70,000 gain with the $50,000 loss, for a net gain of $20,000. Because she wasn’t a resident when she incurred the loss, and the loss wasn’t from Oregon sources, Louise must report a $50,000 addition on Schedule OR-ASC-NP. Example 2: Eric is a Missouri resident who recognizes a $25,000 capital gain from Oregon sources. On his fed­ eral return, Eric offsets the capital gain with $10,000 in capital losses from Missouri sources, for a net gain of $15,000. He reports the $15,000 capital gain in the Ore­ gon column on his nonresident return. Eric must report the $10,000 loss as an addition on Schedule OR-ASC-NP. Oregon College and MFS 529 Savings Plan nonqualified withdrawal [ORS 316.680(2)(j)] [Addition code 117] Did you withdraw funds from an Oregon College or MFS 529 Savings Plan account for nonqualified pur­ poses, where the funds were subtracted on a prior year’s Oregon return? Nonqualified purposes include using funds in the account to pay tuition at a K-12 school. If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Sec­ tion 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reasonable method to determine the amount of the addition. Keep a copy of this determina­ tion with your tax records. For more information about these plans see this topic under “Refundable credits.” Oregon Production Investment Fund contributions (ORS 315.514) [Addition code 144] [Modification code 644] If you claimed an itemized deduction on Sched­ ule OR-A or a business expense deduction for the amount you or your business paid for your Oregon Production Investment Fund tax credit, you will have an addition for the amount of your deduction. Example: Beth bid on $2,000 worth of Oregon Produc­ tion Investment Fund credits during this year’s auc­ tion. She won all the credits she bid on and paid $1,900 for them. On her Oregon return Beth will claim an Oregon Production Investment Fund credit of $2,000. If she claims the $1,900 she paid for the credits as an itemized deduction on Schedule OR-A, she must add back that amount to her income. She reports both the credit and the addition on Schedule OR-ASC. For more information on the Oregon Production Investment Fund, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Additions

150-101-431 (Rev. 04-21-22) 67 Refund of Oregon-only itemized deductions from a prior year [Addition code 136] You may have an addition if you: • Claimed itemized deductions for Oregon but not for federal on a previous year’s return; • Received a refund this year of an item you deducted on the previous year’s Schedule OR-A; and • Don’t have to include the refund as income on this year’s federal return because you didn’t itemize deductions on the previous year’s federal return. You must add back the refunded item only to the extent that you received a tax benefit from the amount refunded. For an explanation of tax benefit with examples, see “Tax benefit doctrine” under “Federal income tax refunds.” Part-year residents and nonresidents. Enter the addi­ tion amount on both the federal and Oregon lines on Schedule OR-ASC-NP, Section C. University Venture Development Fund contributions (ORS 315.640) [Addition code 146] [Modification code 646] If you claimed a deduction on Schedule OR-A for the amount of your University Venture Development Fund contribution, you will have an Oregon addition for the amount of your deduction. Example: Amelia made a contribution to a Univer­ sity Venture Development Fund in the amount of $100,000. She may claim a total credit of 60% of her contribution, or $60,000, limited to her tax liabil­ ity for the year. This year, Amelia’s tax liability is $23,000. On her Oregon return she will claim a credit of $23,000 for her contribution. The rest of her credit is carried forward to a later year. If Amelia claims the $100,000 contribution as an itemized deduction on Schedule OR-A, she must add back the $100,000 to her income on Schedule OR-ASC in the tax year the itemized deduction was claimed. For more information on the University Venture Development Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Unused business credits [ORS 316.680(2)(f)] [Addition code 122] Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon doesn’t allow this deduction. Full-year residents. You must report your federal UBC deduction as an Oregon addition. Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident. Nonresidents. You will have an addition for your fed­ eral UBC deduction related to Oregon credits earned from Oregon sources. WFHDC medical expenses [Addition code 163] [Modification code 651] Some expenses for the care of qualifying persons who aren’t able to care for themselves may qualify as expenses for purposes of claiming the WFHDC credit and also as medical expenses for purposes of claiming itemized deductions. You can use these expenses for either the WFHDC credit or as a medical expense deduc­ tion, but they can’t be used for both. If you choose to use them for both, you’ll have an addition on your Oregon return. Use the WFHDC medical expense worksheet in the Appendix to figure the Oregon addition. Full-year residents. Report any required add back amount on Schedule OR-ASC. Part-year residents and nonresidents. Use a minus sign to report any required add back amount as a negative modification on Schedule OR-ASC-NP. For more information about the WFHDC credit, see this topic under “Refundable credits” or the instruc­ tions for Schedule OR-WFHDC. Additions

150-101-431 (Rev. 04-21-22) 68 Subtractions Generally, subtractions are items the federal govern­ ment taxes but Oregon doesn’t. Subtractions reduce your income taxed by Oregon. Numeric codes are provided with the explanation for most subtractions. For part-year residents and nonresidents, some subtractions will be reported as modifications. This is required when an amount you are subtracting must be adjusted for Oregon tax pur­ poses. When this is the case, a modification code is provided with the explanation for that subtraction. Enter the numeric code and the dollar amount of each subtraction or modification on Schedule OR-ASC or Schedule OR-ASC-NP. The total dollar amount of subtractions and modifications is then reported on your return. If a numeric code isn’t provided for a subtraction or modification, the amount is reported directly on your return. ABLE account deposit carryforward (ORS 316.699) [Subtraction code 360] Contributions you made to an Oregon or contract­ ing state’s ABLE account after December 31, 2019 no longer qualify for a subtraction, but they may qual­ ify for a credit. See “ABLE account contributions” in “Refundable credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2021 return is $5,030 if you file a joint return ($2,515 for all others). This maximum applies to the com­ bined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Addition. You may need to add back funds with­ drawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. See this topic under “Additions” for more information. American Indian (ORS 316.777) [Subtraction code 300] Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true: • You are an enrolled member of a federally recog­ nized American Indian tribe, and • Your income is derived from sources within feder­ ally recognized Indian country in Oregon, and • You lived in federally recognized Indian country in Oregon at the time the income is earned. “Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the U.S. government for a tribe. For enrolled members of federally recognized American Indian tribes who live in Indian country in Oregon, income exempt from Oregon income tax includes: • Wages earned for work performed in Indian coun­ try in Oregon. • Income from business or real estate located in Indian country in Oregon. • Retirement income if the contributions to the plan came from or were connected with services per­ formed in Indian country. • Unemployment insurance benefits if the benefits were received as a result of work performed in Indian country. • Interest, dividends, and capital gains from the sale of stocks and other intangibles, regardless of where the accounts are located. • Gambling winnings from Indian gaming centers (casinos). • Indian tribal disbursements from casino earnings. You must live on and have income derived from sources within Indian country in Oregon and be an enrolled member of a federally recognized tribe to subtract the income listed above. You don’t have to live in and have income from the same Indian coun­ try. The areas where you live and derive income must both be Indian country to qualify for the subtraction. To claim the subtraction, you must report your total income on both the federal and Oregon tax returns. You must file a completed copy of Schedule OR-EIS, Exempt Income Schedule for Enrolled Members of a Feder­ ally Recognized Indian Tribe, with your Oregon return. Go to our website to download the schedule or call us. You must include the following information on the schedule: • The street address of the place you worked, and • The street address of the place you lived, and • The tribe you are enrolled with and your member­ ship number. Subtractions

150-101-431 (Rev. 04-21-22) 69 You must use the street address of your residence on the schedule so we can verify that you lived in Indian country when you earned your income. However, you may use your post office box address on your tax return. If you meet all of the requirements for exemption from Oregon withholding, use Form OR-W-4 to declare that your income is exempt using the appro­ priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 each year that you’re claiming the exemption. Income earned in Oregon but outside of Indian coun­ try will be taxed by Oregon. Also, any Oregon income earned by a member not living in Indian country will be taxed by Oregon. Each member of a household with income must meet these qualifications in order to claim the subtraction of their income. If you are an enrolled member of a federally recog­ nized tribe and a member of the U.S. Armed Forces stationed in Oregon, you may be entitled to an addi­ tional subtraction. For more information, see “Mili­ tary personnel filing information.” AmeriCorps educational award (2021 Or Laws, ch. 525, § 36) [Subtraction code 362] Were you an AmeriCorps volunteer? If you received a national service, summer of service, or silver scholar educational award from the federal Corporation for National and Community Service in 2021, you may subtract the award amount to the extent that it is included in your federal taxable income. The amount you are awarded under 42 U.S.C. Section 12602 must be received after your required term of service is com­ pleted. You can’t subtract any amount that you are deducting elsewhere on your return. Artist’s charitable contribution (ORS 316.838) [Subtraction code 301] [Modification code 600] Oregon allows a subtraction to artists who contribute art objects they’ve created to a recognized charitable organization or governmental unit. What qualifies as an “art object?” The art object must be a painting, sculpture, photo­ graph, graphic or craft art, industrial design, costume or fashion design, tape or sound recording, or film that qualifies for a charitable contribution deduction under IRC Section 170. The charitable organization isn’t required to use the art object for the same purpose or function that quali­ fies it for its federal tax exemption. You may deduct your charitable contribution even if the charitable organization sells the art object. You must have an appraisal report showing the fair market value of the art object at the time of the con­ tribution. Keep the appraisal report with your tax records; we may ask for it later. How to calculate the subtraction The subtraction is equal to the difference between: 1. The amount that would have been allowed as an itemized deduction if you could deduct the fair market value of the art (subject to the federal con­ tribution limit)*, and 2. The actual allowable amount as an itemized deduc­ tion under federal tax law. *Federal law limits charitable contributions. Contributions to some organizations are limited to 50 percent of your federal AGI. Contributions to others are limited to 30 per­ cent of your AGI. Use these limits when you figure your deduction. Example: Ronda’s AGI is $10,000. She donated one of her paintings to an organization for display in a building. The painting has a basis (cost) of $300 and a FMV of $6,000. Here is how she computes her subtraction: 1. Amount allowed as a

charitable contribution

if computed using FMV. $ 6,000 2. Amount allowed as a charitable contribution limited to 50% of AGI. $ 5,000 3. Lesser of line 1 or line 2. $ 5,000 4. Amount allowed as a charitable contribution on Schedule OR-A (basis). ($300) 5. Ronda’s subtraction (line 3 minus 4). $ 4,700 Part-year residents and nonresidents. Follow the same rules as a full-year resident. You don’t have to prorate this subtraction. Part-year residents: Enter your subtraction in section D of Schedule OR-ASC- NP using modification code 600. Nonresidents: Enter your subtraction amount on the “Charitable art donation“ line on Form OR-40-N. Subtractions

150-101-431 (Rev. 04-21-22) 70 Capital Construction Fund (CCF) contributions (ORS 316.048) [Subtraction code 339] If you subtracted your contributions to your qualify­ ing CCF account on your federal return, you may also subtract that amount on your Oregon return. See IRS Publication 595, Capital Construction Fund for Commer­ cial Fishermen, for more information. The subtraction for Oregon is the same as the amount you identified as “CCF” and subtracted on your fed­ eral return. Part-year residents and nonresidents. Enter the full subtraction amount on the federal line on Schedule OR-ASC-NP, section C. The amount allowed on the Oregon line is the Oregon percentage of your fishing trade or business that qualifies you for a CCF account. Example: Greg moved out of Oregon in May and con­ tinued his fishing business in California. His Oregon net fishing income is $10,000 and his California net fishing income is $30,000. He put $15,000 into his CCF account during the past year. On Schedule OR-ASC- NP, Greg will enter $40,000 for his fishing income on the federal line and $10,000 on the Oregon line. Greg’s CCF subtraction on the federal line is the full $15,000. Since 25 percent of his eligible income was Oregon source, he is allowed a CCF subtraction of $3,750 ($15,000 x 25%) on the Oregon line. Charitable contribution non-itemized deduction [Subtraction code 363] [Modification code 653] This federal deduction is for taxpayers who made cash charitable contributions of up to $300 ($600 if married filing jointly) and are not claiming federal itemized deductions for tax year 2021. Note: If you’re itemizing deductions for Oregon, you can’t claim this subtrac­ tion. Simply include this deduction with any other charitable contributions you claim on Schedule OR-A. Part-year residents and nonresidents. Enter the deduction amount as a modification on Schedule OR- ASC-NP, Section D. Construction worker and logger commuting expenses (ORS 316.812, 316.824, 316.832) [Subtraction code 303] If you are a qualified construction worker or logger, you may deduct certain commuting expenses from your Oregon taxable income. To claim these expenses, you must have worked at one or more construction projects or logging operation sites more than 50 miles from your home. A construction project is construction, alteration, repair, improvement, moving, or demolition of a structure. A logging operation is the commercial harvesting of forest products. People in other occupa­ tions aren’t eligible for this subtraction. Management personnel aren’t eligible for this subtraction either. Qualifying workers. Loggers must be fallers or buck­ ers who maintain their own equipment and are paid on a per-unit-cut basis. Construction workers must be members of a recognized trade, craft, or union. Qualifying expenses. You may claim only the actual cost of gas, oil, repairs, and maintenance for your vehicle for getting to and from work sites that are more than 50 miles from your home. You can’t use a standard mileage rate to figure expenses. If you use your vehicle both for business and personal purposes, you must determine your portion of busi­ ness use. Keep a mileage log book during the year to track your business use and record all business trip miles. You should also record your starting and ending odometer reading for your vehicle each year. You may claim only the business portion of your repairs and maintenance as commuting expenses. You can’t claim depreciation. To claim the actual business expenses for your qualified commute miles, you will need to keep your vehicle records during the year. Keep receipts for all your fuel (such as gas, diesel), oil change, repair, and maintenance costs in your permanent tax records. Example: Ewan is a construction worker. He uses his truck for both personal and business purposes. He worked on three construction jobs during the year. Two of the jobs were located more than 50 miles away from his home. Ewan kept a log book in his truck and recorded each trip to and from the construction sites. He also kept a record of all his truck expenses—his receipts for diesel fuel, oil changes, repairs, and main­ tenance for the year. These receipts totaled $4,215. Subtractions

150-101-431 (Rev. 04-21-22) 71 Ewan’s odometer readings were: Year end: December 31 38,306 Year beginning: January 1 26,327 Total miles driven 11,979 Ewan’s mileage log book showed that his mileage to and from qualified construction job sites totaled 4,716 miles. He will use this formula to determine the business use of his truck and the amount of truck expenses which will qualify for this subtraction: Qualified construction miles × actual expenses = Subtraction Total miles driven 4,716 × $4,215 = $1,659 11,979 Ewan will claim a subtraction of $1,659 on Schedule OR-ASC. Duration of project. If you are a construction worker, claim only your expenses for the first year of continu­ ous employment at any one construction site. If your employment continues beyond one year, the job site is considered permanent. You may not subtract any addi­ tional commuting costs for going to and from that site after the first year at that worksite. If your employment at that job site is temporarily interrupted, don’t count the interruption when you figure the one-year limit. If you are a logger, there is no limit on how long you can work at the same job site and still claim expenses. How to claim the subtraction. Claim your commut­ ing expenses on Schedule OR-ASC or OR-ASC-NP. Part-year residents and nonresidents. You can claim only expenses related to income that you included in the Oregon column of your Oregon return. Conversions and exchanged property [ORS 314.290 (repealed), 316.716] [Subtraction code 306] Oregon law used to require an addition for gain on the sale or exchange of certain property deferred on the fed­ eral return. This statute was repealed in 2001. If you were required to make this addition before 2001, you have already been taxed by Oregon for the gain on the sale or exchange of your property. If this gain is now included in your federal income, you may claim a subtraction for the amount of the gain previously taxed by Oregon. Domestic international sales corporation (DISC) dividend payments (ORS 316.749) [Subtraction code 352] Oregon allows a subtraction for the dividend pay­ ments you received from a DISC. You can claim the subtraction if all of the following are true: • The DISC dividend payments are included in your federal AGI, and • The DISC was formed by January 1, 2014, and • The DISC is subject to the 2.5% tax. Federal income tax liability (ORS 316.680, 316.685, 316.695) Part A: Federal income tax liability subtraction [Form OR-40, line 10] [Form OR-40-N or OR-40-P, line 40] Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] Current year’s federal income tax liability. Oregon allows a subtraction for your current year’s federal income tax liability after credits. The subtraction for 2021 is limited to $7,050 ($3,525 if your filing status is married filing separately). It may be limited further based on your AGI; see Table 8. The subtraction is based on the accrual method of accounting. This means you subtract the total amount of your federal tax liability after credits for the cur­ rent tax year (not less than zero) as shown on your original return, regardless of when you pay it. The subtraction is limited to income tax. This includes alternative minimum tax, tax on an IRA, and recap­ ture taxes. You can’t include self-employment tax or Social Security (FICA) tax. You also can’t include penalties, interest, or any shared responsibility pay­ ment required by the federal Affordable Care Act. Federal income tax credits, except for the EITC, reduce your federal tax subtraction. The credits for federal tax on special fuels, special oils, and a regu­ lated investment company won’t reduce your federal tax subtraction. Don’t enter less than $0 or more than your limit. Use the federal tax worksheet to figure your subtraction. RDPs: Use amounts from your actual federal return(s), not your “as if” return. Subtractions

150-101-431 (Rev. 04-21-22) 72 Additional federal income tax paid or determined. If you paid additional federal tax because your federal return was amended or audited, you may be able to claim an additional subtraction or modification for it in the year the tax was paid or determined, which­ ever is later. Your additional prior year’s federal tax plus your current year’s federal tax can't be more than your current year federal tax subtraction limit. This subtraction applies only to additional federal income tax paid because your return was amended or audited. It doesn’t include withholding tax, advance tax payments, interest, penalties, or paying the tax due on your original federal return. Use Part B of the federal tax worksheet to figure your federal tax from a prior year. If you're a resident, report the amount using subtrac­ tion code 309; if you're a part-year resident or nonresi­ dent, report the amount using modification code 602. Amended returns. If your federal tax liability for a prior year is changed, see “Amended returns” to determine whether you should change the amount of the subtraction on your amended Oregon return. Federal tax worksheet Note: All references to federal Form 1040 in this worksheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. Instructions for Part A: Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonre­ fundable credits but before other taxes. This is found on Form 1040, line 22. Line 2: Do you qualify for the refundable child tax credit (CTC)?* If so, enter the amount of your nonre­ fundable CTC, if any, from Form 1040, line 19. Other­ wise, enter $0. Line 3: Add lines 1 and 2. Line 4: Do you have to repay some of the advance pre­ mium tax credit that you received during the year? If so, enter your excess advance premium tax credit repayment. This is found on Form 1040, Schedule 2, line 2. Otherwise, enter $0. Line 5: Line 3 minus line 4. If the result is less than zero, enter $0. Line 6: Enter the total of any other taxes, plus any additions to tax that include only income tax, such as tax credit recaptures, from Form 1040, Schedule 2, lines 8, 10,** 16, and 17. Include any tax on non-effec­ tively connected income from Form 1040-NR, line 23a. Don’t include any additions to tax from Sched­ ule 2, line 17 that are penalties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter $0. Line 7: Add lines 5 and 6. Line 8: If you qualify for the refundable CTC*, enter the amount from Schedule 8812, line 14e. Otherwise, enter 0. This is your allowable CTC, including any nonrefundable amount for other dependents, regard­ less of any advance amount that must be paid back or the amount of refundable credit you’re claiming on your federal return. Line 9: Enter your American opportunity credit from Form 1040 or 1040-SR, line 29. Line 10: Enter any 2021 federal economic stimulus payments you received in 2021 plus your recovery rebate credit, if any, from Form 1040 or 1040-SR, line 30. Refer to your IRS Notice 1444-C for the amount of stimulus payments you received in 2021. Line 11: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allow­ able premium credit regardless of any excess advance payments you received or credit you’re claiming on your federal return. Line 12: Enter your credit for child and dependent care expenses from Form 1040, Schedule 3, line 13g. Line 13: Add lines 8 through 12. Line 14: Line 7 minus line 13. If less than zero, enter $0. This is your federal income tax liability after refundable credits (other than the EITC). Line 15: Enter your maximum allowable federal tax liability subtraction amount from Table 8. Don’t enter more than your limit or less than zero. Line 16: Enter the smaller of line 14 or line 15. This is your federal tax liability subtraction. Part A: Federal tax liability subtraction 1. Federal tax liability (Form 1040, line 22). 1. _________ 2. Nonrefundable CTC* (Form 1040, line 19). 2. _________ 3. Line 1 plus line 2. 3. _________ 4. Excess advance premium tax credit (Form 1040, Schedule 2, line 2). 4. _________ 5. Line 3 minus line 4. (If less than $0, enter $0.) 5. _________ 6. Other taxes** (see instructions). 6. _________ 7. Line 5 plus line 6. 7. _________ Subtractions

150-101-431 (Rev. 04-21-22) 73 8. Child tax credit* (Schedule 8812, line 14e). 8. _________ 9. American opportunity credit (Form 1040 or 1040-SR, line 29). 9. _________ 10. Economic stimulus payments and recovery rebate credit (see instructions). 10. _________ 11. Premium tax credit (Form 8962, line 24). 11. _________ 12. Credit for child and dependent care expenses (Form 1040, Schedule 3, line 13g). 12. _________ 13. Add lines 8 through 12. 13. _________ 14. Line 7 minus line 13. (If less than $0, enter $0). 14. _________ 15. Maximum subtraction amount from Table 8. 15. _________ 16. Smaller of line 14 or line 15. This is your federal tax liability subtraction. 16. _________ *The refundable CTC is not the same as the additional child tax credit (ACTC) for tax year 2021. You’re claiming the refundable CTC only if you checked one of the boxes on Schedule 8812, line 13, and if the amount on Schedule 8812, line 14e is more than the amount on Schedule 8812, line 14h. **Did you file federal Form 5405? If you are required to repay your 2008, 2009, or 2010 first-time homebuyer credit because you disposed of your home or stopped using it as your main home, include the amount reported on your federal Form 1040, Schedule 2, line 10 on line 6 of the worksheet above. Don’t add this amount if you are repaying your 2008 credit and still live in your qualifying home as your main residence. Part B: Federal income tax for a prior year [Subtraction code 309] [Modification code 602] 1. Enter maximum amount from Table 8 (Part A, line 15). 1. _________ 2. Enter federal tax liability subtraction (Part A, line 16). 2. _________ 3. Line 1 minus line 2. If the result is 0, Stop—you can’t deduct your federal tax from a prior year. If greater than $0, continue to line 4. 3. _________ 4. Enter the amount of federal tax you paid in 2021 for a prior year. 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC, section B (subtraction code 309) or Schedule OR-ASC-NP, section D (modification code 602). 5. _________ Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] If your total federal tax subtraction (Part A, line 12 plus Part B, line 5) is $7,050 ($3,525 if your filing status is married filing separately), Stop—you can’t subtract your foreign tax (ORS 316.690). Otherwise, continue to Step 1. 1. Enter $7,050 ($3,525 if your filing status is married filing separately). 1. _________ 2. Enter your total federal tax liability subtraction (Part A, line 16 plus Part B, line 5). 2. _________ 3. Line 1 minus line 2. 3. _________ 4. Enter the amount paid in foreign tax, but not more than $3,000 ($1,500 if your filing status is married filing separately). 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC section B (subtraction code 311) or Schedule OR-ASC-NP section D (modification code 603). 5. _________ Table 8. Federal tax liability subtraction AGI phase-out If your filing status is: and your federal AGI is: then your maximum allowable tax liability subtraction is: at least— but less than— Single 0 $125,000 $7,050 $125,000 $130,000 $5,650 $130,000 $135,000 $4,200 $135,000 $140,000 $2,800 $140,000 $145,000 $1,400 $145,000 or more 0 Married filing separately 0 $125,000 $3,525 $125,000 $130,000 $2,825 $130,000 $135,000 $2,100 $135,000 $140,000 $1,400 $140,000 $145,000 $700 $145,000 or more 0 Married filing jointly or Head of household or Qualifying widow(er) 0 $250,000 $7,050 $250,000 $260,000 $5,650 $260,000 $270,000 $4,200 $270,000 $280,000 $2,800 $280,000 $290,000 $1,400 $290,000 or more 0 Subtractions

150-101-431 (Rev. 04-21-22) 74 Federal pension income [ORS 316.680(1)(e)] [Subtraction code 307] You may be able to subtract some or all of your tax­ able federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It doesn’t include disability payments if you haven’t attained the minimum retirement age. The subtrac­ tion amount is based on the number of months of federal service or points earned for retirement before and after October 1, 1991: • If all of your months of federal service occurred or points were earned before October 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return. • If you have no months of service or points earned before October 1, 1991, you can’t subtract any fed­ eral pension. • If your service occurred or points were earned both before and after October 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service or points earned before October 1, 1991, by your total months of service or points earned. Round your percentage to three places (example: 0.4576 = 45.8%). Once you determine the percentage, it will remain the same from year to year. Federal Thrift Savings Plan (TSP). Once a taxpayer is a retiree, withdrawals from federal TSP accounts are eligible for the subtraction based on dates of ser­ vice. Withdrawals prior to retirement aren’t eligible because the taxpayer must be a retiree at the time of withdrawal to be eligible for the subtraction. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no lon­ ger a federal pension. In this case, future withdraw­ als wouldn't be eligible for the subtraction. Full-year residents. If you're eligible for the federal pension income subtraction, enter the amount on Schedule OR-ASC. Part-year residents. If you received the federal pen­ sion income during the part of the year when you were a resident and you're eligible for the subtrac­ tion, enter the amount on both the federal and Ore­ gon lines of Schedule OR-ASC-NP. Include your fed­ eral pension income received during the part of the year when you were a nonresident only if you were domiciled in Oregon during that time. If you were not domiciled in Oregon during the part of the year that you were a nonresident, exclude the income you received during that time from your Oregon income on your part-year return, and don't claim a subtrac­ tion for any portion of that income. Nonresidents. Claim a subtraction for federal pen­ sion income only if you reported it on your Oregon return. Oregon doesn’t tax your retirement income unless you have kept Oregon as your domicile. For more information, see “Income.” Use this worksheet to determine your federal pension income subtraction amount: 1. Federal pension income included in federal AGI. 1. $ ___________ 2. a. Months of service or points earned from _______

(federal service start date) to October 1, 1991. a. ____ months*/points

b. Months of service or points earned from _______

(federal service start date) to _______ (federal

service retirement date). b. ____ months**/points

Divide the number of months or points on line a by the total number of months or points on line b. This is your federal pension subtraction percentage. Round the decimal three places and enter it here. 2. ___________ 3. Multiply line 1 by the decimal on line 2. This is your federal pension subtraction. 3. $ ___________ * Federal service start date: If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service.

If your federal service start date was the 16th through the end of a month, don’t include the first partial month of service. Start counting the months of federal service with the first full month.

** Federal service retirement date: If your federal service retirement date was the 1st through the 15th of a month, don’t count this final partial month when counting the total months of federal service.

If your retirement date was the 16th through the end of the month, include the entire Subtractions

150-101-431 (Rev. 04-21-22) 75 month when counting the total months of federal service.

Keep a copy of this worksheet with your permanent tax records. Use the same percentage from line 2 to determine your federal pension subtraction in future years. Example 1: Jared worked for the U.S. Department of Agriculture from May 1, 1977, until July 31, 2012. He worked a total of 423 months—173 months before October 1, 1991. In 2021, he received federal pension income of $65,000. He can subtract 40.9 percent (173 ÷ 423) or $26,585 (0.409 × $65,000) of his federal pension. Jared will continue to subtract 40.9 percent of his federal pension from Oregon income in future years. Example 2: Robin served in the U.S. Army Reserves from June 20, 1987 through May 18, 2012. As a retired mem­ ber of the reserves, Robin’s service is easier measured by the retirement points she earned. Her Chronological Statement of Retirement Points shows that she earned 1,917 retirement points before October 1, 1991, out of a total 3,510. Robin received $25,000 in pension benefits in 2021. This worksheet shows how she will determine her federal pension subtraction. 1. Federal pension income included in federal AGI. 1. $ 25,000 2. a. Points earned before October 1, 1991. a. 1,917 points

b. Total points earned. b. 3,510 points

Divide the number of points on line a by the total number of points on line b. Round the decimal three places. This is Robin’s federal pension subtraction percentage. 2. 0.546 3. Multiply line 1 by the decimal on line 2. This is Robin’s federal pension subtraction. 3. $ 13,650 Federal tax credits (ORS 316.716) [Subtraction code 340] [Modification code 609] These credits are not related to individual health insurance premium credits allowed by the federal Affordable Care Act. To claim certain federal tax credits, such as the mort­ gage interest credit or the employer credit for paid family leave allowed by IRC Section 45S, you must reduce your business expenses or itemized deduc­ tions on your federal return by the amount of the credit you figured for the year. Oregon allows a subtraction for the amount reduced on your federal return. Subtract the entire reduction amount in the year you first claimed the federal credit, even if the federal credit is carried over. Part-year residents and nonresidents: Report the reduction amount as a subtraction if the item you reduced was reported on a federal form or sched­ ule other than Schedule A. If you were required to reduce an itemized deduction, report the reduction amount as a modification, not as a subtraction. Mortgage interest credit. Were you required to reduce your mortgage interest deduction because you claimed the federal mortgage interest credit? See the “Mortgage interest credit” section for detailed information about this subtraction. Health Coverage Tax Credit (HCTC). If you claimed this credit on your federal return, you might be allowed a subtraction on your Oregon return. This credit isn’t related to the premium credit allowed by the federal Affordable Care Act. Oregon allows a subtraction or modification for the self-employed health insurance deduction or itemized deductions you couldn’t claim on your federal return because you claimed the HCTC. Part-year residents and nonresidents doing business in Oregon. If your federal credit is related to a busi­ ness operated entirely in Oregon, don’t prorate your subtraction. If the credit is related to a business not operated solely in Oregon, you must prorate your sub­ traction. Use this formula to determine the amount to subtract on the Oregon line on Schedule OR-ASC-NP: Sales in Oregon × Expenses not allowed on your federal return Sales everywhere Enter the expenses not allowed on your federal return on the federal line on the schedule. Partnerships and S corporations. If your federal credit is from a partnership or S corporation, you may subtract a percentage of the expenses not deductible on your federal partnership or S corporation return. This amount will usually be the same as the percent­ age of total partnership or S corporation income you report on your return. Nonresidents or part-year resi­ dents must use the percentage explained in the previ­ ous paragraph to further prorate the expenses. Subtractions

150-101-431 (Rev. 04-21-22) 76 First-time home buyer savings account (FTHBSA) contributions and earnings (ORS 316.798, 316.800) [Subtraction code 361] Oregon allows a subtraction for amounts you depos­ ited during the tax year into a designated FTHBSA, along with any earnings on your deposits. Who may claim the subtraction? Any Oregon resident who hasn’t purchased or owned a single-family home, either individually or jointly, in the three years prior to the date they purchase a new home in Oregon and makes deposits into their desig­ nated FTHBSA may qualify for this subtraction. What are the requirements? A FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of open­ ing the account. What costs will qualify? You must use your FTHBSA funds to pay costs asso­ ciated with buying a home, such as: • Down payment. • Title insurance and other closing costs. • Realtor commissions. • Appraisal and inspection fees. • Loan origination fees. What’s the tax benefit of my FTHBSA? Up to $5,000 in deposits and earnings for the year may be subtracted by an individual filer each year— up to $10,000 each year if you’re filing a joint return— for up to ten years or an aggregate total of $50,000. The maximum subtraction amount is limited by your federal AGI as shown in Table 9. Note: Deposits or earnings that exceed the subtraction limit for the year can’t be carried forward to a later year. Only those amounts that were deposited or earned during the tax year may be subtracted from that year’s Oregon taxable income. Table 9. FTHBSA subtraction limits If your filing status is: and your federal AGI is: then your maximum allowable FTHBSA subtraction is: at least— but less than— Married filing jointly 0 $149,000 $10,000 $149,000 $158,000 $8,000 $158,000 $167,000 $6,000 $167,000 $176,000 $4,000 $176,000 $187,000 $2,000 $187,000 or more 0 All others 0 $104,000 $5,000 $104,000 $111,000 $4,000 $111,000 $117,000 $3,000 $117,000 $123,000 $2,000 $123,000 $131,000 $1,000 $131,000 or more 0 Penalty and add back for nonqualified withdrawal. If the funds in your FTHBSA are withdrawn within 10 years of opening the account, but aren’t used to pur­ chase a home, a 5 percent penalty may be imposed on the amount withdrawn. See this topic in “Interest and penalties.” You will also be required to add back any withdrawn amounts you previously subtracted. See this topic in “Additions.” Note: You may trans­ fer funds from your FTHBSA and deposit them into another FTHBSA that you hold at the same or a dif­ ferent financial institution; to avoid the penalty and the add back requirement, the transfer (or the home purchase) must be completed within 60 calendar days of the withdrawal. For more information about the FTHBSA program, contact a participating Oregon financial institution. For help locating a participating institution, visit the Oregon Association of Realtors’ website at www.ore­ gonrealtors.org. Foreign income tax (ORS 316.690) [Subtraction code 311] [Modification code 603] You can subtract taxes paid to a foreign country if on your federal return: • You claimed a credit for taxes you paid to a foreign country; or • You didn’t claim a credit for tax you paid to a for­ eign country and you didn’t claim foreign taxes as an itemized deduction. Subtractions

150-101-431 (Rev. 04-21-22) 77 Your foreign tax subtraction plus the subtraction for your current federal tax liability plus any additional federal tax paid for a prior year can’t be more than $7,050 ($3,525 if your filing status is married filing separately). The foreign tax portion of your federal tax subtrac­ tion can’t be more than $3,000 ($1,500 if your filing status is married filing separately). Itemized deduction. If you claimed foreign income taxes as an itemized deduction on your federal return, you may claim them in full on Schedule OR-A. The amount you may deduct on your Schedule OR-A isn’t subject to the same limit as the subtraction. See the instructions for Schedule OR-A for more information. If you claim the foreign taxes as an itemized deduc­ tion, you may not also claim them as a subtraction. Use Part C of the Federal tax worksheet to figure your foreign tax subtraction. Income on a composite return (OAR 150-314-0515) [Form OR-40-N/OR-40-P only: Subtraction code 341] If you are an electing owner of a pass-through entity (PTE), you may need to file a personal income tax return in addition to the Oregon composite return, Form OR-OC, that is filed on your behalf by the PTE. This is necessary when you have other Oregon- source income to report. Follow the instructions for filing Form OR-40-N if you have income not already reported on a Form OR-OC. Enter all PTE income (including income reported on the Form OR-OC) in the federal column, line 17F, and all Oregon-source PTE income (includ­ ing Oregon-source income reported on Form OR-OC) in the Oregon column, line 17S, of your Form OR- 40-N. Because the income reported on Form OR-OC has already been taxed, subtract that income on both the federal and Oregon lines on Schedule OR-ASC- NP, section C. Note: Don’t claim the tax paid on your behalf by the PTE as a payment on your Form OR-40-N. That pay­ ment was already used to pay the tax on the income reported on Form OR-OC. For more information, see the Form OR-OC instructions. IDA contributions (ORS 316.848) [Subtraction code 314] An IDA is a matched savings account that builds the financial management skills of qualifying Orego­ nians while they save toward a defined goal. An IDA allows an individual in a lower-income household to accumulate assets tax-free. As the account holder, you make deposits to your own account. Your depos­ its are matched with private donations. Withdrawals made for a qualified purpose are tax free. Qualified purposes include: • Paying higher education expenses or medical expenses; or • Purchasing a primary residence; or • Saving for retirement; or • Starting your own business. Oregon allows a subtraction on your tax return for deposits you make to your IDA through the Neigh­ borhood Partnership Fund. Your subtraction includes the interest earned on your IDA funds if the interest is included in your federal taxable income. Subtract the amount of the deposits made during the year, plus taxable interest earned, on Schedule OR-ASC or OR-ASC-NP. For more information about establishing an IDA, contact The Neighborhood Partnership Fund at 503- 226-3001 or www.neighborhoodpartnerships.org. Interest and dividends on U.S. bonds and notes [ORS 316.680(1)(a)] [Subtraction code 315] Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest. You may also subtract U.S. government interest (called state exempt-interest dividends) from regu­ lated investment companies and asset pools man­ aged by a fiduciary. These include, but aren’t limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or asset pool must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The sub­ traction is limited to your share of the amount of interest actually earned from qualifying U.S. govern­ ment securities. You can’t subtract amounts when the U.S. govern­ ment only guarantees the security. If you receive dis­ tributions from a retirement plan, you may not sub­ tract pension income received from funds invested in U.S. government securities. Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon. Subtractions

150-101-431 (Rev. 04-21-22) 78 Following is a detailed list of bonds and notes that may or may not qualify for this subtraction. For a list of obligations that are exempt from both state and federal taxation, see “Interest and dividends on gov­ ernment bonds of other states“ in “Additions.“ Qualifies Bond/note Yes Banks for Cooperatives District of Columbia. Yes Commodity Credit Corporation. No* Export-Import Bank. No Farmers Home Administration. Yes Federal Deposit Insurance Corporation. Yes Federal Farm Credit Bank. Yes Federal Financing Bank. No Federal Home Loan Mortgage Corpora­ tion (Freddie Mac). Yes Federal Home Loan Bank. Yes Federal Intermediate Credit Bank. Yes Federal Land Bank and Federal Land Bank Association. No Federal National Mortgage Association (Fannie Mae). Yes Federal Savings and Loan Insurance Corporation. No Federal tax refunds. Yes Financing Corporation (FICO). Yes General Insurance Fund. No* Government National Mortgage Asso­ ciation (Ginnie Mae). Yes Government Services Administration (GSA Public Building Trust Participation Certificate). No International Bank for Reconstruction and Development. Yes Production Credit Association (PCA). Yes Resolution Funding Corporation (REFCO). No Repurchase agreements (Repos). Yes Series EE, HH, and I Bonds. No* Small Business Administration. Yes Student Loan Marketing Association (Sallie Mae). Yes Tennessee Valley Authority. Yes Treasury bills and notes—interest. No Treasury bills and notes—gain on sale. No U.S. Merchant Marine bonds. Yes U.S. Postal Service bonds. No* Washington (D.C.) Metropolitan Transit Authority. Yes Zero coupon obligations of the U.S. (for example, “CATs,” “STRIPS,” “TIGRs,” etc.). *If the creditor has defaulted and the U.S. government/ Export-Import Bank is paying the interest, it’s nontaxable. Related expenses You must reduce your subtraction for expenses con­ nected with U.S. bonds and notes if the expenses are included in your Oregon itemized deductions on Schedule OR-A. These expenses include interest paid on money borrowed to buy the bonds and notes and costs incurred in the production of income from the bonds and notes. Land donation to educational institutions carryforward (ORS 316.852) [Subtraction code 316] This provision expired December 31, 2007. However, if you had a qualifying donation or sale prior to that date, you may still have contribution amounts to carryforward. The subtraction allowed in any tax year is limited to a specific percentage of your contribution base. Your contribution base is federal AGI computed without any NOL carryback. If you donated land to a qualified entity, your Ore­ gon subtraction can’t be more than 50 percent of your contribution base. If you sold land to a qualified entity for less than its fair market value, the Oregon subtraction can’t be more than 25 percent of the contribution base. Carryforward. You can carry forward for a maxi­ mum of 15 years any contribution you don’t subtract because it’s more than the specified percentage of the contribution base. Any contributions not subtracted by 2022 will be lost. Example. In tax year 2007, Marykate sold land with a fair market value of $500,000 to a local school district for $200,000 cash. Her contribution base that year was $100,000. Marykate’s subtraction for her contribution of $300,000 ($500,000 – $200,000) was limited to 25 percent of her contribution base, or $25,000 ($100,000 x 0.25). Marykate can carry forward the remaining $275,000 ($300,000 – $25,000) to the next tax year until she has subtracted all of it or tax year 2022, whichever is first. Her subtraction will be limited by her contri­ bution base each year. Subtractions

150-101-431 (Rev. 04-21-22) 79 Legislative Assembly expenses (ORS 171.072) [Subtraction code 335] If you served as a member of the Oregon legislature dur­ ing the tax year, Oregon won’t tax any allowances you received for expenses you incurred while performing your official legislative duties. You may subtract your allowances to the extent that they are included in income on your federal return and not deducted elsewhere. Local government bond interest (ORS 286A.140) [Subtraction code 317] You can subtract interest or dividends on obligations of counties, cities, districts, ports, or other public or municipal corporations or political subdivisions of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by the State of Oregon to the extent included for federal income tax purposes. Related expenses You must reduce your subtraction if you’re including interest you paid on debt incurred to carry the obliga­ tions or securities or other expenses incurred in the production of income from these obligations in your Oregon itemized deductions on Schedule OR-A. Lottery winnings (ORS 461.560) [Subtraction code 322] Oregon won’t tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and aren’t eligible for the subtraction. “Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery doesn’t include gambling winnings from other sources, such as tribal gaming centers. If you’re a Native American, see the “American Indian” sub­ traction for more information. Winnings of more than $600 from a single ticket or play are fully taxable and may be reported by the Oregon State Lottery on Form W-2G. Lottery win­ nings that are more than $1,500 must have 8 percent withheld for Oregon taxes. If state income tax wasn't withheld from your gambling winnings consider making estimated tax payments or increasing your withholding from your wages. To increase your Ore­ gon wage withholding, complete Form OR-W-4. Give the form to your employer. Example 1: Margaret purchased two Oregon Lot­ tery tickets and won $1,000 on one ticket and $500 on the other. She also won $300 from a lottery ticket she bought in Idaho, and $150 on a slot machine at an Oregon casino. Margaret included all $1,950 in winnings on her federal return. Margaret can sub­ tract $500 of her Oregon Lottery ticket winnings on Schedule OR-ASC. Nonresidents: Oregon Lottery winnings are taxable to nonresidents. Oregon Lottery winnings included in federal taxable income are eligible for the subtrac­ tion when winnings per ticket or play are $600 or less. Exception for pre-1998 tickets: You may subtract all Oregon Lottery winnings included in your federal income from tickets purchased prior to January 1, 1998. Did you assign your lottery winnings to a pri­ vate company and receive a lump-sum settlement? If so, your settlement isn’t taxable by Oregon if your winning ticket was purchased before January 1, 1998. Winnings from tickets purchased on or after January 1, 1998 are fully taxable. Gambling loss deduction. If you’re deducting gam­ bling losses related to your tax-exempt lottery win­ nings on Schedule OR-A, you must add back the amount that exceeds the winnings that are taxed by Oregon. See this topic under “Additions” for more information. Manufactured dwelling park capital gain exclusion (Notes following ORS 316.792) [Subtraction code 338] Amounts received from the sale of a manufactured dwelling park to certain organizations are exempt from Oregon income tax. If you included this gain in income on your federal return, you may claim a subtraction for the gain amount on your Oregon return. Enter the amount on Schedule OR-ASC or OR-ASC-NP. To qualify, the park must have been: • Sold to a tenants’ association nonprofit organiza­ tion, community development corporation, or a housing authority; or • Destroyed by a natural disaster and sold to a non­ profit corporation or housing authority that will redevelop the site as a manufactured dwelling park. Subtractions

150-101-431 (Rev. 04-21-22) 80 For purposes of this exclusion, a “natural disaster” includes any disaster resulting in the declaration of a state of emergency by the governor of Oregon, or by the governing body of an Oregon city or county, for wildfires, floods, tsunamis, earthquakes or simi­ lar events, including disasters begun by negligent or intentional acts. Manufactured dwelling park closure payments (ORS 316.795) [Subtraction code 344] Payments received from your former landlord because your manufactured dwelling park was closed are exempt from state taxation. These payments must be included in your federal income in order to be sub­ tracted on your Oregon return. If you didn't include them in federal income, don't subtract them. Marijuana business expenses [ORS 316.680(1)(i)] [Subtraction code 359] Did you operate a business as a medical marijuana dispensary or as a producer, processor, wholesaler, or retailer of medical or recreational marijuana with a license issued by the Oregon Health Authority or the Oregon Liquor Control Commission (OLCC) under ORS Chapter 475B? If so, you may subtract certain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Sec­ tion 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cultivation, manufacture, distribution or sale of cer­ tain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and nec­ essary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Controlled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Erin has a business licensed by the OLCC to sell marijuana in Oregon. Her store sold medi­ cal and recreational marijuana products. Her gross sales for the year totaled $750,000. After deducting $350,000 in cost of goods sold, her gross profit was $400,000, which she reported as business income on her federal Schedule C. Along with paying the cost of the goods she sold, Erin had ordinary and necessary retail business expenses. She completed a second Schedule C for Oregon only and determined that her expenses, other than cost of goods sold, totaled $150,000. She claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Matt grows marijuana in his garage and sells it to his coworkers and friends. This year, he made $50,000 from these sales. He spent $15,000 on costs of goods sold during the year, and another $10,000 in other ordinary and necessary business expenses. Matt doesn’t have a license to produce or sell marijuana in Oregon, but he must file federal and Oregon tax returns to report his income. On his fed­ eral return, he must report $50,000 in gross income and can deduct $15,000 for the cost of the goods he sold. He can’t deduct his other business expenses on his federal return. Matt also can’t take an Oregon sub­ traction for those other business expenses because he doesn’t have a license issued by the Oregon Health Authority or OLCC. Mortgage interest credit (ORS 316.716) [Subtraction code 320] [Modification code 607] If all of the following are true for you, you may have a subtraction for mortgage interest on your Oregon return: • You’re claiming a mortgage interest credit on your federal return, • You’re claiming your mortgage interest as an item­ ized deduction on federal Schedule A, • You reduced your mortgage interest deduction by the federal mortgage interest credit, and • You’re claiming the same reduced amount of mort­ gage interest on Schedule OR-A. Claim a subtraction for the amount of mortgage interest credit allowed on your federal return. Take the subtraction in the year of the payment even if the federal credit is carried forward. Subtractions

150-101-431 (Rev. 04-21-22) 81 Example 1: Shawn and Phillip pay $5,000 in mortgage interest this year. They are entitled to a 50 percent credit, limited to $2,000, on their federal return. They claim the credit and reduce their itemized deduc­ tion for mortgage interest to $3,000. They include the same $3,000 deduction on Schedule OR-A, and claim a $2,000 subtraction on Schedule OR-ASC. Example 2: Use the same facts as Example 1, except that Shawn and Phillip’s federal tax liability is $1,500. They claim $1,500 as a credit on their federal return, claim a deduction of $3,000 in mortgage interest on Schedule A, and have a $500 credit to carry over to next year. They include the $3,000 deduction on Schedule OR-A and subtract $2,000 on Schedule OR-ASC. They don’t have a carryforward amount for Oregon. Oregon College and MFS 529 Savings Plan deposits carryforward (ORS 316.699) [Subtraction code 324] Contributions you made to an Oregon College or MFS 529 Savings Plan account after December 31, 2019 no longer qualify for a subtraction, but they may qualify for a credit. See “Oregon 529 College Savings Net­ work account contributions” in “Refundable credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2021 return is $5,030 if you file a joint return ($2,515 for all oth­ ers). This maximum applies to the combined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Example: Korey and Keri contributed $20,000 in 2019 to an Oregon College Savings Plan account for their son. They subtracted the maximum of $4,865 on their 2019 return. They carried the $15,135 balance of their contribution forward, claimed the maximum of $4,960 on their 2020 return, and will claim the maximum of $5,030 on their 2021 return. They may carry the remaining balance forward for up to two more years. Nonqualified expenses. You may need to add back funds withdrawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. A nonqualified purpose includes using the funds and earnings to pay K-12 tuition. See “Oregon Col­ lege and MFS 529 Savings Plans nonqualified with­ drawal“ under “Additions.” Oregon income tax refund (ORS 316.695) [Form OR-40-P/Form OR-40-N only: Subtraction code 325] Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon doesn’t allow a subtraction for an income tax refund from any other state. Full-year filers: This subtrac­ tion is claimed on Form OR-40. Part-year and non­ resident filers: Claim this subtraction on Schedule OR-ASC-NP, section C. Oregon Investment Advantage

(ORS 316.778) [Subtraction code 342] Oregon has an income tax exemption program for business development in Oregon. The program is available to both new and expanding businesses. Who is eligible for the exemption? The exemption is a 10-year waiver of all income and excise taxes relating to qualifying business opera­ tions. Business Oregon (the Oregon Business Devel­ opment Department, or OBDD) administers this program. To qualify, a company must create at least five new full-time, year-round jobs that meet minimum pay requirements. Facility operations must be the first of their kind in Oregon for the company and must not compete with existing area businesses. Areas that qualify for development can change from year to year. Local unemployment rates and per capita income as of the date of application for preliminary certification determine eligibility. For a list of qualifying counties, go to www.oregon4biz.com. How is a facility certified? There are two application forms necessary for this program. A preliminary certification is completed before hiring or any construction work is done. An annual certification is then completed for each of the 10 years that the income tax exemption is claimed. To find out more about this program or download an application form, contact Business Oregon at www.oregon4biz.com. How is the subtraction computed? The exempt income is determined by multiplying the taxpayer’s federal taxable income by the ratio of their federal AGI derived from the business over their total federal AGI. Subtractions

150-101-431 (Rev. 04-21-22) 82 The resulting amount is then multiplied by the ratio of the business’ income derived from the business’ sales at the certified facility over its sales from all business activities. Nonresident and part-year resident taxpayers deter­ mine exempt income by multiplying only Oregon- sourced federal taxable income in the first step of the computation above. See our administrative rule for additional informa­ tion on determining income derived from qualifying activities (OAR 150-316-0600). Previously taxed employee retirement plans (ORS 316.159) [Subtraction code 327] Oregon allows residents to subtract payments from an IRA, Keogh plan, SEP plan, and certain govern­ ment plans if another state has already taxed contri­ butions or a portion of the contributions to the plan. The payments must be included in federal AGI. All of the following conditions must be met for the contri­ butions to qualify: • Contributions were made while a nonresident of Oregon. • No previous state income tax deduction, exclusion, or exemption was allowed or allowable at the time contributions were made. • No previous state income tax deduction, exclusion, credit, subtraction, or other tax benefit has been allowed for the contributions. • Contributions have been taxed by another state. The subtraction continues until all qualifying contri­ butions are recovered. A statement from the payer showing your total con­ tributions and the start date of your benefits will help you figure your subtraction. Keep this statement with your tax records. Example 1: Judith lived in California. From 1980 to 1996 she contributed to an IRA. In 1980 and 1981 she contributed $1,500 each year. From 1982 through 1996 she contributed $2,000 each year. Both federal and California allowed a maximum deduction of $1,500 for 1980 and 1981. For 1982 through 1986, federal allowed a maximum of $2,000, and California allowed a maximum of $1,500. Both federal and California allowed a maximum of $2,000 for 1987 through 1996. Judith contributed $2,500 ($500 × 5 years) from 1982 through 1986 that she was not allowed to deduct on her California returns. Judith retired and moved to Oregon in November of last year. She receives payments of $1,000 a month from the California IRA. These payments are subject to Oregon tax because she is now an Oregon resident. However, Oregon will allow Judith to subtract the con­ tributions that California has already taxed ($2,500). Judith received two payments of $1,000 last year for a total of $2,000. She can subtract the entire $2,000 on last year’s Oregon return. This year, she’ll be able to subtract the balance of $500 ($2,500 - 2,000) as long as she receives at least that much from her California IRA. From that point on, no subtraction on the Ore­ gon return for recovery of contributions is allowed. Example 2: Use the same facts as in Example 1, except Judith lived and worked in Washington before mov­ ing to Oregon. When she made contributions, she was allowed a federal deduction each year. However, she didn’t get a state tax deduction, because Washington doesn’t have an income tax. After retiring and moving to Oregon, Judith receives the same payments as above. She doesn’t qualify for the Oregon subtraction because her contributions weren't taxed by another state. Previously taxed IRA conversions [ORS 316.680(1)(f)] [Subtraction code 348] Oregon allows a subtraction for converting a tra­ ditional IRA to a Roth IRA, if the IRA is taxed by another state. You must include the payments in fed­ eral taxable income to claim the subtraction. Example: Susan lived in New York in March of last year, when she converted her $100,000 traditional IRA to a Roth IRA. In September, she moved to Oregon. New York state will tax her IRA when she becomes a nonresident. Susan can subtract the amount included in federal income when she files her Oregon tax return. Public Safety Memorial Fund award [ORS 316.680(1)(g)] [Subtraction code 329] Amounts awarded to you by the Public Safety Memo­ rial Fund Board may be subtracted from Oregon income. The award must be included in federal tax­ able income to claim the subtraction. Public Safety Memorial Fund Awards are for public safety officers with certain job-related permanent total disabilities. These awards are also available to family members of a public safety officer who is killed in the line of duty or while interceding in a crime. Subtractions

150-101-431 (Rev. 04-21-22) 83 Railroad Retirement Board benefits (ORS 316.054) [Subtraction code 330] The Railroad Retirement Act of 1974 prohibits states from taxing certain railroad benefits. This act per­ tains to all benefits issued by the Railroad Retire­ ment Board (RRB). Oregon allows a subtraction for Tier 1 RRB benefits (the same as for Social Security benefits). The subtraction has been extended by administrative rule to the other supplemental RRB benefits including Tier 2, windfall, vested dual, sup­ plemental annuities, unemployment, and sickness (OAR 150-316-0065). Tier 1 benefits. Tier 1 benefits are reported like Social Security on your federal return. Subtract these ben­ efits with Social Security on the Oregon return. Tier 2, windfall, vested dual, supplemental annuities, unemployment and sickness paid by the RRB. These benefits are reported as wages or on the private pen­ sion line of your federal return. Subtract these ben­ efits on Schedule OR-ASC, section B or Schedule OR- ASC-NP, section C. Other benefits. A retired railroad employee may receive other retirement benefits from their employer. Benefits paid by private railroad employers are pri­ vate pensions taxed the same on both the federal and Oregon returns. There is no Oregon subtraction for retirement benefits paid by private railroad employers. Only benefits paid by the RRB qualify for the subtrac­ tion. RRB benefits are reported on Form 1099, except for sickness benefits, which are reported on Form W-2. All 1099s issued by the RRB, other than 1099-G for RRB unemployment benefits, are labeled Form RRB-1099-R. More information on RRB benefits is available on the board’s website at www.rrb.gov. Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claim­ ing the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed. Social Security benefits (ORS 316.054) Oregon doesn’t tax Social Security benefits. Any Social Security benefits included in your federal AGI are subtracted on your Oregon return. Special Oregon medical (ORS 316.693) [Subtraction code 351] You may qualify for the special Oregon medical sub­ traction if: • You or your spouse turned 66 by the end of the tax year; • Your federal AGI doesn’t exceed $200,000 ($100,000 if your filing status is single or married filing sepa­ rately); and • You or your spouse have qualifying medical or dental expenses. Medical or dental expenses qualify if they can be included in itemized deductions. See IRS Publica­ tion 502, Medical and Dental Expenses, to see which expenses qualify. You can’t subtract expenses: • For anyone under age 66; • For dependents, regardless of their age; or • That are deducted elsewhere on your return. Table 10. Special Oregon medical subtraction— maximum amount If your filing status is: And your federal adjusted gross income from Form OR-40, line 7 or Form OR-40-N or OR-40-P, line 29F is: Then your maximum allowable medical subtraction per qualifying taxpayer is: at least— but less than— Married filing Jointly; or Head of household; or Qualifying widow(er) 0 $50,000 $1,800 $50,000 $100,000 $1,400 $100,000 $200,001 $1,000 $200,001 or more 0 Single or Married filing separately 0 $25,000 $1,800 $25,000 $50,000 $1,400 $50,000 $100,001 $1,000 $100,001 or more 0 Subtractions

150-101-431 (Rev. 04-21-22) 84 The maximum amount you can subtract for each qualifying person is shown in Table 10. Use the table and the Special Oregon medical subtraction work­ sheet to determine the amount of your subtraction. Shared expenses. Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy doesn’t affect the price of the pol­ icy, it’s reasonable to count all children on the policy as one individual. For example, the cost of insurance premiums for a policy covering two adults and four children can be divided by three. Example 1: Chloe and Sam were ages 67 and 62 at the end of the tax year. They filed a joint return with one depen­ dent (Sam’s mother), federal AGI of $55,000, and itemized deductions for Oregon. During the tax year they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in premi­ ums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Oregon medical subtraction because Sam doesn’t meet the age requirement and Sam’s mother is a dependent. Example 2: Peter turned 66 during the tax year. He’s self-employed and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on Schedule OR-A. He also deducted 100 percent of his self-employed health insurance premiums, totaling $2,500, on his fed­ eral return. Only the $3,200 in medical expenses Peter claimed on Schedule OR-A will be used to calculate his special Oregon medical subtraction because they haven’t been fully deducted. The worksheet will help him calculate the amount of his subtraction. Special Oregon medical subtraction worksheet instructions Line 1: Enter each person’s qualifying medical and den­ tal expenses that you’re claiming as itemized deduc­ tions on Schedule OR-A. Enter your expenses in col­ umn (A) and your spouse’s expenses in column (B). If you’re not including medical expenses in your Oregon itemized deductions or you’re claiming the standard deduction on your Oregon return, skip lines 2–4, enter the amount from line 1 on line 5, and go to line 6. Line 2: Enter the total medical and dental expenses you’re claiming as an itemized deduction (Schedule OR-A, line 1), even if they are for a spouse or depen­ dent whose expenses don’t qualify. Line 3: Line 1 divided by line 2. Round to three deci­ mal places. For example, 0.7308 is rounded to 0.731. Line 4: Enter the lesser of the amount you entered on line 2, above, or the amount on line 3 of your Schedule OR-A. Line 5: Multiply line 3 times line 4 and round to whole dollars. (For example: $101.49 is rounded to $101.) Line 6: Enter the maximum allowable medical sub­ traction for your filing status and federal AGI from Table 10. Don’t enter more than $1,800 in each column. Line 7: Enter the smaller of line 5 or line 6. Line 8: Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. Full-year residents. Enter the amount from line 8 on Schedule OR-ASC, section B. Part-year residents and nonresidents. Enter the full amount from line 8 on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Special Oregon medical subtraction worksheet:

Column Column

(A) (B)

You Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ $ 6. Maximum allowable medical subtraction from Table 10. 6. $ $ 7. Enter the smaller of line 5 or line 6. 7. $ $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ Subtractions

150-101-431 (Rev. 04-21-22) 85 Example 3: Leah and Tyler are ages 67 and 61 at the end of the tax year. They file a joint return with fed­ eral AGI of $45,000 and itemize their deductions for Oregon. During the year, they paid $4,700 in medi­ cal and dental expenses claimed on Schedule OR-A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medi­ cal insurance policy covering both of them. Only Leah’s expenses qualify for the special Oregon medi­ cal subtraction because only she met the age require­ ment. Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows:

Column Column

(A) (B)

Leah Tyler 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 2,150 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 4,700 $ 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.457

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 3,375 $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,542 $ 6. Maximum allowable medical subtraction from Table 10. 6. $ 1,800 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,542 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,542

Leah and Tyler will claim $1,542 on Schedule OR-ASC. Example 4: Kenneth and Sophia were both age 66 at the end of the tax year. They file a joint return with fed­ eral AGI of $78,000. Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses dur­ ing the year. They are self-employed and claimed $3,400 for self-employed health insurance premiums on their federal return. They claimed the remaining $8,900 on line 1 of Schedule OR-A. Of this amount, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia calculate their special Oregon medical subtraction as follows:

Column Column

(A) (B)

Kenneth Sophia 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 7,700 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 8,900 $ 8,900 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.135 0.865 4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 5,850 $ 5,850 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 790 $ 5,060 6. Maximum allowable medical subtraction from Table 10. 6. $ 1,400 $ 1,400 7. Enter the smaller of line 5 or line 6. 7. $ 790 $ 1,400 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 2,190 Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they don’t include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that haven’t been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that haven’t been previously deducted, and $1,400, the maximum amount allowed Sophia). Example 5: Margaret is age 67 at the end of the tax year. She’s single and has a federal AGI of $27,000. During the year, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret doesn’t itemize her deductions because her standard deduction is greater than her itemized deductions for Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows: Subtractions

150-101-431 (Rev. 04-21-22) 86

Column Column

(A) (B)

Margaret Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2 above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,200 $ 6. Maximum allowable medical subtraction from Table 10. 6. $ 1,400 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,200 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,200 The medical expenses paid by Margaret for her 9-year-old granddaughter don’t qualify for the sub­ traction because she is a dependent. Example 6: Same as Example 5, except that Margaret isn’t an Oregon resident. She enters $1,200 on both the federal and Oregon lines of Schedule OR-ASC-NP, section C. Taxable benefits for former RDPs (ORS 314.023, OAR 150-316-0009) [Subtraction code 347] If you and your RDP were legally married or dis­ solved your partnership during the year, you may be allowed an Oregon subtraction for: • The imputed value of certain fringe benefits pro­ vided by your employer for your RDP for the part of the year you were still registered domestic partners. • The transfer of funds from your former domestic partner upon a dissolution decree. The fringe benefits typically include, but aren’t lim­ ited to, health insurance and tuition payments. You must have included the imputed value of the benefits in your federal income to claim the Oregon subtrac­ tion. The imputed value will be included in the total compensation (Box 1) shown on your Form W-2. The transfer of funds typically include, but aren’t limited to, retirement funds. You must have included these amounts in your federal income to claim the Oregon subtraction. Example: Ruth and Jan entered into an RDP eight years ago. They were legally married on June 16 of this tax year. Ruth and Jan must file this year’s tax return as married filing jointly for both federal and Oregon purposes. They won’t file an “as-if” federal return. Instead, they will attach their actual federal return to their Oregon return. Ruth’s employer provides health insurance benefits for Jan, and the imputed value of those benefits were included in Box 1 of Ruth’s W-2 for the portion of the year that Ruth and Jan weren't married (January 1 through June 15). Ruth may claim a subtraction for the value of the imputed benefits included in federal income, as reported on her W-2. Tuition and fees [ORS 316.716(3)] Oregon’s tuition and fees subtraction was for taxpay­ ers who had to reduce the tuition and fees deduction on their federal return because they were claiming a federal education credit. Congress has repealed the federal tuition and fees deduction for tax years after 2020. This means that there is no longer a deduction that must be reduced in order to claim a federal edu­ cation credit. For this reason, Oregon’s tuition and fees subtraction is no longer available. Education credit recapture. If you are required to recapture a federal education credit on a later federal return, you may need to amend your Oregon return to reduce the subtraction you claimed in a prior year. See “Amended returns“ for more information. U.S. government interest in IRA or Keogh distributions (ORS 316.681) [Subtraction code 331] Interest and dividends on U.S. bonds and notes are exempt from state tax. See “Interest and dividends on U.S. bonds and notes.” Answer these questions to see if you have a subtraction on your Oregon return for exempt income related to your retirement distributions: 1. Did you have any distributions from a self- employed retirement plan or an IRA? 2. Was any part of your self-employed retirement plan or your IRA invested in U.S. bonds and notes? Subtractions

150-101-431 (Rev. 04-21-22) 87 3. Did you include your self-employed retirement plan or IRA distribution in your 2021 federal AGI? If you answered “yes” to all the questions above, you may take a subtraction on Schedule OR-ASC or OR-ASC-NP for the retirement plan exempt earnings included in your distribution. Use a worksheet like the one shown in the example here or in OAR 150-316-0525 to calculate your sub­ traction. Keep the worksheet with your records; we may ask for it later. Example: Donna retired last year and began tak­ ing distributions of $10,000 each year from her IRA. The IRA is invested in U.S. government securities so Donna uses the following information to calculate her subtraction for years 1 and 2:

Year 1 Year 2 Current year earnings $4,000 $5,000 Current year distribution $10,000 $10,000 Account balance at 12/31 $100,000 $95,000 Total exempt earnings on account at 12/31 $ 40,000 $45,000 Worksheet Year 1 Year 2 1. Total account balance at year end. $100,000 $95,000 2. Current year distribution. + 10,000 + 10,000 3. Line 1 plus line 2. $110,000 $105,000 4. Total exempt earnings on account at year end. $ 40,000 $45,000 5. Total exempt part of distributions from all prior years. – 0 – $3,636 6. Line 4 minus line 5, but not less than zero. $40,000 $41,364 7. Line 6 divided by line 3. Oregon exempt ratio. 0.3636 0.3939 8. Line 2 multiplied by line 7. Oregon exempt portion of current year’s distribution. $3,636 $3,939 Subtractions

150-101-431 (Rev. 04-21-22) 88 Other items Net operating losses (NOLs) for Oregon (ORS 316.028) [Addition code 116] [Subtraction code 321] An Oregon NOL is figured the same as in IRC Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Ore­ gon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts. Oregon doesn’t allow an NOL from a non-Oregon source that occurred while you were a nonresident. Prohibited amounts Amounts Oregon is prohibited from directly or indi­ rectly taxing include interest earned from Treasury bonds, Treasury notes, and other obligations of the United States. Federal depreciation disconnect If you had an NOL in 2009 or 2010 and also claimed depreciation or expensing not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. See “Deprecia­ tion and amortization” for additional information. Computation of the NOL Full-year residents. Generally, the computation of the Oregon NOL for a resident is the same as the federal NOL, except for the prohibited amount modification. (See Prohibited amounts above.) The computation of the Oregon NOL begins with fed­ eral AGI. Reduce AGI by federal exemptions, federal deductions, and the prohibited amount modifica­ tion to arrive at the modified Oregon taxable income (OTI). Then adjust the modified OTI as required by IRC Section 172(d). Required adjustments are: 1. Oregon NOL deduction (NOLD) from prior years included in Oregon income after adjustments. 2. Net Oregon capital loss deduction. 3. Federal personal exemption amount (this will be $0 through tax year 2025). 4. Excess of nonbusiness deductions over nonbusi­ ness income included in modified Oregon taxable income. Example 1: Maria and Jaime filed joint federal and Oregon tax returns for 2021. On their federal return, they reported wages of $56,000, a business loss of $80,000, a gain on the sale of stock of $500, and inter­ est income of $900 from a bank. They reported total itemized deductions of $28,000, which were all non­ business and included $4,000 in Oregon withholding. On their Oregon return, Maria and Jaime reported an addition of $500 of municipal bond interest from California that was exempt from federal income tax. Their Oregon NOL is computed as follows: Federal tax return Wages $ 56,000 Interest income

900 Schedule C loss (80,000) Schedule D stock gain

500 Federal AGI ($ 22,600) Personal exemptions

0 Schedule A deductions (28,000) Federal taxable income ($ 50,600) Computation of Oregon NOL Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions (28,000) Modified Oregon taxable income ($ 50,600 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Nonbusiness deductions in excess of nonbusiness income 26,600 Oregon NOL ($ 24,000 ) Note: The $500 in California municipal bond interest and the $4,000 in Oregon withholding aren't used in this calculation. Compute the Oregon NOL based on federal NOL methods and definitions. Use Oregon sources with­ out Oregon adjustments (modifications, additions, and subtractions), except for prohibited amounts. Example 2: Use the same facts as in Example 1, except the $900 interest is from U.S. government securities (a prohibited amount). The Oregon NOL for Maria and Jaime is computed as follows: Federal tax return Wages $ 56,000 Interest from U.S. government securities

900 Schedule C loss

( 80,000 ) Other items

150-101-431 (Rev. 04-21-22) 89 Schedule D stock gain

500 Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions

(28,000) Federal taxable income ($ 50,600 ) Computation of Oregon NOL Federal AGI ($ 22,600 ) U.S. government interest

(900 ) Personal exemptions

0 Schedule A deductions

(28,000) Modified Oregon taxable income ($ 51,500 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Excess nonbusiness deductions

26,600 Oregon NOL ($ 24,900 ) Note: U.S. government interest, a prohibited amount, isn’t used to compute an Oregon NOL. Part-year residents and nonresidents. You’re allowed an Oregon NOL if it’s generated from Oregon sources. Computing an Oregon NOL begins with “income after adjustments” from the Oregon column. Reduce this amount by federal exemptions and deductions (attributable to Oregon sources) to arrive at the modi­ fied OTI. Then adjust the modified OTI as required by IRC Section 172(d). The required adjustments are the same as those listed for full-year residents. You aren’t allowed an NOL or carryover on an Ore­ gon return if the loss was incurred while you were a nonresident and wasn't attributable to Oregon sources. If your Oregon NOL is less than your federal NOL, report the difference as an addition using code 116 on Schedule OR-ASC or OR-ASC-NP. Oregon NOL carryforward or carryback. Oregon fol­ lows the IRS carryforward and carryback laws in IRC Section 172. For more information, see IRS Publica­ tion 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. If you carry an NOL back for federal purposes, you must also carry the Oregon NOL back for Oregon purposes. If you elect to carry the federal NOL for­ ward, you must also carry the Oregon NOL forward. Exception: If you weren’t required to file an Oregon return, carry the Oregon NOL to the year the loss may be first applied. The total number of years an NOL may be carried back or forward is the same for Oregon and federal. Example 1: Joe had an NOL for federal and Oregon purposes for 2020. Joe carried his federal NOL back to his 2015 federal return. Because he carried back his NOL for federal purposes, he must carry his NOL back for Oregon purposes. If he wasn't required to file a 2015 Oregon tax return, he may carry his Ore­ gon NOL back to 2016 or a later year until it can be applied. If he carries the NOL to a tax year after 2020, he’ll limit the deduction to the lesser of the NOLD or 80 percent of his FTI for the year. Example 2: Bud and Jody incurred losses from farming in 2020. They computed a farming NOL of $12,000 and chose to carry the loss forward for federal purposes, which means they also had to carry it forward for Oregon purposes. In 2021, before the loss is applied, Bud and Jody have federal AGI of $36,100, and reported additions of $8,000 and $3,000 in subtractions. They’re claiming the $25,100 standard deduction on their federal return and will claim $10,000 in Oregon itemized deductions on Schedule OR-A that aren’t affected by AGI limits. Bud and Jody will apply the NOL and compute the amount available for carryforward to 2022, if any, as follows: Allowable NOLD:

($ 12,000) Federal AGI on the Oregon return $ 36,100 Add: Capital loss deductions or 0

Capital gain deduction 0 Federal AGI for Oregon as revised $ 36,100 Less: Prohibited amounts 0

Standard or itemized deductions recomputed for revised federal AGI (25,100) Modified Oregon taxable income $11,000 NOL available for carryforward to the next year

$1,000 Other items

150-101-431 (Rev. 04-21-22) 90 Bud and Jody’s allowable NOL for Oregon is absorbed by their modified Oregon taxable income. Bud and Jody will carry $1,000 forward to 2022 for both federal and Oregon purposes. They have no Oregon addition or sub­ traction because their NOLD will flow through from their federal return. Part-year residents and nonresidents. Use the federal method without modifications, except prohibited amounts aren’t considered. Also, the NOLD, carryback, and carryover are based only on amounts attributable to Oregon sources. Example 3: While residents of California, Robin and Valerie incurred losses from an Oregon partnership creat­ ing an $85,000 Oregon-only NOL. Before the loss year, neither Robin nor Valerie needed to file Oregon returns. The next year, Robin and Valerie move to Oregon and file a part-year Oregon return. They report federal income after adjustments of $385,000, Oregon income after adjustments of $235,000, and federal itemized deductions of $72,000 that aren’t subject to AGI limits. Robin and Valerie calculate their Oregon taxable income as follows:

Federal Oregon Income after adjustments $ 385,000 $ 235,000 NOLD

(85,000 ) (85,000 ) Modified income after adjustments $ 300,000 $ 150,000 Additions per Oregon return

7,000 7,000 Subtractions per Oregon return

(2,000 ) (2,000 ) Modified income after subtractions $ 305,000 $ 155,000 Oregon percentage: 155,000 ÷ 305,000 = 50.8% Less: Standard or itemized deductions recomputed for revised federal AGI

(72,000 )

Federal tax subtraction

-0 -* Oregon taxable income as revised $ 233,000 *The federal tax subtraction is $0 when federal AGI is $290,000 or more for joint filers. Example 4: Leslie and Jill live in Vancouver, Washington. Leslie operates a business in Oregon. Leslie and Jill filed a nonresident Oregon return for 2020 reporting an Oregon-only NOL of $6,000. Leslie and Jill carried the NOL forward to 2021. In 2021, Leslie and Jill report Oregon income after adjustments of $1,600, federal income after adjustments of $32,000, and their Oregon percentage is 5 percent ($1,600 ÷ $32,000). Their income after adjustments for both federal and Oregon includes a $2,000 capital loss on the sale of some Oregon property. They are claiming the federal standard deduction, and have Oregon itemized deductions of $13,200. Leslie and Jill calculate their NOLD and the carryforward to the next year as follows: NOL

($6,000) Oregon income after adjustments $1,600 Add: Oregon capital loss deduction 2,000

Oregon capital gain deduction 0 Modified Oregon income as revised

$3,600 Less: Prohibited amounts

(0 )

Oregon percentage of standard or itemized

deductions recomputed for revised federal AGI (0.05 x $13,200)

(660 ) Modified Oregon taxable income (limit for NOLD)

2,940 Carryforward of NOL available for next year

($3,060 ) NOL as a subtraction. Generally, your NOL carryback and carryforward amounts will be reflected in your fed­ eral AGI. However, if you have an NOL carryback or an NOL carryforward for Oregon only, the loss won’t be reflected in your federal AGI. If your NOL isn’t reflected in federal AGI, report your carryback or carryforward on Schedule OR-ASC or OR-ASC-NP. Example 5: Same facts as Example 4. For federal purposes, Leslie and Jill's NOL will be entirely absorbed in 2021. The $3,060 that is available to be carried forward to their 2022 return won't be reflected in their 2022 federal AGI. They'll compute the NOLD amount for 2022 as they did for 2021, and report the amount as a subtraction using code 321 on Schedule OR-ASC-NP. Other items

150-101-431 (Rev. 04-21-22) 91 Depreciation and amortization (ORS 316.707, 316.716, 316.739) [Addition code 152] [Subtraction code 354] Your Oregon depreciation deduction is generally the same as for federal purposes. It won’t be the same in the following cases: • You transferred property into Oregon’s taxing jurisdiction. • The asset was placed in service in tax years begin­ ning on or after January 1, 1985, and you took a cor­ responding tax credit on your federal return that isn’t available on the Oregon return. • Assets were placed in service between 1981 and 1985 (Accelerated Cost Recovery System [ACRS] assets), and you didn’t make the adjustment align­ ing Oregon basis with federal basis for them. If you made the adjustment on your 1996 tax return, there won’t be a depreciation difference. • The asset was placed in service during tax years 2009 or 2010 and you claimed bonus depreciation or additional expensing under IRC Sections 168(k) or 179. For tax years 2009 and 2010, Oregon gen­ erally allowed the same expensing of qualifying assets under IRC Sections 168(k) and 179 as allowed under 2008 federal law. Because of this disconnect an addition is required, leaving a higher adjusted basis for Oregon to be depreciated over the life of the asset. Most taxpayers with an addition for this disconnect in 2009 or 2010 will have future year subtractions over the remaining life of the asset NOL and federal depreciation disconnect. Your Ore­ gon NOL is the same as your federal NOL. Therefore if you had an NOL in 2009 or 2010 and also claimed depreciation or expenses not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. Example 1: Paula expensed $144,000 in assets under IRC Section 179 in 2010. Because Oregon only allowed expenses of $134,000, she had a $10,000 addition on her 2010 Oregon return. Due to deductions and losses related to her business, Paula had a $15,000 NOL for 2010. Normally, she would have an Oregon basis of $10,000 and could claim Oregon subtractions over the life of those assets. Because Paula’s federal NOL is the same for Oregon purposes, she has already received the benefit in the NOL deduction. When Paula carries the NOL forward or back she isn’t allowed any future year subtractions due to depreciation differences. Example 2: Same as Example 1 except that Paula’s NOL was only $7,000. Paula still had an addition of $10,000 on her 2010 Oregon return. Paula would have been allowed to claim $10,000 in subtractions over the life of the assets bought in 2010 if she didn’t have an NOL. Because Paula had an NOL, the amount claimed in subtractions over the life of the assets bought in 2010 is reduced to $3,000 ($10,000 expens­ ing difference minus $7,000 already allowed as an NOL deduction). She will use a reasonable method to assign the $3,000 in Oregon adjusted basis to one or more of the assets purchased in 2010 to calculate her future years’ differences in depreciation. Oregon Depreciation Schedule. Use Schedule OR- DEPR to determine if your Oregon depreciation is the same as, or different from, your federal depreciation. Oregon depreciation on all property – Federal depreciation on the same property = Oregon difference in depreciation Oregon subtraction. If your Oregon depreciation is more than your federal depreciation on the same property, you’ll have a subtraction (subtraction code 354) for the difference. Oregon addition. If your Oregon depreciation is less than your federal depreciation on the same property, you’ll have an addition (addition code 152) for the difference. Go to our website to download Schedule OR-DEPR, or contact us to order it. Partnership and S corporation modifications for Oregon and Business tax credits from PTE (ORS 314.712-314.752) [Addition code 119] [Subtraction code 323] If you received a Schedule K-1 from a PTE (partner­ ship, S corporation, or LLC filing as either), then you may have Oregon additions, subtractions, or credits that flow through to your Oregon return. Your modi­ fication or credit is based on the total for the business multiplied by your ownership percentage, which should have been calculated by the business. If there is a specific code for the Oregon addition or subtraction, use that code. Otherwise, use the above codes to identify the Oregon addition or subtraction. Part-year residents: Use the nonresident information for the part of the year you were a nonresident and the full amounts for the time you were a resident. Nonresidents: If your business operates both in and out of Oregon, it has an apportionment percent­ age from Schedule OR-AP. This percentage should be provided to you with your Schedule K-1, since it shows you how much of the income from your busi­ ness is Oregon source. The business should have already multiplied your share of Oregon additions and subtractions by the apportionment percentage. Other items

150-101-431 (Rev. 04-21-22) 92 Oregon credits that flow through may be required to be multiplied by your Oregon percentage on your Form OR-40-N. See the instructions for each credit for requirements. CPAR adjustments (ORS 314.733) [Addition code 187] [Subtraction code 384] If you’re an owner of a partnership that was subject to a partnership-level audit by the IRS (or you’re an owner of a tiered partner of such a partnership), you may have to increase or decrease your Oregon income as a result of the audit. Report an increase in income using addition code 187 or report a decrease in income using subtraction code 384, whichever is applicable. Use these codes even if another code is assigned for the specific type of increased or decreased income. Visit our website for more information. Basis of business assets transferred into Oregon (ORS 316.707) [Addition code 150] [Subtraction code 358] There are several ways that nonresidents can bring assets into Oregon’s taxing jurisdiction. For example: • You become an Oregon resident and transfer busi­ ness assets into Oregon. • You become an Oregon resident and leave the assets in the other state. • You open a business in Oregon and transfer busi­ ness assets into Oregon. Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller. The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Sec­ tion 179. The fair market value and useful life are fig­ ured when you bring the asset into Oregon. Reduce the federal unadjusted basis or the fair mar­ ket value of the asset by any Oregon depreciation previously allowed. Example: Bob was a California resident. He has owned a business in Yreka, California since 1995. Bob bought an office building in Yreka for $800,000. He placed it in service March 1, 1995. For federal purposes, the build­ ing is 31½-year real property and is being depreciated using the applicable percentages. On January 1, 2018, Bob bought a truck for $45,000. For federal purposes, the truck is five-year property and is being depreci­ ated using the applicable percentages. On January 1, 2021, Bob moved to Ashland, but he con­ tinues to operate his business in Yreka. At that time, the building had a fair market value of $1,473,000, and the truck’s fair market value was $27,000. Because Bob is an Oregon resident, he must determine his Oregon basis to depreciate his assets for Oregon. The Oregon adjusted basis is computed as follows: Building Smaller of: Cost of building (federal unadjusted basis) $ 800,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Net basis $ 800,000

or Fair market value as of January 1, 2021 $ 1,473,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Oregon fair market value $ 1,473,000 Bob will depreciate the building for Oregon using the $800,000 federal unadjusted basis and Modified Accelerated Cost Recovery System (MACRS) depre­ ciation for its original federal applicable recovery period. Truck Smaller of: Cost of truck (federal unadjusted basis) $ 45,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Net basis $ 45,000

or Fair market value as of January 1, 2021 $ 27,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Oregon fair market value $ 27,000 Bob will depreciate the truck for Oregon using the $27,000 Oregon fair market value and MACRS depre­ ciation for its original applicable federal recovery period. Sale of assets (ORS 316.716) [Addition code 154] [Subtraction code 355] Gain or loss on property you began depreciating after 1980 and before 1985. During the tax year, did you sell property you began depreciating after December 31, 1980, and before January 1, 1985? If you did and didn’t make the one-time adjustment on your 1996 Oregon return, your gain or loss for Oregon may differ from your gain or loss for federal purposes. If you sold this property during the year, you must Other items

150-101-431 (Rev. 04-21-22) 93 make an adjustment on your return to reconcile your Oregon basis to your federal basis. To figure your gain or loss for Oregon, use the depre­ ciation you claimed on your Oregon return in prior years. Subtract the total amount of gain or loss for Oregon property you began depreciating after 1980 and before 1985 from your gain or loss for federal purposes for the same property. The difference is an Oregon addition or subtraction. Keep a worksheet with your tax records to show how you figured the difference. Addition or subtraction If Oregon depreciation is less than your federal depreciation, you will have an Oregon subtraction. If Oregon depreciation is more than your federal depre­ ciation, you will have an Oregon addition. Partnerships and S corporations Partnerships report differences between federal and Oregon depreciation on the Oregon partner­ ship return. S corporations report the differences on Schedule SM of the Oregon S corporation return. The differences must also be shown on the partner’s or shareholder’s Schedule K-1 or equivalent. The differences will be added to or subtracted from income on the individual partner’s or shareholder’s Oregon income tax return. Gain on the sale of an Oregon residence (ORS 316.048) [Addition code 152] [Subtraction code 354] Generally, Oregon will tax the gain from the sale of your residence only when the federal government taxes it. Oregon won’t tax any gain excluded on your federal return. This is true even if you reinvest in a home outside Oregon. The Oregon basis of your home is generally the same as your federal basis. If your gain is taxed by the fed­ eral government, Oregon will tax the same amount of gain. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may not be the same as the federal basis due to depreciation differences. Note: If you are also taxed by another state or coun­ try on some or all of the gain, see “Mutually-taxed gain on the sale of residential property“ under “Stan­ dard credits.“ Fiduciary adjustment from Oregon estates and trusts (ORS 316.697) [Addition code 133] [Subtraction code 310] The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Sched­ ule OR-ASC or OR-ASC-NP as an addition using code 133 or as a subtraction using code 310. Example: Frank reported $5,000 of trust income from R&C Farewell Trust on federal Schedule E. Of this, $2,500 was from interest on U.S. obligations, which isn’t taxable by Oregon. He also received interest income of $1,000 from the trust that wasn't included in his federal income. This interest was from Cali­ fornia bonds and is taxable by Oregon. Frank should claim a $1,500 subtraction, the net of both fiduciary adjustment items, using subtraction code 310. Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year. Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income. Market-based sourcing (ORS 314.665) Oregon has changed from sourcing business income from the place where the cost of performance is incurred to the place where the taxpayer's market is located. This change affects nonresidents who do business in Oregon who are required to apportion their business income among two or more states. Example: Andrew, a tax professional and Washing­ ton state resident, advertises his services in Oregon, Idaho, and Washington and has clients in all three states. He provides services for his clients out of his Washington office. He earned $400,000 from his Oregon clients, $350,000 from his Idaho clients, and $250,000 from his Washington clients. Although his work is performed in Washington state, Andrew would report 40 percent of his sales ($400,000) as Oregon income because 40 percent of his market is in Oregon. Other items

150-101-431 (Rev. 04-21-22) 94 Passive activity losses (PALs) (ORS 314.300) [Addition code 155] [Subtraction code 356] Generally, a passive activity is any: • Rental activity including equipment and real estate, regardless of your level of participation; or • Business in which you don’t materially participate on a regular, continuous, and substantial basis. Oregon generally adopted the federal passive loss rules in the federal Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. There are some differences in passive losses for Oregon. How to compute and report passive losses for Oregon 1. Modify the federal passive loss by the applicable additions and subtractions listed under “Oregon modifications to federal passive activity losses.“ 2. Apply the federal passive loss limitations to the Oregon passive loss you computed in step 1 above. This will determine how much is deductible for Oregon. To apply the income limitations, use fed­ eral AGI before modifying for Oregon additions or subtractions. 3. Figure the difference between the passive loss reported on your federal return and the deduct­ ible Oregon loss you figured above. You will claim an addition or subtraction on your Oregon return. 4. Keep a schedule with your tax records showing your computations for steps 1, 2, and 3 above. 5. Also keep a schedule (when applicable) showing the allocation of Oregon modifications between the Oregon passive loss activities and other busi­ ness activities. Example: Depreciation modification. Elijah has deter­ mined that his depreciation for Oregon is more than his federal depreciation by $1,000. Ordinarily, he would report a $1,000 subtraction on his Oregon return for the difference in depreciation. Of the $1,000 difference in depreciation, $600 is allo­ cable to passive activities and $400 is allocable to other business activities. His Oregon passive activity loss is his federal passive activity loss increased by the $600 difference in depreciation. He reports the remaining $400 difference in depreciation allocable to other business activities as a subtraction on his Oregon return. Passive activity credits. You can offset in full the tax credits related to a passive activity against your Ore­ gon tax liability for the taxable year. Active participants in rental real estate activities. The $25,000 offset for rental real estate activities provided in IRC Section 469(i) applies to deductions allowed under federal and Oregon law. Don’t reduce the off­ set by deduction equivalents defined in IRC 469 Sec­ tion (j)(5). The phaseout amounts ($100,000/$150,000) are based on federal AGI regardless of whether you are a full-year resident, part-year resident, or nonresi­ dent of Oregon. Part-year residents. Compute your passive activity losses from activities carried on while an Oregon resident. Add those connected with Oregon sources while a nonresident. Modify the result by applicable additions and subtractions listed here. Nonresidents. Compute your passive activity losses from activities connected with Oregon sources. Modify the loss by the applicable additions and subtractions listed here. The loss must be connected with Oregon sources even if you later become an Oregon resident. Oregon modifications to federal passive activity losses Listed here are some of the modifications you must make for Oregon: 1. Additions: • Interest or dividends on obligations of another state. • Depletion in excess of the adjusted basis of property. • Gain on voluntary or involuntary conversions or exchanges of Oregon property reinvested outside Oregon when no election is made to defer it. 2. Subtractions: • Gain or loss on the sale of public utility stock where dividends were reinvested. • Interest or dividends on obligations of the U.S. government. • Wages you didn’t deduct from federal taxable income because you claimed the federal work opportunity credit. • Interest or dividends on obligations of Oregon political subdivisions. 3. Additions or subtractions: • Differences in depreciation. • Differences in gain or loss from basis differences in the sale of an asset. Note: Items used to modify the federal passive activ­ ity loss must occur in the ordinary course of a trade or business. See OAR 150-314-0110 for more information. Oregon percentage (ORS 316.117) Part-year residents and nonresidents must compute an Oregon percentage. This determines allowable deduc­ tions, modifications, Oregon tax , and some tax credits. Other items

150-101-431 (Rev. 04-21-22) 95 In most cases, you’ll divide your income after sub­ tractions from the Oregon column by your income after subtractions from the federal column. Carry the decimal to three places and enter the figure on the Oregon percentage line. Don’t fill in more than 100 percent or less than 0. Negative income. If the federal column is negative and the Oregon column is positive, your Oregon per­ centage is 100 percent. If the federal column is posi­ tive or negative and the Oregon column is negative, your Oregon percentage is 0 percent. If both columns are negative, treat both columns as if they were posi­ tive and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon number, divide the federal number by the Oregon number. See Table 11 for examples. Example: Lisa reported $30,000 of income after sub­ tractions in the federal column. She reported $10,000 of income after subtractions in the Oregon column. Here’s how she figured her Oregon percentage: $10,000 ÷ $30,000 = 0.333 or 33.3% Table 11. Oregon percentage examples

Federal column Oregon column Oregon percentage ($20,000) $42,000 100.0% $50,000 ($22,000) 0.0% ($25,000) ($15,000) 100.0% ($12,000) ($15,000) 80.0% Deductions and modifications

(ORS 316.695) You may claim either Oregon itemized deduc­ tions or Oregon’s standard deduction, whichever is larger, but not both. You can claim Oregon item­ ized deductions even if you’re claiming the stan­ dard deduction on your federal return. Oregon itemized deductions Oregon Schedule OR-A. Oregon has its own form for reporting itemized deductions. If you're itemizing your deductions for Oregon, include Schedule OR-A with your Oregon return whether or not you're item­ izing deductions on your federal return. You still use federal definitions and AGI to figure any itemized deduction limitations. For more information, see the instructions for Schedule OR-A. Itemized deduction add backs Certain items that you may be including on Sched­ ule OR-A must be modified for Oregon purposes. If you’re claiming a deduction that must be modified for Oregon, you may need to add back some (or all) of the amount you deducted. All deductions that must be added back can be found under “Additions.” Follow these instructions for reporting an itemized deduction add back: • Full-year residents: Enter the amount you’re add­ ing back with the indicated addition code on Sched­ ule OR-ASC, section A. • Part-year residents and nonresidents: Use the indicated modification code and enter the dollar amount with a minus sign to report the add back as a “negative modification” on Schedule OR-ASC- NP, section D. Other Oregon modifications Part-year residents and nonresidents. Most income items that are modified for Oregon are reported as additions or subtractions. However, a few items must be reported by part-year residents and nonresidents as modifications on Schedule OR-ASC-NP. These are: • Artist’s charitable contribution subtraction (part- year filers only). • Federal income tax refund addition (negative modification). • Subtraction for federal tax from a prior year. • Foreign tax subtraction. See these items under “Additions” or “Subtractions” and the instructions for Schedules OR-ASC and OR- ASC-NP for more information. Oregon standard deduction Use the standard deduction only if it’s larger than your Oregon itemized deductions. If your filing status is married filing separately and your spouse itemizes, your standard deduction is $0. Generally, your standard deduction is based on your filing status: Single …………………………………………… $2,350 Married filing jointly ………………………………$4,700 Married filing separately If spouse claims standard deduction ………$2,350 If spouse claims itemized deductions …………… $0 Head of household …………………………… $3,780 Qualifying widow(er) ………………………… $4,700 Standard deduction—Nonresident aliens. The stan­ dard deduction for nonresident aliens is $0. Other items

150-101-431 (Rev. 04-21-22) 96 Standard deduction—Short-period return. Individu­ als filing a short-period return may not claim a stan­ dard deduction. Standard deduction—Age 65 or older, blind. If you or your spouse turned 65 on or before January 1, 2022, or if you or your spouse are blind, you’re entitled to an additional deduction amount. If you checked one or more of the boxes on line 17 of your Oregon Form OR-40 or line 38 of your Oregon Form OR-40-N or OR-40-P, multiply the number of boxes checked by: • $1,000 if married or qualifying widow(er). • $1,200 if single or head of household. Add this amount to the standard deduction amount for your filing status from above. Example 1: Matt and Sandy are married and file a joint return. Matt is 67 years old, and Sandy, age 62, is blind. They check boxes 17a and 17d on their Form OR-40. Their total standard deduction is $6,700. They figure their standard deduction as follows:

$4,700 Standard deduction for their filing

status MFJ

$2,000 2 x $1,000

$6,700 Total standard deduction Standard deduction—Single or married filing jointly dependents. If you (or you and your spouse, if fil­ ing jointly) can be claimed as a dependent on another person’s return, use the following worksheets to fig­ ure your standard deduction. Use these worksheets even if the other person doesn’t claim you (or your spouse, if filing jointly). Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually perform, and any part of a scholarship or fellowship grant that you must include in your gross income. Use your earned income from all sources even if you are a part-year resident or nonresident. Standard deduction worksheet for single dependents 1. Enter your earned income. 1. 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. 6. Basic standard deduction for single. 6. $ 2,350 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2022, enter $1,200; if not, enter $0. 8. 9. If blind, enter $1,200; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 2: Homer is single, age 17, not blind, and claimed as a dependent by his father. He had $1,135 of earned income. Homer’s standard deduction is $1,485, figured as follows: 1. Enter your earned income. 1. $ 1,135 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. $ 1,485 4. Minimum standard deduction, set amount. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. $ 1,485 6. Basic standard deduction for single. 6. $ 2,350 7. Enter the smaller of line 5 or 6. 7. $ 1,485 8. If age 65 by 1/1/2022, enter $1,200; if not, enter $0. 8. $ 0 9. If blind, enter $1,200; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 1,485 Standard deduction worksheet for married filing jointly (MFJ) dependents 1. Enter your earned income. 1. 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. 6. Standard deduction for MFJ. 6. $ 4,700 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2022, enter $1,000; if not, enter $0. 8. 9. If blind, enter $1,000; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 3: Jack and Kris are married and are both full-time college students. Jack is 20 and Kris is 21. Neither is blind. They live in Jack’s parents’ home and are both claimed as dependents by Jack’s par­ ents. Jack and Kris work part-time at the university. Together they had $7,620 of wage income. Jack and Kris will file a joint tax return. They calculate their standard deduction as follows: Other items

150-101-431 (Rev. 04-21-22) 97 1. Enter your earned income. 1. $ 7,620 2. Additional $350. 2. $ 350 3. Add lines 1 and 2. 3. $ 7,970 4. Minimum standard deduction. 4. $ 1,100 5. Enter the larger of line 3 or 4. 5. $ 7,970 6. Basic standard deduction for MFJ. 6. $ 4,700 7. Enter the smaller of line 5 or 6. 7. $ 4,700 8. If age 65 by 1/1/2022, enter $1,000; if not, enter $0. 8. $ 0 9. If blind, enter $1,000; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 4,700 Federal law disconnect [Addition code 131] Use this addition code to report items that were excluded or deducted from your federal taxable income and should be added back for Oregon pur­ poses, where those items don’t already have an assigned addition code. Contact us if you have ques­ tions about a situation involving a disconnect from federal taxable income that isn’t described elsewhere in this publication. Other items

150-101-431 (Rev. 04-21-22) 98 Credits Types of credits There are three types of Oregon tax credits: standard, carryforward, and refundable. In addition, some of these credits require certification from another state agency. Certain credits must be prorated on part-year and nonresident returns. Refer to the instructions for the credit you are claiming for specific details. Standard credits. These credits aren’t refundable. They can’t exceed your tax liability for the current tax year. Unused credit in excess of your tax liability can’t be carried forward to a later tax year. Carryforward credits. These credits aren’t refund­ able. They can’t exceed your tax liability for the cur­ rent tax year, but you may carry forward the unused amount to a later tax year. Refundable credits. Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability will be refunded to you. Certified credits. For certain credits, you must qual­ ify, apply, and be certified before you can claim them on your return. Other agencies, not the Department of Revenue, are responsible for certifying these cred­ its. Contact information can be found in the instruc­ tions for each certified credit in this section. Full-year residents. All credits you qualify for are allowed on Form OR-40. Part-year residents and nonresidents. You must pro­ rate certain Oregon credits by multiplying your total credit by your Oregon percentage from Form OR- 40-N or OR-40-P to figure the amount you can claim on your Oregon return. You must prorate the follow­ ing credits: • ABLE account contributions. • Agriculture workforce housing. • Bovine manure production/collection. • Crop donation. • Earned income. • Employer scholarship. • Fish screening devices. • Oregon 529 College Savings Network contributions. • Oregon Cultural Trust. • Oregon Veterans’ Home physicians. • Personal exemption. • Reservation enterprise zone. • Rural emergency medical technicians. • Rural medical practitioners. • Rural technology workforce development. • Short line railroad rehabilitation. • University Venture Development Fund contributions. • Working family household and dependent care. S corporation shareholders. Certain carryforward credits earned by S corporations pass through to shareholders, who then claim these credits on their personal income tax returns. Each of these credits may only be claimed on an Oregon personal income tax return by shareholders of an S corporation that qualifies for the credit or, if the credit is transferable, is a qualified transferee of the credit from another corporation that earned the credit. Except as noted, each credit is limited to the shareholder’s income tax liability for the year, although the carryforward pro­ visions may vary. For more information about credits available to S corporations, visit our website. Credit recaptures. Credits that must be recaptured are reported on Schedule OR-ASC, section E, or Schedule OR-ASC-NP, section G, and on your Oregon return as an addition to tax. See “Additions to tax” in “Oregon tax” for more information. Claiming credits. The exemption credit, political con­ tribution credit (full-year filers), and earned income credit are claimed on specific lines on the return. All other credits are reported on Schedule OR-ASC or Schedule OR-ASC-NP. The schedule contains sec­ tions that are specific for each of the three types of credits. Enter the credit code and the amount you are claiming in the applicable section. The total dol­ lar amount of the credits entered in each section is reported on your return. See the explanation for the specific credit on the following pages to find its code number and more detailed instructions. A list of all credits and their code numbers is included in the Appendix. If you claim any credits on Schedule OR-ASC or OR-ASC- NP, include the schedule when you file your return. Credits

150-101-431 (Rev. 04-21-22) 99 Standard credits Exemption credit (ORS 316.085) This year’s maximum credit is $213 for each quali­ fying personal exemption. The exemption amount is indexed for inflation. A personal exemption credit isn’t allowed if your fed­ eral AGI on line 7 of Form OR-40, or line 29F of Form OR-40-N or Form OR-40-P exceeds: • $200,000 for married filing jointly, head of house­ hold, or qualifying widow(er) filers; or • $100,000 if your filing status is single or married filing separately. Part-year residents and nonresidents. Multiply your personal exemption credit by your Oregon percentage. Personal exemption The term “personal exemption” refers to an individ­ ual who qualifies for a personal exemption deduction on the federal return under IRC Section 151. Through tax year 2025, the amount of the federal deduction is $0; however, the qualifications for the deduction under IRC Sections 151 and 152 haven’t changed, and neither have the qualifications for claiming the Ore­ gon personal exemption credit. An individual who qualifies for a personal exemption deduction under IRC Sections 151 and 152 includes: • The taxpayer (including both the primary and sec­ ondary taxpayers who file a joint return); • The taxpayer’s spouse, if the taxpayer is filing a separate return and the spouse has no gross income and doesn’t qualify for an exemption deduction on another taxpayer’s return; and • The taxpayer’s qualifying child or qualifying relative. Qualifying child. A qualifying child is an individual who is the taxpayer’s: • Child or the child’s descendant, or • Brother, sister, stepbrother, stepsister; or their descendant. The term “child” includes a son, daughter, stepson, or stepdaughter; and includes legally-adopted children and foster children who have been placed with the taxpayer by an authorized placement agency or by court order. At the end of the calendar year, the child must be: • Under the age of 19; or • A student under the age of 24; or • Permanently and totally disabled, regardless of age. A “student” is an individual who attended an edu­ cational organization on a full-time basis during each of five calendar months during the tax year. The educational organization must have a regular faculty and curriculum, with a regularly-enrolled student body who attend where the organization’s educa­ tional activities normally take place. An individual who is a “permanently and totally dis­ abled” child is one who is unable to engage in any “sub­ stantial gainful activity,” as that term is defined under federal law, due to a physical or mental impairment that is medically determinable and can be expected to result in death, or which has lasted, or can be expected to last, for at least 12 continuous months. Qualifying relative. A qualifying relative is an indi­ vidual for whom the taxpayer pays over one-half of the individual’s support for the year, and who is the taxpayer’s: • Child, brother, sister, stepbrother, or stepsister, or their descendant, who isn’t also a qualifying child of the taxpayer; • Father or mother, or their ancestor; • Stepfather, stepmother, father-in-law, or mother-in-law; • Brother-in-law or sister-in-law; • Uncle or aunt; • Nephew or niece; or • An individual who isn’t listed above but is a mem­ ber of the taxpayer’s household and has the same principal place of abode as the taxpayer. The qualifying relative can’t have gross income for 2021 that exceeds $4,300, and can’t be claimed on another tax­ payer’s return. They must also be a U.S. citizen or national, or a resident of the United States, Mexico, or Canada. Special rule for custodial parents. If a qualifying child receives over one-half of their support from parents who are divorced, legally separated, or living apart for the last six months of the year, and the child is in the custody of one or both parents for more than half of the year, the personal exemption credit for the child may be claimed by the noncustodial parent if the custodial parent (the parent who has custody for the greater part of the year) makes a written statement releasing the exemption to the noncustodial parent for the tax year. The custodial parent’s written statement should be kept with the taxpayer’s records; we may ask for it later. For additional information about requirements for the personal exemption deduction, including details about certain exceptions and support limitations, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information. Credits–Standard

150-101-431 (Rev. 04-21-22) 100 You and your spouse You are allowed one personal exemption credit for yourself if no one else can claim you as a dependent. You are allowed one personal exemption credit for your spouse if no one else can claim your spouse as a dependent and: • You’re filing a joint return, or • Your filing status is married filing separately and your spouse has no income. If someone else can claim you as a dependent, you can’t claim an exemption for yourself. If someone else can claim your spouse as a dependent, you can’t claim their exemption. This is true even if the other person doesn’t claim you (or your spouse) as a dependent. Severely disabled (ORS 316.752 , 316.758) Did you have a severe disability at the end of the tax year? If so, you can claim an additional personal exemption credit if your federal AGI doesn’t exceed $100,000, regardless of your filing status. You may qualify for the severely disabled exemption even if someone else can claim you as a dependent. You’re considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet or legs; or • You permanently lost the use of both hands; or • You’re permanently blind; or • You have a permanent condition or an impairment of indefinite duration that limits your ability to:

— Earn a living, or

— Maintain a household, or

— Transport yourself. Deafness or hearing impairment alone don’t qualify as a severe disability for purposes of this additional exemption credit. This is true regardless of any special equipment you may use in your home or workplace. You don’t qualify for this exemption if: • You have a temporary disability from an injury or illness and are expected to recover; or • Your condition keeps you from doing your former work but not from doing other kinds of work with­ out special equipment; or • Your federal AGI is more than $100,000, regardless of your filing status. If you have a permanent severe disability, your physi­ cian must write a letter describing it. Keep the letter with your permanent health records. If you qualify, check the “Severely disabled” exemp­ tion box on your return. If your spouse qualifies, they may also claim this additional exemption credit. All dependents You are allowed one personal exemption credit for: • Each qualifying child you're able to claim as a dependent, and • Each of your other qualifying relatives. On your Oregon return, you must include the fol­ lowing information for all dependents: first and last name, relationship to you, Social Security number, and date of birth. Child with a disability (ORS 316.099) You may be entitled to an additional exemption credit for your dependent child who has a qualifying dis­ ability. To qualify, all of the following must be true. Your federal AGI must not be more than $100,000, regardless of your filing status, and your child: • Qualified as your dependent for the year, and • Was eligible for early intervention or special edu­ cation services, as defined by the Department of Education, and • Was considered to have a disability as of Decem­ ber 31, 2021, under the federal Individuals with Disabilities Education Act, and • Was age 21 or younger at the end of the tax year. Eligible disabilities and their Oregon Department of Education code numbers include:

— Autism spectrum disorder (82).

— Communication disorder (50).

— Deafblindness (43).

— Developmental delay (98).

— Emotional disturbance (60).

— Hearing impairment (20).

— Intellectual disability (10).

— Orthopedic impairment (70).

— Other health impairment (80).

— Specific learning disability (90).

— Traumatic brain injury (74).

— Visual impairment (40). Each year, you must be able to provide an eligibility statement that confirms one of the disabilities listed above from the child’s Individualized Education Pro­ gram (IEP) or Individualized Family Service Plan (IFSP). Keep the eligibility statement with your per­ manent health records. If your dependent qualifies, mark the “Child with qualifying disability” box by your dependent’s name on your return. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 04-21-22) 101 Income taxes paid to another state (ORS 316.082, 316.131) [Credit code 802] If you pay tax to Oregon and another state on the same income, you have “mutually-taxed income.” In certain circumstances, you may be able to claim a credit on your Oregon return for income taxes paid to another state. Only take a credit for tax paid to another state if Oregon taxed the income and the other state also had a right to tax the same income. For instance, if you live in Oregon, other states can’t tax your pension income. Only the state you live in can tax your pension income. If you pay tax to another state on your pension income, you can’t take a credit for that tax. You can’t take a credit for paying tax you don’t owe. This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, alternative minimum tax (AMT), prop­ erty tax, or other state taxes that aren’t based on income. For example, the Idaho Permanent Building Fund Tax and the Washington Business and Occu­ pation (B & O) Tax don’t qualify because they aren’t based on income. When can this credit be claimed? You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit. If Oregon and another state tax you on the same income, but in different tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information. If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either the credit for taxes paid to another state or the credit for mutually-taxed gain on the sale of residential property. You can't claim both credits. See “Mutually-taxed gain on the sale of residential property“ for more information about this credit. Definitions Modified AGI • Full-year residents. Your modified AGI is your fed­ eral AGI modified by certain Oregon additions and subtractions. • Part-year residents and nonresidents. Your modi­ fied AGI is the part of your federal AGI that is tax­ able to Oregon, modified by certain Oregon addi­ tions and subtractions. Formula I Modified AGI taxed by both states Modified AGI x Your Oregon tax after all other credits Formula II Modified AGI taxed by both states Total income on the other state’s return x Other state’s tax after all other credits Oregon additions. These are generally items of income that are taxed by Oregon but not by the federal government. See “Additions” for more information. Oregon subtractions. These are generally items of income that are taxed by the federal government but not by Oregon. For example, U.S. bond interest is an Oregon subtraction because it’s income reported on your federal return that isn’t taxed by Oregon. Note: Don’t subtract the federal tax you paid, because it isn’t an income item. See “Subtractions” for more information. Who may claim this credit? Full-year residents. You may claim the credit on your Oregon return only if you pay tax on the same income to both Oregon and a state other than Ari­ zona, California, Indiana, or Virginia. If you are a full-year Oregon resident with income that is taxed by Arizona, California, Indiana, or Virginia, you must claim the credit on the nonresident return that you file with that state; don’t claim the credit on your Oregon return. See “Note for full-year residents” and “Exception for Oregon resident partners and S corporation shareholders.” Example 1. Roy is a full-year Oregon resident. He has wages from a job in Idaho and income from rental property he owns in California. His Idaho wages and California rental income are taxed by Oregon as well as those states. Roy may claim a credit on his Oregon return for taxes paid to Idaho. He must claim a credit on his California nonresident return for taxes paid to Oregon. Note for full-year residents. If one of the listed states doesn’t allow the credit on your nonresident return, you may amend your Oregon return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to Arizona, California, Indiana, or Virginia on income that was also taxed by Oregon; 2. You paid that state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the nonresident return you filed with that state; and 4. That state didn’t allow your credit. Credits–Standard

150-101-431 (Rev. 04-21-22) 102 Part-year residents. Your credit is based on your mutually-taxed income during the part of the year that you were a nonresident and your mutually- taxed income during the part of the year that you were a resident. • You may claim the credit on your Oregon return for the part of the year you were a nonresident of Oregon only if you pay taxes on the same income that is taxed by both Oregon and one or more of the following states: Arizona, California, Indiana, or Virginia. If the income was taxed by Oregon and a state other than those listed, you must claim a credit for taxes paid to Oregon on the return you file with the other state. See “Note for nonresidents.” • You may claim the credit on your Oregon return for the part of the year you were a resident of Oregon if you pay Oregon tax on income that was also taxed by a state other than Arizona, California, Indiana, or Virginia (or you meet the “Exception for Oregon resident partners and S corporation shareholders”). See “Note for full-year residents“ above. Example 2: Charlotte operates a business in Oregon. She moved from Oregon to Virginia in May, but con­ tinues to have income from her Oregon business after she moves. She also has income during the year from rental properties she owns in Oregon, Virginia, and Georgia. She files a part-year Oregon return, a part-year Virginia return, and a nonresident Geor­ gia return. She will claim a credit for taxes paid to another state on each kind of income as follows: • Oregon business income. Charlotte will pay tax to Oregon for the part of the year she was a resident, and to both Oregon and Virginia for the part of the year she was a nonresident. She may claim a credit on her Oregon return for taxes paid to Virginia for the part of the year that she was a nonresident of Oregon. • Georgia rental income. Charlotte will pay tax to both Oregon and Georgia on this income only dur­ ing the part of the year that she was a resident of Oregon. Once she moves to Virginia and is no lon­ ger an Oregon resident, Oregon doesn’t have the right to tax this income. She may claim a credit on her Oregon return for tax paid to Georgia only for the part of the year that she was an Oregon resi­ dent. (She will claim a credit on her Virginia return for tax paid to Georgia for the part of the year that she was a Virginia resident.) • Virginia rental income. Charlotte will pay tax to both Oregon and Virginia for the part of the year that she was a resident of Oregon, and only to Vir­ ginia after she moves. She can’t claim a credit on her Oregon return for taxes paid to Virginia on this income when she was an Oregon resident. Instead, she must claim a credit for taxes paid to Oregon on her Virginia return for the part of the year that she was a nonresident of Virginia. Nonresidents. You may claim a credit on your Oregon return if you pay taxes on the same income to both Oregon and one or more of the following states— Arizona, California, Indiana, or Virginia. If you pay Oregon tax on income that is also taxed by a state other than those listed, you must claim the credit for taxes you paid to Oregon on the return you file with the other state. See “Note for nonresidents.“ Example 3: Elisa, a calendar-year taxpayer, is a resi­ dent of Indiana who receives income from an upscale boutique she owns in Oregon. Elisa may claim a credit for taxes paid to Indiana on the income from the boutique on her Oregon nonresident return. Example 4: On January 1, Elisa moves away from Indiana and becomes a resident of Hawaii. She still receives income from the boutique in Oregon. Because Hawaii isn’t one of the states listed above, Elisa must claim a credit for taxes paid to Oregon on the return she files with Hawaii. Note for nonresidents. If a state (other than those listed above) doesn’t allow your credit, you may amend your Oregon nonresident return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to a state (other than Arizona, Cali- fornia, Indiana, or Virginia) on income that was also taxed by Oregon; and 2. You paid the other state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the other state’s return; and 4. The other state didn’t allow your credit. How do I calculate the credit amount? Calculate the credit for each state separately. The pro­ cedure for calculating the credit depends on whether you are a full-year resident, a part-year resident, or a nonresident of Oregon. Full-year residents Remember, you may claim the credit on your Oregon return only if you pay tax to Oregon and a state other than Arizona, California, Indiana, or Virginia on the same income. The credit for a full-year resident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to the other state; or • The amount calculated with Formula I. Note: Full-year residents don't use Formula II. Credits–Standard

150-101-431 (Rev. 04-21-22) 103 Example 5: Manar's AGI is $44,000. This includes $10,000 of rental income taxed by both Oregon and Idaho and $5,000 of U.S. bond interest. She received $1,000 in interest from municipal bonds from another state. She has a federal tax liability of $3,000. Her Idaho income tax is $300. Her net Oregon tax is $2,000 (before her credit for income taxes paid to another state). Here’s how she calculates her credit: Federal AGI $ 44,000 Modifications

Add municipal bond interest + 1,000

$ 45,000

Less U.S. bond interest – (5,000 )

Modified AGI $ 40,000 Note: The federal tax subtraction isn’t used in this computation. Formula I: ($10,000 ÷ $40,000) × $2,000 = $500. Manar’s credit is $300, the smallest of: • Her Oregon tax after all other credits ($2,000); or • The tax actually paid to Idaho ($300); or • The amount from Formula I ($500). Part-year residents Your credit is based on your mutually-taxed income, and the tax on that income, during the part of the year that you were a nonresident and your mutually- taxed income, and the tax on that income, during the part of the year that you were a resident. Your credit for the part of the year that you were a nonresident is the smallest of: • Your Oregon tax on mutually-taxed income from the nonresident period after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia on that same income; or • The amount figured using Formula I; or • The amount figured using Formula II. For the part of the year that you were a resident, your credit is the smallest of: • Your Oregon tax on mutually-taxed income while you were a resident after all other credits; or • The tax on that same income you actually paid to a state other than Arizona, California, Indiana, or Virginia; or • The amount calculated with Formula I. Important—Don't use Formula II to calculate the credit for the part of the year that you were a resident. Example 6: Ezra moved from Idaho to Oregon on September 1. He sold Oregon property on June 10, and sold Idaho property on October 18. He worked in Idaho all year. His Idaho income tax after credits is $2,000; of this amount, $700 is on income he received when he was an Oregon resident. His Oregon income tax liability after other credits is $400; of this amount, $150 is on income received during the part of the year when he wasn't an Oregon resident. His income on his Oregon and Idaho returns is: Oregon income Sale of Oregon property June 10 $ 13,500 Wages September 1 to December 31

9,000 Interest September 1 to December 31

500 Sale of Idaho property October 18: Idaho capital gain reported + 6,000* Total AGI taxable to Oregon $ 29,000 Idaho income Sale of Oregon property June 10 $ 13,500 Wages January 1 to December 31

27,000 Interest January 1 to August 31

1,000 Sale of Idaho property October 18: Idaho capital gain reported. 6,000 Less Idaho capital gain exclusion* ($3,600) Net capital gain taxed by Idaho 2,400 Total AGI taxable to Idaho $ 43,900 *If the other state has any income exclusion that applies to the mutually-taxed income, you must adjust the mutually- taxed income by the exclusion amount. In this example, Ezra’s federal capital gain is $19,500. Idaho allows Ezra to exclude 60 percent, or $3,600, of his $6,000 capital gain from the sale of the Idaho property. Ezra’s mutually-taxed income is $24,900 [($6,000 – $3,600) + 13,500 + 9,000]. Nonresident period. Ezra had $13,500 in mutually- taxed income while he was a nonresident. However, because Idaho isn’t one of the four listed states, Ezra must claim his credit for the tax paid to Oregon while he was an Idaho resident on his Idaho part-year return. Residency period. Ezra had $11,400 in mutually- taxed income when he was an Oregon resident: the $9,000 in wages earned from working in Idaho, and the $2,400 portion of the capital gain taxed by Idaho. His total income while he was a resident was $16,000: the $9,000 in wages, $1,000 in interest, and $6,000 cap­ ital gain from the Idaho property. Here’s how Ezra figures his Oregon credit for income taxes paid to Idaho on income received while he was an Oregon resident: Formula I: ($11,400 ÷ $16,000) × $250 = $178 Credits–Standard

150-101-431 (Rev. 04-21-22) 104 His credit for the resident part of the year is $178, the smallest of: • His Oregon tax after all other credits ($250); • The tax actually paid to Idaho ($700); or • The amount from Formula I ($178). Nonresidents You may claim a credit on your Oregon return only if you pay taxes on the same income to both Oregon and one or more of the following states—Arizona, California, Indiana, or Virginia. The credit for a nonresident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia; or • The amount figured using Formula I; or • The amount figured using Formula II. Example 7: Mary is a full-year resident of California. She lived in Oregon for 10 years prior to retiring to California. While living in Oregon, she acquired and maintained rental property there. She now receives installment payments from the sale of the property and pays tax to California on the gain and inter­ est. Her California income tax after credits is $100. Because she is an Oregon nonresident, only the gain is taxed on her Oregon nonresident return. Her Ore­ gon tax after credits is $350. Her income is as follows: Oregon income Capital gain on installment sale of real property $ 10,000 Total AGI taxable to Oregon $ 10,000 California income Capital gain on installment sale of real property $ 10,000 Interest on installment sale 5,000 Other interest 8,000 Business loss (20,000) Total AGI taxable to California $3,000 Her income taxed by both states is $10,000. • Formula I: ($10,000 ÷ $10,000) × $350 ($350). • Formula II: ($10,000 ÷ $3,000) × $100 ($333). Her Oregon credit is $100, the smallest of: • Her Oregon tax after all other credits ($350); or • The tax actually paid to California ($100); or • The amount from Formula I ($350); or • The amount from Formula II ($333). Where do I report the credit? A credit for taxes paid to another state is reported on Schedule OR-ASC, section C or Schedule OR-ASC- NP, section E. Use credit code 802. Enter the dollar amount of the credit and the two-letter postal abbre­ viation for the other state. If you are claiming a credit for taxes paid to more than one state, list each state separately. Include Schedule OR-ASC or OR-ASC-NP when you file your Oregon return, and keep the fol­ lowing with your tax records: 1. A complete copy of the other state’s income tax return; and 2. Proof of payment of the tax, such as:

— A copy of the check written to pay the tax at the time the other state’s return is filed;

— Copies of W-2 statements verifying withhold­ ing paid to the other state;

— A copy of a cashier’s check or other negotiable instrument;

— A copy of a canceled check showing payment of tax or estimated tax payments; or

— A receipt of tax payment. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Itemized deduction You can’t take a credit and a deduction for the same item on your return. If you're claiming a credit for taxes paid to another state on your Oregon return, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Fiduciary returns. See the note under “Income taxes paid to another state by a pass-through entity” in “Additions” if the tax on which the credit is based is deducted on federal Form 1041. Exception for Oregon resident partners and S corporation shareholders Pass-through income taxes paid to another state [Credit code 815] Owners of companies taxed in Oregon as partner­ ships or S corporations may be able to claim a credit on their resident Oregon return for their proportion­ ate share of income taxes paid to another state by the entity. The tax must be an income tax, not a mini­ mum tax. For example, Washington state's B & O tax doesn't qualify for this credit. Claim the credit on your resident return, if: • You elected to be included in the entity’s group/ composite filing for the other state and the entity paid your tax liability; or Credits–Standard

150-101-431 (Rev. 04-21-22) 105 • The entity was taxed directly by the other state. You’re considered to have paid a pro rata share of the income tax imposed on the entity by the other state. For an Oregon resident partner or S corporation shareholder, the allowable credit is the smallest of the following: • Oregon tax on the individual’s return; or • The individual’s pro rata share of the other state’s tax; or • The individual’s pro rata share of the mutually- taxed income from an S corporation or partnership return:

— Divided by the individual’s modified Oregon income, and

— Multiplied by the Oregon tax liability from the individual return. Example 1: Oliver is a full-year Oregon resident with modified Oregon income of $30,400 and Oregon tax (after all other credits) of $1,538. Oliver is a 10 per­ cent shareholder of My Corp., an electing S corpora­ tion in California. California has a corporate tax of 1.5 percent of income, with a minimum corporate tax of $800. For this tax year, My Corp. earned $10,000 in ordinary business income, so Oliver’s share is $1,000. The corporation must pay California $800 of tax, and only $150 is attributable to income ($10,000 × 1.5%). Oliver’s share of this tax is $15. The $650 balance paid by My Corp is a minimum tax and doesn’t qualify for this credit. Oliver’s Oregon credit for income taxes paid to another state is $15, the smallest of: • Oregon tax after all other credit: $1,538, • Pro rata share of California’s tax: $15, • ($1,000 ÷ $30,400) × $1,538 = $51. Oliver claims the credit on Schedule OR-ASC using credit code 815. Example 2: Monte, an Oregon resident, receives part­ nership income from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia doesn’t allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Monte can claim a credit on his Oregon resident return. Example 3: Kate, an Oregon resident, receives income from a partnership doing business in Hawaii. She reports AGI of $21,000, including gain on the sale of partnership property in Hawaii of $5,000. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Kate’s modified AGI is $20,000 ($21,000 of AGI minus the $1,000 basis adjustment). The mutually-taxed income is $4,000 ($5,000 gain minus the $1,000 basis adjustment). Her Oregon tax after all other credits is $1,100. Her pro rata share of Hawaii tax is $360. Kate’s Oregon credit for income taxes paid to Hawaii is $220, the smallest of: • Oregon tax after all other credits: $1,100. • Pro rata share of Hawaii’s tax: $360. • Formula I: ($4,000 ÷ $20,000) x $1,100 = $220. Note: Because Kate is an Oregon resident, she doesn’t use Formula II. Addition. If the PTE paid income tax to another state for itself or on your behalf and is deducting the tax on its own return, you’ll need to add the tax payment on your return. See “Income taxes paid to another state by a pass-through entity” in “Additions.” Mutually-taxed gain on the sale of residential property (ORS 316.109) [Credit code 806] If you sell your personal residence, your Oregon taxable gain will be the same as your federal tax­ able gain. Generally, any gain you excluded on your federal return will also be excluded on your Oregon return. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may be different from the federal basis due to depreciation differences. You may qualify for this credit only if the gain on the sale of your residential property is taxed by both Oregon and another state or country. You may claim either this credit or the credit for income taxes paid to another state, but not both. You aren’t eligible to claim this credit if you qualify for a credit for income taxes paid to another state on the other state’s tax return. How much is the credit? The credit is the smaller of: • Mutually-taxed gain × Other state’s/coun­ try’s tax after all other credits Total income on the return of the other state/country or • Eight percent of the gain taxed by the other state/ country. Mutually-taxed gain. Your mutually-taxed gain is the total gain from the sale of your personal residence, reduced by any deductions or exclusions allowed by either the other state/country or Oregon. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 04-21-22) 106 Itemized deduction If you claim this credit, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Oregon Cultural Trust contributions (ORS 315.675) [Credit code 807] Did you make a donation to an Oregon nonprofit cul­ tural organization during the tax year? If so, you can make a matching donation to the Trust for Cultural Development Account and get an Oregon tax credit. How much is the credit? You may get a credit of up to 100 percent of the amount of the matching contribution, to a maximum credit of $500 per taxpayer ($1,000 on jointly filed returns). For spouses who file separate returns, each may claim a share that would have been allowed on a joint return in proportion to the contribution each spouse made. Be sure to keep receipts from both organizations with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. For more information, contact the Oregon Cul­ tural Trust at 503-986-0088 or visit their website at www.culturaltrust.org. Oregon Veterans’ Home physicians (ORS 315.624) [Credit code 808] Physicians who provide medical care to residents of an Oregon Veterans’ Home (OVH) may be eligible for a credit of up to $5,000 per year. Who can claim the credit? Any resident or nonresident individual physician may qualify for the credit. The physician must be licensed to practice in Oregon (ORS chapter 677). They must pro­ vide care to a minimum of at least eight residents at an OVH. S corporation shareholders and partnership mem­ bers may only claim a credit based on the care they pro­ vided. The full amount of the credit shall be allowed to each taxpayer who qualifies in an individual capacity. How much is the credit? The credit is equal to the lesser of: • $1,000 for every eight residents for whom the physi­ cian provides care at an OVH; or • $5,000. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required You must obtain a letter from the OVH where you provided care. The letter must state that you missed no more than 5 percent of your scheduled visits dur­ ing the tax year. Keep the letter with your tax records; we may request it at a later date. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Political contributions (ORS 316.102) [Credit code 809—Schedule OR-ASC-NP only] Oregon law allows a tax credit for political contribu­ tions. You may not claim this credit if your federal AGI exceeds $150,000 on a jointly filed return, or $75,000 on all other returns. To qualify, you must have contributed money in the tax year you claim the credit. You must reduce the amount of your contribution by the fair market value (FMV) of any items or services you receive in exchange for your contribution. Contributions of goods or services don’t qualify. Keep receipts from the candidate or organization with your tax records. You can use copies of canceled checks as your receipt. How much is the credit? Your credit is equal to your contribution, limited to $100 on a joint return or $50 on a single or separate return. The $3 check-off on the Oregon tax return doesn’t qualify for this credit. Partners or S corporation shareholders can claim a credit for their share of political contributions made by the partnership or S corporation. The contribu­ tion must meet all statutory requirements. The $50 and $100 limits apply individually to each partner’s or shareholder’s return. Which contributions qualify? Candidates and their principal campaign commit­ tees. You can claim a credit for a contribution to a candidate for federal, state, or local elective office, or Credits–Standard

150-101-431 (Rev. 04-21-22) 107 to the candidate’s principal campaign committee. To qualify, at least one of the following must occur in Oregon in the same calendar year in which you made your contribution: • The candidate’s name must be listed on a primary, general, or special election ballot, • A prospective petition of nomination must be filed by or for the candidate, • A declaration of candidacy must be filed by or for the candidate, • A certificate of nomination must be filed by or for the candidate, • A designation of a principal campaign committee must be filed with the Oregon Secretary of State’s Office. Note: The designation must be made in each year that a contribution is made in order to qualify under this provision. Political action committees. You can claim a credit for contributions to political action committees (PACs). The PAC must have certified the name of its politi­ cal treasurer with the appropriate filing officer, usu­ ally the Secretary of State for statewide or regional elections, your county clerk for county elections, or your city recorder for city elections. PACs registered with the Federal Elections Commission may not be required to register in Oregon. Political parties. Political parties can be national, state, or local committees of major political parties. Oregon also allows a tax credit for contributions made to minor political parties that qualify under state law. Contact the Oregon Secretary of State’s Office in Salem at 503-986-1518 to see if a particular party qualifies. Newsletter fund–credit not allowed. Oregon doesn’t allow a credit for contributions made to a newsletter fund. Example 1: Holly contributes $275 for a fund-raising dinner for a presidential candidate. The FMV of the dinner was $35. Holly’s political contribution is $240, because she must reduce her $275 contribution by the $35 FMV of the dinner she received. Being single, Holly’s political contribution credit is limited to $50. Example 2: Burt donated a desk, chair, and a four- drawer file cabinet to his favorite PAC headquarters. The FMV of the furniture is $410. Burt has a written receipt from the PAC. He can’t claim a political contri­ bution credit because he didn’t contribute money to the PAC. His contribution of office furniture doesn’t qualify for the credit. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Reservation enterprise zone (ORS 315.506) [Credit code 810] Businesses in an Oregon reservation enterprise zone that pay tax to tribal governments can claim a credit against their Oregon income tax. The credit is equal to either: • The tribal property tax on a business facility that is paid or incurred during the tax year; or • Any tribal tax paid or incurred during the tax year the business first begins to operate in the reserva­ tion enterprise zone. The credit is allowed only if the tax is imposed uni­ formly in the territory. Contact the Oregon Economic and Community Development Department for the location of reserva­ tion enterprise zones at: www.oregon4biz.com. Who can claim the credit? The credit is available to individuals, partnerships, and corporations. Any business activity qualifies, except property leasing. The business must have begun in 2002 or later. To compute your credit, fill out Schedule OR-REZT, Reservation Enterprise Zone Tax Credit. Download the schedule from our website or call us to order it. Keep the completed schedule with your tax records. Part-year residents and nonresidents. Multiply the credit allowable to a full-year resident by your Ore­ gon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Retirement income (ORS 316.157) [Credit code 811] Who can claim the credit? If you were age 62 or older at the end of the year, and receive taxable retirement income, you may qualify for this credit. Retirement income includes payments in Oregon taxable income from: • State or local government public pensions. • Employee pensions. • Individual retirement plans. • Employee annuity plans. • Deferred compensation plans including defined benefits, profit sharing, and 401(k)s. • Federal pensions (includes military) not subtracted from Oregon taxable income. Credits–Standard

150-101-431 (Rev. 04-21-22) 108 How do you qualify for the credit? • Your household income is less than $22,500 ($45,000 if married filing jointly); and • Your Social Security and/or Tier 1 Railroad Retire­ ment Board (RRB) benefits are less than $7,500 ($15,000 if married filing jointly), and • Your household income plus your Social Security and Tier 1 RRB benefits is less than $22,500 ($45,000 if married filing jointly). What’s included in household income? Household income generally includes all income (both taxable and nontaxable) each spouse received during the year. Household income includes gross income reduced by adjustments as reported in your federal AGI. You also need to include items not in your federal AGI. These items include but aren’t limited to: • Veteran’s and military benefits. • Gifts and grants (total amount minus $500). • Disability pay. • Nontaxable dividends (other than “return of capital”). • Inheritance. • Insurance proceeds. • Nontaxable interest. • Lottery winnings. • RRB benefits (Tier 2 only). • Scholarships. • IRA conversions included in AGI. See the Household income checklist in the Appen­ dix for more help. Don’t include: • Social Security and Tier 1 RRB benefits. • Your state tax refund. • Pension income excluded from federal AGI that is a return of your contributions. • Pensions that are rolled over into an IRA that aren’t included in AGI. To determine household income, you must separate income (or loss) from businesses, farms, rentals or roy­ alties, and dispositions of tangible or intangible prop­ erty. Combine all income from similar sources for net income or loss. Any net loss from the source is lim­ ited to $1,000. NOL carrybacks or carryforwards aren’t allowed. Capital loss carryforwards aren’t allowed. If the combined total of your depreciation, depletion, and amortization deductions is more than $5,000, you must add the excess back into household income.You must also increase your household income by the Oregon income tax modification for depletion in excess of basis. How much is the credit? Use this worksheet to calculate your credit: 1. Enter the retirement income of the eligible individual(s) included on Form OR-40, line 7; or Form OR-40-N or OR-40-P Oregon column, lines 15S and 16S. (Don’t include Social Security/RRB benefits). 1. 2. Enter any federal pension income subtracted from Oregon income. See “Federal pension income.“ 2. 3. Net Oregon taxable pension. Line 1 minus line 2. 3. 4. Enter $7,500 ($15,000 if married filing jointly). 4. 5. Enter both spouses’ total Social Security and Tier 1 RRB benefits. 5. 6. Line 4 minus line 5, but not less than $0. 6. 7. Enter your household income. See the next section to determine household income. 7. 8. Household income base. Enter $15,000 ($30,000 if married filing a joint return). 8. 9. Line 7 minus line 8, but not less than $0. 9. 10. Line 6 minus line 9, but not less than $0. 10. 11. Enter the smaller of line 3 or line 10. 11. 12. Multiply line 11 by 9% (0.09). This is your credit. 12. Example 1: Jack owns a farm and has a $4,000 loss. He is also in a partnership whose main activity is farming. Jack has income from the partnership of $1,500. His net farm loss is $2,500. He may claim only $1,000 of this loss to compute his household income. Any net loss Jack has from other sources is also limited to $1,000 each. If Jack is claiming more than a $1,000 loss on any line, he must include a worksheet showing his computations. Example 2: Callie has a business with gross income of $32,000 for the year. She has an $11,000 depreciation deduction. Other business expenses are $24,500. She reports a business loss for federal purposes of $3,500. She recomputed her business income for household income purposes. The allowable depreciation deduc­ tion is limited to $5,000. She reports $2,500 business income, computed as follows: $32,000 – ($5,000 + $24,500) = $2,500. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 04-21-22) 109 Rural emergency medical service providers (ORS 315.622) [Credit code 812] A tax credit is available for emergency medical ser­ vice providers in qualifying rural areas of Oregon. The credit is based solely on determination of eligi­ bility by the Office of Rural Health. Who can claim the credit? Emergency medical service providers who provide volunteer services in a qualifying rural area may be eligible to claim this tax credit. However, the volun­ teer services must comprise at least 20 percent of the total services provided by the individual in the tax year. A qualifying rural area is an area in Oregon that is located at least 25 miles from any city with a population of 30,000 or more. How much is the credit? The credit is the lesser of $250 or your tax liability for the year. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Forms are available on their website at www.ohsu.edu/oregonruralhealth. Contact Rural Health in Portland at 503-494-4450 if you have questions or need assistance. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Rural health practitioners (ORS 315.613) [Credit code 813] A tax credit is available for health practitioners in certain rural areas of Oregon. The credit is based on eligibility requirements determined by the Office of Rural Health. Who can claim the credit? Physicians, dentists, podiatrists, optometrists, physi­ cian assistants, certified registered nurse anesthetists, and nurse practitioners can qualify for the credit. You qualify for the credit if during the tax year you: • Engage in a rural practice for at least 20 hours per week, averaged over the month. • Remain willing to serve patients with Medicare coverage and medical assistance. • Have AGI of $300,000 or less (unless you meet an exception). The AGI limitation doesn’t apply to a physician who does one of the following:

— Practices as a general surgeon.

— Specializes in obstetrics.

— Specializes in family or general practice and provides obstetrical services. The percentage of your patients who have Medicare coverage or receive medical assistance must bear the same or greater proportion to the ratio of such persons in need of care in the county served by your practice. This ratio is determined by the Office of Rural Health and may not exceed 20 percent Medicare patients or 15 percent medical assistance patients. S corporations and partnerships don’t qualify for the credit. However, shareholders and partners can take the credit on their individual Oregon income tax returns if they meet the eligibility requirements. Beginning with the 2018 tax year, the credit may be claimed each year for up to a maximum of ten years. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Visit their website at www. ohsu.edu/oregonruralhealth for more information. Con­ tact Rural Health in Portland at 503-494-4450 to request an application. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. How much is the credit? The credit is based on the distance from your prac­ tice or hospital where you have a membership and a major population center in a metropolitan statistical area. The credit is the lesser of the amount shown in Table 12 and certified by the Office of Rural Health, or your tax liability for the year. You can claim the credit as long as you have a qualifying practice. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Table 12. Rural health practitioner credit Distance between practice/hospital and major population center, in miles Credit amount At least 10, but less than 20 $3,000 At least 20, but less than 50 $4,000 50 or more $5,000 Credits–Standard

150-101-431 (Rev. 04-21-22) 110 Carryforward credits These credits aren’t refundable. They can’t exceed your tax liability for the current tax year, but you may carry forward the unused amount to a later tax year. For each credit you claim, you’ll report on Schedule OR-ASC or OR-ASC-NP: • Any unused amount of the credit that was avail­ able to use (“awarded”) from a prior year and car­ ried forward to this year; • Any amount awarded for the first time this year; and • The total amount you’re using this year. Report any amounts carried forward from a prior year or awarded for the first time in 2021 even if you’re not using the credit this year. Use credits that expire soonest first. Note: You can’t claim an amount carried forward from a prior year unless you filed a return and claimed the credit for that year, even if none of the credit was used. Refer to the instructions for the credit you are claiming for specific details. Transferable credits. Certain carryforward credits may be transferred to another taxpayer. If you will be transferring a credit, you and the transferee must complete and submit Form OR-TFR, Transfer Notice for Certain Credits, on or before the earliest of: • Thirty days after the transfer takes place; • The date that the transferee files their return on which they claim the credit; or • The due date of the transferee’s return, including extensions. For more details about credit transfer requirements, see Form OR-TFR Instructions. Download the form and instructions from our website or contact us to order a copy. Agriculture workforce housing (ORS 315.164) [Credit code 835] Who can claim the credit? You may be eligible for a credit if you construct or rehabilitate agriculture workforce housing for sea­ sonal or year-round agricultural workers and their immediate families in Oregon. The housing must be occupied at some time during the year by an agricul­ tural worker to qualify for the credit. Housing can’t be used for any purpose except housing for agri­ cultural workers. Your family members aren’t con­ sidered agricultural workers under this credit. The credit is available for projects that physically began on or after January 1, 1990. The project must be com­ pleted before you can claim the credit. S corporations and partnerships. Individual share­ holders must claim the tax credit based on their percentage of S corporation ownership interest. Indi­ vidual partners must claim the tax credit based on their distributive share of partnership income. Your percentage should be listed on your Oregon K-1. Part-year residents and nonresidents. The credit is available to nonresidents and part-year residents who build or restore agriculture workforce housing located in Oregon. Multiply the credit amount allow­ able to a full-year resident by your Oregon percentage. How much is the credit? The total credit is 50 percent of the eligible costs actu­ ally paid or incurred to complete the agriculture workforce housing project. The credit may be taken in any of the ten consecutive tax years beginning with the tax year the agriculture workforce hous­ ing project is completed. The amount of the credit allowed in any one tax year is 20 percent of the total credit. The amount of credit you can use in any one tax year, however, can’t exceed the lesser of: • Twenty percent of the total credit; or • Your tax liability for the year. Construction and rehabilitation costs include those for financing, construction, excavation, installation, and permits. Construction costs also include acquisi­ tion of new or used prefabricated or manufactured housing. However, rehabilitation costs don’t include the costs of acquiring a building or an interest in a building. In either type of project, construction or rehabilitation, acquisition costs of land and existing improvements on that land used for the project aren’t eligible costs. Depreciation and basis. Depreciation and amortiza­ tion expenses associated with the agriculture work­ force housing project aren’t decreased by the amount of the tax credit. Your adjusted basis in the housing project isn’t decreased by the tax credit. Certification required Oregon Housing and Community Services (OHCS) must inspect the agriculture workforce housing proj­ ect prior to occupancy. For an application, call OHCS in Salem at 503-986-2000 or visit their website at www.oregon.gov/ohcs. If your project qualifies, you’ll get a tax credit approval letter. Keep the letter with your tax records. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 111 Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to nine years after the year it was first allowed (awarded). If you don’t use the carryforward within nine years, it’s lost. Example 1: Ann completes an agricultural workforce housing project in tax year 1 with eligible costs of $1,500,000. She receives a tax credit approval letter certifying a credit of $750,000 ($1,500,000 x 0.50). Ann may choose to claim her credit in any of the 10 con­ secutive tax years beginning with tax year 1. Chart A shows Ann’s tax liabilities for the next 12 years. Because Ann’s tax liability is relatively small for tax years 1 and 2, she chooses to claim her credit in tax year 3. Ann is allowed $150,000 (0.20 x 750,000) of her credit in any given tax year. She reports the allowed amount on the “Amount awarded this year” line on Schedule OR-ASC. Chart A shows the allowed amounts she will report as “awarded” each year on Schedule OR-ASC, and the credit remaining after each year. Chart A: Ann’s allowed and remaining credits per year Year Tax liability Amount awarded this year Remaining credit 1 $500 $0 $750,000 2 $1,000 $0 $750,000 3 $90,000 $150,000 $600,000 4 $127,000 $150,000 $450,000 5 $170,000 $150,000 $300,000 6 $50,000 $0 $300,000 7 $95,000 $150,000 $150,000 8 $40,000 $0 $150,000 9 $32,000 $0 $150,000 10 $60,000 $150,000 $0 11 $0 $0 $0 12 $250,000 $0 $0 Chart B shows Ann’s tax liability and amount allowed each year from Chart A. It also shows the amount she uses each year and any unused amount carried forward as they’d be entered on Schedule OR-ASC. The amount she can use each year is limited to her tax liability for the year or $150,000, whichever is less. For example, in Year 3, Ann uses $90,000 of the $150,000 awarded for the year; for Year 4, she reports $60,000 ($150,000 – $90,000) as the amount carried forward from a prior year. Chart B: Ann’s prior year, awarded, and used credit amounts Year Tax liability Amount from prior year Amount awarded this year Amount used this year 1 $500 N/A $0 $0 2 $1,000 N/A $0 $0 3 $90,000 N/A $150,000 $90,000 4 $127,000 $60,000 $150,000 $127,000 5 $170,000 $83,000 $150,000 $150,000 6 $50,000 $83,000 $0 $50,000 7 $95,000 $33,000 $150,000 $95,000 8 $40,000 $88,000 $0 $40,000 9 $32,000 $48,000 $0 $32,000 10 $60,000 $16,000 $150,000 $60,000 11 $0 $106,000 $0 $0 12 $250,000 $106,000 $0 $106,000 Example 2: Use the same facts as Example 1, except that Ann decides to transfer her credit in tax year 6, when Chart A shows she has $300,000 available to transfer. Chart B shows that if she transfers the remaining credit in tax years 6 and 7, Ann would still have $33,000 carried forward from the credit allowed in tax year 5. She may use this amount until it’s gone or until the carryforward expires in tax year 14 (the ninth year after tax year 5), whichever happens first. Alternative qualified research activities carryforward (ORS 317.154) [Credit code 837] This credit is only available to shareholders of an S corporation that qualified for the credit, and should be listed on the shareholder’s Oregon K-1. This credit, which expired in 2017, was allowed to corpora­ tions that incurred qualified research expenses. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 112 Biomass production/collection carryforward (ORS 315.141) [Credit code 838] This certified credit expired on December 31, 2017. Any unused credit could be carried forward for up to four years after the year it was first awarded. Tax year 2021 is the last year that a carryforward may be claimed. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. Bovine manure production/ collection (ORS 315.176, 315.056) [Credit code 869] Who qualifies? If you are a producer or collector of bovine (cattle) manure that is used in Oregon as biofuel or to pro­ duce biofuel, you can claim a credit up to the amount of your tax liability. Certification required This credit is certified by the Oregon Department of Agriculture. You can find out more information, read administrative rules, and download an application form from their website, www.oregon.gov/oda. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to four years after the year it was first awarded. If you don’t use the carryfor­ ward within four years, it’s lost. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Credit transfers. You may transfer your credit to another taxpayer. You and the transferee must jointly file a notice of tax credit transfer with us. Download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Business energy carryforward (ORS 315.354, 315.357) [Credit code 839] Note: For tax year 2021 only, use credit code 836. These credits, which expired in 2012, were available for businesses that invested in certain types of energy conservation projects. Some credits were required to be claimed over five years. Any unused amount could be carried forward for up to eight years after the year it was first awarded. Enter your carryfor­ ward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Child Care Fund contributions (ORS 315.213) [Credit code 841] Contributions to the Child Care Fund qualify for a credit on your Oregon income tax return. Your dona­ tion will help address child-care affordability, provider compensation, and quality assurance issues in Oregon. For details on the program, go to the Oregon Office of Child Care website, www.oregon.earlylearning.com. Certification required The Office of Child Care will compute your allowable tax credit and give you a certificate. The credit can’t be more than 50 percent of the amount contributed. Keep this certificate with your permanent tax records. Part-year residents and nonresidents. You can claim the credit allowed to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to four years after the year it was first awarded. If you don’t use the carryfor­ ward within four years, it’s lost. Oregon itemized deduction If you're claiming your donation to the Child Care Fund as an Oregon itemized deduction, you must add back any portion of the certified credit amount that you’re deducting. See this topic in “Additions.” College Opportunity Grant Fund contributions (auction) (ORS 315.643) [Credit code 871] You may be able to claim a tax credit if you participated in the College Opportunity Grant tax credit auction conducted by the Department of Revenue, in coopera­ tion with the Higher Education Coordinating Commis­ sion (HECC). Proceeds from the auction go to Oregon’s Opportunity Grant Fund. Total credits certified by the HECC each fiscal year are limited to $14 million. New for tax year 2021: You may claim the credit for the tax year in which you participated in the auction or for the prior Credits–Carryforward

150-101-431 (Rev. 04-21-22) 113 tax year, if the auction is held by April 15 and you haven’t yet filed the prior year’s return. Visit the HECC website, www.oregon.gov/highered, for information about the Opportunity Grant Fund, and our website for information about upcoming auctions, auction rules, and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on the certificate issued by the HECC. Keep this certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contributions, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Crop donation (ORS 315.156) [Credit code 843] Oregon allows a tax credit for crops donated to a glean­ ing cooperative, food bank, or other charitable organi­ zation that distributes food without charge. The orga­ nization receiving the donation must have a principal or ongoing purpose of distribution of food to children, homeless, unemployed, elderly, or low-income indi­ viduals. The organization must be located in Oregon and exempt from federal income taxes under the IRC. To qualify for this credit, you must: • Be in the business of growing a crop to be sold for cash; and • Donate the crop to a tax-exempt organization located in Oregon; and • Complete Form OR-CROP, Crop Donation Tax Credit, which must be signed by the organization receiv­ ing the donation. The crop must be fit for human consumption. The food must meet all quality and labeling standards imposed by federal, state, or local laws, even though the food may not be readily marketable due to appear­ ance, age, freshness, grade, size, surplus, or other condition. Eligible crops include, but aren’t limited to, bedding plants that produce food, orchard stock that produces food, and livestock that may be processed into food for human consumption. How much is the credit? The credit is 15 percent of the value of the quantity of the crop donated, computed at the wholesale market price at the time of donation. The wholesale market price is determined by either: • The amount paid to the grower by the last cash buyer of the particular crop, or • In the event there is no previous cash buyer, a price based on the market price of the nearest regional wholesale buyer or a regional u-pick market price. Example: 5,000 pounds of potatoes at $ 0.10/lb.

5,000 x 0.10 = $500 (market value)

15% (0.15) x $500 = $75 (credit allowed) Certification required Keep the completed Form OR-CROP with your tax records to verify your donation. The organization where you donate the crop may have this form avail­ able, or you may download it from our website. Also, if there was a previous cash buyer, you must keep a copy of an invoice or other statement identifying the price received for crops of comparable grade or quality. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Electronic commerce zone investment carryforward (ORS 315.507) [Credit code 845] This credit, which expired in 2017, was available to individuals and businesses that engage in electronic commerce in an Oregon enterprise zone or city desig­ nated for electronic commerce. Any unused amount could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Employer scholarship (ORS 315.237) [Credit code 847 ] A tax credit is allowed to Oregon employers who have scholarship programs for their employees and their employees’ dependents. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 114 How much is the credit? The credit is the smaller of: • Fifty percent of the amount of qualified scholar­ ship funds actually paid to or on behalf of qualified scholarship recipients during the tax year; or • $50,000. Certification required The credit must be certified by the Oregon Student Assistance Commission. Keep the certificate with your tax records. For an application and more information, contact the commission in Eugene at 541-687-7400 or toll-free from an Oregon prefix at 800-452-8807, or go to their website at www.oregonstudentaid.gov. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Energy conservation project (ORS 315.331) [Credit code 849] This tax credit for energy conservation projects cer­ tified by the Oregon Department of Energy is no longer available. No new credits were certified for tax years that began after December 31, 2017. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you have a credit that is claimed over multiple years, enter only the amount for tax year 2021 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line, and enter any amount carried forward on the “Amount from prior year” line. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Fish screening devices (ORS 315.138) [Credit code 850] A tax credit is available to taxpayers who pay to install fish screening devices required by the Oregon Department of Fish and Wildlife (ODFW). Who can claim the credit? The credit is available to individuals, partners, sole proprietorships, and S corporation shareholders. Shareholders and partners can claim the credit based on their pro rata share of the certified costs. How much is the credit? Full-year residents. The credit is equal to the smaller of: • Fifty percent of the net costs of installing the device, or • $5,000. You can still claim any depreciation or amortization otherwise allowed. Don’t reduce your basis in the property by the credit amount. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required ODFW will send you a preliminary certificate within 90 days of the receipt of plans, specifications, and other information it requests from you. After you complete the project, ODFW will send you a final cer­ tificate that includes the verified costs of the installa­ tion. Contact ODFW in Salem at 503-947-6000 or toll- free from an Oregon prefix at 800-720-6339, or go to www.dfw.state.or.us. Keep the final ODFW certificate with your tax records. Also keep a statement showing the computation of the allowed credit, if this isn’t on the certificate. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: affordable housing (ORS 317.097) [Credit code 854] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Oregon K-1. This transferable certified credit is available to lend­ ing institutions making qualifying loans to finance certified housing projects for low-income house­ holds. Annual certification by Oregon Housing and Community Services is required. Part-year residents and nonresidents. You may claim the full amount of the credit, limited by your tax liability for the year. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 115 Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: energy conservation carryforward (ORS 317.112) [Credit code 848] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit, which expired in 2011, was allowed to commercial lending institutions that made loans to owners of oil- or wood-heated residential property, to finance energy conservation measures. Any unused credit could be carried forward for up to 15 years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within 15 years after it was first awarded, it’s lost. Long-term enterprise zone facilities carryforward (ORS 317.124) [Credit code 853] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Oregon K-1. This certified credit was available to corporations that constructed and operated facilities in a qualified rural enterprise zone, where the facility was eligible for long-term exemption from property tax. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Oregon IDA Initiative Fund donation (ORS 315.271) [Credit code 852] IDAs are matched savings accounts that build the financial management skills of qualifying Orego­ nians with lower incomes while they save toward a defined goal. Oregon allows a tax credit for donations made to the Oregon IDA Initiative Fund during the tax year. The total amount of credits allowed to all taxpayers in any tax year may not exceed $7.5 million. How much is the credit? The credit amount is the percentage determined by the fiduciary agency, but may be no more than 90 percent of the donation made. The maximum credit amount allowed for any taxpayer in any tax year, including amounts carried forward from an earlier tax year, is $500,000. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. You may carry forward any unused credit for three years after the year when you made the donation. If you don’t use the carryfor­ ward within three years, it’s lost. For information on how to make a donation to the Oregon IDA Initiative Fund, contact The Neighbor­ hood Partnership Fund at 503-226-3001 or visit their website at www.neighborhoodpartnerships.org. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your donation, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Oregon Low-Income Community Jobs Initiative/New Markets (ORS 315.533) [Credit code 855] The New Markets tax credit was available for a quali­ fied equity investment made before July 1, 2016 in a qualified community development entity. For more information on qualifying investments and entities, visit www.oregon4biz.com, or contact the Oregon Business Development Department at 503-986-0123. How much is the credit? The credit is equal to 39 percent of the purchase price of the qualified equity investment. It must be taken over seven years, beginning with the year of investment. The allowable tax credit for each of the seven years is: • Zero percent in the first and second years. • Seven percent of the purchase price in the third year. • Eight percent of the purchase price in each of the fourth through seventh years. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 116 Certification required You must have obtained certification from the Ore­ gon Business Development Department indicating the amount of your tax credit. Keep your certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. This credit can’t be trans­ ferred or sold. Oregon Production Investment Fund contributions (auction) (ORS 315.514) [Credit code 856] You may be able to claim a tax credit if you partici­ pated in the Oregon Production Investment Fund tax credit auction we conducted in cooperation with the Oregon Film and Video Office. Proceeds from the auction go to the Oregon Production Investment Fund. Total credits certified by the Oregon Film and Video Office are limited to $20 million for each fis­ cal year starting on or after July 1, 2021. New for tax year 2021: You may claim the credit for the tax year in which you participated in the auction or for the prior tax year, if the auction is held by April 15 and you haven’t yet filed the prior year’s return. Visit the Oregon Film and Video Office website, www.oregon­ film.org, for information about the Oregon Produc­ tion Investment fund, and our website for informa­ tion about upcoming auctions, and auction rules and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on your certificate issued by the Oregon Film and Video Office. Keep the certifi­ cate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Pollution control facilities carryforward (ORS 315.304) [Credit code 857] This credit was certified by the Oregon Department of Environmental Quality (DEQ). The last year to apply for certification of a pollution control facility was 2008. The total amount of the certified credit was divided over the remaining useful life of the facility, up to a maximum of ten years. Any unused credit could be carried forward for up to three years after the year it was first awarded. Tax year 2021 is the last year that a carryforward of this credit may be claimed. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. The amount used can’t be more than your tax liabil­ ity for the year. If you don’t use the carryforward this year, it’s lost. Qualified research activities carryforward (ORS 317.152) [Credit code 858] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit, which expired in 2018, was allowed to corporations that increased their qualified research expenses and basic research payments (IRC Section 41). Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Renewable energy resource equipment manufacturing facility carryforward (ORS 315.341) [Credit code 860] This tax credit was certified by the Business Devel­ opment Department or Department of Energy. The Credits–Carryforward

150-101-431 (Rev. 04-21-22) 117 deadline for filing an application for final certifica­ tion of a facility was December 31, 2013. The credit was claimed over a period of years. Any unused credit could be carried forward for up to eight years after the year it was first awarded. Enter your car­ ryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Residential energy carryforward (ORS 316.116) [Credit code 861] This certified credit, which expired on December 31, 2017, was allowed for taxpayers who purchased vari­ ous energy-efficient devices for residential use. Some credits had to be claimed over a four-year period. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Rural technology workforce development (ORS 315.523) [Credit code 868] A tax credit is allowed to Oregon employers located in certain areas of the state who establish and imple­ ment an employee training program in collaboration with a local community college. The employer must be located in a county with these characteristics: • Population between 60,000 and 80,000; • Located outside the urban growth boundary of the Portland metro area or a city with population greater than 30,000; • Unemployment rate at least 1.5 percentage points greater than the statewide rate; • Has an agreement with an institute of higher edu­ cation to coordinate efforts to promote business enterprise throughout the county; • Is the site of a U.S. military base that employs at least 750 civilian and armed forces personnel; and • Has sufficient internet service to conduct electronic commerce. How much is the credit? The credit is 12 percent of the costs to establish and implement the employee training program. Records sufficient to prove these costs must be kept for at least five years. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can't be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first allowed (awarded). If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Short line railroad rehabilitation (ORS 315.593) [Credit code 872] A transferable tax credit is allowed for short line rail­ roads that pay or incur costs for rehabilitation proj­ ects in Oregon. The project costs must be directly related to the work necessary to maintain, recon­ struct, or replace tracks, switches, sidings, roadbeds, railroad bridges, or industrial leads owned or leased in Oregon. “Short line railroad” refers to a class II or class III railroad as defined in title 49 of the Code of Federal Regulations, part 1201. Costs that are funded by or used to qualify for state or federal grants or to claim a federal tax credit don’t qualify for the credit. The credit doesn’t take the place of any depreciation or amortization deduction allowed for the rehabilita­ tion project or decrease the taxpayer’s adjusted basis for determining gain or loss. How much is the credit? The credit amount depends on whether the short line railroad is in Tier I or Tier II: • Tier I. The total length of short line railroad track owned or leased in Oregon is at least 200 miles. • Tier II: Any short line railroad that isn’t a Tier I short line railroad, or is one that is owned or leased by the state, a city, a county, a port, or any other public or municipal corporation. The credit amount is the smaller of: • $1,000 (Tier I) or $3,500 (Tier II) times the number of miles of track owned or leased in Oregon on the day the project is completed; or • Fifty percent of the rehabilitation project costs paid or incurred by the taxpayer during the tax year in which the credit is claimed. Credits–Carryforward

150-101-431 (Rev. 04-21-22) 118 Certification required This credit is certified by the Oregon Department of Transportation (ODOT). Final certification of the rehabilitation project is required before the credit may be claimed. Visit ODOT’s website, www.oregon. gov/odot, for more information. Transfer. If the credit will be transferred, download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If the carryforward isn’t used within five years, it’s lost. The carryforward may not be transferred. Transportation projects (ORS 315.336) [Credit code 863] All transportation project credits certified by the Department of Energy have expired. Any unused credit could be carried forward for up to five years after the year it was first awarded. If you have an alternative fuel vehicle project credit that is claimed over multiple years, enter only the amount for tax year 2021 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line and any amount car­ ried forward on the “Amount from prior year” line. For more information about these credits, see earlier editions of this publication. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. University Venture Development Fund contributions (ORS 315.640) [Credit code 864] A tax credit is available for contributions to Oregon University Venture Development Funds. Who can claim the credit? Any taxpayer who makes a qualifying charitable contribution to an Oregon University Venture Devel­ opment Fund is eligible for the credit. S corpora­ tions and partnerships may claim a credit for their contributions. How much is the credit? The credit is 60 percent of the amount contributed, as stated on the tax credit certificate, but can’t be more than $600,000. The amount of the credit allowed to be taken on your Oregon tax return may not be more than your tax liability for the year. Certification required The university that established the fund will issue a tax credit certificate to you. Keep this certificate with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Oregon itemized deduction If you're claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Credits–Carryforward

150-101-431 (Rev. 04-21-22) 119 Credits–Refundable Refundable credits Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability is treated like an overpayment of tax and may be refunded to you. ABLE account contributions (ORS 315.650) [Credit code 897] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contribu­ tions to an Oregon Achieving a Better Life Experi­ ence (ABLE) account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. Contributions may be made up until the date the return is filed or the due date (not including extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see this topic in “Subtractions.” What is an ABLE account? An ABLE account is a state-sponsored savings account, established through the Oregon Savings Network, that allows a person with disabilities to save money for disability-related expenses without affect­ ing their eligibility for government or other benefits. ABLE accounts qualify for special tax status under IRC Section 529A. Once you open an account and select an investment option, the Oregon Savings Net­ work board and a private investment company man­ age your investment. The earnings on these accounts aren’t taxed. ABLE account funds don’t affect a ben­ eficiary’s eligibility for government or other benefits. Funds withdrawn to pay qualified expenses related to the beneficiary’s disability won’t be taxed. These include expenses for education, housing, transporta­ tion, assistive technology, personal support services, employment training and support, and fees for legal and financial services, among others. For more information about ABLE accounts, go to www.oregonablesavings.com. Rollovers. Rollovers to an ABLE account don’t qual­ ify for a credit if an Oregon subtraction or credit has already been based on the funds rolled over. Credit recapture for nonqualified withdrawals. If you claim a credit based on your contributions and later use the funds for a nonqualified purpose, you must repay the tax with a credit recapture on your return for the year when the funds are withdrawn. See “Addi­ tions to tax” in “Oregon tax” for more information about the credit recapture. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an earlier year, see “Additions.” How much is the credit? Your AGI determines the percentage of the contribu­ tions you made during the year that you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 13 to find your percentage. Table 13. Credit percentage If your AGI is at least: But not more than: your percentage is: $0 $30,000 100 $30,001 $70,000 50 $70,001 $100,000 25 $100,001 $250,000 10 $250,001 5 Example. Jesse and Stacey make a $4,000 contribution to an ABLE account they opened for their daughter, who has a disability. Their AGI is $150,000. Their per­ centage from Table 13 is 10 percent. They may claim the lesser of 10 percent of their contribution ($4,000 x 0.10 = $400) or $300. Their credit is $300. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Claim of right income repayment (ORS 315.068) [Credit code 890] Did you repay more than $3,000 of income taxed by Oregon in a prior year and claim a federal claim of right income repayment deduction or credit under IRC Section 1341(a)? If so, you may claim an Oregon credit based on the Oregon tax you paid in that ear­ lier year on the income that you later repaid. Repay­ ments of $3,000 or less don’t qualify for an Oregon credit. See the instructions for Worksheet OR-CRC to calcu­ late your Oregon credit. Worksheet OR-CRC is avail­ able from our website or contact us to order it. Claim the credit on Schedule OR-ASC or OR-ASC-NP.

150-101-431 (Rev. 04-21-22) 120 Credits–Refundable Note: If you’re claiming the federal deduction instead of the federal credit, see this topic in “Additions.” Earned income credit (EIC) (ORS 315.266) You’re allowed an Oregon EIC only if you qualify for the EITC on your federal return. Your Oregon EIC is 12 percent of your federal EITC if you have a qualifying dependent who was younger than 3 years old at the end of the tax year; otherwise, your credit is 9 percent of your federal EITC. This credit is claimed on your return. Part-year residents and nonresidents. Multiply your Oregon EIC by your Oregon percentage. Manufactured dwelling park closure (Temporary provisions following ORS 316.116) [Credit code 891] Did you move out of a manufactured dwelling park because the park was closing? If so, you may be eli­ gible for a credit. To qualify, you must meet all of the following requirements: • Owned your manufactured dwelling; and • Rented space in a manufactured dwelling park that closed during the tax year; and • Occupied your manufactured dwelling as your principal residence; and • Received notice from the landlord that the park was closing, and • Moved out of the manufactured dwelling park (along with all members of your household) because of the park closure notice. If you qualify, you can claim a $5,000 refundable credit on your tax return for the year that your house­ hold moved out of the park. To claim this credit, fol­ low the instructions for Schedule OR-MPC, Oregon Mobile Home Credit, and enter the credit amount on Schedule OR-ASC or OR-ASC-NP. You can download Schedule OR-MPC from our website or contact us to order it. Include Schedule OR-MPC with your tax return. Note: If you qualify for this credit, you may have received a payment from your landlord of $5,000, $7,000, or $9,000 depending on the size of your manu­ factured dwelling. These payments can be subtracted on your Oregon return if they are included in taxable income on your federal return. See this topic under “Subtractions” for more information. Oregon 529 College Savings Network account contributions (ORS 315.650) [Credit code 896] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contri­ butions to an Oregon 529 College Savings Network account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. Contributions may be made up until the date the return is filed or the due date (not includ­ ing extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see “Subtractions.” What is an Oregon 529 College Savings Network account? These state-sponsored plans qualify for special tax status as qualified tuition programs under (IRC Sec­ tion 529). Account holders can save money for college for any designated beneficiary. Once you open an account and select an investment option, the Oregon Savings Network board and a private investment company manage your investment. Qualified withdrawals. Funds that are withdrawn from the account must be used to pay for the des­ ignated beneficiary’s qualified higher education expenses. These include expenses for tuition, fees, books, supplies, equipment, and room and board at an eligible educational institutional anywhere in the United States and certain foreign countries. A list of eligible institutions can be found on the U.S. Depart­ ment of Education’s website at www.fafsa.ed.gov. Qualified withdrawals also include rollovers to an ABLE account for the same designated beneficiary or a member of their family. New for tax year 2021: Qualified withdrawals now include: • Expenses related to apprenticeship programs reg­ istered and certified under the National Appren­ ticeship Act (29 U.S.C. 50). • Principal and interest payments on up to $10,000 of the designated beneficiary’s (or their sibling’s) qualified education loans, as allowed by IRC Sec­ tion 529. Rollovers. Rollovers from a 529 college savings plan in another state qualify as a new contribution for purposes of the credit. However, you can’t claim a credit based on any amount rolled over from an IDA

150-101-431 (Rev. 04-21-22) 121 Credits–Refundable or from any rollover funds that have been allowed as an Oregon subtraction or an Oregon credit . Nonqualified withdrawals Credit recapture. If you claim a credit based on your contributions and later use the funds for a nonquali­ fied purpose, you must repay the tax with a credit recapture on your return for the year when the funds are withdrawn. See “Additions to tax” in “Oregon tax” for more information. Note: Nonqualified withdrawals include funds with­ drawn from an Oregon 529 savings plan account that are used to pay K-12 tuition if those funds were sub­ tracted or claimed as a credit on an Oregon return. Addition. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an ear­ lier year, see “Additions.” How much is the credit? Your AGI determines the percentage of your contri­ butions made during the year you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 13 under “ABLE account contributions” to find your percentage. Example. Carol is single and contributes $800 to an Oregon 529 College Savings Plan account she opened for her grandson. Her AGI is $72,000. Her percent­ age from Table 13 is 25 percent. Carol may claim the lesser of 25 percent of her contribution ($1,000 x 0.25 = $250) or $150. Her credit is $150. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. For more information about Oregon higher education savings plans, call the Oregon College Savings Plan at 1-866-772-8464 or go to www.oregoncollegesavings.com Working family household and dependent care (WFHDC) (ORS 315.264) [Credit code 895] This refundable credit is available to low- to mod­ erate-income working families who paid for depen­ dent care during the year for one or more qualifying individuals. For more information, see the instruc­ tions for Schedule OR-WFHDC. What are the income limitations for this credit? Your federal AGI or your Oregon AGI, whichever is greater, must be at or below the allowable limit for your household size to be eligible for this credit. Household size AGI limit 2 $52,260 3 $65,880 4 $79,500 5 $93,120 6 $106,740 7 $120,360 8 or more $133,980 How much is the credit? The credit amount is based on your income, care expenses paid, household size, and the age of your youngest qualifying individual. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Oregon itemized deduction for medical expenses Certain medical expenses that can be included in your Oregon itemized deductions are also quali­ fied expenses for this credit. If you claim medical expenses on Schedule OR-WFHDC, you may have to add back some or all of those expenses if you’re including them in your Oregon itemized deductions. See this topic in “Additions.” How do I claim the credit? Download Schedule OR-WFHDC from our website or contact us to order a copy. You’ll also need a copy of your federal Form 2441, Child and Dependent Care Expenses. Figure your federal and Oregon AGI and complete Form 2441 before you calculate your credit. Review the instructions for Schedule OR-WFHDC carefully to see if you qualify for the credit. Make sure all the information you provide on Schedule OR- WFHDC is complete and correct. We may ask you to verify the information you provide. If your informa­ tion is incorrect or incomplete, your credit might be delayed or denied. Claim the credit on Schedule OR-ASC or OR-ASC- NP. Be sure to include this schedule and Schedule OR-WFHDC when you file your Oregon return. Penalty: You may be charged a penalty if you know­ ingly claim or knowingly assist someone in claiming

150-101-431 (Rev. 04-21-22) 122 this credit falsely. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjust­ ment or denial of the credit. Oregon surplus credit (ORS 291.349) The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. Every two years, the Oregon Department of Admin­ istrative Services (DAS) determines whether there is a surplus and the amount to be returned to taxpayers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refundable tax credit or donated to the State School Fund. The kicker credit is available only on the return for an odd-numbered year. If there’s no surplus, or if the tax year is even- numbered, no kicker is available. DAS has determined that there is a surplus for the most recent two-year period. For tax year 2021, the kicker is 17.341 percent of your 2020 personal income tax liability. For more information, see the instruc­ tions for your 2021 Oregon return. Credits–Refundable

150-101-431 (Rev. 04-21-22) 123 Interest on underpayment of estimated tax Do I owe underpayment interest? If you were required to make estimated payments but paid less than the required amounts due by each pay­ ment date, you have an underpayment of estimated tax. Oregon charges interest on underpayment of the estimated tax due. If your 2021 tax after all credits, credit recaptures, and withholding is $1,000 or more, you must complete Oregon Form OR-10, Underpay­ ment of Oregon Estimated Tax, and submit it with your return. The form and instructions for calculating underpayment interest can be found on our website or contact us to order them. Figure your required annual payment Required annual payment To calculate your underpayment interest, you must determine your required annual tax payment. Your required annual payment is the total amount of all tax payments, including estimated tax and withhold­ ing, you must make in order to avoid paying under­ payment interest. Your required annual payment is the lesser of: • Ninety percent of the net tax shown on your 2021 tax return; or • One hundred percent of the tax shown on your 2020 Oregon return (commonly called Safe Harbor). Annual estimated tax payment Your annual estimated tax payment is your required annual payment minus your withholding. Required installment payment Your annual estimated tax payment may be paid all at once or you may pay it in up to four installments. If you make the payment in installments, determine the required installment amount using one of these two methods: • Regular installment: Divide your annual estimated payment by the number of installment periods. • Annualized installment: Your installment is based on your actual income for the installment period. This method may benefit part-year residents and taxpayers whose income isn’t received evenly throughout the year. See Form OR-10 Instructions to calculate your required installment amount. 2021 required installment due dates If you made one annual estimated payment, the due date was April 15, 2021. If you paid in installments and you’re a calendar-year filer, your 2021 install­ ment payments were due on: April 15, 2021 June 15, 2021 September 15, 2021 January 18, 2022 Underpayment interest calculation Underpayment interest is calculated on estimated tax that is due but isn’t paid by the installment due date. The interest rate is 4 percent per year for 2021 and 2022. Interest is calculated daily, based on a 365-day year. Use the worksheets in Form OR-10 Instructions to cal­ culate your underpayment interest. Report the total amount on Form OR-10 and your return. Include Form OR-10 when you file your return. Exceptions to paying interest on an underpayment of estimated tax If you qualify for one of the following exceptions, you don’t have to pay interest on an underpayment of estimated tax. See Form OR-10 Instructions for more information about claiming an exception on both Form OR-10 and your return. Exception 1—Farmers and commercial fishermen. If at least two-thirds (66.7 percent)* of your 2020 or 2021 gross income is from farming, oyster farming, or fish­ ing, you won’t have to pay underpayment interest. *Only reported income from specific federal forms and schedules are considered in this calculation. The form or schedule must be included when you file your return. Exception 2—Prior year. You don’t need to pay inter­ est on an underpayment of estimated tax if all of the following were true for you: • You had no Oregon tax liability* for 2020, or you weren't required to file an Oregon return; and • Your 2020 tax year was a full 12-month period; and • You were a full-year Oregon resident for 2020. *Your Oregon tax liability is your liability after tax credits, but before withholding and estimated tax payments. Interest on underpayment of estimated tax

150-101-431 (Rev. 04-21-22) 124 Exception 3—You retired at age 62 or older or became disabled in 2020 or 2021, and you had a rea­ sonable cause for the underpayment. Include a state­ ment explaining the cause. Exception 4—Underpayment was due to casualty, disaster, or other unusual circumstances, and it would be unfair to impose underpayment interest. Include a statement with your return explaining the unusual circumstance. An unusual circumstance isn’t the same as reasonable cause. Exception 5—First-year S corporation shareholders who are nonresidents or were part-year residents. No interest is due on underpayment of S corporation income as a shareholder if: • The income is for the first year that S corporation status is elected; and • You’re a nonresident for 2021; or • You were a part-year resident for 2020. Interest on underpayment of estimated tax

150-101-431 (Rev. 04-21-22) 125 Estimated tax Should I pay estimated tax? Oregon law requires some taxpayers to pay esti­ mated tax. Oregon’s estimated tax system is similar to the federal system, but when you figure estimated tax for Oregon: • Use Oregon income tax laws and tax rates. • Don’t include Social Security tax (FICA), self-employ­ ment tax, or household employment tax. In most cases, you must make estimated tax payments if your 2022 tax after all credits and withholding will be $1,000 or more when you file your return. Pay estimated tax for tax year 2022 if: You expect your 2022 tax after all credits, credit recaptures, and withholding will be $1,000 or more when you file your return and you estimate that your total withheld tax will be less than: • One hundred percent of the tax shown on your 2021 income tax return that covered all 12 months of the year; or • Ninety percent of the tax to be shown on your 2022 income tax return; or • Ninety percent of the tax on your 2022 annualized income. You can make estimated tax payments even if you expect that your 2022 tax after all credits, credit recaptures, and withholding will be less than $1,000. For instructions and examples, download Publication OR-ESTIMATE from our website or contact us to order it. Note: Estimated tax payments aren’t a substitute for withholding Oregon income tax from wage income. If you need to increase the amount of Oregon tax withheld from your wages or other income, give an updated Form OR-W-4 to your employer or other payer. You can download Form OR-W-4 from our website or contact us to order it. Exceptions Farmers and commercial fishermen Farmers and fishermen aren’t required to pay esti­ mated tax if at least two-thirds of their 2021 gross income or two-thirds of their 2022 estimated gross income from all sources is from farming or fishing. This includes oyster farming. See “Interest on under­ payment of estimated tax.” Fiduciaries You don’t need to pay estimated tax on behalf of an estate or trust. Special situations Nonresidents and part-year residents Nonresidents figure Oregon estimated tax only on income that is: • Subject to Oregon tax; or • From conducting a trade or business within Oregon; or • Single ticket Oregon lottery winnings greater than $600. S corporation, limited liability company (LLC), or partnership income If you’re a shareholder in an S corporation, a mem­ ber of an LLC, or in a partnership with income from Oregon sources, you may need to make estimated tax payments. Undistributed income should be com­ puted on a per share, per day basis and reported as earned evenly through the year. Part-year residents. For the part of the year you were a nonresident, you are subject to Oregon tax on your share of the Oregon income reported by the S corpo­ ration, LLC, or partnership. Partners must also report guaranteed payments. For the part of the year you were a resident, you’re subject to Oregon tax on your share of all the S corporation, LLC, or partnership income. Nonresidents. You’re subject to Oregon tax on your share of the Oregon income reported by the S corporation, LLC, or partnership. You’re also subject to Oregon tax on any guaranteed payments from the partnership. The payments are apportioned using the partnership’s percentage. Retirees If you’re retired or will soon retire, you may need to make estimated tax payments if you’re unable to have Oregon income tax withheld from your retire­ ment income. Contact the payer of the income to see if withholding is possible. If so, complete Form OR-W-4 and give it to the payer. Retirees who are Oregon residents but not living in Oregon may be subject to tax on their Oregon-source pensions. This law applies to retirees who still have Oregon as their domicile but file as nonresidents. See “Retirement income” under “Income.” Nonresident aliens Estimated tax filing requirements are the same for both U.S. citizens and nonresident aliens. Nonresi­ dent aliens can be either Oregon residents or nonresi­ dents. If you, or your spouse, are a nonresident alien, you must make separate estimated tax payments. Estimated tax

150-101-431 (Rev. 04-21-22) 126 Appendix Contents 2021 Household Income Checklist WFHDC Medical Expense Worksheet Capital Loss Carryover Difference Worksheet 2021 Numeric Codes Appendix

150-101-431 (Rev. 04-21-22) 127 Household income checklist Use this list to decide if an item must be included in total household income. Alimony and separate maintenance Yes Annuities and pensions (reduced by cost recovery) Yes Business income (reduced by expenses) (losses limited to $1,000) Yes Cafeteria plan benefits

No Capital loss carryover

No Capital losses (in year determined) (losses limited to $1,000) Yes Child support Yes Child support included in public assistance Yes Clergy’s rental or housing allowance, in excess of expenses claimed to determine federal AGI Yes Compensation for services performed Back pay Yes Bonuses Yes Clergy fees Yes Commissions Yes Director fees Yes Fees in general (trustee, executor, jury duty) Yes Lodging for convenience of employer

No Meals for convenience of employer

No Salaries Yes Severance pay Yes Tips and gratuities Yes Wages Yes Deferred compensation Contributions made

No Payments received Yes Depletion in excess of basis Yes Depreciation, depletion, and amortization in excess of $5,000 Yes Disability income (entire amount) Yes Dividends, taxable and nontaxable Credit union savings account “dividends” (interest) Yes Insurance policy “dividends” (return of premium)

No Return of capital dividends

No Stock dividends Yes Tax-exempt dividends Yes Earned income credit, advanced

No Estate and trust income (also see “Inheritance”) (losses limited to $1,000) Yes Farm income (reduced by expenses) (losses limited to $1,000) Yes Agricultural program payments Yes Patronage dividends Yes Proceeds from sale of crops and livestock Yes Rents Yes Sale of services Yes Fellowships Yes Foreign income excluded from federal AGI Yes Foster child care (reduced by expenses)

No Funeral expenses received

No Gains on sales (receipts less cost) Yes Excluded gain for Oregon on sale of residence

No Gambling winnings (without reduction for losses) Yes Gifts and grants (totaling more than $500 in value) Cash Yes Gifts from nonspouse in the same household Yes Gifts from spouse in the same household

No Gifts other than cash (report at fair market value) Yes Payment of indebtedness by another person Yes Grants and payments by foreign governments not included in federal AGI Yes Grants by federal government for rehabilitation of home

No Gratuities and tips Yes Hobby income Yes Honoraria Yes IRA Conventional IRA Payments received Yes Payments contributed

No Rollovers or conversions not included

in AGI

No

Rollovers or conversion

included in AGI Yes Roth IRA Payments received

No Payments contributed Yes Rollovers or conversions not included

in AGI

No Rollovers or conversion

included in AGI Yes Inheritance Yes From spouse who resided in the same household

No Insurance proceeds Accident and health Yes Disability payments Yes Employee death benefits Yes Household income checklist

150-101-431 (Rev. 04-21-22) 128 Life insurance Yes Personal injury damages (less attorney fees) Yes Property damage if included in federal income Yes Reimbursement of medical expense

No Sick pay (employer sickness and injury pay) Yes Strike benefits Yes Unemployment insurance benefits Yes Workers’ compensation Yes Interest, taxable and nontaxable Contracts Yes Municipal bonds and other securities Yes Savings accounts Yes Tax-exempt interest Yes U.S. Savings Bonds Yes Losses on sales (to extent used in determining AGI) (losses limited to $1,000) Yes From sales of real or personal property (nonbusiness)

No Lottery winnings Yes Lump-sum distribution (less cost recovery) Yes Military and veteran’s benefits (taxable and nontaxable) Combat pay Yes Disability pensions Yes Educational benefits (GI Bill) Yes Family allowances Yes Pensions Yes NOL carryback and carryover

No Partnership income (reduced by expenses) (losses limited to $1,000) Yes Parsonage (rental value) or housing allowance in excess of expenses used in determining federal AGI Yes Pensions and annuities (taxable and nontaxable) (reduced by cost recovered in the current year) Yes Prizes and awards Yes Public assistance benefits Aid to blind and disabled Yes Child care payments Yes Child support included in public assistance Yes Direct payments to nursing home

No Fuel assistance

No In-home services approved by the Department of Human Services

No Medical mileage reimbursements Yes Medical payments to doctors

No Oregon Supplemental Income Program (OSIP) Yes Payments for medical care, drugs, medical supplies, and services for which no direct payment is received

No Reimbursements of expenses paid or incurred by participants in work or training programs

No Special Shelter Allowance

No Supplemental Nutrition Assistance Program (SNAP) benefits

No Surplus food

No Temporary assistance for needy families (TANF) Yes Women, Infants, and Children program (WIC)

No Railroad Retirement Board benefits Yes Refunds Earned income credit

No Federal tax

No Property tax

No Oregon income tax

No Other states’ income tax (if included in federal AGI) Yes Prior-year rental assistance payment

No Reimbursements in excess of expenses Yes Rental allowances paid to ministers not included in federal AGI Yes Rental and royalty income (reduced by expenses) (losses limited to $1,000) Yes Residence sales (see “Gains on sales”) Yes Retirement benefits (see “Pensions” and “Social Security”) Scholarships (excess more than $500) Yes Sick pay Yes Social Security (taxable and nontaxable) Children’s benefits paid to parent Yes Children’s benefits paid to your child

No Disability pension Yes Medicare payments of medical expenses

No Medicare premiums deducted from Social Security Yes Old-age benefits Yes Social Security Disability Insurance (SSDI) Yes Supplemental Security Income (SSI) Yes Survivor benefits Yes Stipends (excess more than $500) Yes Strike benefits Yes Support from parents who don’t live in your household Yes Trust income Yes Unemployment insurance benefits Yes Wages Yes Household income checklist

150-101-431 (Rev. 04-21-22) 129 WFHDC medical expense worksheet 1. Enter your expense limit (Schedule OR-WFHDC, line 27). 1. $ __________________ 2. Enter the total expenses you paid for care (Schedule OR-WFHDC, line 10). 2. $ __________________ 3. Enter the expenses from step 2 that are also included in your medical expenses

on Schedule OR-A, line 1. 3. $ __________________ 4. Step 2 minus step 3. These are your non-medical WFHDC care expenses. 4. $ __________________ Compare step 4 to step 1. If step 4 is more than step 1, your non-medical expenses are more than your expense limit and you don’t have an add back. If step 4 is less than step 1, continue to step 5. 5. Step 1 minus step 4. 5. $ __________________ 6. Enter your medical and dental expenses from Schedule OR-A, line 1. 6. $ __________________ 7. Enter your medical expense deduction from Schedule OR-A, line 4. 7. $ __________________ 8. Step 7 divided by step 6. Round to three decimal places. 8. ___________________ 9. Step 8 times step 3. This is the portion of your WFHDC medical care expenses

that you included in itemized deductions. 9. $ __________________ 10. Enter the smaller of step 5 or step 9. This is the portion of the medical care

expenses you deducted and on which you based your credit. 10. $ __________________ 11. Enter your Oregon itemized deductions from Schedule OR-A, line 23. 11. $ __________________ 12. Enter the Oregon standard deduction for your filing status plus any

additional standard deduction you could claim if you didn’t itemize

deductions (see “Other items”). 12. $ __________________ 13. Step 11 minus step 12. This is the difference between your itemized

deductions and standard deduction. 13. $ __________________ 14. Enter the smaller of step 10 or step 13. This is the amount you must add back.

Use addition code 163 on Schedule OR-ASC, section A, or enter this amount

with a minus sign and use modification code 651 on Schedule OR-ASC-NP,

section D. 14. $ __________________ WFHDC medical expense worksheet

150-101-431 (Rev. 04-21-22) 130 Capital loss carryover difference worksheet Capital loss carryover difference worksheet This worksheet is used to calculate an addition if the tax benefit of a capital loss carryover on your federal return is different from the tax benefit on your Oregon return. Use this worksheet only if all of the following are true: • You filed federal and Oregon returns for 2020; • You deducted a capital loss on your 2020 federal return; • Your AGI was less than your federal standard deduction or itemized deductions; • You carried over some or all of your 2020 capital loss deduction to 2021; • If you filed a part-year or nonresident return for tax year 2020, at least some of your 2020 capital losses were from Oregon sources; and • Your 2020 federal AGI was within the applicable range in Table 6 (see “Additions”). If all of the above are true, you’ll need to have these items in order to complete the worksheet: • Your federal return with Schedule D for 2020 and 2021, and • Your 2020 Oregon return. Part-year or nonresident return filed for tax year 2020. Capital losses may be claimed on an Oregon return only if they are from Oregon sources—that is, from Oregon sources while a nonresident, or from all sources while an Oregon resident. If you filed a part-year or nonresident return for 2020 and your capital losses included Oregon-source losses, complete the following before you start the Oregon worksheet: (a) Enter your net short-term capital loss or gain from your 2020 Schedule D, line 7. (a) $ ____________

(b) Enter the portion of the amount in (a) that is from Oregon sources. (b) $ ____________ (c) Line (b) divided by line (a). Round to three decimal places. (c) ____________ (d) Enter your net long-term capital loss or gain from your 2020 Schedule D, line 15. (d) $ ____________ (e) Enter the portion of the amount in (d) that is from Oregon sources. (e) $ ____________ (f) Line (e) divided by line (d). Round to three decimal places. (f) ____________ Part A. Figure your Oregon loss carryforward amount. 1. Enter your 2020 Oregon taxable income (Form OR-40, line 19; Form OR-40-N, line 45; or Form OR-40-P, line 43 times line 35). If less than $0, enclose in parentheses. 1. $ ____________ 2. Full-year residents: Enter the capital loss deduction from your 2020 Form 1040, line 6, as a positive amount. Part-year residents and nonresidents: Enter the Oregon amount from your 2020 Form OR-40-N or Form OR-40-P, line 13S, as a positive amount. 2. $ ____________ 3. Line 1 plus line 2. If zero or less, enter $0.

3. $ _____________ 4. Enter the smaller of line 2 or line 3. 4. $ ____________ If line 7 of your 2020 Schedule D shows a loss, go to line 5; otherwise, enter $0 on line 5 and go to line 9. 5. Enter the net short-term loss from your 2020 Schedule D, line 7, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above, as a positive amount.

5. $ _____________ 6. Enter the net long-term gain, if any, from your 2020 Schedule D, line 15. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above. If a loss, enter $0. 6. $ ____________

150-101-431 (Rev. 04-21-22) 131 Capital loss carryover difference worksheet 7. Line 4 plus line 6.

7. $ _____________ 8. Oregon short-term capital loss carryover for 2021. Line 5 minus line 7. If zero or less, enter $0.

8. $ _____________ If line 15 of your 2020 Schedule D is a loss, go to line 9; otherwise, skip to Part B. 9. Enter the net long-term loss from your 2020 Schedule D, line 15, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above, as a positive amount.

9. $ _____________ 10. Enter the net short-term gain, if any, from your 2020 Schedule D, line 7. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above. If a loss, enter $0. 10. $___________ 11. Line 4 minus line 5. If zero or less, enter $0. 11. $___________ 12. Line 10 plus line 11.

12. $ _____________ 13. Oregon long-term capital loss carryover for 2021. Line 9 minus line 12. If zero or less, enter $0.

13. $ _____________ Part B. Figure your Oregon addition. 14. Enter your federal short-term capital loss carryover from your 2021 Schedule D, line 6, as a positive amount. 2020 part-year residents and nonresidents: Multiply this amount times the decimal in (c), above; round to the nearest dollar. 14. $___________ 15. Oregon tax benefit from 2020 short-term loss. Line 14 minus line 8.

15. $ _____________ 16. Enter your federal long-term loss carryover from your 2021 Schedule D, line 14, as a positive amount. 2020 part-year residents and nonresidents: Multiply this amount times the decimal in (f), above; round to the nearest dollar. 16. $___________ 17. Oregon tax benefit from 2020 long-term loss. Line 16 minus line 13.

17. $ _____________ 18. Line 15 plus line 17. This is your Oregon addition.

18. $ _____________ Full-year filer for 2021. Enter the amount from line 18 on Schedule OR-ASC, section A, using code 162. Part-year or nonresident filer for 2021. Enter the amount from line 18 on both the federal and Oregon lines on Schedule OR-ASC-NP, section B.

150-101-431 (Rev. 04-21-22) 132 Numeric codes Numeric codes Numeric codes are required when you are claiming or reporting an adjustment, addition, subtraction, modifi­ cation, or credit on Schedule OR-ASC or OR-ASC-NP. If you have multiple items that use the same code, other than a credit for income taxes paid to another state, add them together and enter the total as a single item. Modifications marked with + must be entered as a negative number. Credits marked with * must be prorated by part-year residents and nonresidents. Include Schedule OR-ASC or OR-ASC-NP when you file your return. (Note: For page numbers, see the item’s listing in the Index.) Adjustments—Nonresident and part-year resident filers only, Schedule OR-ASC-NP, Section A Code Certain business expenses of reservists, performing artists, and fee-basis government officials —Form 1040, Schedule 1, Line 12 ..............................................................................................................................002 Health savings account deduction—Form 1040, Schedule 1, Line 13 ..................................................................003 Penalty on early withdrawal of savings—Form 1040, Schedule 1, Line 18.........................................................004 Other adjustments on Form 1040, Schedule 1, Lines 23 and 25 ............................................................................005 Additions—Schedule OR-ASC, Section A or OR-ASC-NP, Section B Code Claim of right income repayments ...........................................................................................................................103 Disposition of inherited Oregon farmland or forestland......................................................................................106 Federal election on interest and dividends of a minor child ................................................................................107 Federal income tax refunds .......................................................................................................................................109 Net operating loss—non-Oregon source .................................................................................................................116 Oregon College and MFS 529 Savings Plan non-qualified withdrawal .............................................................117 Oregon deferral of reinvested capital gain ..............................................................................................................118 Partnership and S corporation modifications for Oregon ....................................................................................119 Unused business credits ............................................................................................................................................122 Federal subsidies for employer prescription drug plans ......................................................................................123 Federal law disconnect ...............................................................................................................................................131 Accumulation distribution from certain domestic trusts .....................................................................................132 Fiduciary adjustment from Oregon estates and trusts .........................................................................................133 Gambling losses claimed as an itemized deduction..............................................................................................134 Refund of Oregon-only itemized deductions from a prior year ..........................................................................136 IDA nonqualified withdrawal ...................................................................................................................................137 Oregon IDA Initiative Fund donation credit add back .........................................................................................138 Lump-sum distribution from a qualified retirement plan ...................................................................................139 Passive foreign investment company income .........................................................................................................140 Child Care Fund Contributions ................................................................................................................................142 Oregon Production Investment Fund contributions .............................................................................................144 University Venture Development Fund contributions ..........................................................................................146 Income taxes paid to another state by a pass-through entity ...............................................................................148 Basis of business assets transferred into Oregon ...................................................................................................150 Depletion in excess of property basis ......................................................................................................................151 Depreciation difference for Oregon .........................................................................................................................152 Federal depreciation disconnect ...............................................................................................................................153 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................154 Passive activity losses .................................................................................................................................................155 Suspended losses ........................................................................................................................................................156 Federal estate tax .........................................................................................................................................................157 Interest and dividends on government bonds of other states ..............................................................................158 Federal subtraction for retirement savings rollover from IDA ............................................................................159 Disqualified charitable donations ............................................................................................................................160 Nonresident capital losses and loss carryovers ......................................................................................................161 Capital loss carryover difference ..............................................................................................................................162 WFHDC medical expenses ........................................................................................................................................163 ABLE account subtraction nonqualified withdrawal ............................................................................................164 College Opportunity Grant Fund contributions ....................................................................................................165

150-101-431 (Rev. 04-21-22) 133 Numeric codes First-time homebuyer savings account nonqualified withdrawal .......................................................................166 CPAR addition .............................................................................................................................................................187 Subtractions—Schedule OR-ASC, Section B or OR-ASC-NP, Section C Code American Indian .........................................................................................................................................................300 Artist’s charitable contribution .................................................................................................................................301 Construction worker and logger commuting expenses ........................................................................................303 Federal gain previously taxed by Oregon ...............................................................................................................306 Federal pension income .............................................................................................................................................307 Federal income tax paid for a prior year .................................................................................................................309 Fiduciary adjustments from Oregon estates and trusts ........................................................................................310 Foreign income tax ......................................................................................................................................................311 IDA contributions ........................................................................................................................................................314 Interest and dividends on U S bonds and notes ....................................................................................................315 Land donation to educational institutions carryforward .....................................................................................316 Interest from state and local government bonds ....................................................................................................317 Military pay .................................................................................................................................................................319 Mortgage interest credit .............................................................................................................................................320 Net operating loss for Oregon ...................................................................................................................................321 Oregon lottery winnings ...........................................................................................................................................322 Partnership and S corporation modifications for Oregon ....................................................................................323 Oregon College and MFS 529 Savings Plan deposits carryforward ....................................................................324 Oregon income tax refund .........................................................................................................................................325 Previously taxed employee retirement plans..........................................................................................................327 Public Safety Memorial Fund award .......................................................................................................................329 Railroad Retirement Board benefits .........................................................................................................................330 U.S. government interest in IRA or Keogh distributions ......................................................................................331 Scholarship awards used for housing expenses.....................................................................................................333 Legislative Assembly expenses .................................................................................................................................335 Film production labor rebate—Greenlight Oregon Labor Rebate Fund ............................................................336 Manufactured dwelling park capital gain exclusion .............................................................................................338 Capital Construction Fund (CCF) contributions ....................................................................................................339 Federal tax credits .......................................................................................................................................................340 Income on a composite return...................................................................................................................................341 Oregon Investment Advantage .................................................................................................................................342 Manufactured dwelling park closure payment ......................................................................................................344 Taxable benefits for former RDPs .............................................................................................................................347 Previously-taxed IRA conversions ...........................................................................................................................348 Special Oregon medical .............................................................................................................................................351 DISC dividend payments ...........................................................................................................................................352 Depreciation difference for Oregon .........................................................................................................................354 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................355 Passive activity losses .................................................................................................................................................356 Suspended losses ........................................................................................................................................................357 Basis of business assets transferred into Oregon ...................................................................................................358 Marijuana business expenses ....................................................................................................................................359 ABLE account deposit carryforward ........................................................................................................................360 First-time home buyer savings account contributions and earnings ..................................................................361 AmeriCorps educational award ................................................................................................................................362 Charitable contribution non-itemized deduction ...................................................................................................363 CPAR subtraction ........................................................................................................................................................384 Modifications—Part-year and nonresident filers only, Schedule OR-ASC-NP, Section D Code Artist’s charitable contribution (Part-year filers only) ...........................................................................................600 Federal income tax refunds + ....................................................................................................................................601 Federal income tax paid for a prior year .................................................................................................................602 Foreign income tax ......................................................................................................................................................603

150-101-431 (Rev. 04-21-22) 134 Gambling losses claimed as an itemized deduction + ..........................................................................................604 Federal estate tax + .....................................................................................................................................................605 Federal mortgage interest credit ...............................................................................................................................607 Federal tax credits .......................................................................................................................................................609 Child Care Fund contributions +..............................................................................................................................642 Oregon Production Investment Fund contributions + ..........................................................................................644 University Venture Development Fund contributions + ......................................................................................646 Oregon IDA Initiative Fund donation credit add back + ......................................................................................648 Claim of right income repayment + .........................................................................................................................649 Disqualified charitable donations + .........................................................................................................................650 WFHDC medical expenses + ....................................................................................................................................651 College Opportunity Grant Fund contributions + .................................................................................................652 Charitable contribution non-itemized deduction ...................................................................................................653 + Must be entered as a negative number Standard credits—Schedule OR-ASC, Section C or OR-ASC-NP, Section E Code Income taxes paid to another state ...........................................................................................................................802 Mutually-taxed gain on the sale of residential property ......................................................................................806 Oregon Cultural Trust contributions * .....................................................................................................................807 Oregon Veterans’ Home physicians *.......................................................................................................................808 Political contributions (Part-year and nonresident filers only) ............................................................................809 Reservation enterprise zone * ....................................................................................................................................810 Retirement income ......................................................................................................................................................811 Rural emergency medical service providers * ........................................................................................................812 Rural health practitioners * ........................................................................................................................................813 Pass-through income taxes paid to another state ...................................................................................................815 Carryforward credits—Schedule OR-ASC, Section D or OR-ASC-NP, Section F Code Agriculture workforce housing * ..............................................................................................................................835 Biomass production/collection carryforward ........................................................................................................838 Business energy carryforward ..................................................................................................................................836 Child Care Fund contributions .................................................................................................................................841 Crop donation * ...........................................................................................................................................................843 Electronic commerce zone investment carryforward ...........................................................................................845 Employer scholarship * ..............................................................................................................................................847 Energy conservation project ......................................................................................................................................849 Fish screening devices * .............................................................................................................................................850 Oregon IDA Initiative Fund donation ......................................................................................................................852 Oregon Low Income Community Jobs Initiative/New Markets .........................................................................855 Oregon Production Investment Fund contributions (auction) .............................................................................856 Pollution control facilities carryforward .................................................................................................................857 Renewable energy resource equipment manufacturing facility carryforward .................................................860 Residential energy carryforward ..............................................................................................................................861 Transportation projects ..............................................................................................................................................863 University Venture Development Fund contributions ..........................................................................................864 Reforestation of underproductive forestlands ........................................................................................................867 Rural technology workforce development * ...........................................................................................................868 Bovine manure production/collection * ..................................................................................................................869 College Opportunity Grant Fund contributions (auction) ....................................................................................871 Short line railroad rehabilitation * ............................................................................................................................872 Carryforward credits—Available only to S Corporation shareholders Code Agriculture workforce housing loans (S corporation) ...........................................................................................836 Alternative qualified research activities carryforward (S corporation) ..............................................................837 Lender’s credit: affordable housing (S corporation) ...............................................................................................854 Lender’s credit: energy conservation carryforward (S corporation) ...................................................................848 Long-term enterprise zone facilities carryforward (S corporation) .....................................................................853 Qualified research activities carryforward (S corporation) ..................................................................................858 Numeric codes

150-101-431 (Rev. 04-21-22) 135 Credit recaptures—Schedule OR-ASC, Section E or OR-ASC-NP, Section G Code ABLE account credit recapture .................................................................................................................................950 Oregon 529 College Savings Network account credit recapture..........................................................................951 Refundable credits—Schedule OR-ASC, Section F or OR-ASC-NP, Section H Code Claim of right income repayment .............................................................................................................................890 Manufactured dwelling park closure ......................................................................................................................891 Working family household and dependent care (WFHDC) * ..............................................................................895 Oregon 529 College Savings Network account contributions * ............................................................................896 ABLE account contributions * ...................................................................................................................................897 * Credit must be prorated by part-year residents and nonresidents. Numeric codes

150-101-431 (Rev. 04-21-22) 136 Index Symbols 2-D barcode filing for Oregon ............................................ 11 529 plans—see Oregon 529 College Savings Network A ABLE account Contributions—credit ....................................................... 119 Credit recapture...................................................................29 Deposit—subtraction ..........................................................68 Nonqualified withdrawal—addition ...............................59 Abusive tax avoidance transactions penalty ....................39 Accumulation distribution from a trust—addition ........59 Additions ABLE account nonqualified withdrawal—addition ......59 Accumulation distribution from a trust ..........................59 Basis of business assets transferred into Oregon ............92 Capital loss carryover difference ......................................59 Child Care Fund contributions .........................................59 Claim of right income repayments ...................................60 College Opportunity Grant Fund contributions ............60 Depletion in excess of property basis ...............................60 Depreciation and amortization .........................................91 Disposition of inherited Oregon farmland or forestland .....60 Disqualified charitable contributions ...............................61 Federal business income deduction .................................61 Federal depreciation disconnect .................................88, 91 Federal election on interest and dividends of a minor child .................................................................61 Federal estate tax .................................................................62 Federal income tax refunds ...............................................62 Federal subsidies for employer prescription drug plans ...................................................................63 Fiduciary adjustment from Oregon estates and trusts ....93 First-time home buyer savings account nonqualified withdrawal .................................................................63 Gain on the sale of an Oregon residence .........................93 Gambling losses claimed as an itemized deduction ......64 Income taxes paid to another state by a pass-through entity ............................................................................64 Individual development account Donation credit ..................................................................65 Nonqualified withdrawal ................................................65 Rollover to retirement account........................................65 In general ..............................................................................59 Interest and dividends on government bonds of other states ..................................................................65 Lump-sum distributions ....................................................65 Nonresident capital losses and loss carryovers ..............66 Oregon College and MFS 529 Savings Plan nonqualified withdrawal ..........................................66 Oregon Production Investment Fund contributions .....66 Partnership and S corporation modifications for Oregon .........................................................................91 Passive activity losses .........................................................94 Refund of Oregon-only itemized deductions from a prior year ........................................................67 Sale of assets ........................................................................92 University Venture Development Fund contributions ..............................................................67 Unused business credits .....................................................67 WFHDC medical expenses ................................................67 Additions to tax Interest on certain installment sales .................................29 Credit recaptures .................................................................29 Addresses ..............................................................................141 Adjustments to income Alimony paid .......................................................................54 Educator expenses ..............................................................55 Fee-basis government officials, business expenses of ...54 Health savings account deduction ...................................55 In general ..............................................................................54 IRA or self-employed SEP and SIMPLE contributions ....55 Moving expenses .................................................................56 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ............................................................57 Penalty on early withdrawal of savings ..........................56 Performing artists, business expenses of .........................54 Reservists, business expenses of .......................................54 Self-employed health insurance ........................................56 Self-employment tax ...........................................................57 Student loan interest ...........................................................57 Agriculture workforce housing—credit ......................... 110 Air carrier employees ...........................................................47 Alimony Paid, deduction—adjustment ............................................54 Received, income ................................................................48 Alternative qualified research activities–credit ............ 111 Amended returns ..................................................................35 American Indian—subtraction ...........................................68 AmeriCorps educational award—subtraction .................69 Amtrak Act .............................................................................49 Appeals Appealing a deficiency based on federal audit reports or audit reports of other states ...................43 Conference ...........................................................................43 Doubtful liability .................................................................44 Interest ............................................................................43, 44 Notice of Assessment..........................................................42 Notice of Deficiency ............................................................42 Oregon Tax Court ................................................................44 Paying your taxes during the appeal ...............................44 Penalty or interest ...............................................................43 Revenue Online .............................................................43, 44 Written objection .................................................................43 Appendix ..............................................................................126 Application of refund ...........................................................32 Artist’s charitable contribution—subtraction ..................69 “As if” federal returns ..........................................................17 Auctions, tax credit College Opportunity Grant Fund ................................... 112 Oregon Production Investment Fund ............................ 116 Audit ......................................................................................41 B Basis of business assets transferred into Oregon ...........92 Bona fide residence test .......................................................14 Bond interest ..............................................................65, 77, 79 Business energy—credit .................................................... 112 Business income or loss .......................................................48 Business income reduced tax rate ......................................26 Business tax credits from pass-through entity ................91 C Capital Construction Fund—subtraction .........................70 Capital gain ................................................................28, 48, 65 Capital loss carryover difference—addition ....................59 Index

150-101-431 (Rev. 04-21-22) 137 Centralized partnership audit regime Adjustments .........................................................................92 Federal audits ......................................................................41 Tax ......................................................................................30 Charitable contribution non-itemized deduction— subtraction .................................................................70 Child Care Fund contributions Credit .................................................................................. 112 Claim of right income repayments Addition ...............................................................................60 Credit .................................................................................. 119 College Opportunity Grant Fund contributions Addition ...............................................................................60 Credit .................................................................................. 112 Commercial fishers Estimated tax .....................................................................125 Underpayment interest ....................................................123 Community property income .......................................18, 47 Commuting expenses, construction worker/logger— subtraction .................................................................70 Composite return, filing ......................................................16 Income on, subtraction .......................................................77 Conversions and exchanged property—subtraction ......71 Credit recaptures ...................................................................29 Credit transfers .................................................................... 110 Credit types ............................................................................98 Credits, carryforward Agriculture workforce housing ...................................... 110 Alternative qualified research activities .........................111 Biomass production/collection ....................................... 112 Bovine manure production/collection .......................... 112 Business energy ................................................................. 112 Child Care Fund contributions ....................................... 112 College Opportunity Grant Fund contributions .......... 112 Crop donation .................................................................... 113 Electronic commerce zone investment ........................... 113 Employer scholarship ....................................................... 113 Energy conservation project ............................................ 114 Fish screening devices ...................................................... 114 Lender’s credit: affordable housing ............................... 114 Lender’s credit: energy conservation ............................. 115 Long-term enterprise zone facilities ............................... 115 New Markets ..................................................................... 115 Oregon IDA Initiative Fund donation ........................... 115 Oregon Low-Income Community Jobs Initiative ......... 115 Oregon Production Investment Fund contributions ... 116 Pollution control facilities ................................................ 116 Qualified research activities ............................................ 116 Renewable energy resource equipment manufacturing facility ............................................. 116 Residential energy ............................................................. 117 Rural technology workforce development .................... 117 Short line railroad rehabilitation ..................................... 117 Transportation projects ..................................................... 118 University Venture Development Fund contributions .... 118 Credits, refundable ABLE account contributions ............................................ 119 Claim of right income repayment ................................... 119 Earned income ...................................................................120 Manufactured dwelling park closure .............................120 Oregon 529 College Savings Network account contributions ............................................................120 Oregon surplus (kicker) ...................................................122 Working family household and dependent care (WFHDC) ..................................................................121 Credits, standard Exemption ............................................................................99 Income taxes paid to another state .................................101 Mutually-taxed gain on the sale of residential property ...105 Oregon Cultural Trust contributions ..............................106 Oregon Veterans’ Home physicians ...............................106 Pass-through income taxes paid to another state .........104 Political contributions ......................................................106 Reservation enterprise zone ............................................107 Retirement income ............................................................107 Rural emergency medical service providers .................109 Rural health practitioners ................................................109 Crop donation—credit ........................................................ 113 D Dam workers ..........................................................................48 Deceased person’s return .......................................................8 Deductions and modifications ...........................................95 Itemized deductions ...........................................................95 Standard deduction ............................................................95 Age 65 or older, blind .......................................................96 Single or married filing jointly dependents ..................96 Dependent ..........................................................................9, 96 Depletion in excess of property basis—addition ............60 Depreciation and amortization ...........................................91 Direct deposit of refund ......................................................31 DISC dividend payments—subtraction ...........................71 Disposition of inherited Oregon farmland or forestland—addition ................................................60 Disqualified charitable donations—addition .................61 Dividend income .............................................................49, 77 Domicile ..................................................................................13 E Early withdrawal penalty—adjustment ...........................56 Earned income—credit .......................................................120 Educator expenses—adjustment ........................................55 Electronic commerce zone investment—credit ............. 113 Electronic filing for Oregon ................................................ 11 Employee retirement plans, previously taxed— subtraction .................................................................82 Employer scholarship—credit .......................................... 113 Energy conservation project—credit ............................... 114 Estimated tax ........................................................................125 Exempt income Air carrier employees, nonresident ..................................47 Amtrak Act ...........................................................................49 Hydroelectric dam workers ...............................................48 Interstate transportation wages (Amtrak Act) ................49 Manufactured dwelling park closure payments ............80 Railroad Retirement Board benefits .................................52 Social Security benefits .......................................................52 Waterway workers, nonresident .......................................53 Extensions of time to file .....................................................15 F Failure to file ..........................................................................45 Appeal procedure ...............................................................45 Assessment of tax ................................................................45 Penalty, 25 percent ..............................................................38 Penalty, 25 percent, additional ..........................................38 Penalty, 100 percent ............................................................39 Index

150-101-431 (Rev. 04-21-22) 138 Farmers and commercial fishers Estimated tax .....................................................................125 Underpayment interest ....................................................123 Farm income averaging ........................................................29 Farm liquidation long-term capital gain tax rate ............28 Federal depreciation disconnect .........................................91 Federal election on interest and dividends of a minor child—addition ..........61 Federal estate tax—addition ................................................62 Federal income tax refunds—addition ..............................62 Federal income tax liability—subtraction Additional tax paid .............................................................72 Amended returns—when to change amount .................36 Current year .........................................................................71 Prior year ..............................................................................73 Federal law connection ..........................................................7 Federal law disconnect—addition .....................................97 Federal pension income—subtraction ..............................74 Federal return “As if” ...................................................................................17 Audit of ................................................................................42 Extensions of time to file ....................................................15 Filing status ..........................................................................16 Need for ................................................................................ 11 RDPs ......................................................................................19 Federal subsidies for employer prescription drug plans—addition .........................................................63 Federal tax credits—subtraction .........................................75 Federal tax worksheet ...........................................................72 Fee-basis government officials, business expenses of—adjustment ..........................................................54 Fiduciary .................................................................................93 Additions ..............................................................................59 Adjustments from Oregon estates and trusts .................93 Income taxes paid to another state ...................................64 Returns....................................................................................8 Tax ......................................................................................30 Filing requirements ................................................................9 Nonresidents ........................................................................10 Part-year residents ..............................................................10 Filing status ............................................................................16 Fish screening devices—credit ......................................... 114 Foreign income tax—subtraction .......................................76 G Gain, loss, and distributions ...............................................48 Gain on the sale of an Oregon residence ..........................93 Gambling losses claimed as an itemized deduction— addition .......................................................................64 Global intangible low-taxed income .................................48 H Health savings account deduction—adjustment ............55 Household income checklist .............................................127 Housing expenses, scholarships used for—subtraction ....83 Hydroelectric dam workers .................................................48 I Income Air carrier employees .........................................................47 Alimony received ................................................................48 Amtrak Act ...........................................................................49 Business income or loss ......................................................48 Federal Schedule E and F income .....................................48 Gain, loss, and distributions ..............................................48 Global intangible low-taxed income ................................48 Hydroelectric dam workers ...............................................48 Individual Retirement Account ........................................49 Interest and dividend income ...........................................49 Interstate transportation wages ........................................49 Like-kind exchange or conversions of property .............51 Railroad Retirement Board benefits .................................52 Retirement income ..............................................................52 Salaries ..................................................................................53 Social Security benefits .......................................................52 State and local income tax refunds ...................................52 Taxable to Oregon ...............................................................47 Unemployment insurance benefits ..................................52 Wages ....................................................................................53 Waterway workers ..............................................................53 Income averaging, farm .......................................................29 Income on a composite return—subtraction ....................77 Income taxes paid to another state Addition ...............................................................................64 Credit, full-year residents ................................................102 Credit, generally ................................................................101 Credit, nonresidents .........................................................104 Credit, part-year residents ...............................................103 Mutually-taxed gain on the sale of residential property .....................................................................105 Pass-through entity ...........................................................104 Income tax refund Federal—addition ...............................................................62 Oregon—subtraction ..........................................................81 Individual Development Account Additions ..............................................................................65 Initiative Fund donation credit ....................................... 115 Subtraction ...........................................................................77 Individual Taxpayer Identification Number ...................19 Inherited farmland/forestland—addition ........................60 Interest .....................................................................................37 Appeals .................................................................................43 Refunds .................................................................................37 Underpayment of estimated tax .....................................123 Unpaid tax ............................................................................37 Interest and dividends on government bonds of other states—addition ........................................................65 Interest and dividends on U.S. bonds or notes—subtraction ...77 Interest income ..........................................................49, 65, 77 Interest on certain installment sales ..................................29 Interstate transportation wages ..........................................49 IRA conversions, previously taxed—subtraction ...........82 IRA or self-employed SEP and SIMPLE contributions—adjustment .....................................55 K Kicker (Oregon surplus credit) .........................................122 L Land donation to educational institutions carryforward—subtraction ......................................78 Lender’s credit: affordable housing ................................ 114 Lender’s credit: energy conservation ............................... 115 Like-kind exchange or conversions of property .............51 Local government bond interest—subtraction ................79 Long-term enterprise zone facilities—credit ................. 115 Lottery winnings—subtraction ..........................................79 Lump-sum distributions—addition Capital gains income ..........................................................65 Ordinary income .................................................................66 Index

150-101-431 (Rev. 04-21-22) 139 Index M Mailing addresses ...............................................................141 Manufactured dwelling park capital gain exclusion .....79 Manufactured dwelling park closure—credit ...............120 Manufactured dwelling park closure payments —subtraction ............................................................80 Marijuana business expenses—subtraction ....................80 Market-based sourcing ........................................................93 Medical subtraction, special Oregon .................................83 Military personnel filing information ..............................20 Minor child, federal election on interest and dividends—addition ................................................61 Minor child’s return ................................................................8 Mortgage interest credit—subtraction ..............................81 Moving expenses—adjustment ..........................................56 Mutually-taxed gain on the sale of residential property—credit ......................................................105 N Negative modifications ........................................................59 Net operating losses (NOLs) ...............................................88 New Markets—credit ......................................................... 115 Nonresidents Adjustments .........................................................................54 Composite return filed by pass-through entity ..............16 Earned income credit ........................................................120 Estimated tax .....................................................................125 Exemption credit .................................................................99 Filing requirements .............................................................10 Form OR-40-N .....................................................................15 Income taxes paid to another state .................................101 Married taxpayers with different residency status ........16 Negative modifications ......................................................59 Oregon percentage ..............................................................94 Rental property in Oregon .................................................10 Residency .............................................................................14 O Open estimated tax account ................................................32 Oregon 529 College Savings Network Addition, non-qualified withdrawal ................................66 Credit ..................................................................................120 Credit recapture...................................................................29 Subtraction ...........................................................................81 Oregon Cultural Trust contributions—credit ................106 Oregon IDA Initiative Fund donation Addition ...............................................................................65 Credit .................................................................................. 115 Oregon income tax refund—subtraction ..........................81 Oregon Low-Income Community Jobs Initiative—credit ...115 Oregon percentage ................................................................94 Oregon Production Investment Fund (auction) Addition ...............................................................................67 Credit .................................................................................. 116 Oregon special medical subtraction ..................................83 Oregon surplus credit (kicker) .........................................122 Oregon tax ..............................................................................25 Oregon Veterans’ Home physicians—credit ..................106 Other individual taxes CPAR .....................................................................................30 Fiduciary ..............................................................................30 Statewide transit ..................................................................29 Transit self-employment ....................................................30 Oyster farmers Estimated tax .....................................................................125 Underpayment interest ....................................................123 P Partnership and S corporation modifications for Oregon ...91 Part-year residents Adjustments .........................................................................54 Earned income credit ........................................................120 Estimated tax .....................................................................125 Exemption credit .................................................................99 Filing requirements .............................................................10 Form OR-40-P ......................................................................15 Income taxes paid to another state .................................101 Married taxpayers with different residency status ........16 Negative modifications ......................................................59 Net operating losses ...........................................................89 Oregon percentage ..............................................................94 Residency .............................................................................14 Passive activity losses ...........................................................94 Computation of Oregon losses ..........................................94 Modifications to federal losses for Oregon .....................94 Pass-through entities Business tax credits .............................................................91 Composite tax return ..........................................................16 Federal partnership audits ................................................41 Income on a composite return—subtraction ...................77 Income taxes paid to another state—addition ................64 Income taxes paid to another state—credit ...................104 Nonresident withholding ..................................................16 Reduced tax rate ..................................................................26 Penalties ..................................................................................38 Abusive tax avoidance transactions .................................39 Failure to file, 25 percent, additional ................................38 Failure to file, 100 percent ..................................................39 False claim, WFHDC credit .............................................121 First-time home buyer savings account, nonqualified withdrawal ..........................................39 Frivolous return...................................................................39 Performing artists, business expenses of—adjustment ...54 Personal income tax rates ....................................................25 Political contributions—credit .........................................106 Pollution control facilities—credit .................................. 116 Prescription drug plans, employer subsidies—addition ...63 Previously taxed employee retirement plans— subtraction .................................................................82 Previously taxed IRA conversions—subtraction ............82 Prohibited amounts for Oregon NOLs .............................88 Protective claim for refund ..................................................35 Public Safety Memorial Fund award—subtraction ........82 Q Qualified business income reduced tax rate ....................26 Qualified research activities—credit ............................... 116 R Railroad Retirement Board benefits—subtraction .........83 Record-keeping requirements ............................................ 11 Refunds Amended returns ................................................................35 Application to open estimated tax account .....................32 Delays ...................................................................................33 Direct deposit .......................................................................31 Injured spouse refund claims ............................................33 Interest ..................................................................................37 Minimum................................................................................8 Oregon statute of limitations .............................................33

150-101-431 (Rev. 04-21-22) 140 Index Processing.............................................................................33 Protective claim ...................................................................35 Registered domestic partners .............................................19 Renewable energy resource equipment manufacturing facility carryforward—credit .... 116 Reservation enterprise zone—credit ...............................107 Reservists, business expenses of—adjustment ...............54 Residency Bona fide residence test ......................................................14 Domicile ...............................................................................13 Foreign country ...................................................................13 Military personnel...............................................................20 Military spouses ..................................................................23 Nonresidents ........................................................................14 Part-year residents ..............................................................14 Physical presence test .........................................................13 Special-case Oregon residents ...........................................13 Tax treaties ...........................................................................14 Residential energy—credit ................................................ 117 Retirement income ................................................................52 Credit ..................................................................................107 Revenue Online .......................................................................7 Rural technology workforce development—credit ...... 117 S Salary income .........................................................................53 Sale of assets ..........................................................................92 Scholarships used for housing expenses—subtraction ...83 Self-employed health insurance—adjustment ................56 Self-employment tax—adjustment ....................................57 Short line railroad rehabilitation—credit ...................... 117 Social Security and Railroad Retirement Board .............52 Social Security benefits—subtraction ...............................83 Special Oregon medical—subtraction ..............................83 Standard deduction ..............................................................95 State and local income tax refunds ....................................52 Statewide transit tax .............................................................29 Statute of limitations Generally ..............................................................................12 Net operating loss carryback .............................................36 Notice of deficiency for listed transaction .......................40 Refunds .................................................................................33 Student loan interest—adjustment ....................................57 Subtractions ABLE account deposit ........................................................68 American Indian .................................................................68 AmeriCorps educational award .......................................69 Artist’s charitable contribution .........................................69 Basis of business assets transferred into Oregon ............92 Capital Construction Fund contributions .......................70 Charitable contribution non-itemized deduction ..........70 CPAR subtraction ................................................................92 Commuting expenses, construction worker/logger .....70 Conversions and exchanged property .............................71 Depreciation and amortization .........................................91 DISC dividend payments ..................................................71 Federal income tax liability ...............................................71 Federal pension income .....................................................74 Federal tax credits ...............................................................75 Fiduciary adjustment ..........................................................93 First-time home buyer savings account contributions and earnings ......................................76 Foreign income tax ..............................................................76 Gain on the sale of an Oregon residence .........................93 Income on a composite return ...........................................77 IDA contributions ...............................................................77 In general ..............................................................................68 Interest and dividends on U.S. bonds and notes ............77 Land donation to educational institutions ......................78 Legislative Assembly expenses .........................................79 Local government bond interest .......................................79 Lottery winnings .................................................................79 Manufactured dwelling park capital gain exclusion .....79 Manufactured dwelling park closure payments ............80 Marijuana business expenses ............................................80 Mortgage interest credit .....................................................80 Net operating losses for Oregon .......................................88 Oregon College and MFS 529 Savings Plan deposits ....81 Oregon income tax refund .................................................81 Oregon Investment Advantage ...................................................81 Partnership and S corporation modifications for Oregon ...91 Passive activity losses .........................................................94 Previously taxed employee retirement plans..................82 Previously taxed IRA conversions ....................................82 Public Safety Memorial Fund award ...............................82 Railroad Retirement Board benefits .................................83 Sale of assets ........................................................................92 Scholarships used for housing expenses .........................83 Social Security benefits .......................................................83 Special Oregon medical ......................................................83 Taxable benefits for former RDPs .....................................86 U.S. government interest in IRA or Keogh distribution ....86 Surplus credit (kicker) .......................................................122 T Taxable benefits for former RDPs—subtraction .............86 Tax benefit doctrine ..............................................................62 Tax credit auctions College Opportunity Grant Fund ................................... 112 Oregon Production Investment Fund ............................ 116 Tax rates ...................................................................................25 Tax treaties ..............................................................................14 Transferable credits ............................................................ 110 Transit self-employment tax ...............................................30 Transit tax, statewide ............................................................29 Transportation projects—credit ........................................ 118 U Underpayment of estimated tax, interest on ..................123 Appeals .................................................................................42 Exceptions ..........................................................................123 Unemployment compensation Income ..................................................................................52 Railroad Retirement Board benefits—subtraction .........83 University Venture Development Fund contributions Addition ...............................................................................67 Credit .................................................................................. 118 Unused business credits—addition ...................................67 U.S. bonds and notes, interest on—subtraction ..............77 U.S. government interest in IRA or Keogh distribution—subtraction .......................................86 W Wage income ..........................................................................53 Waterway workers.................................................................53 Working family household and dependent care (WFHDC)—credit ...................................................121 Medical expenses claimed as itemized deduction .........67 Penalty for false claim ................................................39, 121 Written objection ...................................................................43

150-101-431 (Rev. 04-21-22) 141 Important mailing addresses If you are responding to a specific notice or letter, use the address and contact information listed on that correspondence. Send all returns and forms to the address listed on it or its instructions. See our website for additional mailing addresses. Physical address: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Forms and publications requests: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Federal ITIN information: Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Tax Information Authorization and Power of Attorney for Representation form: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Fax: 503-945-8735 Return after tax has been assessed: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Donations to State School Fund: Oregon Department of Education Attention: OFA Cashier 255 Capitol Street NE Salem OR 97310-1206 Injured spouse refund requests: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Written objections, conference requests, and requests for interest or penalty adjustments: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Appeals to the Oregon tax court: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 Appeals of interest on underpayment of tax: UND Team Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018

Miscellaneous Oregon income tax information for tax years 2018–2021 (Refer to prior year return instructions before filing delinquent or amended returns) Tax year 2018 2019 2020 2021 Return due date (Calendar year filer) 4/15/19 7/15/20 5/17/21 4/18/22 Standard deduction Single (can be claimed on another’s return) $1,050* $1,100* $1,100* $1,100* Single $2,215 $2,270 $2,315 $2,350 Married filing jointly or qualifying widow(er) $4,435 $4,545 $4,630 $4,700 Married filing separately $2,215† $2,270† $2,315† $2,350† Head of household $3,570 $3,655 $3,725 $3,780 Federal tax subtraction maximum $6,650–$0‡ $6,800–$0‡ $6,950–$0‡ $7,050–$0‡ Exemption credit $201 or $0x% $206 or $0x% $210 or $0x% $213 or $0x% Oregon College and MFS 529 Savings Plans and ABLE account contribution maximum Joint return $4,750 $4,865 $4,960# $5,030# All others $2,375 $2,435 $2,480# $2,515# Marginal tax rates Single Married filing separately 5% First $3,450 First $3,550 4.75% First $3,600 First $3,650 7% $3,451–$8,700 $3,351–$8,900 6.75% $3,601–$9,050 $3,651–$9,200 9% $8,701–$125,000 $8,901–$125,000 8.75% $9,051–$125,000 $9,201–$125,000 9.9% Over $125,000 Over $125,000 9.9% Over $125,000 Over $125,000 Married filing jointly Head of household Qualifying widow(er) 5% First $6,900 First $7,100 4.75% First $7,200 First $7,300 7% $6,901–$17,400 $7,101–$17,800 6.75% $7,201–$18,100 $7,301–$18,400 9% $17,401–$250,000 $17,801–$250,000 8.75% $18,101–$250,000 $18,401–$250,000 9.9% Over $250,000 Over $250,000 9.9% Over $250,000 Over $250,000 * Greater of amount shown or earned income plus $350, but not more than the standard deduction for a single filer. † If your spouse itemizes deductions, your standard deduction is $0. ‡ If federal AGI is $125,000 or greater, the federal tax subtraction is limited. Use the federal tax subtraction worksheet. x If federal AGI is more than $100,000 ($200,000 for a joint return), the exemption credit amount is $0. % The additional exemption credit for a disabled child or severely disabled taxpayer or spouse is $0 if AGI is over $100,000, regardless of filing status. # Carryforward of pre-2020 contributions only.

150-101-431 (Rev. 09-30-22) 2022 OREGON Publication OR-17 Individual Income Tax Guide

Important updates

This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax (For Individuals). This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 questions.dor@dor.oregon.gov Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include .txt files in your email, but we are unable to open any other type of attachment. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. • Personal and partnership income tax: prac.revenue@dor.oregon.gov. • Pass-through entity elective tax: businessalternative.incometax@dor.oregon.gov • Corporate income or excise tax: corp.help.dor@dor.oregon.gov. • Corporate minimum tax: corp.help.dor@dor.oregon.gov. • Corporate nexus and voluntary disclosure: nexus.help.dor@dor.oregon.gov. • Corporate activity tax: cattax.questions@dor.oregon.gov. • Payroll and business tax: payroll.help.dor@dor.oregon.gov. • Fiduciary/estate/inheritance tax: estate.help.dor@dor.oregon.gov. • Transit self-employment taxes: tse.help.dor@dor.oregon.gov. Revenews. To receive emailed information from us, subscribe to Revenews using the link on our Tax professionals webpage.

150-101-431 (Rev. 09-30-22) 4 Contents Federal tax law ....................................................................7 New information .................................................................7 Important reminders ..........................................................7 General information ..................................................9 Do I have to file an Oregon income tax return? .............9 Electronic filing for Oregon ............................................11 2-D barcode filing for Oregon .........................................11 Why Oregon needs a federal return ..............................11 Record-keeping requirements .........................................11 Filing an Oregon return .........................................13 Residency ...........................................................................13 Extensions of time to file .................................................15 Which form do I file? ........................................................15 Filing status........................................................................16 Registered domestic partners (RDPs) ............................19 Individual Taxpayer Identification Number .................19 Military personnel filing information ...........................20 Oregon tax ....................................................................25 Personal income tax rates ................................................25 Qualified business income reduced tax rate ................26 Farm liquidation long-term capital gain tax rate .........28 Farm income averaging ....................................................29 Pass-through entity elective tax ......................................29 CPAR amount in lieu of tax paid by partners ..............30 Interest on certain installment sales ..............................30 ABLE account or Oregon 529 College Savings Network account tax recapture .................................30 Other individual taxes .....................................................31 Payments and refunds ...........................................32 Payment options ................................................................32 Refunds ...............................................................................32 Direct deposit of refund ...................................................33 Application of refund .......................................................33 Refund processing ............................................................34 Injured spouse refund claims .........................................35 Oregon statute of limitations on refunds .....................35 Amended returns .....................................................36 How do I amend my Oregon return? ............................36 Interest and penalties.............................................38 Interest ................................................................................38 Penalties ..............................................................................39 Audits and appeals ...................................................41 What to do if your return is audited ..............................41 Appeals ...............................................................................42 Failure to file an Oregon income tax return ...45 Filing a return after tax is assessed ................................45 Income ............................................................................47 What income is taxable to Oregon? ................................47 Air carrier employees .......................................................47 Alimony received ..............................................................48 Business income or loss ....................................................48 Federal Schedule E and F income ...................................48 Gain, loss, and distributions ...........................................48 Global intangible low-taxed income (GILTI) ................48 Hydroelectric dam workers .............................................48 Individual Retirement Account (IRA) distributions ...49 Interest and dividend income .........................................49 Interstate transportation wages (Amtrak Act ) ............49 Like-kind exchange or involuntary conversion ...........51 Retirement income ............................................................52 Social Security and Railroad Retirement Board benefits ...52 State and local income tax refunds ................................52 Unemployment insurance (UI) benefits and other taxable income ..............................................................52 Wages, salaries, and other pay for work ........................53 Waterway workers ............................................................53 Adjustments .................................................................54 Alimony paid .....................................................................54 Certain business expenses of reservists, performing artists, and fee-basis government officials ...............54 Educator expenses ............................................................55 Health savings account (HSA) deduction .....................55 IRA or self-employed SEP and SIMPLE contributions ...55 Moving expenses ..............................................................56 Penalty on early withdrawal of savings ........................56 Self-employed health insurance ....................................56 Self-employment tax ........................................................57 Student loan interest ........................................................57 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ........................................57 Additions ........................................................................59 Accumulation distribution from certain domestic trusts ..............................................................................59 ABLE account subtraction nonqualified withdrawal ....59 Capital loss carryover difference ....................................59 Child Care Fund contributions .......................................59 Claim of right income repayments .................................60 College Opportunity Grant Fund contributions ..........60 Depletion in excess of property basis ............................60 Disposition of inherited Oregon farmland or forestland ..................................................................60 Disqualified charitable donations ..................................61 Federal business income deduction ...............................61 Federal election on interest and dividends of a minor child ...................................................................61 Federal estate tax ...............................................................62 Federal income tax refunds .............................................62 Federal subsidies for employer prescription drug plans .....................................................................63 First-time home buyer savings account nonqualified withdrawal ............................................63 Gambling losses claimed as an itemized deduction ...63 Income taxes paid to another state by a pass-through entity .....................................................64 Individual development account (IDA) .........................64 Interest and dividends on government bonds of other states ................................................................65 Lump-sum distribution from a qualified retirement plan .............................................................65 Nonresident capital losses and loss carryovers ............66 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal .......................66

150-101-431 (Rev. 09-30-22) 5 Oregon Production Investment Fund contributions ......................................................66 Passive foreign investment company income ...............66 PTE-E tax deducted on entity-level federal return ......67 Refund of Oregon-only itemized deductions from a prior year ....................................................................67 University Venture Development Fund contributions ...67 Unused business credits ..................................................67 WFHDC medical expenses..............................................68 Subtractions .................................................................69 ABLE account deposit carryforward .............................69 American Indian ...............................................................69 AmeriCorps educational award .....................................70 Artist’s charitable contribution .......................................70 Capital Construction Fund (CCF) contributions ..........70 Construction worker and logger commuting expenses ...71 Domestic international sales corporation (DISC) dividend payments ......................................................72 Federal gain previously taxed by Oregon .....................72 Federal income tax liability .............................................72 Federal tax worksheet ......................................................72 Federal pension income ...................................................74 Federal mortgage interest credit .....................................75 Federal tax credits ...........................................................76 Film production labor rebate ...........................................76 First-time home buyer savings account (FTHBSA) contributions and earnings ........................................76 Foreign income tax ...........................................................77 IDA contributions .............................................................77 Income on a composite return ........................................78 Interest and dividends on U.S. bonds and notes ..........78 Land donation to educational institutions carryforward ...79 Legislative Assembly expenses ......................................79 Manufactured dwelling park capital gain exclusion ...80 Manufactured dwelling park closure payments ..........80 Marijuana business expenses .........................................80 Oregon College and MFS 529 Savings Plan deposits carryforward .................................................81 Oregon income tax refund ..............................................81 Oregon Investment Advantage .......................................81 Oregon Lottery winnings ................................................82 Previously taxed employee retirement plan contributions ...82 Previously taxed IRA conversions .................................83 Psilocybin business expenses .........................................83 Public Safety Memorial Fund award .............................84 Railroad Retirement Board benefits ...............................84 Scholarship awards used for housing expenses ..........84 Social Security benefits ....................................................84 Special Oregon medical ...................................................84 State and local government bond interest .....................87 Taxable benefits for former RDPs ...................................87 U.S. government interest in IRA or Keogh distributions ...88 Other items ...................................................................89 Net operating losses (NOLs) ...........................................89 Depreciation difference for Oregon ...............................92 Federal depreciation disconnect .....................................92 Partnership and S corporation modifications for Oregon ...........................................................................92 CPAR adjustments ............................................................93 Basis of business assets transferred into Oregon .........93 Sale of assets ......................................................................94 Gain on the sale of an Oregon residence .......................94 Fiduciary adjustment from Oregon estates and trusts ....94 Market-based sourcing ....................................................94 Passive activity losses (PALs) ..........................................95 Suspended losses ..............................................................96 Oregon percentage ............................................................96 Deductions and modifications ........................................96 Oregon deferral of reinvested capital gain ...................98 Federal law disconnect .....................................................98 Credits ............................................................................99 Types of credits ..................................................................99 Standard credits ......................................................100 Exemption credit .............................................................100 Income taxes paid to another state on mutually-taxed income .............................................102 Exception for Oregon resident partners and S corporation shareholders ..........................................106 Mutually-taxed gain on the sale of residential property .......................................................................106 Oregon Cultural Trust contributions ...........................107 Oregon Veterans’ Home physicians .............................107 Political contributions ....................................................108 Reservation enterprise zone ..........................................108 Retirement income ..........................................................109 Rural emergency medical service providers ..............110 Rural health practitioners ..............................................110 Carryforward credits .............................................112 Agriculture workforce housing ....................................112 Alternative qualified research activities carryforward ...113 Bovine manure production/collection carryforward ... 114 Business energy carryforward ...................................... 114 Child Care Fund contributions carryforward ............ 114 College Opportunity Grant Fund contributions (auction) ....................................................................... 114 Crop donation .................................................................. 114 Electronic commerce zone investment carryforward ...115 Employer scholarship .....................................................115 Energy conservation project ..........................................116 Fish screening devices ....................................................116 Lender’s credit: affordable housing ..............................116 Lender’s credit: energy conservation carryforward ....116 Long-term enterprise zone facilities ............................117 Oregon IDA Initiative Fund donation .........................117 Oregon Low-Income Community Jobs Initiative/New Markets ............................................117 Oregon Production Investment Fund contributions (auction) ..............................................118 Qualified research activities carryforward ................118 Renewable energy resource equipment manufacturing facility carryforward .....................118 Residential energy carryforward .................................118 Rural technology workforce development ..................119 Short line railroad rehabilitation ..................................119 Transportation projects ..................................................119 University Venture Development Fund contributions ...120 Refundable credits .................................................121 ABLE account contributions ..........................................121 Claim of right income repayment ................................121 Earned income credit (EIC) ...........................................122 Manufactured dwelling park closure ..........................122 Oregon 529 College Savings Network account contributions ...............................................................122 Oregon EIC for ITIN filers .............................................123

Pass-through entity elective taxes paid .......................123 Working family household and dependent care (WFHDC) ....................................................................123 Oregon surplus credit ....................................................124 Interest on underpayment of estimated tax ...125 Do I owe underpayment interest? ................................125 Figure your required annual payment ........................125 Exceptions to paying interest on an underpayment of estimated tax ...............................125 Estimated tax .............................................................127 Should I pay estimated tax?...........................................127 Exceptions ........................................................................127 Special situations ............................................................127 Appendix ......................................................................128 Contents ............................................................................128

150-101-431 (Rev. 09-30-22) 7 Federal tax law No extension to pay. Oregon doesn’t allow an extension of time to pay your tax, even if the IRS is allowing an extension. Your 2022 Oregon tax is due April 18, 2023. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2021. Oregon exceptions to federal tax law: • Internal Revenue Code (IRC) Section 139A tax exemp­ tion for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. • IRC Section 529 tax exemption for earnings on col­ lege savings plan funds used for K-12 tuition. Ore­ gon College & MFS 529 Savings Plans may be used for higher education expenses only. • IRC Section 199A deduction for noncorporate quali­ fied business income (QBID). Oregon is discon­ nected from the QBID. This deduction doesn’t flow through to the Oregon personal income tax return, so there is no addition to report; however, the deduc­ tion must be added back on fiduciary returns. References to federal return forms. In this publica­ tion, references to the federal return or to Form 1040 also include a reference to Forms 1040-SR, 1040-NR, and 1040-X, unless otherwise indicated. New information Earned income credit (EIC) for filers using Individual Taxpayer Identification Numbers (ITINs). If you are unable to claim some or all of the federal earned income tax credit (EITC) only because you, your spouse (if filing a joint return), or your child use an ITIN, you may be able to claim Oregon’s EIC for ITIN filers. See “Refundable credits” for more information. Working family household and dependent care (WFHDC) credit. There are several changes for tax year 2022 for students claiming the WFHDC credit. If you (or your spouse, if you’re filing a joint return) were a student during 2022 and paid for care for a qualifying dependent so that you could attend school, see “Refundable credits” for more information about these changes. New deadline for Oregon IDA Initiative Fund dona­ tions. You now have a few extra months to make a donation to the Oregon IDA Initiative Fund and claim a credit for it. You can claim the credit for tax year 2022 if you make your donation no later than April 15, 2023 or the date you file your 2022 return, whichever is sooner. See “Carryforward credits” for more information about this credit. New exception for rural health practitioner credit. There is a new exception to the income limit for this credit, for physicians who practice emergency medi­ cine in a frontier rural practice county. See “Standard credits” for information about this credit. Elective tax for partnerships and S corporations. Certain partnerships and S corporations may elect to pay income tax at the entity level for tax years begin­ ning on or after January 1, 2022 and before January 1, 2024. Individuals who are direct or indirect part­ ners or shareholders may claim a credit for the tax paid by the partnership or S corporation. See “Pass- through entity elective tax” in “Oregon tax” for more information. Federal tax liability subtraction. The federal tax subtraction limit is $7,250 ($3,625 if married filing separately) for 2022. It may be limited further based on your adjusted gross income (AGI). See “Federal income tax liability” in “Subtractions.” Important reminders Revenue Online. Revenue Online provides conve­ nient, secure access to tools for managing your Ore­ gon tax account. With Revenue Online, you can: • Check the status of this year’s refund. • View and print letters from us. • Make or schedule payments. • Securely communicate with us. • Check balances and view your tax account history. • Submit your requests (such as penalty waivers or appeals) or information we’ve requested from you. • View your Form 1099-G, if applicable. Tax professionals with third party access have addi­ tional benefits, such as viewing clients’ accounts. For more information and instructions on setting up your personal Revenue Online account, go to www. oregon.gov/dor and click on Revenue Online. Data security breaches. Tax professionals suffering a data security breach associated with tax return preparation must report the breach to us promptly. See our Tax professionals webpage for details. Military pay. Oregon doesn’t tax your military pay if you aren’t an Oregon resident. For more information about residency and the Oregon military pay subtrac­ tions, see “Military personnel filing information.” Federal centralized partnership audit regime (CPAR). Oregon recognizes CPAR, the federal regime for auditing partnerships. See “Oregon tax” and “Audits and appeals.” Special Oregon medical subtraction. You or your spouse must be age 66 or older at the end of the tax Federal tax law

150-101-431 (Rev. 09-30-22) 8 year to qualify for the subtraction. See “Special Ore­ gon medical subtraction.” Fiduciary returns. This publication includes infor­ mation for Oregon fiduciary return filers, where the treatment of an item may differ from the treatment on personal income tax returns. Also, see the instruc­ tions for Form OR-41, Oregon Fiduciary Income Tax Return. Statewide transit tax (STT). This income tax funds public transportation services and improvements within Oregon. See “Oregon tax” for filing require­ ments and other details. Market-based sourcing. Nonresident taxpayers must apportion their business income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See ORS 314.665, ORS 314.666, and OAR 150-314-0435. Payment options. We accept tax payments by check, money order, debit card, and credit card. See “Pay­ ments and refunds.” Direct deposit. Instead of receiving your refund check in the mail, you may have your refund depos­ ited directly into your account that accepts electronic deposits. See “Direct deposit of refund” in “Pay­ ments and refunds.” You can also have your refund deposited directly into an Oregon College or MFS 529 Savings Plan account. You may choose up to four accounts. See our full-year and part-year/nonresident booklets for more information. Minimum refund. Under Oregon law, the minimum refund that can be issued is $1. Minor child’s return and signature. If your child must file a tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By (your signature), parent (or legal guardian) for minor child.” Deceased person’s return. A final return for a person who died during the calendar year must be filed if a return would normally be required. If a return must be filed, check the “Deceased” box after the person’s name on the return. If you filed a final return with a refund and are unable to cash the refund check, you will need to return the check to us along with Form OR-243, Claim to Refund Due a Deceased Person. Go to our website to download the form or contact us to order it. If you are a court appointed personal representative or have filed a small estate affidavit and you need more information about trusts or estates, contact our Estate Unit at estate.help.dor@dor.oregon.gov. Additional exemption credits. Additional exemption credits for severely disabled taxpayers and for dis­ abled children aren’t available for taxpayers whose AGI is more than $100,000, regardless of filing sta­ tus. For more information, see “Exemption credit” in “Standard credits.“ Registered domestic partners (RDPs). For Oregon tax purposes, same-sex RDPs are treated the same as married couples. References to “spouse” within this publication include RDPs. Nonresident disaster relief workers. You don’t need to file a return if you worked in Oregon solely to pro­ vide relief during a declared disaster or emergency. See “General information” for more details. Important reminders

150-101-431 (Rev. 09-30-22) 9 General information Do I have to file an Oregon income tax return? Use the following charts and examples to determine whether you are required to file an Oregon personal income tax return. See the explanations in this publi­ cation if you are unsure about: • Residency status—see “Residency.“ • Filing status—see “Filing status.“ • Taxable income—see “What income is taxable to Oregon?” • Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Oregon income tax withheld, even if you aren’t oth­ erwise required to file a return. Note: You don’t have to file an Oregon return if you are an out-of-state employee or the operator of an out-of-state business and you were in Oregon solely for purposes of performing disaster or emergency- related work (ORS 401.690). Full-year residents You need to file if your gross income is more than the amount shown for your filing status in Table 1. Note: The amounts in Table 1 apply to gross income from all taxable sources. Table 1. Filing thresholds for full-year residents Your filing status is: Number of boxes checked below line 17 of Form OR-40: And your gross income is more than: Single, can be claimed on another’s return Any See “Dependents” Single 0 $6,780 1 $7,980 2 $9,180 Married filing jointly 0 $13,555 1 $14,555 2 $15,555 3 $16,555 4 $17,555 Married filing separately 0 $6,780 1 $7,780 2 $8,780 Head of household 0 $8,510 1 $9,710 2 $10,910 Qualifying surviving spouse 0 $9,455 1 $10,455 2 $11,455 In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages. Dependents. If you can be claimed as a dependent on another person’s return, you must file your own return if your income is more than the lesser of: • The standard deduction allowed on your federal return, or • The Oregon standard deduction for a single filer. You can use this worksheet, which has the federal amounts, to help you figure out if you need to file your own return. 1. Enter gross income from all 1. $ ________ taxable sources.

2. Earned income $_____ plus $400. 2. $ ________ Enter total. 3. Set federal amount. 3. $ 1,150 4. Enter the larger of line 2 or 3. 4. $ ________ 5. Enter the Oregon standard 5. $ ________ deduction for a single person: • Basic standard deduction: $2,420. • Age 65 or older, or blind: $3,620. • Age 65 or older and blind: $4,820. 6. Enter the smaller of line 4 or 5. 6. $ ________ If line 1 is more than line 6, you must file an Ore­ gon return. If line 6 is more than line 1, you aren’t required to file an Oregon return. Example 1: Emily is single, age 20, and a full-time college student. Her parents claim her as a depen­ dent. Emily has earned income of $800 from her job. She also has $29 of interest income from her savings account. 1. Enter gross income from all 1. $ 829 taxable sources. 2. Earned income $800 plus $400. 2. $ 1,200 Enter total. General information

150-101-431 (Rev. 09-30-22) 10 3. Set federal amount. 3. $ 1,150 4. Enter the larger of line 2 or 3. 4. $ 1,200 5. Enter the Oregon standard 5. $ 2,420 deduction for a single person: • Basic standard deduction: $2,420. • Age 65 or older, or blind: $3,620. • Age 65 or older and blind: $4,820. 6. Enter the smaller of line 4 or 5. 6. $ 1,200 Because line 6 ($1,200) is more than line 1 ($829), Emily isn’t required to file an Oregon return. Note: If Emily had any Oregon income tax withheld from her income, she must file an Oregon return to claim a refund. Example 2: Norman, age 77, is claimed as a depen­ dent by his son. Norman has income of $3,015 from a pension and interest. He doesn’t have any other tax­ able income. 1. Enter gross income from all 1. $ 3,015 taxable sources. 2. Earned income $0 plus $400. 2. $ 400 Enter total. 3. Set federal amount. 3. $ 1,150 4. Enter the larger of line 2 or 3. 4. $ 1,150 5. Enter the Oregon standard 5. $ 3,620 deduction for a single person: • Basic standard deduction: $2,420. • Age 65 or older, or blind: $3,620. • Age 65 or older and blind: $4,820. 6. Enter the smaller of line 4 or 5. 6. $ 1,150 Because line 1 ($3,015) is more than line 6 ($1,150), Norman is required to file an Oregon return. Example 3: Katrina is single, age 19, a full-time stu­ dent, and claimed as a dependent by her mother. Katrina didn’t work but had $1,200 of unearned inter­ est income. 1. Enter gross income from all 1. $ 1,200 taxable sources. 2. Earned income $0 plus $400. 2. $ 400 Enter total. 3. Set federal amount. 3. $ 1,150 4. Enter the larger of line 2 or 3. 4. $ 1,150 5. Enter the Oregon standard 5. $ 2,420 deduction for a single person: • Basic standard deduction: $2,420. • Age 65 or older, or blind: $3,620. • Age 65 or older and blind: $4,820. 6. Enter the smaller of line 4 or 5. 6. $ 1,150 Because line 1 ($1,200) is more than line 6 ($1,150), Katrina is required to file an Oregon return. Part-year residents and nonresidents You need to file an Oregon return if your gross income is more than the amount shown for your fil­ ing status in Table 2. Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident and gross income from all taxable sources while an Oregon resident. Table 2. Filing thresholds for part-year residents and nonresidents Your filing status is: And your Oregon gross income is more than: Single, can be claimed on another’s return $1,150* Single $2,420 Married filing jointly $4,840 Married filing separately If spouse claims standard deduction $2,420 If spouse itemizes deductions 0 Head of household $3,895 Qualifying surviving spouse $4,840 * The larger of $1,150 or your earned income plus $400, up to your standard deduction amount. If your Oregon income is less than the amount in Table 2, you aren’t required to file a return unless you had $1 or more of Oregon tax withheld from your wages. Nonresidents with rental property in Oregon You don’t have to file an Oregon return if: • Your only Oregon-source income is from rental property, and • You have a loss from the rental activity for the year. However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-tax­ able transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return. General information

150-101-431 (Rev. 09-30-22) 11 Electronic filing for Oregon Electronic filing is a fast, efficient, and accurate way to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Practitioners are automatically approved for Oregon electronic filing after the IRS accepts your online application to become an authorized e-file provider. There is no separate registration required for Oregon. Paid preparers who meet the requirements of the fed­ eral e-file mandate must also e-file Oregon personal income tax returns. For information on waivers of this requirement, see the information for tax profes­ sionals on our website. The copy of a tax return provided to a client must be an exact copy of the tax return submitted to us. 2-D barcode filing for Oregon 2-D barcode filing is an alternative way to file a paper Oregon return. Oregon-approved tax software pack­ ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on the tax return is a “picture” of the information on the return, which is printed on the top right-hand cor­ ner of the return’s front page. A machine reads the barcode information so it doesn’t have to be entered manually into our computer system. If changes are made to the return after it has been printed, the entire return must be re-printed so that the barcode will reflect the correct information. The copy of a 2-D barcode return provided to a tax­ payer must be an exact copy of the tax return you submit to us. Why Oregon needs a federal return Most information to support the amounts on your Oregon return comes from your federal return. Even when Oregon law differs from federal law (such as additions, subtractions, and credits), we still need information from your federal return (ORS 314.380). If you file an electronic return, we will receive your federal return with your Oregon return. If you are filing a paper return, you must include a copy of the front and back of your federal return with Schedules 1 through 3 (if applicable). Also include any “as if” federal returns. If you’re not required to file a federal return, prepare a federal return as if you were actually filing it and include it with your Oregon return. Don’t include extension requests or federal schedules other than those listed above, but keep a copy of those with your tax records. We may ask for copies later. Record-keeping requirements Why is record-keeping important? • Keeping records of your income and deductions will help you prepare an accurate tax return and pay the correct tax. • You must be able to prove all items on your return with adequate records and sufficient evidence. Keep records that verify the income, deductions, credits, and other items reported on your tax return. Estimates or approximations don’t qualify as proof. • Accurate records will help you if we select your tax return for audit. Usually, an audit will occur one to three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from various sources. You may also have to pay more tax if you can’t prove the figures you used. How should I keep my records? You must keep accurate records, but no particular system is required for keeping them. Your records should contain all the information you used to fig­ ure your income, deductions, credits, and other items shown on your income tax return. What records should I keep? If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list of records you should keep: • Receipts and sales documents for deductible busi­ ness expenses, self-employment, farm, rentals, sale of assets, etc. • Dated and signed receipts for any cash payments that might be deductible. • Income statements, including Form W-2 for your wages and Form 1099 for interest, dividends, rents, and nonemployee compensation. • All payroll records, including copies of W-2 and 1099 forms you’ve issued. • Pay statements if you have deductible expenses withheld from your paycheck. • Receipts and certificates to verify Oregon tax cred­ its claimed. • Copies of your tax returns, including complete federal returns with all required schedules, or an “as if” return if you don't have a federal filing requirement. General information

150-101-431 (Rev. 09-30-22) 12 • Copies of your “as if” returns if you were required to prepare them to claim a special filing status. • Worksheets, summary statements, calendars, log books, journals, etc. • Canceled checks, substitute checks or carbon cop­ ies of checks, bank deposit slips, and receipts. • Checking and savings account statements for both personal and business accounts. • If you deduct alimony payments, keep copies of canceled checks and the divorce, separate main­ tenance, or support decree or a written separation agreement. • For property you own, keep proof of the purchase price, any purchase expenses, the cost of any improvements, and any other basis adjustments, such as depreciation and deductible casualty losses. If you received property as a gift, you must have records that show the donor’s adjusted basis just before the property was given to you, its fair market value on the date of the gift, and any gift tax paid on it. • The sale of a capital asset (and certain other assets). This type of sale is reported as a capital gain or loss. Your records must show when and how the asset was acquired, how it was used, and when and how you disposed of it. Records must also show your cost or other basis, the gross selling price, and the expenses of the sale. • Year-end statements showing total interest paid on loans, mortgages, or notes. • Statements and canceled checks, mortgage state­ ments, and other documents for your real estate and personal property taxes paid. • Proof of payment to your care provider if you are claiming the Oregon WFHDC credit. How do I document deductible expenses? A receipt is the best evidence to prove the amount of an expense. A canceled check, together with a bill or invoice from the payee, ordinarily establishes the cost. A canceled check might not prove a business expense without other evidence to show that it was for a business purpose. All records should show: • The date, • The amount, and • The purpose of the expense. To be deductible, a business expense must be both ordinary and necessary. How do I document car or truck expenses? You must have written records to verify your vehicle expenses. To deduct car or truck expenses, you must be able to prove: • The amount of each separate expense for a vehicle, such as the cost of purchase, capital improvements, lease payments, maintenance, and repairs. • The mileage for each business or investment use of the vehicle and the total miles for the tax year. • The date of the expense or use. Keep a trip log at the time of use, showing the date and mileage for each business use, including odometer readings. • The business or investment reason for the expense or use of the vehicle. Keep the proof you need for these items in an account book, diary, log, statement of expense, trip sheet, etc. Include all documents needed to verify the item. How long should I save my records? Keep records that support an item of income or a deduction on your return at least until the statute of limitations expires for that return. A statute of limita­ tions is the period of time after which no legal action can be brought. Usually this is three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. Returns filed before the due date are treated as if they were filed on the due date. Exceptions: There are times you should keep records longer, including the following: • Keep records that support your basis in property for at least four years after you sell or dispose of the property (including all capital improvements). • If you’re depreciating property, keep records related to each item’s depreciation expenses for its entire recovery period plus three years. • If your return was audited by the federal govern­ ment, Oregon has two years from the date we receive the federal audit report to review your Ore­ gon return for adjustments. • If you have employees, we recommend you keep all of your employment tax records for at least five years after the date the tax becomes due or is paid, whichever is later. This includes copies of Form W-2 for each employee, and all payroll records. • If you didn’t report some income and it’s more than 25 percent of the income shown on your return, the return may be audited within five years after it was filed. If a return is false or fraudulent or if no return is filed, there is no time limit. What if I don’t have all of my records? If records have been destroyed and your return is selected for audit, the auditor will advise you about reconstructing your records. General information

150-101-431 (Rev. 09-30-22) 13 Filing an Oregon return In order to correctly file an Oregon personal income tax return, you must know: • Your residency status. • Which form to file. • Your filing status. Residency (ORS 316.027) General rule. Oregon taxes residents on all sources of income. Oregon taxes nonresidents on income from Oregon sources. Residents An Oregon resident is someone who is domiciled in this state. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan to return after an absence. Domicile isn’t the same as home, abode, or residence. Intent is the deciding factor when you determine your domicile. The law assumes you have a domicile somewhere. It also assumes you have only one domicile. Home. If you have one home, your domicile is gen­ erally where that home is located. If you have two homes, your domicile follows your center of activity. To determine your center of activity and your domi­ cile, consider: • Physical characteristics of the place. • Time you spend there. • Things you do there. • People and property there. • Your attitude toward the place. • Your intent to return to the place when you are away. Family relations. Generally, spouses living together have the same domicile. The domicile of minor chil­ dren is determined by the domicile of the person who has legal custody of them. When living apart, spouses each may establish their own domicile if they meet the requirements for a change of domicile. Change of domicile. Intent is the most important factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your domicile. Once domicile is established, it’s never lost until all of the following happen: • You intend to abandon the old domicile, and • You intend to acquire a specific new domicile, and • You are physically present in the new domicile. The important points are physical presence at a new dwelling and the intent to make the new dwelling a home. Non-domiciled residents. An Oregon resident may also be someone who isn’t domiciled in Oregon, but: • Maintains a residence in Oregon, and • Spends a total of more than 200 days in Oregon during the taxable year. A fraction of a day is considered to be a whole day when figuring the 200 days. We won’t consider you to be a resident if you are in Oregon for a temporary purpose. The burden of proof is on you to show your stay here is only temporary. Consider both your domicile and the place where you live to determine how you are taxed. Special-case Oregon residents (Oregon residents liv­ ing in another US state). Even if you are domiciled in Oregon, you will be taxed as a nonresident if you meet all of the following requirements: • You don’t maintain a permanent residence in Ore­ gon for yourself or your family during any part of the year, and • You maintain a permanent residence outside Ore­ gon during the entire year, and • You spend less than 31 days of the year in Oregon. Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be taxed as foreign nonresidents. In general, you’re considered to be a foreign non­ resident if you meet the residency requirements for foreign earned income or housing exclusion under federal law. To qualify as a foreign nonresident, you must meet one of these two federal tests: • The “physical presence” test; or • The “bona fide residence” test. Note: You may be treated as an Oregon nonresident for tax purposes if you are in the civil service or mili­ tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel filing information” for more details. Physical presence test. To meet the requirements of the physical presence test: • Your tax home must be in a foreign country, and • You must be present in a foreign country or coun­ tries for 330 full days out of any consecutive 12-month period. “Tax home” is generally your regular place of busi­ ness or the location where you work, regardless of Filing an Oregon return

150-101-431 (Rev. 09-30-22) 14 where you live. For more information on tax home, refer to IRS Publication 17, Your Federal Income Tax for Individuals. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may begin on any date in the calendar year. The period ends the day before that same date, one year later. For example, a 12-month period beginning October 10 would end October 9 of the following year. The 330 full days must fall within that 12-month period. Example 1: Juan arrives in England on April 24, 2021, at noon. He establishes his tax home in England and remains there until 2 p.m. on March 21, 2023, when he leaves England to return to the United States. Juan is physically present in a foreign country for 330 full days during at least one 12-month period: • One 12-month period starts on his first full day in England, April 25, 2021, and ends April 24, 2022. • Another 12-month period starts on March 21, 2022, and ends March 20, 2023, his last full day in England. Juan may use any 12-month period that begins after his arrival in England and ends before he returned to the United States to meet the physical presence test. Juan qualifies for nonresident treatment for the months he was out of the country during 2021, 2022, and 2023. He should file Oregon part-year returns for 2021 and 2023, and a nonresident return for 2022. Example 2: Use the facts in Example 1, but change Juan’s arrival date to June 23, 2022. In this case, Juan won’t qualify for nonresident treatment because he wasn't physically present in a foreign country for 330 days. He must file a full-year resident return for 2022 and 2023 as well as 2021. Bona fide residence test. To meet the requirements of the bona fide residence test, you must: • Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country, and • Maintain a bona fide residence for an uninter­ rupted period that includes a full tax year. Example 3: Sandra is a calendar-year taxpayer. She establishes a bona fide residence in Russia on August 12, 2021. On June 10, 2022, she moves out of her residence and spends six weeks at a hotel in Alaska. On July 22, 2022, she establishes a bona fide residence in South Korea. She is transferred back to the United States on May 8, 2023. She doesn’t meet the requirements of the bona fide residence test because she doesn’t maintain a bona fide residence for an uninterrupted period that includes a full tax year. She also doesn’t qualify for the physical presence test because she isn’t physically present in a foreign coun­ try for 330 full days out of a consecutive 12-month period. Example 4: Use example 3, but instead of going to South Korea, Sandra continues to work in Russia until February 2023. She would now qualify under the bona fide residence test. Her residence was estab­ lished for a full tax year. Sandra should file a nonresi­ dent return for 2022. Sandra also qualifies for non­ resident treatment for the months in 2021 and 2023 that she maintained the bona fide foreign residence. She should file Oregon part-year returns for 2021 and 2023. For more information about physical presence or bona fide residence, see IRS Publication 54, A Tax Guide for U.S. Citizens and Resident Aliens Abroad. Tax treaties. If a U.S. tax treaty changes the meaning of terms used in determining federal taxable income, Oregon accepts the changed meaning as it applies to affected taxpayers. We may ask you to provide records showing how a particular treaty affects your taxable income. Nonresidents If you were domiciled outside Oregon and lived out­ side Oregon for the entire year, you were a nonresi­ dent of Oregon. If you are a nonresident, Oregon taxes only income you earned in Oregon and received from Oregon sources. In some cases, however, a taxpayer domiciled in Oregon can be treated as a nonresident. See “Special-case Oregon residents.“ Example 1: Misha was a permanent California resi­ dent in 2022. She temporarily worked in Medford as a computer consultant for two months in 2022. Misha is a nonresident of Oregon. She will pay Oregon tax on the income she earned in Oregon. California will also tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax her income, Misha may claim a credit for taxes paid to another state. For information about this credit, see “Income taxes paid to another state.” Example 2: Nash is a permanent Nevada resident. He has rental property in Oregon. Nash is a nonresident of Oregon. He will pay Oregon tax on the income from his Oregon rental property. Part-year residents If you were domiciled in Oregon for part of the year and in another state for part of the year, you were a part-year Oregon resident. Oregon taxes all of your income for the part of the year you were an Oregon resident. Oregon also taxes any income earned in Filing an Oregon return

150-101-431 (Rev. 09-30-22) 15 Oregon or received from Oregon sources for the part of the year you were a nonresident. Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and established a new domicile here. Gustav is considered to be a part-year Oregon resident for the tax year. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because she doesn’t abandon her Oregon domicile when she works in Alaska. Extensions of time to file If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For 2022 returns, this means you have until October 16, 2023 to file. An extension of time to file your return doesn’t mean you have more time to pay your taxes. You must pay any tax you expect to owe by April 18, 2023. If you don’t, you will owe interest on the unpaid balance from April 19, 2023 until the date it’s paid, and will be subject to a minimum penalty of 5 percent of the unpaid tax. To avoid penalty and interest charges, include enough payment with your extension to cover your tax liability. Once you file your return, if you have overpaid, we'll refund the overpayment. See “Interest and penalties” for more information. Were you stationed in a designated combat zone? If you were in the military and stationed in a desig­ nated combat zone, you may qualify for an automatic extension of time to file your return. See “Military personnel filing information.” Was your home or business located in a presidentially-declared disaster area? Did you receive additional time to file your federal tax return and pay your federal tax? If so, you may qualify for additional time to file your Oregon return and pay your Oregon tax. Check the “Federal disas­ ter relief” box on your return. Extension for filing returns Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to file your Oregon return and you owe tax, see Publica­ tion OR-40-EXT, Instructions for Automatic Extension of Time to File Oregon Individual Income Tax Return. Your extension payment must be received by April 18, 2023, to avoid penalties and interest. Download Publication OR-40-EXT from our website or contact us to order it. Whether you owe tax or are expecting a refund, mark the “Extension filed” box on your Oregon return and file your return by October 16, 2023. Which form do I file? Oregon has three types of personal income tax forms. The form you use depends on your residency status. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Part-year resident—Form OR-40-P Use Form OR-40-P if any one of the following is true: • You are a part-year resident; or • You are filing jointly and one spouse is a full-year Oregon resident and one is a part-year resident; or • You qualified as an Oregon resident living abroad for part of the year. Nonresident—Form OR-40-N Use Form OR-40-N if any one of the following is true: • You are a nonresident; or • You are a special-case Oregon resident (see “Resi­ dency”); or • You and your spouse are filing jointly and one (or both) of you is a nonresident; or • You meet the military personnel nonresident requirements (see “Military personnel filing infor­ mation”); or • You qualified as an Oregon resident living in a for­ eign country for the entire year (see “Residency”). You may need to file supplemental schedules or forms, depending on your circumstances. Nonresident trusts. If you file a federal Form 1040- NR and you’re filing an Oregon return for a nonresi­ dent trust, you must file using Form OR-41. Don’t file using Oregon Form OR-40-N. Sales of Oregon real property by nonresidents Withholding on real property sales. Authorized escrow agents may be required to withhold taxes due when a nonresident sells real property located in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: • Four percent of the consideration; • The net proceeds from the sale; or • Eight percent of the gain includible in Oregon tax­ able income. Filing an Oregon return

150-101-431 (Rev. 09-30-22) 16 For more information about this requirement and its exceptions, see the instructions for Form OR-18-WC, Report of Tax Payment or Written Affirmation for Oregon Real Property Conveyance, available on our website. If required, the nonresident transferor uses Form OR- 18-WC to calculate their gain or claim an exemption from withholding, then gives the form to the escrow agent. The escrow agent completes the rest of the form and submits it and any required payment to the department. Keep a copy of this form for your own records. Pass-through entities (PTEs) Partnerships. Except for publicly-traded partner­ ships taxed as corporations, every partnership with one or more Oregon resident partners, and every partnership having income or loss derived from or connected with Oregon sources, must file Form OR-65, Oregon Partnership Income Return. Partnership income is generally taxable to the partners rather than the partnership. See the Form OR-65 instruc­ tions for further details. Note: Oregon follows fed­ eral filing guidelines including the due date for fil­ ing a partnership return. If you aren’t required to file a federal partnership return, you don't need to file one for Oregon. S corporations. S corporations doing business in Oregon or receiving income from Oregon sources are required to file Form OR-20-S, Oregon S Corporation Tax Return. S corporation income is generally tax­ able to the shareholders rather than the corporation. However, S corporations do pay Oregon tax on cer­ tain kinds of income. For more information, see the instructions for Form OR-20-S on our website. LLCs. Oregon LLCs and foreign LLCs doing business in Oregon are taxed and classified the same as for federal income tax purposes. • An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax Return, or Form OR-20-INC, Oregon Corporation Income Tax Return. • A multiple-member LLC that chooses to be taxed as a partnership files Form OR-65. • A single-member LLC that chooses to be taxed as a sole proprietorship and files Schedule C, Sched­ ule E, or Schedule F with their federal individual income tax return files the same way for Oregon. PTEs with nonresident owners (ORS 314.778, 314.784) Composite tax return. A PTE must file Form OR-OC, Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For forms and instructions, see our website. Nonresident withholding. A PTE must withhold tax on a nonresident owner’s share of Oregon-source income if the nonresident owner elects not to be included on Form OR-OC, unless the nonresident owner’s share of Oregon-source income is less than $1,000 or other exceptions listed in ORS 314.784 apply. For more information, see the instructions for Form OR-19, Annual Report of Pass-through Entity Owner Tax Payments. Filing status General rule The filing status on your Oregon return must be the same as your filing status on your federal return, unless you’re married and have a different residency status than your spouse or you’re an RDP who isn’t married. Example 1: Minerva filed her federal return using the filing status of single. She must use the single filing status on her Oregon return. Example 2: Peter and Della are married and both are full-year Oregon residents. They filed a joint federal return. Peter and Della must use the married filing jointly filing status on their Oregon return. Example 3: Tia and Colin are married and choose the married filing separately filing status on their federal returns. They must use the married filing separately filing status on each of their separate Oregon returns. Exception: Filing status for married taxpayers with different residency status If you and your spouse file a joint federal return but only one of you was an Oregon resident (either full- year or part-year), you have a choice of two different filing statuses to use for Oregon: • You and your spouse may file one Oregon return using the married filing jointly status; or • You and your spouse may each file a separate Oregon return using the married filing separately status. You may not file as head of household (ORS 316.122). Note: This exception doesn’t apply to unmarried RDPs or married nonresident aliens because these taxpayers may not file joint federal returns. For information on RDP filing, see “Registered domestic partners.” Which forms do we file? Use Table 3 to determine which return form to use if you file a joint return or separate returns for Oregon. Filing an Oregon return

150-101-431 (Rev. 09-30-22) 17 Table 3. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns, use: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P Note: If you file separate federal returns, you must file separate Oregon returns. If you are a married nonresident without Oregon income, and you and your spouse are filing separate returns, you aren’t required to file an Oregon return. What information goes on each return? On each spouse’s separate Oregon return, enter the filer’s name and Social Security number first, then the spouse’s name and Social Security number. Mark the “Married filing separately” box. “As if” federal returns. You must include an “as if” federal return showing how the return would have appeared if you had filed a separate federal return, along with a copy of the joint federal return that you actually filed. Label the “as if” federal returns and mark the “Calculated using ‘as if’ federal return” box on each Oregon return. If you are filing paper returns, mail both Oregon returns, the “as if” federal returns, and the actual federal return in the same envelope, but don’t staple them together. Income and deductions. You and your spouse each report your own share of income and deductions. Also, report your share of any Oregon additions, sub­ tractions, modifications, or adjustments, including the federal tax subtraction. Use the following guidelines when preparing your return: Your percentage. Use this formula to compute your share of certain deductions: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI If your share is less than $0, your percentage is 0. Federal tax subtraction. Each spouse may subtract their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (after all credits except the EIC) by your percentage to determine your federal tax subtraction, with the applicable AGI limitation. Itemized deductions. Multiply each itemized deduc­ tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Itemized Deductions, if you can't clearly determine each spouse’s deductions. For more information about itemized deductions, see the instructions for Schedule OR-A. • Standard deduction. The Oregon standard deduc­ tion is $2,420 for each spouse. • Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or before January 1, 2023 or if they’re blind. The addi­ tional deduction is $1,000 for married taxpayers filing separately. A taxpayer who is both age 65 or older and blind may claim two additional deduc­ tions plus the basic standard deduction. • Exception: If one spouse claims itemized deduc­ tions, the other spouse can’t claim the standard deduction. The other spouse may only claim item­ ized deductions. Exemption credits. You can’t prorate exemptions. You may claim exemptions for yourself and any dependents allowed on your federal return. You can’t claim an exemption for the same dependent claimed on your spouse’s return. Example: Jim worked and lived in Oregon all year. Mary moved from Idaho to Oregon in July and mar­ ried Jim. They filed a joint federal return and are fil­ ing separate returns for Oregon. Mary earned $30,000 in Oregon and $22,000 in Idaho. Jim earned $41,000 in Oregon. Their total federal AGI was $93,000. Jim and Mary claimed the standard deduction on their joint federal return. They had $12,200 in Oregon itemized deductions, including $4,000 in property tax and $6,400 in mortgage interest on their Oregon home, and $1,800 in charitable contributions. Their joint fed­ eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his income of $41,000. On the return, he enters his own name and Social Security number (SSN) first, then enters Mary’s information, and marks the “Married filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal return” box on the Oregon return, and claims the fol­ lowing federal tax liability and deductions: His share: $41,000 ÷ $93,000 = 0.44 (44%) Federal tax: 0.44 × $14,400 = $6,336 (His subtraction is limited to $3,625; see “Federal income tax liability” in “Subtractions.”) Filing an Oregon return

150-101-431 (Rev. 09-30-22) 18 Oregon itemized deductions:

Property tax: 0.44 × $4,000 = $1,760 Mortgage interest: 0.44 × $6,400 = $2,816 Charitable contributions: 0.44 × $1,800 = $792 Total Oregon itemized deductions:

$5,368 Jim will have Oregon itemized deductions of $5,368. He follows the line instructions for Oregon Form OR-40 and Schedule OR-A to complete his return. Mary, a part-year resident, files Form OR-40-P and reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and SSN first, then enters Jim’s information, and marks the “Married filing separately” box. She creates an “as if” federal return, marks the ”Calculated using 'as if' federal return” box on the Oregon return, and claims the following federal tax liability and deductions: Her share: $52,000 ÷ $93,000 = 0.56 (56%) Federal tax: 0.56 × $14,400 = $8,064 (Her subtraction is also limited to $3,625.) Oregon itemized deductions:

Property tax: 0.56 × $4,000 = $2,240 Mortgage interest: 0.56 × $6,400 = $3,584 Charitable contributions: 0.56 × $1,800 = $1,008 Total Oregon itemized deductions:

$6,832 Mary will have Oregon itemized deductions of $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. Married filing separately with community property income An Oregon resident whose spouse lives in a commu­ nity property state may have community property income that is taxable by Oregon. There are nine com­ munity property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Some residents of community property states aren’t subject to community property laws for various rea­ sons. You will need to check with your community property state for details. IRS Publication 555, Com­ munity Property, also contains information that may be helpful to you. Here are examples of how to file for Oregon: Example 1: Paul and Marie are married, but they are legally separated. Paul is an Oregon resident. Marie is a resident of California, a community property state. They maintain separate households, don’t combine funds, and have no plans to get back together. They file a joint return with the IRS. When Paul files his separate return for Oregon on Form OR-40, he doesn’t have to include any community property income because California’s community property laws don’t apply to him and Marie. Example 2: Renton is an Idaho resident. His wife, Julie, lives in Oregon. Julie plans to move to Idaho next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap­ ital gain, and $100 in interest. Because Renton is domiciled in Idaho, he and Julie are subject to Idaho’s community property laws. His income for the year is $60,000 in wages and $500 in interest. They plan to file a joint return with the IRS, but aren’t sure whether they want to file jointly for Oregon. If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain all of Julie’s income, because Oregon taxes all of her income from all sources. In addition to Julie’s sepa­ rate income, she has $30,250 of community property income for the year—half of Renton’s wages and bank interest. Line 34F (federal column) of their joint Form OR-40-N is $103,600, which is equal to their federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community property income ($40,000 + $3,000 + $100 + $30,250). They are also eligible for a credit for taxes paid to Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state on mutually- taxed income“ for more information on this credit.) If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal return as if she had filed separately. She will include $73,350 in separate income and community property income. This amount flows through to Line 7 of her Oregon Form OR-40. She is eligible for a credit for taxes paid to Idaho, because she must also file a non­ resident Idaho return to report her community prop­ erty income of $30,250. Example 3: Kevin lives and works in California and is subject to California’s community property laws. Lori, his wife, moved to Oregon with their kids two years ago. Kevin supports them and will be ready to transfer to Oregon within the next two years. Kevin has $110,000 in wages. Kevin and Lori have joint income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. They decide to file separate federal returns. Lori’s federal AGI is $63,000: half of Kevin’s wages, half of their joint income, and all of her business income. Filing an Oregon return

150-101-431 (Rev. 09-30-22) 19 Kevin’s federal AGI is $58,000; half of his wages and half of their joint income. Lori must file using the married filing separately filing status for Oregon on Form OR-40 because she did so on her federal return. She is eligible for a credit for taxes paid to another state, but must claim it on her California nonresident return. Kevin isn’t required to file for Oregon. Important: You must check the laws of the commu­ nity property state to see if you, or your spouse, are subject to those laws even if your situation is similar to one of the examples. Registered domestic partners (RDPs) (ORS 314.023) Filing your Oregon income tax return The following section applies only to Oregon same-sex RDPs who haven’t been legally married. If you were legally married at the end of the tax year, you are considered mar­ ried for federal and Oregon purposes. You don’t need to complete an “as-if” federal return. Instead, attach your actual federal return to your Oregon return and follow the instructions for married individuals. In Oregon, a domestic partnership is a civil contract entered into between two individuals of the same sex, where at least one of the individuals is an Oregon res­ ident. RDPs are subject to the same tax statutes and regulations that apply to married filers. As an RDP, you are no longer eligible to use the single filing sta­ tus on your Oregon return; generally, you must use the married filing jointly or married filing separately status. See IRS Publication 17 for information about other filing status requirements. To correctly figure your Oregon tax liability, you need to complete an “as if” federal income tax return as if you are filing as married filing jointly or married filing separately for federal purposes. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return. You won't submit your “as if” fed­ eral return to the IRS, but you must include a copy with your Oregon tax return. Mark the “Calculated using ‘as if’ federal return” box on the Oregon return. General filing instructions for RDPs If you were an Oregon RDP on December 31, or if you were an RDP during the year and your partner died and you didn’t enter into a new registered domestic partnership or marry before the end of the year, fol­ low these directions for filing your income tax return: 1. Complete your federal return forms for each part- ner using the appropriate federal filing status, such as single or head of household. File these returns with the IRS. 2. Use another federal form to complete an “as if” federal return. Use all the same IRS rules and procedures that apply to married couples, except for the federal tax liability. Important: Don’t file this “as if” federal return with the IRS. Note: If your wage statement includes the imputed value of health or education benefits you received from your employer for your partner or qualifying dependents, subtract the amount included in your wages as “other income” on Schedule 1 of your “as if” federal return. 3. Complete your Oregon return using the same fil- ing status you used on the “as if” federal return. Information used to fill out the Oregon return must be taken from the “as if” federal return and not the individual federal return that you actually filed with the IRS, except for the federal income tax liability subtraction. Use the amount each partner actually paid in federal tax to compute the correct federal tax subtraction. 4. Submit both of your actual federal returns, your “as if” federal return, and your Oregon return to us. If you and your partner file separate Oregon returns, send the returns in the same envelope, but don’t staple your separate returns together. It’s very important to keep copies of all “as if” fed­ eral returns with your tax records for future refer­ ence. For more information on filing your tax return as an Oregon RDP, visit our website and search for RDP information. Individual Taxpayer Identification Number The IRS issues individual taxpayer identification numbers (ITINs) to taxpayers and their dependents who don’t have SSNs. If you have your own SSN, don't apply for an ITIN; use your SSN. If you already have an ITIN, enter your ITIN wherever a SSN is requested. Requesting an ITIN from the IRS If you don’t have an ITIN, you must file your fed­ eral return and attach Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS will issue an ITIN, associate the ITIN with your return, and process your return. For Form W-7, go to the IRS website at www.irs.gov or call 800-829-3676. Filing your Oregon return before receiving your ITIN You may file your Oregon return without an SSN or ITIN. Follow these instructions if you, your spouse, or your dependents don’t have an ITIN when you file your Oregon return: Filing an Oregon return

150-101-431 (Rev. 09-30-22) 20 1. Complete and file each ITIN application (federal Form W-7) according to IRS instructions. 2. On your Oregon tax return, mark the “Applied for ITIN” box wherever the SSN is required for you or your family members who have applied for an ITIN. You don’t need the ITIN(s) to file your Ore- gon tax return. Don’t attach your ITIN application to your Oregon tax return. 3. File your 2022 Oregon tax return by April 18, 2023. 4. The IRS will send you a letter with your ITIN information. We need this information to issue your refund and correctly apply your future tax payments to your account. Refunds won’t be issued without a valid SSN or ITIN. Send us your: • Name (and the name of your spouse and dependents if they applied for an ITIN). • Current address. • Previous SSNs or ITINs used when filing an Oregon return (if any); and • A copy of each of the letters you receive from the IRS with the ITINs for you, your spouse, or your dependents. Send this information to:

Oregon Department of Revenue

PO Box 14999

Salem OR 97309-0990 Military personnel filing information Oregon follows federal law, including the Service- member’s Civil Relief Act (SCRA). Under the SCRA, military pay of a nonresident for service within Oregon isn’t considered to be income from Oregon sources. As a member of the military, if you are sta­ tioned in Oregon, but you aren’t domiciled in Ore­ gon, your military pay isn’t taxed by Oregon. If you are domiciled in Oregon, but stationed outside of the state, you could be treated as a nonresident for tax purposes if you meet the “special-case nonresi­ dent” exception requirements. If you are domiciled in Oregon, and performing military service in Ore­ gon, your military pay is subject to tax, although the pay could qualify for certain subtractions. Military personnel performing active service within Oregon are treated as nonresidents for tax purposes, if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, no matter where they are domiciled (ORS 316.027). Moving expense deduction Your unreimbursed moving expenses may be deducted on your Oregon return only if: • You are on active duty in the U.S. Army, Navy, Air Force, Marines, or Coast Guard, • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move), • Your new duty station is in Oregon, and • You have taxable income from employment (mili­ tary pay or other employment, including self- employment) performed in Oregon. Note: Are you the spouse of a military member? See “Military spouses.“ Residency of military personnel Domicile. Generally, you are considered to be an Ore­ gon resident if your domicile is in Oregon. Your domi­ cile is the place that you consider to be your home. It’s the place where you are from, and where you plan to return when you are away. Your domicile doesn’t change if you are assigned to perform military ser­ vice in another state, unless you take other actions to establish a new domicile there. Domicile and resi­ dency are explained in more detail in “Residency.“ Exceptions to Oregon residency Even if you are domiciled in Oregon, you may be treated as a nonresident for tax purposes if you meet the requirements listed in A or B: A. Special-case nonresident. You are treated as a “special-case” nonresident of Oregon if you are stationed outside of Oregon and all three of the following are true: 1. You didn’t have a permanent residence in Ore- gon for yourself or your family during any part of the tax year, and 2. Your permanent residence was outside Oregon during the entire tax year, and 3. You spent less than 31 days in Oregon during the tax year. B. DFAS address outside of Oregon. You are treated as a nonresident of Oregon, no matter where you are stationed, if both of the following are true: 1. You are performing “active service,” as defined in 10 United States Code (U.S.C.) Section 101(d) (3), other than annual training duty or inactive- duty training, and 2. You are a resident of another state according to DFAS payroll records. If you meet the requirements in either A or B above, you are treated as a nonresident for Oregon tax pur­ poses and Oregon won’t tax your military pay. You Filing an Oregon return

150-101-431 (Rev. 09-30-22) 21 will owe Oregon tax only if you had income from another Oregon source. This income may be from an Oregon property sale, a business, or rental property located in Oregon. If you have had Oregon income tax withheld from your military pay, you should file an Oregon nonresident tax return to get a refund of the withheld tax. If you continue to be a nonresident, file an Oregon-only withholding certificate with your pay clerk as described in “Withholding exemption.” Oregon residents Stationed in Oregon. If you are domiciled in Oregon and stationed in Oregon, you are taxed on income from all sources, both inside and outside Oregon. This includes your military pay for service in Oregon if either of the following is true for you: • Your address in the DFAS payroll records is in Ore­ gon; or • Your military pay is from annual training duty, inactive-duty training, or other service in Oregon that isn’t “active service” as defined in 10 U.S.C. Section 101(d)(3). If neither of these are true, see the Exceptions to Ore­ gon residency, above, to see if you qualify for treat­ ment as a nonresident for tax purposes. Stationed outside Oregon. If you are domiciled in Oregon, but you are stationed outside of the state, see the Exceptions to Oregon residency, above, to find out whether you can be treated as a nonresident of Oregon for tax purposes. If you don’t qualify as a nonresident, you will be taxed as a resident on your income from all sources, both inside and outside Oregon. Military pay subtractions [Subtraction code 319] You may qualify for more than one subtraction for military pay. To be eligible for the subtractions, the military pay must be included in federal AGI. Mili­ tary pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual train­ ing, weekend drills, and inactive duty training. The Oregon military pay subtractions are: • Stationed outside Oregon. As of August 1, 1990, you can subtract military pay earned while sta­ tioned anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. The date wasn't set when this material was last revised. You aren’t required to be stationed in a designated com­ bat zone to be eligible for this subtraction. • Guard and reserve away from home. National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time. • Other military pay. You can subtract any remain­ ing taxable military pay after taking the above sub­ tractions, up to $6,000. Total subtraction. You may qualify for more than one military pay subtraction. However, your total subtraction can’t be more than the total military pay included in federal AGI. Note: Certain forms of military pay that aren’t included in federal AGI, such as combat pay, aren’t taxed in Oregon. They aren’t subtracted on your return because they aren’t included in your federal taxable income. The following examples show the military pay sub­ tractions described above. Example 1: Seth, an Oregon resident, enlisted in the Navy. He earned $10,000 of active duty pay in Spain and $8,000 of military pay inside Oregon during the year. His address in the DFAS payroll records is in Oregon. He included the $18,000 in his federal AGI. Seth’s total military pay subtraction is $16,000. Seth can subtract the $10,000 earned outside Oregon, and $6,000 of his military pay earned in Oregon. Seth files Oregon Form OR-40 and claims his military pay sub­ traction on Schedule OR-ASC. Example 2: Brett is an Oregon resident and files jointly with his wife, who lives and maintains a resi­ dence in Oregon. Brett served in a designated combat zone for five months this year and earned $8,000 in combat pay. He served in Germany for the rest of the year and earned $15,000 of military pay. The presi­ dent didn’t declare an end to combat zone activities this year. Because Brett excluded his combat pay on his federal return, he doesn’t have to subtract it on his Oregon return. Therefore, Brett’s Oregon subtraction is the $15,000 of military pay earned outside Oregon and included in federal AGI. Brett and his wife will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Example 3: Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a com­ bat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and again for two weeks in November. He served in Oregon when away from home. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and Merlin will include $31,500 of military pay in their Filing an Oregon return

150-101-431 (Rev. 09-30-22) 22 federal AGI. Then they will determine their Oregon subtraction. • Stationed outside Oregon: All $21,000 of Ger­ trude’s active duty pay is eligible for this subtrac­ tion because she was stationed outside Oregon. • Guard and reserve away from home: $8,000 of Merlin’s pay is eligible for this subtraction because he was away from home for more than 21 consecu­ tive days from April to July. The pay he received for the two weeks he was away from home in Novem­ ber doesn’t qualify. • Other military pay: Gertrude doesn’t have any other military pay not already eligible for the other subtractions. Merlin’s remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500. Combined, Gertrude and Merlin have a military pay subtraction of $31,500, because all of their military pay is eligible for at least one of Oregon’s military pay subtractions. They will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Nonresidents stationed in Oregon Oregon doesn’t tax your military pay if you are domi­ ciled in another state. You don’t need to file an Oregon return unless you had other income from an Oregon source or had Oregon tax withheld from your pay. Examples of Oregon-source income include: • Wages from a job held on off-duty hours. • Earnings from an Oregon business or rental property. Note: Nonresidents’ interest income from an Oregon bank account generally isn’t taxable by Oregon. If you had Oregon tax withheld from your military pay, you should file a return to claim a refund. You should also contact your payroll clerk to stop with­ holding Oregon taxes if Oregon isn’t your state of domicile. Example 1: Selina is a nonresident of Oregon in the U.S. Navy stationed in Portland. She has no other Oregon-source income and doesn’t have Oregon income tax withheld from her military pay. Selina isn’t required to file an Oregon return. Example 2: Jared is a nonresident of Oregon in the U.S. Coast Guard stationed in Astoria. In his off-duty hours he works part-time for an Oregon employer. Because Jared has Oregon income other than his mil­ itary wages, he will file Oregon Form OR-40-N as a nonresident. Example 3: Caitlyn was domiciled in Oregon when she joined the U.S. Army in 2018, and she hasn’t established a new domicile in another state. Since July 2021 she has been stationed at the Army’s chemi­ cal depot in Umatilla, and her DFAS address is her apartment in Kennewick, Washington. Along with her military pay, in 2022 she earned interest from a savings account in an Oregon bank and has wages from an off-duty job in Kennewick. Since Caitlyn is treated as a nonresident for tax purposes, her military pay isn’t taxed by Oregon. The interest she earned from the Oregon bank isn't taxed because she is con­ sidered to be a nonresident. She also isn't taxed on the wages from her Kennewick job. Caitlyn isn’t required to file an Oregon return for 2022 unless Oregon tax was withheld from her military pay. Filing your nonresident return If you have other income from Oregon sources, use Form OR-40-N. Enter your military income on line 7 in the federal column only. Don’t enter your mili­ tary pay in the Oregon column. Report other income taxable by Oregon in the Oregon column. On Sched­ ule OR-ASC-NP, enter the military wage income you reported in the federal column on line 7, but only in the federal column. In the Oregon column, enter $0. It’s important to enter your military pay this way because it affects the amount of deductions and cred­ its you’re entitled to claim. Mark the “Military” box on the return. If you and your spouse file a joint federal return, and you are both nonresidents of Oregon, you must file a joint Oregon return as well. Use Form OR-40-N. If your spouse is an Oregon resident, you have the option of using the married filing separately status for Oregon. Your spouse would file Form OR-40, or Form OR-40-P if a part-year Oregon resident, and you would file Form OR-40-N. If you file a joint return, use Form OR-40-N. Filing and payment date The due date for filing a calendar year return and payment of the tax is usually April 15. If the 15th falls on a Saturday, Sunday, or legal holiday, the due date is the next working day of the month. If you are out­ side the United States for military duty on the due date, the due date is extended by two months. Mark the “Extension filed” box on your return. See “Exten­ sions of time to file” for more information. If you owe tax on your Oregon income tax return, you must pay the entire amount by the due date. Interest and penalty will be added to all unpaid balances. Extension for filing your return You can get an extension to file your return, but you can’t get an extension to pay your tax. More informa­ tion can be found under “Extensions of time to file.” Filing an Oregon return

150-101-431 (Rev. 09-30-22) 23 Combat zone/Contingency area. Were you sta­ tioned in a combat zone or contingency area? Did you receive additional time from the IRS to file your federal return and pay your tax? If both are true, Oregon allows the same additional time to file and pay your Oregon tax. Mark the “Extension filed” and “Military” boxes on your return. Keep your payroll records or other proof of your combat zone/contin­ gency area service and the IRS extension with your tax records; we may request a copy at a later date. Note: Oregon follows federal law regarding the treatment of combat pay and related remedies. If you served in the Sinai Peninsula of Egypt at any time after June 9, 2015 and you’re amending your federal return to exclude this military pay, you may also amend your Oregon return if Oregon taxed this income. If you were assessed related penalties or interest, contact us for further instructions. Interest and collections If your active duty service (Title 10) has materially affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity while on active duty and up to 180 days thereafter. The interest rate on tax debt owed by mili­ tary members is limited to 6 percent annually. File a claim for relief by writing to us within 180 days after your active duty service has ended. Relief may not be available for the period prior to receiving your request. Include a copy of orders showing your active duty status and dates. You may qualify for relief of interest and collection activity under Oregon law if you meet all of the fol­ lowing requirements: • You have a tax liability that came due while on active duty under Title 10, • You have been on active duty for more than 90 con­ secutive days, • Your active duty service (Title 10) occurred on or after September 11, 2001, and • You notify us within 180 days after your active duty service has ended. Guard members called into active state service by the governor under Title 32 may qualify for relief of inter­ est and collection activities on any tax owed prior to active state service. Send a written request for relief to us within 180 days after the active state service has ended. Include a copy of your orders. Relief may not be available for the period prior to receiving your notification. Withholding exemption You have the option to stop Oregon withholding from your military pay if all of the following are true: • You had a right to a refund of all 2022 Oregon income tax withheld because you had no tax liabil­ ity, and • You expect a refund of all 2023 Oregon income tax withheld because you reasonably believe you won’t have any tax liability, and • For all of 2023, you expect to be stationed outside of Oregon or continue to have an address outside of Oregon in the DFAS payroll records. If all of the above are true and you don’t want Oregon tax withheld from your military pay, you must file an additional withholding certificate with your payroll office. Use Form OR-W-4, Oregon Withholding State­ ment and Exemption Certificate, and follow the instruc­ tions to declare that your military pay is exempt using the appropriate code. Give Form OR-W-4 to your pay clerk, and submit a new form by February 15 of each year that you’re claiming the exemption. Military spouses If you’re a military spouse, the state where you live may be different from the state where you are domi­ ciled. See “Residency” for more information about determining your domicile. Oregon follows federal law, including the SCRA and the Military Spouse Residency Relief Act (MSRRA). Under the SCRA, for tax purposes you may elect to be treated as a resident of the same state as the mili­ tary member. Under MSRRA, your income may not be taxable to Oregon if your spouse is stationed in Oregon, you are living in Oregon to be with your spouse, and you are domiciled outside of Oregon. In addition, your income may not be taxable if you are domiciled in Oregon, but you are living in another state where your spouse is stationed. See “Special- case Oregon residents” in “Residency” for details. Nonresident spouse of military member stationed in Oregon MSRRA prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you’re living in Oregon only to be with your spouse who is sta­ tioned here, and you’re domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and aren’t considered to be Oregon-source income. Note: This exemption doesn’t apply to spouses who are also members of the military. You aren’t required to file an Oregon return unless you had other income from an Oregon source or Ore­ gon taxes were withheld from your pay. Examples of Oregon-source income include: • Non-military wages earned by your spouse (the military member) in Oregon. • Income from a business you operate in Oregon. Filing an Oregon return

150-101-431 (Rev. 09-30-22) 24 • Rental income from Oregon property. If you file an Oregon return, use Form OR-40-N. Include all of your wages on line 7 in the federal col­ umn only. Don’t include your exempt income (or your spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the subtraction for your spouse’s military pay, see “Filing your nonresident return”, above. Example: Staff Sergeant Wilson, USAF, and his spouse, Tracy, are Arizona residents living in Klam­ ath Falls where SSgt Wilson is stationed. In addition to his military duty, SSgt Wilson works part-time at a local car dealership where Tracy works as the finance manager. They must file an Oregon nonresi­ dent return to report SSgt Wilson's wages from the car dealership. They report his military pay and all of their wages in the federal column of Form OR-40-N, and only his wages from the car dealership in the Oregon column. To stop withholding of Oregon income tax from your exempt wages, complete an additional withholding certificate. Use Form OR-W-4 and follow the instruc­ tions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Your employer may require proof that you qualify for the exemption. Oregon resident spouse of military member stationed outside Oregon If your spouse is stationed outside of Oregon, but you are an Oregon resident living in Oregon, your income is taxable for Oregon purposes. If you file a joint return with your spouse, use Form OR-40-N, and include all of your income in the Oregon column. If you and your spouse file a joint federal return, and your spouse isn’t a resident of Oregon, you have the option to file joint or separate returns. If you file a joint return, use Form OR-40-N; if you use the mar­ ried filing separately status, use Form OR-40 (or Form OR-40-P if you’re a part-year resident) and your spouse with Oregon-source income uses Form OR- 40-N. If your spouse doesn’t have income taxable to Oregon, they aren’t required to file a separate Oregon return. Use the general instructions for all taxpayers. Do you qualify to be treated as a nonresident because you meet the “special-case resident” requirements or you’re making the election under the SCRA? If so, you aren’t taxed on your out-of-state wages or self- employment income. This is the case even if the other state can’t tax you because of MSRRA. You don’t have to file an Oregon return unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. See “Special-case Oregon residents” in “Residency” for details. If you file an Oregon return, use Form OR-40-N. Moving expenses of military spouses As the spouse of an active duty member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, your unreimbursed moving expenses may be deducted on your Oregon return only if: • Your expenses are deductible on your federal return, • You relocate to, or within, Oregon when the mili­ tary member is ordered to relocate due to a perma­ nent change of duty station (known as a PCS move), and • You have taxable income from employment, includ­ ing self-employment, performed in Oregon. Filing an Oregon return

150-101-431 (Rev. 09-30-22) 25 Oregon tax Your Oregon income tax is based on your taxable income. Oregon taxable income is your federal taxable income with the additions, subtractions, and modifica­ tions described in Oregon’s tax laws and this publica­ tion. For Oregon residents, your income tax is based on your taxable income from all sources. The income tax for nonresidents is based on taxable income from Oregon sources. If you’re a part-year resident, your tax is figured the same way as a resident’s, and then your Oregon percentage is applied to the tax. Personal income tax rates (ORS 316.037) For individuals, the Oregon tax rate that applies to your taxable income increases as your income increases from one bracket to the next. The tax rates and bracket amounts for 2019 through 2022 are shown on the last page of this publication. This section provides a general outline of how to figure your tax. You can find detailed examples in the instruc­ tions for your Oregon personal income tax return. Full- year residents use either the tax tables or the tax rate charts published inside Form OR-40 Instructions. Non­ residents and part-year residents use the tax rate charts published inside Form OR-40-N and Form OR-40-P Instructions. Alternative tax rates. Most taxpayers use either the tax tables or rate charts in the return instructions to figure their Oregon income tax. However, there are special methods if your income includes any of these items: • Qualified business income. • Income from farming. • Capital gain from the sale of farming property. These items are described in more detail later. Elective tax for partnerships and S corporations. For tax years beginning on or after January 1, 2022 and before January 1, 2024, certain partnerships and S corporations may elect to pay income tax at the entity level. See “Pass-through entity elective tax” for more information. Amount in lieu of tax for federally-audited partner­ ships. Partnerships audited at the federal level may pay an amount in lieu of Oregon income tax owed by its partners on the audit adjustments. See “CPAR amount in lieu of tax.” Additions to tax You may have the following additions to your Ore­ gon income tax to report on your return: • Interest on installment sales. • Tax recapture for nonqualified withdrawal from Oregon 529 college savings network accounts. • Tax recapture for nonqualified withdrawal from ABLE accounts. These items are described in more detail later. Credits and payments Credits. After you figure your income tax and any addi­ tions to tax, determine if you are eligible for any tax credits. A few of Oregon’s tax credits are refundable, meaning you may receive a refund of any amount that is more than your tax for the year. Most are nonrefund­ able and can’t be more than your tax liability for the year. Some nonrefundable credits allow any unused amount to be carried forward to a later year. Qualifica­ tions and other detailed information for Oregon’s tax credits can be found in “Credits,” in the Schedule OR- ASC and OR-ASC-NP Instructions, and in the instruc­ tions for your Oregon income tax return. Payments. After you determine your total tax, includ­ ing any additions to tax, and subtract your tax cred­ its, figure the total payments you have already made for the year. Payments may include the following: • Income tax withheld from your wages by your employer. • Tax withheld from lottery winnings, annuities, and pensions. • Estimated tax payments. • Refund from a prior year applied to this year’s esti­ mated tax. • Payment made with an extension request. • Tax payments made on your behalf by a PTE. • Tax withheld from the sale of Oregon real property by a nonresident seller. Refundable credits are also considered to be tax payments. For more information about these different types of payments, see the instructions for your Oregon per­ sonal income tax return and the following forms and publications: • Form OR-W-4 and Form OR-W-4 Instructions for information about withholding. • Publication OR-ESTIMATE, Oregon Estimated Income Tax Instructions, and the “Estimated tax” section of this publication. • Publication OR-40-EXT for information about request­ ing an Oregon extension to file your return. • Schedule OR-K-1, Distributive Share of Income, Deduc­ tions, Credits, etc., and Schedule OR-K-1 Instructions for owner taxes paid by a partnership. Oregon tax

150-101-431 (Rev. 09-30-22) 26 • Form OR-19 Instructions for tax withheld by a PTE on behalf of a nonresident owner. • Publication OR-OC for amounts in lieu of tax paid by a partnership following a CPAR adjustment. • Form OR-18-WC and Form OR-18-WC Instructions for tax withheld from the sale of Oregon real prop­ erty by a nonresident seller. Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment when you file your Oregon return, com­ pare your total payments with your total tax. If you are entitled to a refund, see the instructions for your Oregon return and the “Refunds” section of this pub­ lication for your options. If you have a balance due, see “Payment options” for information about ways to pay your Oregon income tax. Interest and penalties You may owe penalties and interest if you don’t make your tax payments on time. If you are required to make estimated tax payments, you may owe under­ payment interest if your installment payments aren’t made by the due dates, even if you are receiving a refund. See “Interest and penalties” and “Interest on underpayment of estimated tax” in this publication and Form OR-10 Instructions for details. Qualified business income reduced tax rate (ORS 316.043) If you have qualifying business income from a sole proprietorship, a partnership, or an S corporation, you may elect to calculate your Oregon income tax using a reduced tax rate for that income. The tax on the first $5 million in qualifying business income is shown in Table 4: Table 4. Tax on qualified business income Amount of qualifying business income Tax At least But not more than $0 $500,000 7 percent $500,001 $1,000,000 $35,000 plus 7.5 percent of the amount above $500,000 $1,000,001 $2,500,000 $72,500 plus 8 percent of the amount above $1,000,000 $2,500,001 $5,000,000 $192,500 plus 9 percent of the amount above $2,500,000 Qualifying business income that is more than $5 mil­ lion is taxed at the maximum personal income tax rate of nine and nine-tenths percent. The qualified business income reduced tax rate is an irrevocable election for each tax year that must be made on the original return. You can’t amend to revoke or make the election after your original return is filed unless you file an amended return on or before the original due date of April 18, 2023, or if filing on extension, before the extension due date of October 16, 2023. The election is made by submitting the Schedule OR-PTE, Oregon Business Income Reduced Tax Rate Schedule, appropriate for your residency status and checking the PTE box on your Oregon income tax return. No additions, sub­ tractions, or deductions other than depreciation are allowed in the calculation of the tax on qualifying income. The schedule and instructions are available for download from our website, or you can contact us to order them. You can find answers to common questions on our website. Visit www.oregon.gov/dor and click on FAQ to search for “reduced tax rate.” Qualifications General requirements To be eligible for the reduced tax rate, you must: • Have qualified business income from the business; • Materially participate in the business; and • Employ one or more employees in Oregon who meet the employee requirements explained below. Partnership or S corporation requirements In addition to the general requirements, to be eligible for the reduced tax rate, a partner or S corporation shareholder must: • Have ordinary business income that doesn’t exceed $5 million; and • If ordinary business income is more than $250,000, comply with the employee-to-owner ratio require­ ment shown in Table 5 or meet the income distribu­ tion requirement described below. Employee-to-owner ratio requirement. Unless the income distribution requirement is met, partner­ ships and S corporations with more than $250,000 in ordinary business income must have, at a minimum, the number of qualifying employees in Oregon per owner as shown in Table 5. The combined total of hours worked by the qualifying employees, up to 1,200 hours per employee, must be at least the num­ ber shown in Table 5. Oregon tax

150-101-431 (Rev. 09-30-22) 27 Table 5. Partnership and S corporation employee requirements Ordinary business income is at least But not more than Employees required Aggregate hours worked by employees $0 $250,000 One 1,200 $250,001 $500,000 One per owner 1,200 $500,001 $1,000,000 Two per owner 2,400 $1,000,001 $2,500,000 Four per owner 4,800 $2,500,001 $5,000,000 Ten per owner 12,000 Income distribution requirement. A partnership or S corporation with more than $250,000 in ordinary busi­ ness income may still qualify for the reduced tax rate even if the employee-to-owner ratio shown in Table 5 isn’t met, so long as income distributions don’t exceed 25 percent of ordinary business income. Calculate the percentage using the total distributions and total ordi­ nary business income for the current tax year and up to two of the most recent tax years. Treat an annual amount of less than zero as zero for that year. Qualified business income. Qualified business income is income other than from passive activities as that term is defined in IRC Section 469. Income from trusts, estates, qualified joint ventures, and disregarded enti­ ties doesn’t qualify. Note for tiered entities: Qualified business income passed through to a higher-tier entity from a lower-tier entity will qualify for the reduced tax rate if the lower-tier entity meets the ordinary business income and the employee or distribution requirements. PTE-E tax addition. Certain partnerships and S cor­ porations may elect to pay Oregon income tax at the entity level. Individuals who are direct or indirect members of an electing entity must report an addi­ tion for any PTE-E tax deducted on an entity-level federal return. The addition amount may be included in qualified business income, but only to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. Individuals must use the federal Schedule K-1 and Oregon Schedule OR-21-K-1 issued by the electing entity and this formula if not all of the ordinary busi­ ness income passed through from the entity qualifies for the reduced tax rate: Qualifying business income from electing entity x Addition from Schedule OR-21-K-1, line 2 = Amount to include in qualified business income Ordinary business income from Schedule K-1, box 1 See “Pass-through entity elective tax” for more information. Example 1: Bryant and Marcus are each the sole share­ holders of an S corporation. The S corporations are each 50 percent owners in a partnership. Bryant and Marcus both materially participate in the partnership, which has ordinary business income of $2 million. The partnership employs seven full-time employees who perform their work in Oregon all year long. Bryant and Marcus receive a distributive share of nonpassive income from the partnership that passes through their respective S corporations. Each also receives a salary for work performed for the partnership. The distribu­ tive share of nonpassive income they receive from the partnership qualifies for the reduced tax rate because the partnership meets the ordinary business income and employee requirements. However, the salary each received from the partnership doesn’t qualify for the reduced rate. Material participation. A taxpayer materially partici­ pates in an activity if the taxpayer works on a regular, continuous, and substantial basis in operations of the business. Under certain circumstances, related entities may be grouped into a single activity in order to meet this requirement. Refer to IRC Section 469 and the related IRS regulations for more detailed information. Employee requirement. The business must have the required number of employees who performed work for the entity in Oregon for the required number of hours during the tax year. An employee must work at least 30 hours in a week for that week’s hours to count. An employee can’t be an owner, a member, a limited partner, or the sole proprietor, but hours worked by an employee who is a spouse or other family member (who isn’t an owner, member, limited partner, or sole proprietor) can be used to meet the hour requirement. Example 2: Alpha Partnership has $200,000 in ordi­ nary business income for the year. Alpha’s employee, Ralph, worked a total of 1,496 hours during the year in Oregon. Ralph worked 32 hours per week for 31 weeks and 24 hours per week for 19 weeks. Alpha can only count the hours for the 31 weeks that Ralph worked at least 30 hours. Alpha’s qualifying hours total 992 (32 hours x 31 weeks). This is less than the 1,200 hours required, so Alpha’s nonpassive income doesn’t qualify for the reduced tax rate. Example 3: Beta Corp, an S corporation, has three shareholders. Beta Corp has ordinary business income of $900,000, of which $300,000 is included in annual Oregon tax

150-101-431 (Rev. 09-30-22) 28 income distributions. Six employees (who aren’t share­ holders) worked in Oregon for Beta Corp during the year for a total of 6,160 hours. One employee, Alfreda, worked 40 hours a week for 50 weeks, for a total of 2,000 hours (40 x 50). Another employee, Betty, worked 32 hours a week for 30 weeks, for a total of 960 hours (32 x 30). The other four employees each worked 20 hours per week for 40 weeks in a job-share position. Only Alfreda and Betty’s hours can be counted as qualify­ ing hours for purposes of the employee requirement and the employee-to-owner ratio. Unless the income distribution requirement is met, Beta Corp’s nonpas­ sive income doesn’t qualify for the reduced tax rate because only 1,200 of Alfreda’s hours can be counted toward the 2,400 minimum hours required. Alfreda’s 1,200 hours plus Betty’s 960 hours total 2,160 hours, which doesn’t meet the 2,400 hour requirement. Example 4: Charlie, a sole proprietor, had three employ­ ees working at his Oregon business during the year. One employee worked 32 hours a week for 20 weeks (total 640 hours) and the other two employees each worked 40 hours per week during the same 20 weeks (total 800 hours each). The hours for each employee qualify because each employee worked at least 30 hours a week. The aggregate number of hours worked by all three employees (2,240 hours) meets the 1,200-hour requirement. Therefore, Charlie’s business meets the employee requirement for the reduced tax rate. Example 5: Delta Inc. is an S corporation with two shareholders and annual ordinary business income of $800,000. It has three employees, all of whom work 35-hour weeks. The office manager and the two share­ holders each work 50 weeks a year, a sales clerk works for 30 weeks a year, and a delivery driver works 20 weeks a year, for a total of 3,500 hours worked by non- owner employees. Annual income distributions to the shareholders include $150,000 in ordinary business income. With only three employees, Delta Inc. doesn’t meet the employee ratio requirement; however, because it distributes less than 25 percent of its ordinary busi­ ness income to the shareholders each year, Delta’s non­ passive income still qualifies for the reduced tax rate. Temporary or “leased” employees. If the business contracts with a professional employer organiza­ tion to employ temporary or “leased” employees, the business can use the hours worked in Oregon by those employees to qualify for the reduced tax rate if the employee requirements are otherwise met. Amended returns Amending to elect or revoke. You can’t amend to revoke or make the election after your 2022 return is filed unless you file an amended return on or before the original due date of April 18, 2023; or if filing on extension, before the extension due date of October 16, 2023. Example 6: Liam filed his original return on March 1, 2023 and didn’t elect the qualified business income reduced tax rate. He files an amended return on April 12, 2023 to make the election to use the reduced tax rate. Liam will be allowed the qualified business income reduced tax rate because the amended return was filed before the original due date. Example 7: Maggie filed her original return with a timely-filed extension on August 17, 2023 and elected the qualified business income reduced tax rate. She files an amended return on October 10, 2023 to revoke the election. Maggie will be allowed to revoke the qualified business income reduced tax rate because the amended return was filed before the extended due date. Amended Schedule OR-PTE. You must amend Sched­ ule OR-PTE if you elected to use the reduced tax rate and: • An IRS or other state audit resulted in a change that affects your Oregon return; • You amended your federal or other state return and the changes you made affect your Oregon return; • You have an NOL; or • You need to correct income or deductions you orig­ inally reported. If you amend Schedule OR-PTE after the due date for the return (April 18, 2023, or October 16, 2023, if fil­ ing on extension), you must report the tax using the reduced rate on the amended tax worksheet even if the amount of tax using the ordinary tax rate is less. This is because the election to use the reduced tax rate is irrevocable and can’t be changed by filing an amended return after the due date for the return. See the instructions for Schedule OR-PTE-FY, Sched­ ule OR-PTE-NR, or Schedule OR-PTE-PY for addi­ tional information. Farm liquidation long-term capital gain tax rate (ORS 316.045) If you sold or exchanged capital assets used in farming activities during the tax year, you may be able to apply a reduced tax rate to your net long-term capital gain. Farming activities include: • Raising, harvesting, and selling crops. • Feeding, breeding, managing, or selling: livestock, poultry, fur-bearing animals, or honeybees or the product thereof. • Dairying and selling of dairy products. • Stabling or training horses, including providing rid­ ing lessons, training clinics, and schooling shows. • Propagating, cultivating, maintaining, or harvest­ ing: aquatic species, birds, and other animal species. Oregon tax

150-101-431 (Rev. 09-30-22) 29 • Growing and harvesting cultured Christmas trees or certain hardwood timber. • On-site construction and maintenance of equip­ ment and facilities used in farming activities. • Preparing, storing, or disposing of products or by- products raised for human or animal use on land employed in farming activities. Farming activities don’t include growing and har­ vesting trees of a marketable species, other than growing and harvesting cultured Christmas trees or certain hardwood timber. General rules. The sale or exchange must end all of your ownership interests in a farming business or in property that is used in a farming business. You may not claim the special tax rate on a sale or exchange to a relative, as that term is defined by IRC Section 267. A farm dwelling or farm homesite isn’t considered to be property used in the trade or business of farming. If you have a net loss from all the assets you sold or exchanged during the year, you don’t qualify for the reduced rate on the sale or exchange of your farm assets. Partnerships or S corporations. The sale of owner­ ship interests in a farming corporation, partnership, or other entity qualifies for the special tax rate. The taxpayer must have had at least a 10 percent owner­ ship interest in the entity before the sale or exchange. Computing the tax. Use Publication OR-FCG, Farm Liquidation Long-Term Capital Gain Tax, to figure your tax using the reduced rate. Download the publica­ tion from our website or contact us to order it. Check the box labeled “Worksheet FCG” on your Oregon tax return. Don’t include the worksheet with your return; keep it with your tax records. Farm income averaging (ORS 314.297) You can figure your Oregon income tax by averaging this year’s farm income using your farm income from the previous three (base) years. This may result in less tax if this year’s farm income is higher than your tax­ able income for one or more of the three prior years. A farming business is the trade or business of cultivat­ ing land or raising or harvesting any agricultural or horticultural commodity. Your elected farm income is the amount of your taxable income from farming that you elect to include in the calculation. You don’t have to include all of your taxable income from farming. It may be to your advantage to include less than the full amount. Schedules. Use our farm income averaging (FIA) schedules and instructions to figure your Oregon income tax. They can be downloaded from our web­ site or ordered by contacting us. Be sure to mark the FIA box on your return to indi­ cate that you figured your tax by averaging your farm income. Don’t include the schedules with your return; keep them with your tax records. Pass-through entity elective tax (2021 Or Laws, ch. 589) Certain pass-through entities (PTEs) may elect to pay income tax at the entity level and pass along an Ore­ gon tax benefit to its members. Oregon’s PTE elective tax (PTE-E tax) is available for tax years beginning on or after January 1, 2022 and before January 1, 2024. Electing PTE. An electing PTE must be a partnership, an S corporation, or a limited liability company (LLC) taxed as a partnership or S corporation. All of the PTE’s members must be individuals or other PTEs whose members are all individuals. Grantor trusts and single-member LLCs taxed as individuals are treated as individuals for purposes of the PTE-E tax. Tax rate. The tax is on the sum of the PTE members’ shares of distributive proceeds from Oregon sources. An electing PTE pays tax of 9 percent on the first $250,000 and 9.9 percent on proceeds exceeding $250,000. Making the election. The PTE makes the election by filing Form OR-21, Oregon Pass-through Entity Elective Tax Return. Form OR-21 can be filed through Revenue Online or electronically through an approved soft­ ware provider. Note: Filing Form OR-21 does not sat­ isfy the PTE’s requirement to file an Oregon income or excise tax return. Tax credit and addition. An individual member of an electing PTE (or a member of a PTE that is a member of an electing PTE) is allowed to claim a refundable tax credit equal to the individual’s share of the PTE-E tax paid. A credit may be claimed only on a member’s per­ sonal income tax return, including a composite return joined by a nonresident member. The individual mem­ ber must also report an addition for their share of the PTE-E tax that the PTE deducts on its federal return. Example: Atlas and Daughters, a partnership, has seven partners who are all individuals. The sum of the distributive proceeds from Oregon sources for all of its partners is $400,000. It elects to file Form OR-21 and pay the PTE-E tax for calendar year 2022. The PTE calculates the tax as follows: Sum of distributive proceeds $400,000 Subtract the first $250,000 - 250,000 Amount in excess of $250,000 $150,000 Tax rate on excess amount (9.9%) x 0.099 Tax on excess amount $14,850 Tax on first $250,000 at 9% (0.09) + 22,500 Total PTE-E tax $37,350 Oregon tax

150-101-431 (Rev. 09-30-22) 30 On the PTE’s federal partnership return, it deducts $37,350 in state taxes to arrive at the amount of business income distributed to its partners. For Oregon, the PTE will report each partner’s share of the $400,000 in distributive proceeds from Oregon sources, their share of the $37,350 PTE-E tax that it paid, and their share of the $37,350 in state taxes that the PTE deducted on its federal return. On their individual returns, each partner will report their dis­ tributive share of business income, as reported on the PTE’s federal partnership return, in the usual man­ ner. Each partner will claim a credit for their share of the PTE-E tax paid by the PTE and report an addition for their share of the state taxes that the PTE deducted on its federal return. PTE-E addition and qualified business income reduced tax rate. Individual members who are using the qualified business income reduced tax rate to cal­ culate their Oregon income tax may include the addi­ tion amount in their qualified business income, to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. See “Qualified business income reduced tax rate” for details. See Form OR-21 Instructions or our website for more information about the PTE-E tax. Individual PTE members can find information about the tax credit and addition in “PTE-E tax” under “Refundable cred­ its“ and “Additions.” CPAR amount in lieu of tax paid by partners (ORS 314.733) Partnerships with income adjustments resulting from a federal CPAR audit may elect to pay an amount in lieu of taxes owed by its partners. The amount is based on adjustments to income from Oregon sources and is calculated using the highest marginal tax rate applicable to corporate or noncorporate partners. See Publication OR-OC, Oregon Composite Return Instruc­ tions for Pass-through Entities, for instructions for pay­ ing the in-lieu-of amount. Interest on certain installment sales (ORS 314.302) Do you have installment sales for which you had to pay interest on the deferred tax liability for fed­ eral purposes? If so, you must also pay interest for Oregon. The interest is reported as an addition to tax on your Oregon return, just as it is on your federal return. The amount due is computed the same way as for federal. The interest rate for 2022 is 4 percent per year, or 0.33 percent (0.0033) per month. The inter­ est rate for 2023 is 6 percent per year, or 0.5 percent (0.005) per month. Part-year residents. For the part of the year you were a nonresident, include only those installment obligations that were from dispositions of property in this state. For the part of the year you were a resident, consider all installment obligations. Nonresidents. Include only those installment obliga­ tions from dispositions of Oregon property. ABLE account or Oregon 529 College Savings Network account tax recapture (ORS 315.653) [Recapture code 950 or 951] If you claimed a tax credit for contributions made to an ABLE account or an Oregon 529 College Sav­ ings Network account and later made a nonquali­ fied withdrawal of funds from the account, you may have to forfeit your tax credit. A forfeited tax credit is reported as a tax recapture on your return for the year when you made the nonqualified withdrawal. Types of nonqualified withdrawals include: • Spending the funds for a purpose that is unrelated to the purpose of the account. • Using college savings plan funds to pay tuition or other expenses for elementary or secondary school. Tax benefit. Before you report a tax recapture, you must find out if you received a tax benefit from the contributed funds that were used for a nonqualified purpose. You received a tax benefit if the contribu­ tion made a difference in the amount of credit you received. Example: Jordan contributed $500 to an Oregon 529 College Savings Network account for the first time in 2020. Her AGI was $28,000, so she was allowed a credit for 100 percent of her contributions, up to the $150 limit for a single filer. She claimed a $150 credit on her 2020 Oregon return. In 2022, she withdrew $100 from the account and used it for a nonqualified purpose. To determine her tax benefit from the $100 she withdrew, she starts by subtracting it from her total contribution. The remaining contribution equals $400 ($500 - $100). Next, Jordan figures her credit for a $400 contribution in 2020. She finds that the credit amount would still be $150. The $100 contribution that she withdrew for a nonqualified purpose didn’t make a difference, so there was no tax benefit from it. Jordan doesn’t have to report a tax recapture on her 2022 return. Oregon tax

150-101-431 (Rev. 09-30-22) 31 Due to the fact that Oregon has also offered a sub­ traction for these contributions for tax years before 2020, figuring your tax benefit could be complex. For a detailed explanation and examples, see OAR 150- 315-0065. Keep a statement showing how you calcu­ lated the recapture amount with your tax records. Reporting the recapture. Report the recapture on Schedule OR-ASC, Section E or Schedule OR-ASC- NP, Section G. If the recapture is due to a nonquali­ fied withdrawal of contributions to an ABLE account, use code 950. If the recapture is due to a nonqualified withdrawal of contributions to an Oregon 529 Col­ lege Savings Network account, use code 951. Other individual taxes Statewide transit tax (STT) (ORS 320.550) This tax on wages funds public transportation services and improvements within Oregon. It’s not reported on your Oregon income tax return. The tax is equal to one-tenth of one percent (0.1% or 0.001) of the wages received by an employee who is an Oregon resident or a nonresident employee who performs services in Oregon. Oregon employers are required to automatically withhold the STT from your wages. If you’re an Oregon resident who earns wages from an employer outside of Oregon, your employer isn’t required to withhold the STT on your behalf, but they may choose to do so voluntarily. If your out-of-state employer doesn’t withhold the STT from your wages, you must file Form OR-STI, State­ wide Transit Individual Tax Return, and pay the tax. If your employer withheld too much STT from your wages because you were working outside Oregon, you must file Form OR-STI to claim a refund. The due date for your return and payment is the same as the due date for your Oregon income tax return and payment. See Form OR-STI Instructions for more information. Transit self-employment tax The department collects self-employment taxes owed to TriMet Transportation District (TriMet) and Lane Transit District (LTD). This tax is on the self-employ­ ment earnings of taxpayers doing business or provid­ ing services to a location within the transit districts. It is not reported on your personal income tax return. See Publication OR-TRAN-SE, Oregon Transit Self- employment Taxes, for more information. Fiduciary tax Oregon personal income tax is imposed on the tax­ able income of estates and trusts, except for trusts taxed as corporations. See Form OR-41 Instructions for more information. Oregon tax

150-101-431 (Rev. 09-30-22) 32 Payments and refunds Payment options Payment is due on April 18, 2023, regardless of any extension you may have to file your return. If pay­ ment isn’t made by the due date, interest and penal­ ties may be charged. See “Interest and penalties” for more information. Electronic payments from your checking or savings account You can pay your prior year income taxes, current year income taxes, and 2023 estimated income taxes directly from your checking or savings account. You also have the option to pay by direct debit when you file your return. There is no fee for this. Visit our website for more information. Credit card payments You can pay your current year balance due, make esti­ mated tax payments for 2023, and pay prior year taxes with your Discover, MasterCard, or Visa credit card. To make an online payment, go to Revenue Online on our website. A convenience fee may be charged for this service. Keep the payment confirmation number for your records. Payment by check or money order • Make your check or money order payable to Oregon Department of Revenue. • Write the tax year, the form number or type of pay­ ment you’re making, and the last four digits of your SSN or ITIN on your check. • Use blue or black ballpoint pen. Don’t use red or purple ink or gel pens. • Don’t send cash or a postdated check. • If you’re mailing a payment with your return, send your payment in the same envelope with your return. Don’t use a payment voucher. • If you’re mailing a payment separate from your return, include the payment voucher, Form OR- 40-V, with your payment. Form OR-40-V is avail­ able in our tax booklets and on our website. Refunds If the amount of tax you paid is more than the amount of tax due on your return, we will usually refund the amount of your overpayment. A refundable tax credit, such as the earned income credit, will be treated like an overpayment even if you didn’t pay any tax. Time limit for claiming a refund. If you have an over­ payment of $1 or more, you must file to claim your refund within the time limit allowed by law. See “Stat­ ute of limitations on refunds” for more information. Refund offset. In some instances, your overpayment won’t result in a refund coming to you. If you (or your spouse, if married) owe money to the state for reasons other than this year’s tax, or if you owe money to the federal government, your refund may be used to pay the amounts you owe. This is known as an “offset.” Some common types of offsets include delinquent tax from prior years, past-due child support, delinquent student loans, and legal judgments. If you have ques­ tions about a refund offset, contact us for assistance. Refund applications. When you file a return show­ ing an overpayment, you may request that some or all of your refund be used to make an estimated pay­ ment of next year’s tax or applied in other ways. See “Application of refund” for your options. Direct deposit. If you will be receiving a refund, you may request it to be deposited directly into your checking or savings account. See “Direct deposit of refund” for details. Paper check. A refund that isn’t offset, applied to next year’s tax or other application, or deposited directly into a bank account will be printed out and mailed to you at the address shown on your return. • Direct deposit information is invalid. If the direct deposit information you provide to us is invalid or if we are unable to complete the deposit for any reason, your refund will be issued to you by paper check instead. • Lost refund check. If your paper refund check is lost, you may request that we reissue it to you. The lost check must be at least 30 days old before it can be reissued. Contact us for assistance. • Check returned to the Department of Revenue. If the address shown on your return isn’t your cur­ rent address, or if the U.S. Postal Service is unable to deliver it for any reason, your paper refund check may be returned to the Department of Reve­ nue. Contact us for assistance with your unclaimed refund. • Uncashed paper checks more than two years old. If you don’t cash the paper check within two years from the date it was issued, your refund will be transferred to the Oregon State Treasury and held as “unclaimed property.” If you want to claim the refund after it has been transferred, you will have to request it from Treasury. Visit their website at www.oregon.gov/treasury for information. Refunds owed to a deceased taxpayer. If a taxpayer who was owed a refund has died, the refund may be Payments and refunds

150-101-431 (Rev. 09-30-22) 33 claimed by the taxpayer’s personal representative, heir, or the trustee of the taxpayer’s estate. See Form OR-243 Instructions for more information. Interest on refunds. Interest may be paid on some types of refunds if we are unable to issue the refund within a certain period of time. Not all types of refunds bear interest. See “How to figure interest on refunds” for interest rate information and examples. Kicker refunds. The Oregon surplus rebate, known as the “kicker,” is available when the state declares that a minimum amount of budget surplus exists for the biennium (the state’s two-year budget period). In past years, the kicker was paid to taxpayers as an automatic refund. Now, the kicker is a refundable credit that is claimed on the return in odd-numbered tax years when a surplus has been declared. See “Refundable credits” for more information. Direct deposit of refund We can deposit your income tax refund directly into an account you designate, such as a checking, sav­ ings, or certain type of retirement account. Requirements for direct deposit: • The account must have routing and account num­ bers and be able to accept Automated Clearing House (ACH) payments. • The final destination for the deposit can’t be out­ side the United States. • If you are filing a joint return, both you and your spouse must sign the return. Note: Some accounts may not accept direct deposits. Also, some institutions don’t permit the deposit of a joint refund into an individual account. Contact your financial institution to verify your rout­ ing and account numbers and to make sure your deposit will be accepted. • Routing numbers are nine digits and must begin with 01 through 12, 21 through 32, or 61 through 72. • Account numbers can be up to 17 characters, both numbers and letters. Include hyphens, but don’t include spaces or special symbols. If your account number is fewer than 17 characters, leave the unused boxes (on your return) blank. See the sample check diagram for help with identify­ ing these numbers. Caution: It’s your responsibility to make sure your information is correct. These numbers can’t be changed after your return is filed, and we can’t undo a deposit that was made to the wrong account. We aren’t responsible when an institution rejects a direct deposit. If your direct deposit is rejected, we will issue a check and send it to the mailing address shown on your return. Application of refund If your original or amended return shows a refund, you may apply some or all of it to: • Make an estimated tax payment for a later tax year. • Donate to a charitable organization. Payments and refunds Direct deposit—necessary numbers

150-101-431 (Rev. 09-30-22) 34 • Make a deposit to one or more Oregon College or MFS 529 Savings Plan accounts. • Contribute to a political party (Form OR-40 filers only). Estimated tax payment. If you apply your refund as an estimated tax payment for a later tax year, the payment will be credited to your open estimated tax account as of the date shown in Table 6. Table 6. Refund applied as estimated tax payment If you file: The payment will be credited as of: An original return on or before the due date, without extension The date that the first estimated payment of the open tax period is due (usually April 15). An original return on extension, on or before the extension due date The later of: • The due date for the first estimated payment of the open tax period (usually April 15), or • The date of the pay­ ment that resulted in the refund. An original or amended return: • After the due date, without extension; or • On extension, after the extension due date The later of: • The date the return was filed, or • The date of the payment that resulted in the refund. You can’t revoke your choice to apply your refund as an estimated tax payment. Example 1: Beth made four estimated tax payments for tax year 2022; her last payment was made on Janu­ ary 17, 2023. On September 8, 2023, Beth filed her 2022 return on extension. Beth’s return showed a $500 refund. She chose to have the refund applied as an estimated payment. The $500 refund will be credited to Beth’s 2023 tax account as of April 18, 2023 (the first estimated payment due date for the open tax period). Example 2: Ray filed his 2021 return on May 13, 2023. Ray overpaid his 2021 tax by $2,500. He chose to apply $2,000 of the refund as an estimated tax pay­ ment. Because Ray’s 2021 return was filed after the due date, the $2,000 will be applied as an estimated tax payment as of May 13, 2023, the date he filed his return. Ray will claim $2,000 as an estimated pay­ ment when he files his 2023 return. Two open tax accounts. An estimated tax account is “open” for accepting payments from the first day of the tax year until 15 days after the last day of the tax year. For most taxpayers, this means they will have two “open” accounts from January 1 through January 15, one account for the later year that opens on Janu­ ary 1, and one account for the earlier year that closes on January 15. If a payment from an applied refund is credited at a time when two accounts are open, the payment will be automatically applied to the later year. If you want your payment to be applied to the earlier year instead, you must contact us in writing before the account for the earlier year closes (usually January 15). Example 3: Sally filed her 2020 Oregon return in April 2021 with tax to pay. On January 10, 2023, Sally filed an amended 2020 return showing a $1,500 refund. She elected to apply the refund as an estimated pay­ ment. Sally’s refund is automatically applied to her 2023 estimated tax account as of January 10, 2023, the date she filed her amended return. Sally can contact us in writing no later than January 17, 2023, the date that her estimated tax account closes for 2022, and ask that the $1,500 payment be applied to tax year 2022 instead. Other refund applications. See your return instruc­ tions for details on using your refund to donate to a charitable organization, contribute to the politi­ cal party of your choice (Form OR-40 filers only), or make a deposit in up to four Oregon College or MFS 529 Savings Plan accounts. Refund processing How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of the return. Electronically- filed returns generally process faster. Paper returns must have all supporting documentation included to ensure smooth processing. Paper returns can also take longer as the due date approaches, when the largest number of returns are received. To check the status of your refund, go to www.oregon.gov/dor, click on “Revenue Online,” and click on “Where’s my refund?”. Refund delays Several things might delay processing of your tax return or your refund: • Failure to respond timely to requests for informa­ tion. If we send you a letter requesting informa­ tion to process your return, it’s important that you respond by the due date on the letter. Otherwise, we may adjust or invalidate your return. Contact us if you have questions about our letter. You may view most of the letters we send by logging into Revenue Online. Note: If we’re requesting infor­ mation about your WFHDC credit, replying to our request for information via Revenue Online allows us to respond faster. Payments and refunds

150-101-431 (Rev. 09-30-22) 35 • Change in name. If you have a different name in our records from a previous filing, special han­ dling will be required. • If you notified us about identity theft, special han­ dling will be required. • Change in SSN. • Application for an ITIN. • Failure to attach proof of Oregon withholding (such as Form W-2 or 1099). • Failure to attach a copy of your federal return (with Schedules 1 through 3, if applicable). • Failure to include required schedules, such as Sched­ ule OR-A if you’re claiming itemized deductions. • Claiming the WFHDC or manufactured dwelling park closure credit. These refundable tax credit claims are reviewed manually and take additional time to process. • Failure to identify additions, subtractions, adjust­ ments, modifications, or credits. Numeric codes for identifying these are shown in the Appendix. • Debt to other agencies. If you, or your spouse, owe money to state or federal agencies (for such things as student loans, unpaid parking tickets, or back child support), your refund might be delayed or used to offset your debt. • Incorrect bank account information. Verify your bank account information for direct deposit refunds. If your bank information is incorrect, we must wait for the bank to return the funds before issuing a refund check. Injured spouse refund claims [ORS 314.415(7)] Are you filing a joint return with a spouse who is sepa­ rately liable for a debt to a state or federal agency? If so, you may request that your joint refund be apportioned. When your return is processed, we will notify you of our intent to apply the joint refund to any debts owed. Within 30 days of the date of our notice, send us your request to apportion the refund. You may use federal Form 8379, Injured Spouse Alloca­ tion, and fill in the Oregon refund numbers, or create your own worksheet. Separate your withholding, tax payments, and items of income. Income from jointly held property must be split evenly, including interest earned on joint bank accounts. You may submit an apportionment request through Revenue Online or mail it to this address: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Visit www.oregon.gov/dor for answers to com­ mon questions. Click on FAQ to search for “injured spouse” information. Oregon statute of limitations on refunds Oregon law limits the time you have to claim a refund of Oregon tax. The allowable time depends on your circumstances. Withholding and estimated tax refunds You must file your original return within three years of the due date to claim a refund of tax withheld or esti­ mated tax payments. The due date doesn’t include exten­ sions. If you file more than three years after the due date, the excess tax withheld or estimated tax payments can’t be refunded or applied to tax you owe for another year. Amended returns If your original return was filed within three years of the due date, you may amend (change) your return and file for a refund of an overpayment of tax by the date which is the latest of: • Three years from the due date of your original return; or • Three years from the date you filed your original return; or • Two years from the date you paid your tax or paid any part of your tax. If you file your amended return after three years, but within two years of the date you paid tax, your refund can’t be more than the amount of tax you paid during that two-year period. Note: If we adjusted items on your return and your right to appeal has expired, you can’t use the above rules. You can't claim a refund for those items. Example: Bob filed his 2019 Oregon return and paid $300 tax due on time. In March 2022, he discovered he had forgotten to report some interest income. He amended his return. He paid $220 additional tax on April 1, 2022. On August 4, 2023, Bob discovers he failed to claim a large charitable contribution he made in 2019. Bob must amend his 2019 return by April 1, 2024. His refund will be limited to $220, the additional tax he paid within the last two years. Federal or other state corrections to tax returns Sometimes the IRS or another state corrects your return with changes that could affect your Oregon return, resulting in a refund. You have two years from the date of the correction to amend your Oregon return and claim a refund, even if the three-year stat­ ute of limitations has expired. Payments and refunds

150-101-431 (Rev. 09-30-22) 36 Amended returns Reasons to file an amended return • An IRS audit (or other state audit) resulted in a change to your original return that affects your Oregon return. • You amended your federal (or other state) return and the changes you made affect your Oregon return. • You made an election on federal Form 4684, Casual­ ties and Thefts, to carry back a casualty loss result­ ing from a federally-declared disaster. • You are required to recapture a federal education credit for a tax year when you claimed an Oregon tuition and fees subtraction. • You have a net operating loss (NOL) to carry back, so you need to amend your return for the carry­ back year. • You need to correct the income, deductions, or credits you originally reported. How do I amend my Oregon return? You will need the following items: • The tax form and instruction booklet for the year that you are amending. This will usually be the same form type as your original return, unless you filed the incorrect form for your residency status. Use the correct form type to amend. • A copy of the Oregon tax return that you originally filed for the year being amended; this will provide the guidance needed for completing your amended return. • A copy of any previously amended returns you filed for the year being amended. • A copy of all notices from us, another state, or the IRS for the tax year being amended. Follow these steps to amend your return: 1. Read through these instructions before filling out your form. 2. Mark the “Amended” box on the return. 3. If we sent you a notice with corrections to your return, use the figures from that notice when amending your return. 4. Use the worksheet for amended returns in the instruction booklet to determine your amended refund or tax to pay. Complete the entire work- sheet using the corrected information. 5. If the amended return shows a refund, you can elect to apply it as a payment of estimated tax or make other refund applications, but you can’t change any election you made on your original return. See “Application of refund“ in “Payments and refunds.“ 6. Use the “Amended statement” section of the return to explain why you are amending your tax return. 7. Mail or drop off your amended tax return or, if your software allows it, you may file your amended return electronically. Be sure to include a copy of the federal or other state’s corrected return or audit report. If you’re amending your Oregon return only, include a copy of your origi- nal federal return. If you don’t have a copy of your original Oregon tax return, you may request a transcript or a copy of the return from us. You can obtain copies of prior years’ returns for a small fee by going to our website, log­ ging into Revenue Online, and selecting “Request Photocopies,” or by requesting copies by mail. You can also request a return transcript for free by send­ ing a message in Revenue Online or by calling us directly. Partnership returns. Our website has information for partnerships that need to: • File an amended Form OR-OC, • Report audit adjustments made under CPAR, or • Make tax payments on behalf of partners due to CPAR adjustments. Also see “Audits and appeals.” How long do I have to file for a refund? In most cases, you must file for a refund within three years from the due date of your original return, or the date you filed your original return, whichever is later. For more information about time limits for filing a return to claim a refund, see “Oregon statute of limi­ tations on refunds.” When should I file and pay if I owe additional tax? File your amended return as soon as you know that a change needs to be made. Interest is calculated from the day after the due date of the original return up to the date the tax is paid. Pay any tax and interest due as soon as possible to avoid additional interest. There may also be a penalty. How do I file a protective claim for refund? You can file a protective claim for refund when the outcome of a court case or legislative action is expected to be known after the time for requesting a refund has expired. Use Form OR-PCR, Protective Claim for Refund, when your claim to a refund is con­ tingent on a pending court decision or legislative Amended returns

150-101-431 (Rev. 09-30-22) 37 action. Notify us every six months on the status of the claim. If the court decision or legislative action changes your Oregon income tax, file an amended return within 90 days of the determination. How long will it take to process my amended return? Processing time for amended returns varies. It may take six months or longer to process your amended return. How do I amend for an NOL? You may claim a refund from an NOL carryback within three years after the due date (including extensions) of the return that showed the NOL. Mark the “Amended return” box and enter the year of the NOL. See “NOLs for Oregon” in “Other items“ for more instructions. Do I change my federal tax liability on my amended return? Usually not, but there are a few exceptions to this general rule. Change allowed Changing the federal tax liability amount on your amended return is allowed only if one of these excep­ tions applies: • Failure to claim on original return. You qualified for this subtraction on your original Oregon return but failed to claim it. If so, you may claim the sub­ traction based on your original federal income tax liability or the amount allowed by one of the other exceptions. • Correction notice from us. Did we correct the fed­ eral tax subtraction on your original return? If so, change the amount on your amended return. Use the corrected amount from our notice. • Federal return amended before due date. Did you amend your federal return before the due date of the original return? If so, change the amount on your amended return. The federal tax on your amended federal return filed before the due date is the amount you will use for your amended Oregon return. • Different AGI phase-out limit. Does a different phase-out limit apply to your amended AGI? The amount of federal tax liability you may subtract on your return is limited if your AGI is within a cer­ tain range. These ranges and limitation amounts can be found in Table 9 under “Federal income tax liability“ in “Subtractions.“ If your amended AGI is now within a different range, change the amount on your amended return only if the taxes you are deducting were paid or accrued during the tax year you are amending. Increase or decrease the subtraction to match the limitation amount that applies to your amended AGI. Change not allowed Unless one of the above exceptions applies, you can’t change the amount of your federal tax liability on your amended return. However, you might have a subtraction or addition on your return for the year in which you file the amended return. • More federal tax paid. Did you pay additional federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Claim the additional federal tax as a subtraction on your Oregon return in the year you paid the additional tax. • Federal tax refund. Did you get a refund of federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Show the federal tax refund as an addition on your Oregon return in the year you received the refund, but only if you received a tax benefit. See “Federal income tax refunds“ in “Additions” for more information about the tax benefit doctrine. Example 1: Sergei received a notice from us in May and is filling out an amended return in July. The notice stated that his federal tax subtraction was reduced from $3,500 to $3,000. He will use the corrected fed­ eral tax subtraction of $3,000 on his amended return. Example 2: Alicia paid additional federal tax in 2022 for an audit adjustment on her 2019 federal tax return. She will include the adjusted items when she com­ pletes her amended 2019 Oregon tax return, but won’t change the 2019 federal tax subtraction. Because she paid the additional tax in 2022, she will subtract this amount, up to the annual limit, on her 2022 Oregon return. See “Federal income tax liability” in “Subtrac­ tions“ for the federal tax subtraction limits. Example 3: Tonya, a single taxpayer, timely filed her original 2021 return, with an AGI of $138,000. She paid $35,000 in federal taxes during 2020. Her federal tax subtraction was limited to $2,800 because of her AGI. In 2022, she amended her 2021 federal return to claim expenses she had left off of her original return. Her amended AGI is now $133,000. Tonya may change her federal tax liability on her amended return to $4,200, the amount she could have claimed on her original return, because her limitation amount has changed. Amended returns

150-101-431 (Rev. 09-30-22) 38 Interest and penalties Interest Interest rates are the same for taxes owed and for refunds. Interest is charged and paid on tax only. Interest isn’t charged on penalties. We don’t charge compound interest. Table 7 shows interest rates since 2018. For previous interest rates, see prior versions of this publication or contact us. Table 7. Interest percentage rates Interest as of: Annual Daily January 1, 2018 5% 0.0137% January 1, 2019 6% 0.0164% January 1, 2021 4% 0.0110% January 1, 2023 6% 0.0164% As of January 1, 2018, interest is figured daily, based on a 365-day year. The annual interest rate is 4 per­ cent for 2022. The annual interest rate is 6 percent for 2023. The interest rate may be changed once per calendar year. Additional interest of 4 percent per year is charged as described under “Two-tiered interest on deficien­ cies and delinquencies.“ How to figure interest on tax you owe Your 2022 tax must be paid by April 18, 2023, even if you requested an extension to file your return. Inter­ est starts accruing on April 19 and continues to accrue every day, including the date of your payment. To figure your interest for 2023, count the number of days starting with April 19, 2023 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply by 0.000110 (the daily rate converted to a decimal). If you’re entering the interest amount on your return, round the total to the nearest whole dollar. Amended return. If you file an amended return, or if your taxable income changed because of a federal or state audit, and you have tax to pay, you will be charged interest starting the day after the due date of the original return until the date of your payment. Calculate interest based on the additional amount of tax you must pay. Example: Nick filed an amended income tax return for tax year 2020 on March 13, 2023. His original 2020 return was due on May 17, 2021. He paid additional tax of $500 with his amended return. Here is how Nick figures the interest that he owes: May 18, 2021 to December 31, 2022 593 days at 0.0110% 0.000110 x $500 x 593 days ...........................= $ 32.62 January 1, 2023 to March 13, 2023 72 days at a daily rate of 0.0164% 0.000164 x $500 x 72 days..............................= $ 5.90 Total interest $38.52 Two-tiered interest on deficiencies and delinquencies Additional interest of 4 percent per year will be charged on deficiencies or delinquencies if: • You have filed a return showing tax due (a self- assessed tax liability) and don’t pay the tax due within 60 days after the date of our Notice of Assessment, or • We have assessed an existing deficiency, and you don’t pay the assessment within 60 days after the date on the Notice of Assessment. If you appeal to us (or, in a hardship situation, to the Oregon Tax Court) without paying the tax, the increased interest rate will start 61 days after: • The date of our written objection decision; or • The date of our conference decision letter (CDL); or • The date the Magistrate Division enters its final decision; or • The date the Tax Court or the Oregon Supreme Court enters its final judgment. How to figure interest on refunds of personal income tax Generally, interest is paid on refunds issued more than 45 days after the later of: • The due date of the original return (without exten­ sions), or • The date you file your original return. Note: If your refund results from a payment you made after the due date of your return (without extensions), interest will be paid if the refund is issued more than 45 days from the date of that payment. Example 1: Irina filed her original 2020 income tax return on February 15, 2023, to claim a $1,900 refund of withheld tax. The return was due on May 17, 2021. We issued the refund on May 8, 2023, more than 45 days after Irina filed the return. The interest on the refund is calculated as follows: February 16, 2023 to April 1, 2023 45 days, no interest paid April 2, 2023 to May 8, 2023 0.000164 x $1,900 x 37 days $ 11.53 Example 2: Jean filed her original 2020 return on May 17, 2021. She then filed an amended 2020 return on Febru­ ary 3, 2023, which shows a $1,000 refund of estimated tax. Interest and penalties

150-101-431 (Rev. 09-30-22) 39 Here is how we figure the interest due on Jean’s refund, as of the date she filed the amended return: May 18, 2021 to July 1, 2021 45 days, no interest paid July 2, 2021 to December 31, 2022 0.000110 x $1,000 x 548 days .........................= $ 60.28 January 1, 2023 to February 3, 2023 0.000164 x $1,000 x 34 days ...........................= $ 5.58 Total interest $ 65.86 Note: Interest is calculated on the amount that is a refund of tax paid, including any refund amount that you choose to donate by charitable check-off, contrib­ ute to a political party, or deposit into an Oregon Col­ lege or MFS 529 Savings Plan account. Refunds that don’t accrue interest. Interest isn’t paid on the portion of a refund attributable to the EIC or the WFHDC credit. Also, interest doesn’t accrue on refunds applied as an estimated payment to a later year’s tax. See “Application of refund” in “Payments and refunds.“ Tax credit auction bid payments that are returned to the bidder don’t accrue interest. Two-tiered interest on refunds The interest rate will increase if we are unable to issue a refund within 60 days from the date of a Tax Court or Supreme Court judgment. The annual rate will increase by 4 percent beginning 61 days after the date the final judgment is entered. Penalties Penalties for filing or paying late Your 2022 return must be filed by April 18, 2023. If you requested an extension, your return must be filed by October 16, 2023. Your 2022 tax must be paid by April 18, 2023, even if you requested an extension to file your return. If you’re entering a penalty amount on your return, round the total to the nearest whole dollar. Five percent failure to pay penalty. You must pay a penalty if you don’t pay your tax by the original due date of the return, even if you have an extension of time to file. The failure-to-pay penalty is 5 percent of the tax (after all credits, withholding, and payments) that wasn't paid by the original due date. You won’t be charged the 5 percent failure-to-pay penalty if you do all of the following: • File federal Form 4868, Extension of Time to File U.S. Individual Income Tax Return (the automatic extension of time to file), or send us a payment according to the instructions in Publication OR-40-EXT; • Pay at least 90 percent of your tax after credits (including recaptures) by the original due date*; • File your return within the extension period; • Pay the balance of tax due when you file your return; and • Pay the interest on the balance of tax due when you file your return or within 30 days of the date of the bill you receive from us. *To find your tax after credits, start with your tax after tax recaptures, then subtract refundable credit amounts. If you file with a valid extension but didn’t pay 90 percent of your tax by the original due date, you will be charged the 5 percent failure-to-pay penalty. Twenty percent failure-to-file penalty. You must pay a penalty if you don’t file your return within three months after the due date (including extensions). The penalty is 20 percent of the tax (after all credits, tax recaptures, withholding, and payments) that wasn’t paid by the original due date. You won’t be charged the 20 percent failure-to-file penalty if you: • File federal Form 4868 (the automatic extension of time to file); or • Make a payment according to the instructions in Publication OR-40-EXT, and • File the return within three months after the due date (including extensions). Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax (after all credits, tax recaptures, withholding, and payments) that wasn’t paid by April 18, 2023. Example. Emir filed his 2022 return on November 17, 2023. His return was due April 18, 2023 and he didn’t have an extension. Emir paid the tax due of $2,000 with the late-filed return. His penalties total 25 per­ cent of the $2,000 tax: Failure-to-pay penalty: 0.05 x $2,000 ..................... $100 Failure-to-file penalty: 0.20 x $2,000 ......................$400 Total penalties: 0.25 x $2,000 $500 Note: Emir will also owe interest on the $2,000 tax. Additional 25 percent failure-to-file penalty If you fail to file a return within three months of the due date (including extensions), we may send you a notice with a demand that you file. If you don't file a return within 30 days of the date the demand let­ ter was mailed, we will figure the tax for you and an additional penalty of 25 percent of the unpaid tax will be assessed for a total penalty of 50 percent. Interest and penalties

150-101-431 (Rev. 09-30-22) 40 One hundred percent failure–to–file penalty If you don’t file returns for three consecutive years by the due date of the third year’s return, including extensions, you must pay a 100 percent failure-to-file penalty on the tax due for each year. Penalty for intent to evade tax Filing a falsely prepared return with the intent to avoid tax will result in a penalty equal to 100 percent of the tax deficiency determined by the Department of Revenue. In addition, you could be charged with tax evasion, a class C felony. You could be fined up to $125,000, serve a jail sentence, or both. Total penalties The total of these penalties can’t be more than 100 per­ cent of the tax due. Exceptions: Penalties for substan­ tial understatement of net tax, filing a frivolous return, falsely claiming the WFHDC credit, making a non- qualified withdrawal from a first-time home buyer savings account, and abusive tax avoidance transac­ tions may be imposed in addition to other penalties. Substantial understatement of net tax penalty If we determine that you have substantially under­ stated your net tax on your return, you must pay a penalty equal to 20 percent of the understated tax. A penalty will be assessed if net tax for 2022 has been understated by more than $2,650 ($3,850 for a C corporation). Substantially understated net tax also includes net tax on income attributable to an abusive tax shelter, even if fully disclosed. This penalty is in addition to all other penalties pro­ vided by law. $250 frivolous return penalty If you file a frivolous return that is meant to deliber­ ately delay or block the administration of tax laws, you must pay a $250 penalty. “Frivolous” includes, but isn’t limited to: • An argument, without any good basis, that there has been a violation of your constitutional rights. • Reliance on a “gold standard” or “war tax” deduction. • An argument that wages or salary aren’t taxable income. • An argument that the 16th Amendment to the U.S. Constitution wasn't properly adopted. • An argument that “unenfranchised, sovereign, free­ men, or natural persons” aren’t subject to tax laws. This penalty is in addition to all other penalties pro­ vided by law. Working family household and dependent care (WFHDC) credit false claim penalty You may be charged a penalty if you knowingly falsely claim (or knowingly assist someone else in falsely claiming) the WFHDC credit. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjustment or denial of the credit. This penalty can be charged to each person involved with the false claim. This penalty is in addition to all other penalties pro­ vided by law. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal A penalty of 5 percent of the funds withdrawn from your FTHBSA may be imposed if you withdraw the funds from the account for a purpose other than pur­ chasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties provided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions.” Abusive tax avoidance transaction (ATAT) penalties Penalties can be imposed on income items identified by the IRS as ATATs, including listed transactions, reportable transactions, and promotion of tax shel­ ters, as follows: • A penalty of 60 percent of the understated net income from a listed transaction understatement. This penalty is in addition to and not in lieu of any other penalties. • Failure to report a reportable transaction will result in a penalty of $3,300 for an individual taxpayer or $16,700 for a corporation. • If the reportable transaction is also a listed transac­ tion, the penalty is $33,000 for an individual tax­ payer and $66,000 for a corporation. • A promoter of tax shelters will be assessed a pen­ alty of 100 percent of the gross income derived from promoting the shelter. This penalty is in addition to and not in lieu of any other penalties. The ATAT penalties are in addition to all other penal­ ties provided by law. In addition to these penalties, if we find there is a deficiency in tax paid as a result of the use of a listed transaction reported or reflected by the return, the statute of limitations for issuing a notice of that deficiency is increased from three years to nine years from the date the return was filed. Interest and penalties

150-101-431 (Rev. 09-30-22) 41 Audits and appeals What to do if your return is audited General information We audit returns for several reasons. Many audits are based on adjustments made by the IRS, with whom we share information. Other returns are selected because there are sections of tax law that require additional focus due to difficulties or frequent errors in tax law application. An audit is the process of reviewing a return to make sure it was prepared correctly. If your return is cho­ sen for an audit, it doesn’t mean you made an error or are dishonest. By law, we must keep your tax information private. In rare situations involving returns filed after Decem­ ber 31, 2017, we may share information between tax­ payers who have claimed the same item on their indi­ vidual returns in order to efficiently resolve the mat­ ter—for example, divorced taxpayers who both claim an exemption credit for the same dependent. Other­ wise, we are prohibited from sharing your informa­ tion with anyone without your consent. People who prepare your return or represent you must also keep your information confidential. You have the right to know why we are asking for information, exactly how we will use any information you provide, and what might happen if you don’t provide the information. Our goal is to treat taxpayers fairly. We strive to be responsive to the issues and reasonable in our deci­ sions and actions. We will explain any changes we make to your return. We encourage you to ask about anything you don’t understand. For more information, read our publication Your Rights as an Oregon Taxpayer. You can find the publica­ tion at www.oregon.gov/dor/forms or contact us to order a copy. Types of reviews Processing adjustments. Processing adjustments are corrections we make to a return while we process it. We make some adjustments without the need for additional information, such as math errors. If we need additional information, we’ll send a letter. It’s important that we get a response by the date speci­ fied in the letter. Federal audits. These audits are based on informa­ tion from the IRS. This information includes their CP2000 program and federal Revenue Agent Reports. The CP2000 program matches Form W-2 and 1099 information reported by payers to what is shown on a return. A Revenue Agent Report is a federal audit report showing adjustments the IRS made to a return. If you received either of these reports from the IRS, you need to determine if the changes made by the IRS affect your Oregon return. If they do, you should amend your Oregon return as soon as possible. Inter­ est charges accrue until all tax is paid. If you don’t amend your Oregon return, you may receive a notice from us showing adjustments we have made to your return. Correspondence audits. These are written requests asking you to confirm items on a return. The letter will explain what items we are reviewing and what we need to verify them. You will be asked to send copies of the documents to the auditor who will review the information and notify you of the results. Correspondence audits usually don’t require a meet­ ing with the auditor. Field audits. These audits are more in-depth and typically involve a review of business income and expenses. Field audits usually require a meeting with the auditor. The time and place of the meeting will be arranged between you and the auditor. Partnership audits. The IRS makes audit adjust­ ments and collects taxes at the partnership level for partnerships subject to CPAR, IRC Sections 6225 to 6227. Oregon’s CPAR provisions can be found in ORS 314.731 to 314.739. If an IRS audit under CPAR results in adjustments that affect any partner’s Oregon tax, the partnership must follow certain procedures and timelines for reporting the adjustments to Oregon. The partnership may elect to pay an amount in lieu of tax owed by the partners resulting from the adjust­ ments. See Publication OR-OC or visit our website for more information. What records will I need for the audit? You’ll get a letter from us asking questions and requesting copies of specific documents. Answer the questions completely and send copies of the requested documents by the deadline in the letter. It’s important that you have a complete copy of your state and federal tax records and provide copies, as requested. See “Record-keeping requirements” in “General information” for additional tips. You should also keep a copy of your response to the audit letter. If you get a letter asking you to make an appoint­ ment, contact the auditor who sent the letter. We try to schedule audit appointments at your convenience. It may be held at the business location, at your repre­ sentative’s office, or at one of our field offices. The letter will explain the records needed for the audit. Organize the information for the appointment. Audits and appeals

150-101-431 (Rev. 09-30-22) 42 The auditor may ask you to make copies of the records. Generally, your return is examined in the district where you live. If your return can be examined more quickly and easily in another district (such as where the books and records are located), you may ask to have the audit transferred. Who can represent me? Throughout any audit, you can represent yourself, have someone accompany you, or designate some­ one to represent you. You may represent yourself in all stages of your audit and appeal. However, if your case is hard to understand or involves many issues, you may want someone to help you. Also, if some­ one else prepared the return, you may want their help. You may authorize someone to receive your confidential information (tax information authoriza­ tion), or you may designate someone to represent you (power of attorney for representation) who would be able to make decisions for you. People who can repre­ sent you are Oregon-licensed: • Lawyers. • Public accountants or certified public accountants. • Tax consultants. • Enrolled agents. Out-of-state CPAs may practice in Oregon if they meet the substantial equivalency requirements (ORS 673.010): 1. Licensed in another state; and 2. Have an accredited baccalaureate degree with at least 150 semester hours; and 3. Passed the Uniform CPA exam; and 4. Have a minimum of one year of experience. If you own a business and have an employee who regularly does your tax work, that employee can also represent you. You must give written authorization to a person you want to represent you. Use our Tax Information Autho­ rization and Power of Attorney for Representation form. The auditor handling the case can provide a copy of this form, or you can download it from our website or call us to order a copy. What if I disagree with the audit results? When we propose changes to your return, we will explain the reasons for them. It’s important that you understand why we propose changes before they become final. Ask about anything that is unclear to you. If you disagree with the final changes, you can appeal. Appeal rights will be included with the notice you receive. What if the IRS or another state has audited my return? We have an agreement with the IRS to exchange tax return information. If the IRS audits an Oregon tax­ payer's return, we may receive a copy of that infor­ mation. If your federal return or the return you filed with another state is adjusted, you should amend your Oregon tax return if that adjustment also affects your Oregon return. If your return was previously audited by the IRS and the notice you receive from us has a different adjust­ ment, send a copy of the final audit adjustments or cancellation from the IRS to us. If you filed an appeal with the IRS or the other state and you get a notice from us, send a copy of the IRS or other state appeal notification. We will suspend further action until your IRS or other state case is resolved. You have two years from the date of the correction to claim a refund of Oregon tax as a result of the audit adjustment. See “Oregon statute of limitations for refunds” in “Payments and refunds” for more information. Appeals If you disagree with an action we've taken, you have the right to appeal. Follow the appeal procedures out­ lined here if you have a disagreement with: • A Notice of Deficiency or Notice of Proposed Refund Adjustment. • Our notice based on a federal audit report or an audit by another state. • Penalties or interest charges shown on our notice. • Interest charged on underpayment of estimated tax. • A Notice of Assessment. You may be able to resolve certain issues without a formal appeal process. Contact us if your disagree­ ment concerns: • The date or amount of payments made to your account. • A withholding adjustment. Appealing a Notice of Deficiency or Notice of Proposed Refund Adjustment within 30 days If you disagree with a Notice of Deficiency or a Notice of Proposed Refund Adjustment, you may submit an appeal online by logging in to Revenue Online within 30 days and following the instructions on your notice. Or, you may submit an appeal in writing within 30 days from the date on our notice. Audits and appeals

150-101-431 (Rev. 09-30-22) 43 To make your appeal, choose just one of these two options: written objection or conference request. Written objection. Write to us explaining why you disagree with the Notice of Deficiency or Notice of Pro­ posed Refund Adjustment. Include any new informa­ tion you have. We will review your explanation, try to resolve the matter, and send you a written deci­ sion. If an auditor adjusted your return, that auditor will review your explanation, along with any infor­ mation you provide, and send you a written decision. Conference. Request a conference by sending us an explanation of why you disagree with our Notice of Deficiency or Notice of Proposed Refund Adjustment. Include any new information you have. Be sure to indicate that you are requesting a conference. A conference officer will discuss the matter with you or with someone you choose to represent you, usu­ ally by phone. The conference officer will send you a written decision. You may choose to receive the deci­ sion by either regular or certified mail. If you disagree with our decision, you may continue your appeal and will receive new appeal instructions. Appealing a Notice of Proposed Refund Adjustment after 30 days have passed If you don’t send us a written objection or conference request, but you still want to appeal a Notice of Pro­ posed Refund Adjustment, you must file a complaint with the Magistrate Division of the Oregon Tax Court no later than 120 days from the date of the notice. If you don’t file a complaint within 120 days, your appeal rights will expire and the adjustment can’t be changed. See “Appealing to the Oregon Tax Court” for more information. Appealing a deficiency based on federal audit reports or audit reports of other states Do you have an appeal in progress with the IRS or another state? If so, you may have extra time to file an appeal with the Magistrate Division of the Oregon Tax Court. To see if the appeal rights apply to you, answer the following questions: 1. Did you receive an Oregon notice of a deficiency on the same item billed by the IRS or another state? 2. Did you file a timely appeal with the IRS or another

state? If you answered “no” to either question, use the appeal procedures included with your Oregon notice. If you answered “yes” to both questions, you need to send us proof of your appeal to the IRS or other state. This should include a copy of the notice from the IRS or other state, plus a copy of your written appeal request. The time allowed for filing your proof of federal or other state’s appeal varies: • Did you receive a Notice of Deficiency from us? If so, send us proof of your IRS or other state appeal within 30 days of the date on the Notice of Deficiency. Your account will be assessed without penalty and held until the appeal with the IRS or other state is resolved. • Did you receive a Notice of Assessment from us before sending us proof of the appeal? If so, send us proof of your IRS or other state appeal as soon as possible. After you file proof of your appeal, we will delay any further action on your account until the appeal process is completed. Note: Interest will continue to accrue on any unpaid tax. You must notify us within 30 days of the final resolu­ tion of your appeal with the IRS or the other state. We will review the information and determine whether any adjustments need to be made to your Oregon tax return. You will receive written notification of our determination. If you disagree with our determina­ tion, you may appeal within 90 days to the Magis­ trate Division of the Oregon Tax Court. Your com­ plete appeal rights will be explained with the written determination. Appealing penalty or interest Do you believe there is reasonable cause for a reduc­ tion of penalties or interest? If so, you may ask for a waiver or reduction of part or all of the penalty and interest charges. However, we generally won’t waive interest charges. Waiver criteria are outlined in Oregon Administrative Rule (OAR) 150-305-0068. You must explain how your situation meets any of the criteria. We will review your waiver request and let you know our decision in writing. You’ll receive further appeal instructions to follow if you disagree with the decision. How to start the appeal process All appeals must be submitted through Revenue Online or sent to us in writing. If you are sending us a written appeal, you may submit it by regular mail, fax, or email. Your written appeal must include: • Your full name. • Your current mailing address. • Your SSN or ITIN. • The tax year(s) involved. • A detailed explanation of why you are appealing. Audits and appeals

150-101-431 (Rev. 09-30-22) 44 • Proof of your IRS or other state appeal, if applicable. • The waiver criteria if you are requesting a reduc­ tion of penalty or interest (OAR 150-305-0068). • Any new information you want us to consider; and • A daytime phone number. Be sure to indicate whether you are making a writ­ ten objection, requesting a conference, or requesting a waiver or reduction of penalties or interest. Keep us informed of any changes to your address or phone. Regular mail. Send your written appeal to: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Email. If you are appealing a determination made by an auditor, you may send a written objection or request for a conference to that auditor by email. You should note, however, that we are unable to guarantee the security of any information sent to us by email. Fax: You may fax your written appeal to 503-945-8738. Revenue Online: You may submit your appeal using your Revenue Online account. After logging in, sim­ ply click on the link for your personal income tax account, then select the “Appeals” link and follow the instructions. Be sure that the type of appeal you select is the one you intend to choose. Go to our web­ site for more information about setting up your Rev­ enue Online account. Appealing to the Oregon Tax Court If you disagree with a Notice of Assessment or a writ­ ten determination following your written objection or conference, you have the right to appeal. You must appeal to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the Notice of Assessment or our written determination. Complaint forms for appealing to the Magistrate Division are available from the Tax Court’s website, www.courts. oregon.gov/courts/tax, or you may contact the Ore­ gon Tax Court by mail or phone: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 Mail the signed complaint form along with the fil­ ing fee and a copy of the Notice of Assessment or other written determination to the above address. Note: You can’t appeal tax that you said you owed when you filed your return. Further appeal rights Tax paid in full. If you pay the tax due in the Notice of Deficiency in full, your deficiency is considered to be assessed either on the date of your payment or 30 days from the date of the notice, whichever is later. If you don’t file a timely appeal, you have two years from the date your liability is paid in full to appeal the assessment. Appeal to the Magistrate Division of the Oregon Tax Court as outlined above. Doubtful liability. In certain situations, we may con­ sider your case even if you didn’t file a timely appeal. Visit our website or contact us to see if you meet the conditions for “doubtful liability” relief. Interest charges Appealing a deficiency or an assessment won’t stop interest from accruing on the taxes owed. Interest is computed from the day after the due date of the original return, without extensions, to the date of payment. Interest is charged even if you have a valid extension. If your appeal results in a reduction of the tax due, the interest charges will also be reduced. Paying your taxes during the appeal You may pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the notice, but it does stop interest from accruing on your liability. If you don’t pay before the tax is assessed, a 5 percent failure-to-pay penalty will be added to your balance due. If your appeal is successful, you will receive a refund of any overpayment, including interest. See “Payments and refunds“ for payment options, and “Interest and penalties“ for more information about the failure-to-pay penalty. Audits and appeals

150-101-431 (Rev. 09-30-22) 45 Failure to file an Oregon income tax return For information about penalties for failing to file an Oregon income tax return, see “Penalties.” Filing a return after tax is assessed When you don’t file a tax return but were required to file, we will “assess” your tax. This means we com­ pute how much tax you owe based on information we have available. You will then receive a Notice of Assessment. Even if we have assessed your tax for one or more years, you may still file returns for those years. Why you should file We compute your tax assessment using the infor­ mation available to us about your income, filing sta­ tus, exemptions, and withholding or estimated tax payments. Because we don’t have all your tax information, we may not be able to give you all the deductions or credits you may be entitled to. Once you file a tax return, we may be able to change the tax we assessed. You may receive a refund If your withholding and/or estimated tax payments add up to more than the tax due, we may be able to refund the excess to you. However, there are time limits. If you paid more tax than you should have, a refund will be allowed only if you file your return within three years of the due date of the original return, not including extensions. For example: • The return for 2019 was due July 15, 2020. Three years after that date is July 15, 2023. To receive a refund of excess tax payments for 2019, your return must be postmarked by July 15, 2023. • The return for 2020 was due on May 17, 2021. Three years after that date is May 17, 2024. To receive a refund of excess tax payments for 2020, your return must be postmarked by May 17, 2024. Where to mail your return after tax is assessed Send paper returns, with a copy of your federal return (including Schedules 1 through 3, if applicable) to: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Reviewing your return After reviewing your return, if we agree with the tax you show, we will change the tax assessed. If the income, deductions, credits, or payments shown on your return don’t match our information, we will notify you. The notice we send will explain our adjustments and what to do if you disagree. Your return must include information about filing status, exemptions, income, deductions, credits, tax, and payments. It must be signed and include a state­ ment that, to the best of your knowledge and belief, it’s true, correct, and complete. The full statement is printed on the forms provided by us and appears directly above the signature lines. If you change this statement on the form, your return may not be accepted. Your return also may not be accepted if: • It contains a frivolous argument concerning the payment of taxes; or • You file a return you know isn’t true or correct. You will receive a Notice of Rejection if your return isn’t accepted. This notice can be appealed to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the notice, but only if your return was sent to us within 90 days of the date on the Notice of Assessment. Appealing the Notice of Assessment to the Oregon Tax Court You may also choose to file an appeal with the Mag­ istrate Division of the Oregon Tax Court. Your appeal must be made within 90 days of the date of the Notice of Assessment or within two years after the tax, pen­ alty, and interest shown on the notice is paid in full. If you file an appeal with the Magistrate Division, you will usually be required to file a tax return before the court will change our assessment. You can get a complaint form for filing an appeal at: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 www.courts.oregon.gov/courts/tax Within 90 days of the date on your notice, mail the following items to the address above: • Your completed and signed complaint form. • Your filing fee, and • A copy of the Notice of Assessment. Failure to file

150-101-431 (Rev. 09-30-22) 46 Appealing doesn’t stop interest from being charged on the tax you owe. If you appeal and your tax assess­ ment is reduced, the penalty and interest charges will also be reduced. Paying your taxes during the appeal process You can pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the assessment, but it does stop interest from accruing on the assessed tax. If you pay, you can still appeal any time within two years of the date you pay the tax, penalty, and interest shown on the Notice of Assessment. See “Payments and refunds” for payment options. Requesting a waiver of penalty or interest You can ask for a discretionary waiver of part or all of the penalty and interest charges (OAR 150-305- 0066, 150-305-0068). We can resolve most penalty and interest charge disagreements. For more information about requesting a discretionary waiver, see “Appeal­ ing penalty or interest” in “Audits and appeals.“ If you believe part or all of the penalty and interest charges should be adjusted, write to: Oregon Department Revenue PO Box 14725 Salem OR 97309-5018 Failure to file

150-101-431 (Rev. 09-30-22) 47 Income What income is taxable to Oregon? Full-year residents (Form OR-40). You are taxed on income from all sources. Part-year residents (Form OR-40-P). You are taxed on income from all sources earned or received while an Oregon resident. For the period of time you were not an Oregon resident, Oregon taxes only certain income from Oregon sources. Nonresidents (Form OR-40-N). You are taxed on income from Oregon sources. This includes income shown on your federal return from Oregon wages or Oregon fees or for services performed in Oregon. Other income from Oregon sources includes: • Businesses, S corporations, partnerships, and lim­ ited liability companies taxed as partnerships located or doing business in Oregon, and in some cases, work that is performed in another state for Oregon customers. • Unemployment insurance benefits received because of an Oregon job. • Severance pay you received because of an Oregon job. • Oregon farms. • Oregon estates and trusts. • Sales of Oregon property. • Rents and royalties for use of Oregon property. • Wages for services performed in Oregon by employ­ ees who also telecommute from outside the state. Note: Community property income. Oregon isn’t a community property state. If you’re a resident of Ore­ gon and your spouse is a resident of a state with com­ munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you are taxed on any of your spouse’s income. See “Filing sta­ tus” for more information about community property. Air carrier employees (OAR 150-316-0173) Nonresidents. You are exempt from Oregon tax on wages earned while working on aircraft in Oregon, if you meet all of the following qualifications: • You are a nonresident of Oregon; and • You perform regularly assigned duties on aircraft in Oregon and at least one other state as an employee of an air carrier; and • Your scheduled flight time in Oregon is 50 percent or less of your total scheduled flight time during the calendar year. Additionally, the air carrier you work for must provide: • Interstate or foreign air transportation of passen­ gers or property by aircraft as a common carrier for compensation; or • Interstate or foreign transportation of mail by aircraft. If you are a federal, state, or local government employee, you may not exclude your income under this section. (U.S. Postal Service employees are considered employ­ ees of the federal government.) If you meet all of these qualifications, file Form OR- 40-N and mark the “Employment exception” box on the return. [For more information about the “Employ­ ment exception” box, see “Interstate transportation wages (Amtrak Act).“] Show that your income is exempt by excluding it from the Oregon column. Example 1: Chantell is a nonresident who works as a pilot for an Oregon-based corporation, transporting the corporation’s executives to various job locations in the United States. Chantell isn’t exempt from Ore­ gon tax because she doesn’t work for an air carrier that provides air transportation for compensation. Her wages are subject to Oregon tax to the extent ser­ vices are performed in Oregon. Example 2: George is a nonresident who works as an office manager for an air carrier. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his pilot’s license. George doesn’t qualify as exempt from Oregon tax because his “reg­ ularly assigned duties” aren’t on an aircraft, but as a manager in an office. Example 3: Allison is a nonresident and works as a flight attendant for Delta Airlines. She regularly works on flights in California, Oregon, and Washing­ ton. Her scheduled flight time in Oregon amounts to 35 percent of her total scheduled flight time this year. Because Allison meets the qualifications mentioned above, she can exclude, from the Oregon column, all of her wages from Delta Airlines on her Oregon non­ resident return. Oregon withholding. To stop withholding of Oregon income tax from your exempt wages, use Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income

150-101-431 (Rev. 09-30-22) 48 Alimony received Oregon only taxes alimony payments received that must be included on your federal return. Full-year residents. Oregon taxes all alimony you received during the year that is included on your fed­ eral return. Part-year residents. Oregon taxes any alimony you received for the part of the year you were a resident of Oregon that is included on your federal return. Nonresidents. Oregon doesn’t tax any alimony you received while a nonresident of Oregon. Business income or loss Full-year residents. Oregon taxes all of your business income (or allows your business loss) received during the year. Part-year residents. Oregon taxes all of your business income (or allows your business loss) while you’re an Oregon resident. Oregon also taxes income (or allows losses) from an Oregon business while a nonresident. Nonresidents. Oregon taxes your income (or allows your business loss) from an Oregon business. This includes apportioned business income and allocated nonbusiness income from sole proprietorships. Federal Schedule E and F income Full-year residents. Oregon taxes the income reported on federal Schedules E and F, including rent, royalty, Real Estate Mortgage Investment Conduits (REMIC), Real Estate Investment Trust (REIT), partnership, S corporation, estate, trust, and farm income. Part-year residents. Oregon taxes the income reported on federal Schedules E and F that you received while you were an Oregon resident. Oregon also taxes this income if you received or earned it from Oregon sources while a nonresident. Nonresidents. Oregon taxes the income reported on federal Schedules E and F that you received or earned from Oregon sources. Gain, loss, and distributions Capital gain, loss, and distributions Full-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) dur­ ing the year. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Part-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) while you were an Oregon resident. Oregon also taxes gain or distributions received (or allows losses you incurred) from Oregon sources while a nonresident. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Nonresidents. Oregon taxes your gain or distribution (or allows your loss) from Oregon sources. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Note: See “Capital loss carryover difference” under “Additions” for information about an addition to Ore­ gon income for capital losses carried over from last year’s return under certain unusual circumstances. Other gain or loss Full-year residents. Oregon taxes your gain (or allows your loss) received during the year. Part-year residents. Oregon taxes your gain (or allows your loss) while an Oregon resident. Oregon also taxes the amount from Oregon sources while a nonresident. Nonresidents. Oregon taxes your gain (or allows your loss) from Oregon sources. Global intangible low-taxed income (GILTI) This category of foreign income is included as "other income" on the federal return. It must be reported as income when it's deemed received, even if it isn't actually received by the taxpayer during the tax year. Full-year residents. This income flows through to your Oregon return. Part-year residents. Report this income in the Ore­ gon column if you were an Oregon resident on the date you received it (actual or deemed receipt) or if it’s from property employed in a business, trade, pro­ fession, or occupation carried on in Oregon while a nonresident. Nonresidents. Report this income in the Oregon col­ umn if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon. Hydroelectric dam workers [ORS 316.127(8)] Full-year residents. Oregon taxes all of your wages earned while working on the McNary, John Day, The Dalles, or Bonneville dams. Income

150-101-431 (Rev. 09-30-22) 49 Part-year residents. Oregon taxes all the income you earned during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, the wages you earned while working on any of the listed dams are exempt from Oregon tax. Mark the “Employment exception” box on your return and include only the wages you earned while working on any of the listed dams while you were an Oregon resident. Nonresidents. You are exempt from Oregon tax on wages earned while working on any of the listed dams. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. If you have any other income from Oregon sources, you must show that income in the Oregon column. Oregon withholding. To stop withholding of Ore­ gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Individual Retirement Account (IRA) distributions Full-year residents. Oregon taxes any taxable IRA distribution you received during the year and any amounts reported in federal income that you con­ verted from a traditional IRA into a Roth IRA. Part-year residents. Oregon taxes any taxable IRA distribution you received while you were an Oregon resident. Oregon also taxes income amounts from IRA conversions if you were an Oregon resident at the time of the conversion. Nonresidents. Oregon doesn’t tax any amount unless you are a nonresident domiciled in Oregon. If you are domiciled in Oregon but otherwise taxed as a non­ resident, your Oregon-source IRA will still be taxed by Oregon. See “Retirement income.“ Interest and dividend income Interest Generally, interest income is only taxed by your state of residence. It includes any interest received or cred­ ited to your account that you could withdraw and any interest you received on tax refunds. See the following exceptions: • Interest and dividends on government bonds of other states. • Interest and dividends on U.S. bonds and notes. Full-year residents. Oregon taxes the interest income you received and reported on your federal return. Part-year residents. Oregon taxes the interest income you received while you were an Oregon resident. Oregon also taxes Oregon business activity interest income received while a nonresident. Nonresidents. Oregon taxes the interest income you received on funds used for business activity in Ore­ gon. Oregon doesn’t tax interest received on install­ ment sales. Dividends Generally, dividend income is only taxed by your state of residence. Include the stock dividends you received under a public utility dividend reinvestment plan in Oregon income. Full-year residents. Oregon taxes the dividends you received during the year. Part-year residents. Oregon taxes all dividends you received while an Oregon resident that are included on your federal return. Oregon also taxes any divi­ dends passed through to you during the part of the year you were a nonresident from an S corporation or partnership that has no business activity outside Oregon. Nonresidents. Oregon taxes dividends passed through to you from an S corporation or partnership that has no business activity outside Oregon. These are divi­ dends your S corporation or partnership received on the stock of another corporation. Interstate transportation wages (Amtrak Act ) (OAR 150-316-0173) Nonresidents. Are you a nonresident of Oregon with regularly assigned duties in Oregon and at least one other state? If you meet certain qualifications (listed below), Oregon won’t tax you on these wages. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. State income tax provisions in the federal Amtrak Reauthorization and Improvement Act of 1990, Pub­ lic Law 101-322, can be found in U.S.C. Sections 11502 and 14503. These provisions, which we refer to as the “Amtrak Act,“ prohibit states and local governments from taxing compensation of certain nonresident employees who have regularly assigned duties in more than one state. If you are a federal, state, or local government employee, you may not exclude your income under these federal laws. (U.S. Postal Service employees are considered employees of the federal government.) Income

150-101-431 (Rev. 09-30-22) 50 Who qualifies? To qualify, you must work for: • An interstate railroad; or • An interstate motor carrier; or • An interstate motor private carrier. In addition, you must: • Be a nonresident of Oregon; and • Have regularly assigned duties in more than one state (that is, you perform duties in each state on a regular basis; duties you perform on an “on-call” or “as-needed” basis or on a sporadic or intermittent basis during the year aren’t considered “regularly assigned”); and • Be subject to the jurisdiction of the U.S. Secretary of Transportation; and • Not be covered under the overtime requirements of the Fair Labor Standards Act. Note: You may receive overtime payment at the dis­ cretion of your employer and be subject to the juris­ diction of the U.S. Secretary of Transportation. Refer to your employer to determine if you are subject to the jurisdiction of the U.S. Secretary of Transporta­ tion or to the Fair Labor Standards Act. You can’t be subject to both. For employees of interstate motor carriers or motor private carriers, you must meet both of the following requirements: • Perform work that directly affects the safety of a commercial motor vehicle. This means you are required by your regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be direct and hands-on, requiring you to physically move, touch, or affect the vehicle or its contents. Super­ visory, managerial, consulting, or other duties that indirectly affect the safety of a motor vehicle don’t meet the definition of “directly affects”. • Work as:

— An operator of a commercial motor vehicle;

— A mechanic;

— A freight handler; or

— Someone, other than an employer, who directly affects the safety of a motor vehicle. A commercial motor vehicle is any self-propelled or towed vehicle used on highways in interstate com­ merce to transport passengers or property if such vehicle: • Has a gross vehicle weight rating of more than 10,000 pounds; or • Is designed or used to transport passengers for compensation, except for vehicles providing taxi cab service when the vehicle has a capacity of eight or fewer passengers and isn’t operated on a regular route or between specified places; or • Is designed to transport more than 15 passengers, including the driver, and isn’t used to transport passengers for compensation; or • Is used and labeled for the transportation of haz­ ardous materials. Example 1: Adam and Natalya are married nonresi­ dents who are filing a joint federal return. Adam works for an Oregon interstate motor carrier as a commercial motor vehicle driver. He has a regular route from Idaho to Oregon, delivering products in Oregon. Because Adam is the driver of a commer­ cial motor vehicle and has regularly assigned duties in more than one state, this income is exempt from Oregon tax. Natalya is a chef at an Oregon restaurant. They must file a joint Form OR-40-N. Only Natalya’s wages are entered in the Oregon column; Adam’s wages are exempt and aren’t included in the Oregon column. Example 2: Brenda is a nonresident who works for an interstate motor carrier as a mechanic directly affect­ ing the safety of commercial motor vehicles engaged in interstate commerce. She has regular duties in a Washington terminal and an Oregon terminal. She works one day a week in Washington and four days a week in Oregon. Because Brenda directly affects the safety of a com­ mercial motor vehicle in interstate commerce and performs regularly assigned duties in two states, she is exempt from Oregon tax. It doesn’t matter that the majority of her work is performed in Oregon. Brenda must file a Form OR-40-N but she won’t include these wages in the Oregon column. Example 3: Jorge is a nonresident who works as a mechanic for an interstate motor carrier, directly affecting the safety of commercial motor vehicles engaged in interstate commerce. He regularly works in Medford but is required to be on-call some week­ ends to perform minor repair work. Several times a year he may travel to California to repair a flat tire, do minor engine work, etc. Jorge doesn’t have regularly assigned duties in more than one state. Duties that are performed on an on- call or as-needed basis aren’t considered to be regu­ larly assigned. Jorge’s wages earned in Oregon are taxable by Oregon. He must file Form OR-40-N and report his wages in the Oregon column. Example 4: Carl is a nonresident who works for an interstate motor carrier as a driver. Carl picks up a lumber delivery truck every morning in Washing­ ton and receives delivery assignments for the day. Depending on where the lumber needs to be deliv­ ered, he may not come to Oregon on a daily basis. Income

150-101-431 (Rev. 09-30-22) 51 Carl may pick up and deliver lumber only within Washington or only within Oregon. Carl drives to Oregon at least once a month. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself doesn’t know what each day’s delivery route will be until customers place orders. Although Carl may not have a regular route in Wash­ ington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have regularly assigned duties in two states, as long as all routes are assigned randomly among all drivers on a regu­ lar basis. Carl’s wages earned in Oregon are exempt from Oregon tax. Carl must file Form OR-40-N but he won’t include these wages in the Oregon column. Example 5: Ed is a nonresident who works for an Ore­ gon wholesaler as a shipping clerk. The company has one terminal in Oregon and one terminal in Washing­ ton. Ed regularly works in both terminals. Although he has regularly assigned duties in two states, Ed’s Oregon wages aren’t considered exempt within the scope of the Amtrak Act. He isn’t a driver, mechanic, or freight handler. His duties don’t directly affect the safety of a vehicle. Ed’s wages earned in Oregon are taxable by Oregon. He must file Form OR- 40-N and include this income in the Oregon column. Example 6: Frieda is a nonresident who works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occa­ sionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda doesn’t have “regularly assigned duties in more than one state” and she doesn’t work for an interstate motor carrier. Her Oregon-source wages are taxable by Oregon. Frieda must file Form OR-40-N and include this income in the Oregon column. Example 7: Butch is a nonresident who works for an Oregon-based interstate trucking carrier as a super­ visor. His regular duties within the state of Oregon include safety training. Also, Butch frequently drives to Washington to conduct safety training. Wages for performing supervisory duties don’t qual­ ify as exempt under the Amtrak Act. The employee’s duties must directly affect the safety of a commercial vehicle. Conducting safety training only indirectly affects the safety of a commercial motor vehicle. Butch’s wages are taxable by Oregon. He must file Form OR-40-N and include his wages in the Oregon column. Example 8: Connie Sue is a nonresident who works for an interstate trucking carrier at her company’s Oregon and Washington yards. She has a variety of duties, including helping load trucks. Connie Sue is allowed overtime as a result of being subject to the Fair Labor Standards Act. Because she is covered under the Fair Labor Stan­ dards Act and isn’t subject to the jurisdiction of the Secretary of Transportation, Connie Sue doesn’t qualify for the Amtrak Act exemption. Her wages are taxable by Oregon. She must file Form OR-40-N and include her wages in the Oregon column. Employer withholding If your wages are exempt from Oregon tax under the Amtrak Act, Oregon tax doesn’t have to be withheld from your pay. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer and attach an explanation of your qualifying duties. Submit a new form and expla­ nation by February 15 of each year that you’re claim­ ing the exemption. You must still file an Oregon tax return even if you claim exemption from withholding under the Amtrak Act. Like-kind exchange or involuntary conversion (ORS 316.738, 317.327) You may elect to defer gain on like-kind business or investment property not held primarily for sale that is exchanged, in the case of real property under IRC Section 1031, or involuntarily converted under IRC Section 1033. If Oregon real property is exchanged for real property in another state, or if property located in Oregon is involuntarily converted into similar prop­ erty located outside of Oregon, include Form OR-24 with your Oregon return in the year of the exchange or conversion, or submit it to us through Revenue Online. Submit the form to us each year, until you've disposed of the like-kind property, even if you don't have to file an Oregon income tax return. Download the form from our website or call us to order it. Full-year residents. Report your Oregon gain on the sale or other disposition of the acquired property when it’s reported on your federal return. Part-year residents and nonresidents. If you were an Oregon resident at the time of the exchange or invol­ untary conversion, file an Oregon return and report the Oregon portion of the gain when you report the gain on your federal return. If you were a nonresi­ dent at the time you exchanged or converted your Oregon property or you're a nonresident when the gain is reported on your federal return, you will need to file an Oregon Form OR-40-N to report the gain. Income

150-101-431 (Rev. 09-30-22) 52 Retirement income Full-year and part-year residents. Most retirement income is subject to Oregon tax when received by an Oregon resident. This is true even if you were a non­ resident when you earned the income. However, if you have federal pension income, you may subtract some or all of it from Oregon income. See “Federal pension income” in “Subtractions” for more information. For other exceptions, see “Previously taxed employee retirement plans” and “Previously taxed IRA conver­ sions” in “Subtractions.” Nonresidents. Oregon doesn’t tax your retirement income if you are a nonresident who isn’t domiciled in Oregon. If you are an Oregon nonresident who is still domiciled in Oregon, any Oregon-source retirement income is taxable by Oregon. This applies to most forms of retirement income taxed by Oregon, including public pension plans, corporate retirement plans, Keogh plans, simplified employee pensions (SEPs), and IRAs. For the definition of domicile, see “Residency.” Example: Hiro has always resided and worked in Oregon, which he thinks of as his home. He recently retired and now receives his pension and interest income from Oregon. Earlier this year, he sold his Oregon residence, bought an RV, and went to Ari­ zona, where he rents space year-round in an RV park. He intends to stay in Arizona for a year or two and then return to Oregon. Hiro hasn’t given up his Oregon driver’s license. His RV and vehicles are registered with the state of Ore­ gon. He hasn’t changed his voter registration to any other state. Hiro hasn’t shown an intent to give up Oregon as his home, and he hasn’t maintained a permanent home elsewhere. Based on these facts, Hiro's domicile is in the state of Oregon. Although Hiro may be treated as a nonresident for tax purposes on other forms of income (his interest income isn’t taxed by Oregon), because his domicile is still Oregon, his Oregon- source retirement income is taxable by Oregon. Retirement income means income from: • Qualifying employer pension and profit-sharing plans exempt from federal tax [IRC Section 401(a)]. • Annuity plans [IRC Sections 403(a) and 403(b)]. • Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]. • Simplified employee pension plans [IRC Section 408(k)]. • Individual retirement arrangements [IRC Sections 408(a) and 408(b)]. • Plans for federal, state, or local government employ­ ees [IRC Section 414(d)]. • Pay for uniformed service members under chapter 71 of Title 10 of the United States Code. • Trusts that were created before June 25, 1959 [IRC Section 501(c)(18)]. Payments received after termination of employ­ ment qualify if the payment is made under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described above. Payments received from nonqualified deferred com­ pensation plans [as described in IRC Section 3121(v) (2)(C)] qualify as retirement income if the payments are part of a series of substantially equal periodic payments made for a period of at least ten years or for the life or life expectancy of the recipient. Retirement income doesn’t include income received from: • Stock options. • Restructured stock plans. • Severance plans. Social Security and Railroad Retirement Board benefits (ORS 316.054) Oregon doesn’t tax any amount of your Social Security, Railroad Retirement Board, or railroad unemployment benefits. For information on the Railroad Retirement Board and Social Security benefits subtractions, see the related sections under “Subtractions.” State and local income tax refunds If you received a refund of income tax from another state or local government that is included in your fed­ eral income, and you deducted those taxes on a prior year’s Oregon return, include the refund in your Oregon income. This refund isn’t taxable to Oregon if you didn’t deduct the taxes on an Oregon return. See “Subtractions” for information on the Oregon income tax refund subtraction. Unemployment insurance (UI) benefits and other taxable income Full-year residents. Oregon taxes UI benefits and any other taxable income you received during the year. Part-year residents. Oregon taxes UI benefits and any other taxable income you received while an Ore­ gon resident. Oregon also taxes any UI benefits and Income

150-101-431 (Rev. 09-30-22) 53 other taxable income from Oregon sources or based on Oregon sources received while a nonresident. Nonresidents. Oregon taxes any UI benefits and any other taxable income included in federal AGI received from Oregon sources or based on Oregon sources. Wages, salaries, and other pay for work Full-year residents. Oregon taxes all of your earnings for services you performed inside and outside Oregon. Part-year residents. *Oregon taxes all of your earn­ ings while an Oregon resident. Oregon also taxes the amount you earned working in Oregon while you were a nonresident. If your Oregon wages aren’t stated separately on your W-2, compute your Oregon-source income using the formula at the end of this section. Nonresidents. *Oregon taxes the income you earned while working in Oregon. Oregon doesn’t tax any amount you earned while you were working outside Oregon. Nonresident telecommuters who work for an Oregon employer are taxed only on the income earned from work performed in Oregon, including sick pay or other benefits. *Nonresident exceptions: To see if you qualify to exclude certain income, see “Air carrier employees,“ “Interstate transportation wages (Amtrak Act),“ or “Hydroelectric dam workers“ above, or “Waterway workers“ below. If the amount you earned working in Oregon differs from the Oregon wages shown on your Form W-2, compute your Oregon-source income using the for­ mula at the end of this section. You should ask your employer to provide you with a signed explanation of the wage difference, written on company letterhead. Keep the explanation with your tax records, as we may ask for it at a later date. Important information for using this formula: When you count the number of days you actually worked in Oregon and the number of days you actually worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. Use this formula to determine total wages taxable by Oregon: Days actually worked in Oregon × Total wages = Oregon wages Total days actually worked everywhere If you only worked in Oregon, don’t use the formula above. All your earnings are taxable by Oregon, and you must report them on your Oregon return. Waterway workers (ORS 316.127) Full-year residents. Oregon taxes all the income you earned while working on a watercraft in interstate waters. Part-year residents. Oregon taxes all the income you earned while working on a watercraft in inter­ state waters during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, see the following guidelines. Nonresidents. Certain nonresident employees serv­ ing on watercraft who have regularly assigned duties in interstate navigable waters aren’t subject to Oregon income tax. To qualify you must: • Be engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. Section 7101 or licensed or authorized under the laws of the state; or • Perform regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating in navigable waters in two or more states. If you qualify, Oregon won’t tax these wages. File Form OR-40-N (or Form OR-40-P if a part-year resi­ dent) and exclude your wages from your Oregon income. Mark the “Employment exception” box on your return. See “Interstate transportation wages (Amtrak Act)” for more information. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income

150-101-431 (Rev. 09-30-22) 54 Adjustments Adjustments are deductions from your gross income. They result in “adjusted gross income,” or AGI, on your federal return. For full-year residents, these items flow through to your Oregon return. Part-year residents and nonresidents report most of these items directly on Form OR-40-P or OR-40-N. Enter the fed­ eral amount in the federal column and the Oregon amount, if any, in the Oregon column. If the item has an adjustment code, enter the federal and Oregon amounts in section A of Schedule OR-ASC-NP, then enter the totals from section A on your return. Your Oregon adjustment can’t be more than the adjust­ ment on your federal return. Alimony paid Oregon allows a deduction for alimony paid under a divorce decree or separation agreement if the deduc­ tion is allowed on your federal return. The alimony you paid must be taxable income to your former spouse. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the alimony you paid while an Oregon resident with a partial deduction for alimony paid while a nonresi­ dent if you had Oregon-source income and the deduc­ tion was allowed on your federal return. Use the for­ mula under Nonresidents to determine the nonresi­ dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for alimony you paid while a nonresident if you had Ore­ gon-source income and the deduction was allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Alimony you paid while a nonresident = Nonresident deduction Total income received while a nonresident Certain business expenses of reservists, performing artists, and fee-basis government officials [Adjustment code 002] Reservists If you were a National Guard or reserve member of the U.S. Armed Forces who traveled more than 100 miles from your home to perform services, you may be able to deduct certain business expenses you paid or incurred in connection with that service. For more information, see the instructions for federal Form 2106, Employee Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Oregon doesn’t tax the reservist income of nonresidents, so you can’t deduct expenses you incurred while you were a nonresident. You may deduct only the expenses you incurred while you were an Oregon resident. Your Oregon deduction while you were a nonresident is $0. Performing artists If you were a qualified performing artist, you may be able to deduct business expenses you paid or incurred in connection with your services in the per­ forming arts as an employee. For qualifications and other information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the expenses you paid while you were an Oregon resident, along with a partial deduction for the expenses you paid while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for these business expenses while you were a non­ resident if you had income from an Oregon source. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Performing artist employee business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Fee-basis government officials If you are a government official who is paid on a fee basis instead of wages or salary, you may be able to deduct certain business expenses you paid or incurred Adjustments

150-101-431 (Rev. 09-30-22) 55 in connection with services you performed. For more information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the expenses you paid while you were an Oregon res­ ident with a partial deduction for the expenses you paid while you were a nonresident if you had Ore­ gon-source income. Use the formula under Nonresi­ dents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the expenses you paid while you were a nonresi­ dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Official business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Educator expenses If you were an eligible educator in 2021, you can deduct up to $300 of qualified expenses you paid in 2022. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $600. For information about eligibility and qualified expenses, see the instructions for your federal return or IRS Publication 529, Miscellaneous Deductions. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the qualified educator expenses you paid while you were an Oregon resident with the expenses you paid while working in an Oregon elementary or sec­ ondary school while you were a nonresident. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for the expenses you paid while working in an Oregon ele­ mentary or secondary school. Your Oregon deduc­ tion can’t be more than the deduction allowed on your federal return. If you didn’t work in an Oregon elementary or secondary school, your Oregon deduc­ tion is $0. Health savings account (HSA) deduction [Adjustment code 003] You may be able to take this federal deduction if you made contributions to an HSA during 2022. For more information about this deduction, see the instruc­ tions for federal Form 8889 or IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the HSA contributions you made while you were an Oregon resident with a partial deduction for contributions you made while you were a non­ resident if you had Oregon-source income. Use the formula under Nonresidents to determine the non­ resident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for HSA contributions you made while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × HSA contribution made while a nonresident = Nonresident deduction Total income from all sources while a nonresident IRA or self-employed SEP and SIMPLE contributions These federal deductions are for contributions made to an IRA, SEP (simplified employee pension), SIM­ PLE (savings incentive match plan for employees), or other qualified retirement plan for yourself or, if you’re a sole proprietor or partner in a small busi­ ness, your employees. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. For more Adjustments

150-101-431 (Rev. 09-30-22) 56 information about these deductions, see these IRS publications: • Publication 590-A, Contributions to Individual Retire­ ment Arrangements (IRAs). • Publication 560, Retirement Plans for Small Business. • Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Note: If any part of your contribution deduction came from the rollover of an individual develop­ ment account (IDA), you must add back the amount already subtracted as an IDA contribution. See “Indi­ vidual development account” under “Additions” for more information. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. You may be limited in the amount of IRA or other retirement plan contributions you can deduct for Oregon. Use these formulas to figure your deduction: IRA formula. For the part of the year you were a non­ resident, use this formula to determine your Oregon deduction: Oregon compensation while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Self-employed SEPs, SIMPLEs, and other qualified plans. Use this formula to determine your Oregon deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × Contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Moving expenses (ORS 316.048) This deduction is only allowed for active-duty mem­ bers of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or their spouses, who are ordered to relocate to or within Oregon due to a permanent change in duty station (known as a PCS move), if the deduction is allowed on the federal return. See “Military personnel filing information” for more information. Penalty on early withdrawal of savings [Adjustment code 004] This federal deduction is for taxpayers who paid a penalty to a financial institution for early withdrawal of funds from a time savings account, certificate of deposit, or similar type of deposit. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction is the portion of the penalty amount you claimed on your federal return that is related to interest income that is taxed by Oregon. If the penalty isn’t related to interest income taxed by Oregon, your Oregon deduction is $0. Example: Liam claimed a deduction of $1,800 on his federal return for an early withdrawal penalty. Only 30 percent of the interest income related to this penalty is taxable by Oregon. Liam’s Oregon deduction is also limited to 30 percent of the penalty, so his deduction will be $600 ($1,800 x 0.30). Nonresidents. Because Oregon generally doesn’t tax interest income of a nonresident, your Oregon deduc­ tion is $0. Enter the full amount on the federal line on Schedule OR-ASC-NP and $0 on the Oregon line. Self-employed health insurance If you’re self-employed, you may be able to claim this federal deduction for the amount you paid for health insurance for yourself, your spouse, and your dependents. This deduction is limited to earned income from your trade or business for which the insurance plan was established. For more information about this deduc­ tion, see IRS Publication 535, Business Expenses. Adjustments

150-101-431 (Rev. 09-30-22) 57 Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is 100 percent of your health insurance premiums related to your self-employment for the part of the year you were an Oregon resident com­ bined with the health insurance premiums paid by an Oregon business from which you received self- employment income while a nonresident. Your total Oregon deduction is limited to the earnings from self-employment reported in the Oregon column. Self-employment tax If you were self-employed, you may deduct up to one-half of your self-employment tax on your federal return. For more information about this deduction, see the instructions for federal Schedule SE, Self- Employment Tax. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is the proportional amount of self-employ­ ment tax that is related to earnings taxed by Oregon. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Self-employment earnings taxed by Oregon × Federal deduction for self-employment tax = Oregon deduction Total self-employment earnings Student loan interest You may be able to take this federal deduction if you paid interest in 2022 on a qualified student loan, your filing status isn’t married filing separately, your AGI is less than the federal threshold, and you (or your spouse, if filing jointly) aren’t claimed as a dependent on someone else’s return. For more information, see the instructions for your federal return or IRS Publi­ cation 970, Tax Benefits for Education. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the student loan interest you paid while you were an Oregon resident with a partial deduction for interest you paid while you were a nonresident if you had Oregon- source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the student loan interest you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Your Oregon deduc­ tion can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 [Adjustment code 005] These deductions from federal income are included on Form 1040, Schedule 1, lines 23 through 25: • Archer MSA deduction. • Jury duty pay you gave your employer because your employer paid your salary while you served on the jury. • Deductible expenses related to income from the rental of personal property for profit. • Nontaxable amount of Olympic, Paralympic, and U.S. Olympic Committee income. • Reforestation amortization and expenses. • Repayment of supplemental unemployment ben­ efits under the Trade Act of 1974. • Contributions to Section 501(c)(18)(D) pension plans. • Contributions by certain chaplains to Section 403(b) plans. • Attorney fees and court costs for actions involv­ ing certain unlawful discrimination claims to the extent of gross income from such actions. • Attorney fees and court costs you paid in connec­ tion with an award from the IRS for helping them detect tax law violations, up to the amount of the award includible in your gross income. • Housing deduction from Form 2555. • Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). • Other write-in adjustments listed on Schedule 1, line 24z. Add together the amounts from Schedule 1, lines 23 and 25. Full-year residents. These adjustments flow through to your Oregon return via your federal AGI. Don’t claim any additional deductions on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the amount of any adjustment(s) you incurred while you were an Oregon resident with any adjust­ ment that is deductible from Oregon-source income Adjustments

150-101-431 (Rev. 09-30-22) 58 while you were a nonresident. Combine these amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduc­ tions allowed on your federal return. Nonresidents. Oregon allows a deduction for adjust­ ments that are deductible from Oregon-source income. Your Oregon deduction can’t be more than the deduc­ tions allowed on your federal return. If none of your adjustments are deductible from Oregon-source income, your Oregon deduction is $0. Adjustments

150-101-431 (Rev. 09-30-22) 59 Additions Generally, additions are items the federal govern­ ment doesn’t tax but Oregon does. Additions increase your income taxed by Oregon. Numeric codes are provided with the explanation for most additions. A modification code is provided if an addition must be reported as a “negative modifica­ tion” by a part-year resident or nonresident. Enter the numeric code and the dollar amount of each addition or modification on Schedule OR-ASC or OR-ASC- NP. Your total additions and modifications are then reported on your return. If a numeric code isn’t provided for an addition or modification, the amount is reported directly on your return. Itemized deduction add backs. The items listed below are related to itemized deductions. If you’re claiming any of these as itemized deductions on Schedule OR-A, you may have to report an addition on Schedule OR-ASC or a negative modification on Schedule OR-ASC-NP. • Child Care Fund deduction carryovers. • Claim of right income repayments. • College Opportunity Grant contributions. • Donations to disqualified charitable organizations. • Federal estate tax on income in respect of a decedent. • Gambling losses related to tax-exempt lottery winnings. • Oregon IDA Initiative Fund donations. • Oregon Production Investment Fund contributions. • University Venture Development Fund contributions. • Medical expenses claimed for the WFHDC credit. Fiduciary additions. If the instructions for reporting an addition on a fiduciary return are different from the instructions for reporting an addition on a per­ sonal income tax return, they are noted within each section. Accumulation distribution from certain domestic trusts (ORS 316.737) [Addition code 132] If you used federal Form 4970 to figure the partial tax on a distribution of accumulated income from a domestic trust created before March 1, 1984, contact us or email the Fiduciary Unit at estate.help.dor@dor. oregon.gov for information about this addition. ABLE account subtraction nonqualified withdrawal [ORS 316.680(2)(k)] [Addition code 164] Did you withdraw funds from an Oregon ABLE account for a purpose other than paying for quali­ fied disability expenses? If the withdrawn funds were from contributions previously subtracted on your Ore­ gon return, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. Qualified disability expenses are defined in IRC Sec­ tion 529A. For more information about Oregon ABLE accounts and examples of qualified withdrawals, see “ABLE account contributions” in “Refundable credits.“ Capital loss carryover difference [Addition code 162] This addition affects few taxpayers. You'll have an addition on your Oregon return only if you're carry­ ing over a capital loss from last year’s return and last year’s federal AGI was within the limits in Table 8. If so, use the Capital loss carryover difference work­ sheet in the Appendix to calculate your addition. Table 8. Capital loss carryover difference If line 11 on your 2021 Form 1040 was less than line 12, and— you filed: and: was more than: Form OR-40 Line 7 Line 14 plus line 18 minus the larger of line 8 or Form 1040, line 7*. Form OR-40-P Line 29S Line 33S plus (line 42 times line 35) minus the larger of lines 13S* or 30S. Form OR-40-N Line 29S Line 33S plus line 44 minus the larger of lines 13S* or 30S. you may have an addition on your 2022 Oregon return. * As a positive amount. Child Care Fund contributions (ORS 315.213) [Addition code 142] [Modification code 642] The credit for contributions to the Child Care Fund was last awarded for tax years beginning before January 1, 2022. If you carried over a deduction on Schedule OR-A for any amount you paid for a Child Care Fund contribution tax credit, you will have an Additions

150-101-431 (Rev. 09-30-22) 60 Oregon addition for the portion of your carryover deduction included in your credit. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Claim of right income repayments [ORS 316.680(2)(i)] [Addition code 103] [Modification code 649] Are you taking a deduction on your federal return under IRC Section 1341(a) for a repayment of more than $3,000 of income that was included in a prior year’s taxable income under a claim of right? If so, and you’re claiming the Oregon credit for the same repayment, you can’t deduct the repayment on your Oregon return. If you claimed the repayment deduction on Sched­ ule OR-A, you must add back the itemized deduc­ tion amount. Use addition code 103 or report a nega­ tive modification using code 649. If you claimed the repayment deduction on a federal form or schedule other than Schedule A, you must add back the deduc­ tion as an addition on Schedule OR-ASC, section A or Schedule OR-ASC-NP, section C. See the instructions for Worksheet OR-CRC, Claim of Right Income Repayments, for more information. You can download the worksheet and instructions from our website or contact us to order it. Note: If you’re claiming a deduction on your federal return for repaid income that wasn’t taxed by Ore­ gon, see “Federal law disconnect” in “Other items.” Fiduciary addition. If the repayment is allowed as a deduction on Form 1041 and the Oregon credit is claimed on Form OR-41, report the deducted amount as an addition on Schedule OR-ASC-FID. College Opportunity Grant Fund contributions (ORS 315.643) [Addition code 165] [Modification code 652] If you claimed an itemized deduction on Sched­ ule OR-A for the amount you paid for your College Opportunity Grant tax credit, and you are claiming the credit on your return, you will have an Oregon addition for the amount of your deduction. Example: John bid on $4,000 worth of College Oppor­ tunity Grant credits during this year’s auction. He won all the credits that he bid on and paid $3,950 for them. On his Oregon return, John claims the $4,000 credit, and includes the same amount as an itemized deduction on Schedule OR-A. He must add back that amount to his income. He reports both the addition and the credit on Schedule OR-ASC. For more information on the College Opportunity Grant credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Depletion in excess of property basis [ORS 316.680(2)(d)] [Addition code 151] Depletion is using up natural resources by mining, quarrying, drilling, or felling. The depletion deduc­ tion allows an owner or operator to account for the reduction of a product’s reserves. If you claim percentage depletion on your federal return, you must add to your Oregon income any deple­ tion that is more than your adjusted basis in the prop­ erty. The addition includes any depletion in excess of basis taken by an S corporation or partnership of which you are a shareholder or partner. Usually you need to add to Oregon income any depletion that is a preference item subject to the federal alternative minimum tax. Disposition of inherited Oregon farmland or forestland (ORS 316.844) [Addition code 106] You may have an addition on your return if: • You dispose of farmland you inherited from some­ one who died on or after October 5, 1973, and before January 1, 1987; or • You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987. You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax pur­ poses. Generally, the federal valuation is the fair mar­ ket value of the property at the date of the previous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheritance tax purposes the property may have been valued as farm-use or forestland. Farm-use value. If the previous owner died on or after October 5, 1973, but before September 13, 1975, use the farm-use value for the year preceding death. If death occurred on or after September 13, 1975, use the Additions

150-101-431 (Rev. 09-30-22) 61 farm-use value for the year of death. You won’t have this addition if the carryover basis was elected for a death after December 31, 1976, but before November 7, 1978. Forest-use value. Use the forest-use value for the year of death. How to figure the addition. This addition is equal to the difference between: • The taxable gain or loss, using the Oregon valua­ tion as your basis, and • The taxable gain or loss, using the federal valuation as your basis. This addition will increase the gain or reduce the loss you reported on your federal return. Transfers of property. An addition is required when the beneficiary sells the inherited property. It’s also required when: • You recognize gain or loss on property that acquired the inherited property’s basis due to a nontaxable exchange or involuntary conversion. • You recognize gain or loss on property you received as a gift from a donor who inherited it. Example: Anne inherited farmland from a relative who died on March 1, 1986. She sold the land in 2022 for $1,100,000. The fair market value at the date of the relative’s death was $180,000. The farm-use value of the land on the 1986–87 property tax statement was $50,000. Anne must show a $130,000 addition on Schedule OR-ASC. Here is how she figures her addition: Oregon valuation: Selling price $ 1,100,000 Less: Farm-use value – 50,000 Gain

$ 1,050,000 Federal valuation: Selling price $ 1,100,000 Less: Fair market value

on March 1, 1986 – 180,000 Gain

– 920,000 Difference in total gain

Addition amount

$ 130,000 Disqualified charitable donations (ORS 128.760, 128.763) [Addition code 160] [Modification code 650] The Oregon Department of Justice (DOJ) issues dis­ qualification orders to charitable organizations that fail to spend at least 30 percent of their annual functional expenses for program services. Names of disqualified organizations can be found by contacting DOJ. For more information, visit the DOJ website, www.doj.state. or.us. The organization is required to notify you that your donation may not be deducted on your Oregon return. If you made such a donation, you must report an addition on Schedule OR-ASC for the amount of the donation that you deducted on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Federal business income deduction (ORS 316.859) [Schedule OR-ASC-FID only: Addition code 185] Oregon is disconnected from the federal deduction for qualified business income in IRC Section 199A. Personal income tax returns. This deduction doesn’t flow through to the Oregon return. No addition is required. Fiduciary returns. Report the amount from federal Form 1041, line 20, as an addition on Schedule OR- ASC-FID using code 185. See “Qualified business income reduced tax rate” in “Oregon tax” for information about Oregon’s reduced tax rate for sole proprietorships and pass-through entities. Federal election on interest and dividends of a minor child (ORS 316.372) [Addition code 107] Did you use federal Form 8814, Parents’ Election to Report Child’s Interest and Dividends, to report the interest or dividends of your minor child on your federal return? If so, you must add the amount sub­ ject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or local government that you didn’t include as income on your federal return. Full-year residents. Oregon taxes the smaller of line 13 or 14 from Form 8814. Oregon also taxes any inter­ est or dividends your child received from state and local governments outside Oregon. Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident. Nonresidents. Oregon generally doesn’t tax interest or dividends received while you were a nonresident. Additions

150-101-431 (Rev. 09-30-22) 62 Federal estate tax [ORS 316.680(2)(c)] [Addition code 157] [Modification code 605] Federal estate tax on income in respect of a decedent (IRD) is allowed as a deduction on your federal return. If any of this tax is on income not taxed by Oregon, you must show an addition on your Oregon return. Use this formula to figure the Oregon addition: IRD not taxable by Oregon × Federal estate tax deducted on the federal return = Oregon addition IRD included in federal taxable income Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Fiduciary returns. Federal estate tax on IRD is allowed as a deduction on federal Form 1041 when the tax on that income will be paid by the recipient. An addition is required if the deducted tax is on income not taxed by Oregon. See the instructions for Form OR-41, Schedule 2, line 16. Federal income tax refunds (ORS 316.685) [Addition code 109] [Modification code 601] Did you get a federal tax refund because of a federal audit or amended return? If so, you may need to add part or all of that refund to your Oregon income. An explanation of the federal income tax liability sub­ traction can be found in “Subtractions.” Tax benefit doctrine. You need to add back only refunds of federal tax for which you received a ben­ efit in a prior year. Example 1: Rosa subtracted her entire federal tax liability of $2,800 on her 2020 Oregon return. In 2022, she amended her 2020 federal return. Rosa reduced her federal tax to $2,300 and received a federal refund of $500. She received a $500 tax benefit because she subtracted $500 more on her 2020 Oregon return than her corrected federal tax liability. Rosa will have an addition of $500 on her 2022 return. When to report the refund. As a general rule, report the refund in the year you get it. The rules for fig­ uring the addition are explained here, but first, note these exceptions: Exception 1 If there is an error on your federal return, we may correct your federal tax liability when your Oregon return is pro­ cessed. This may decrease your federal tax subtraction. When the IRS later refunds the difference between your correct federal liability and the liability on your original return, don’t report the refund as an addition. Because the tax subtraction on your original Oregon return was corrected, you didn’t receive a tax benefit from the total federal tax subtracted on your original return. Example 2: The Jacksons showed a $3,700 federal tax lia­ bility on their federal return. They claimed a federal tax subtraction for that same amount on their Oregon return. When their Oregon return was processed, we discov­ ered a math error on their federal return. We figured the Jacksons’ correct federal tax as $2,400 and reduced their Oregon federal tax subtraction to that amount. The Jack­ sons received the IRS refund of $1,300. They won’t report the refund as an addition on their current year Oregon return because they didn’t receive a tax benefit for it. Exception 2 If you file an amended return before the filing due date for that tax year, your amended return is treated as your original return for that year. In this case, the federal tax subtraction is corrected to reflect the fed­ eral income tax liability on your amended return. Example 3: Heather filed this year's federal and Oregon returns in February. Her federal tax liability was $4,800, which she subtracted in full on her Oregon return. In March, she amended her federal return to claim addi­ tional deductions. She refigured her federal tax as $3,000. She also amended her Oregon return to claim the same additional deductions and reduce her federal tax subtrac­ tion by $1,800 (from $4,800 to $3,000). The $1,800 federal refund she receives won’t be reported as income on her Oregon return. Because Heather filed the amended Ore­ gon return before the original due date, her amended return is treated as her original return this year. Figuring the addition You must report as an addition the amount of the fed­ eral refund from which you received a tax benefit. The tax benefit is the amount of federal tax you deducted in a prior year and received as a refund in a later year, if the amount you received reduced your Oregon tax­ able income in the prior year. Use the limit that applied to your federal tax liability subtraction for the prior year. The maximum allow­ able subtraction amount for the past few years can be found on the last page of this publication. See “Fed­ eral income tax liability” and Table 9 in “Subtrac­ tions” for more information about annual limits. Use this worksheet to figure your tax benefit. 1. Original federal tax liability from the prior year, up to annual limit. 1._________ 2. Corrected federal tax liability from the prior year, up to annual limit. 2. ________ 3. Line 1 minus line 2. This is the tax benefit you received from your refund. 3. ________ Additions

150-101-431 (Rev. 09-30-22) 63 Example 4: Jill’s 2020 federal tax liability was $9,000. Her subtraction was limited to $6,950, which she subtracted on her Oregon return. Jill amended her 2020 federal return and received a refund of $4,000 in 2022. The addi­ tion on Jill’s 2021 return will be $1,950, figured as follows: 1. Federal tax subtracted on Jill’s 2020 Oregon return (limit $6,950). $ 6,950 2. Less: Corrected federal tax ($9,000 – $4,000) (limit $6,950). -5,000 3. Tax benefit received and Jill’s Oregon addition. $ 1,950 Example 5: Ella’s 2019 original federal tax liability was $8,200. She amended her 2019 federal return and part- year Oregon return in January 2022. She received a $1,000 federal refund in 2022. Ella doesn’t change the federal tax amount on her amended Oregon return. Her 2019 corrected federal tax is $7,200. Because Ella’s cor­ rected federal tax is still more than the $6,800 maximum subtraction she claimed on her Oregon return, she didn’t receive a tax benefit from the federal refund. Ella doesn’t have an addition to report on her 2022 Oregon return. Nonresidents. A nonresident’s tax benefit from federal tax refunds is the difference between the tax actually subtracted on the prior year’s return and the tax that would have been subtracted had the federal return been correct. If the amounts on your federal return changed because you amended your federal return or because it was audited, your Oregon percentage may also change. Use the corrected percentage to figure the tax benefit. Example 6: Brokston was a nonresident with Oregon- source income in 2020. His original federal tax was $8,600. His Oregon percentage was 40 percent. In March 2022, he amended his 2020 federal and Oregon returns. Brokston doesn’t change the federal tax amount on his amended Oregon return. He received a $4,500 federal refund in 2022. His revised Oregon percentage for 2020 was 50 percent. He received a tax benefit of $730 from the refund. He figures his tax benefit as follows: 1. Original federal tax liability (limit $6,950) $ 6,950 × original Oregon percentage. × 0.40

$ 2,780 2. Less: Corrected federal tax ($8,600 - $4,500) (limit $6,950) $ 4,100 × revised Oregon percentage. × 0.50

– 2,050 3. Tax benefit received and Brokston’s Oregon addition. $ 730 Full-year residents. Enter the tax benefit as an addition on Schedule OR-ASC, section A, using addition code 109. Part-year residents and nonresidents. Use a minus sign to enter the tax benefit as a negative modifica­ tion on Schedule OR-ASC-NP, section D, using modi­ fication code 601. Federal subsidies for employer prescription drug plans (ORS 316.837) [Addition code 123] Employers who provide a prescription drug plan for their retired employees may receive a federal subsidy if they meet the requirements in 42 U.S.C. Section 1395w- 132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return. Full-year residents. Enter the full amount of the sub­ sidy on Schedule OR-ASC. Part-year residents and nonresidents. Enter the full amount of the subsidy on the federal line on Schedule OR-ASC-NP. On the Oregon line, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. First-time home buyer savings account nonqualified withdrawal (ORS 316.801, OAR 150-316-0607) [Addition code 166] Funds that are withdrawn from a first-time home buyer savings account (FTHBSA) but aren’t used to pay eligible costs must be added back to Oregon income if: • The withdrawn funds were previously subtracted on an Oregon return, and • The funds weren’t redeposited within 60 days into another FTHBSA held by the taxpayer. For more information about the FTHBSA subtraction, eligible costs, and other requirements, see this topic in “Subtractions.” Penalty. Nonqualified withdrawals that require an add back are also subject to a 5 percent penalty. See this topic in “Interest and penalties” and in the return instructions. Gambling losses claimed as an itemized deduction (ORS 461.560) [Addition code 134] [Modification code 604] If you claimed gambling losses as an itemized deduc­ tion on Schedule OR-A, you may have an addition on your Oregon return. Your gambling losses are limited to the amount of your gambling winnings taxed by Oregon. Additions

150-101-431 (Rev. 09-30-22) 64 Oregon doesn’t tax Oregon Lottery winnings of $600 or less from a single ticket or play. See “Oregon lottery winnings“ under “Subtractions” for more information. Example 1: Angela reported total gambling income of $580 on her federal return ($500 from the Oregon Lottery plus $80 from horse races). On Schedule OR-A, Angela deducted $300 of gambling losses. Angela will subtract $500 in Oregon Lottery winnings from her Oregon income. Her net gambling winnings, taxable by Oregon, are reduced to $80. Because Angela may not claim more in gambling losses than her gambling winnings taxable by Oregon, she can’t claim more than $80 in gambling losses on her Oregon return. She is required to reduce her deduction for gambling losses from $300 to $80. The difference of $220 is an Oregon addition. Gambling winnings reported in federal AGI $ 580 Less subtraction for Oregon Lottery winnings (500 ) Net gambling winnings taxable by Oregon $ 80 Gambling losses claimed on Schedule OR-A $ 300 Net gambling winnings included in Oregon income -80 Reduction in gambling losses— Oregon addition $ 220 Example 2: Satish won $100 from playing video poker and $400 from Oregon lottery tickets. He included all $500 in gambling winnings on his federal return, and he’s deducting $300 in gambling losses on Schedule OR-A. Satish is subtracting the $400 in lottery win­ nings on his Oregon return because they’re exempt from Oregon tax. Because only $100 of his gambling winnings are taxed by Oregon, Satish must add back $200 ($300 - $100) of the gambling losses he’s deduct­ ing on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Income taxes paid to another state by a pass-through entity (ORS 316.082) [Addition code 148] If you’re an owner of a PTE with income that is taxed by more than one state, report an addition if: • The PTE paid tax to another state on your behalf on income that is also taxed by Oregon; • You’re claiming a credit for tax the PTE paid to the other state on your behalf; and • The PTE deducted the tax paid on your behalf on its own return. The amount of your addition is the lesser of the tax that was paid or deducted by the PTE on its return. Note: See the instructions for fiduciary returns at the end of this section if a credit is claimed on Form OR-41. Example 1: Chad owns 5 percent of West Group, LLP, a limited partnership doing business in Utah. The LLP paid or withheld $10,000 of Utah income tax on Chad’s behalf in 2022 and deducted that amount on the LLP’s 2022 federal return. Chad filed his own Utah nonresident return for 2022. His Utah tax liabil­ ity was $9,000. He’ll receive a $1,000 refund in 2023. On his 2022 Oregon return, Chad calculates his 2022 credit based on his $9,000 Utah tax liability. The income from the LLP that flowed through to Chad’s return was reduced by the amount of tax that the LLP paid and deducted. For this reason, Chad must add the lesser of the tax paid ($10,000) or deducted ($9,000) to his income. Chad adds $9,000 to his income on Schedule OR-ASC. Example 2: Susan owns 50 percent of Painter, Inc., an Oregon S corporation. Painter, Inc. pays California income tax. It deducts the tax on its corporate return. It paid California $30,000 of 2022 tax for her in 2022, and $10,000 of 2022 tax in January 2023. The corporation paid $2,000 of tax for her with its 2022 tax return filed in 2023. Susan elects to be included in the group nonresident return that Painter, Inc. files with California. She calcu­ lates her credit for 2022 using $42,000: $30,000 in pay­ ments made in 2022, and the $12,000 in 2022 tax paid in 2023. She claims the full credit on her 2022 return. Because Painter, Inc. is deducting the tax on its own return, Susan must add the lesser of the total tax paid or deducted to her income. This is true whether Susan’s share of the tax was paid when the composite return was filed or was paid or withheld by Painter, Inc. during the tax year. For 2022, she adds $30,000 to her Oregon income on Schedule OR-ASC. She'll add the remaining $12,000 to her Oregon taxable income on her 2023 return. Credit claimed on fiduciary return. If a credit is claimed on Form OR-41 for income taxes paid to another state, and the taxes on which the credit is based are deducted on federal Form 1041, line 11, the taxes must be restored to income on the Oregon return. Report the smaller of the other state’s 2022 tax liability or the tax claimed as a deduction on Form 1041 as an addition on Schedule OR- ASC-FID, section 1. For more information and exam­ ples, see the instructions for Schedule OR-ASC-FID. Individual development account (IDA) (ORS 315.271, 316.848) [Addition code 137, 138, or 159] [Modification code 648] For more information about IDAs, see this topic under "Subtractions." Donation credit. If you’re claiming an itemized deduc­ tion for donations you made to the Oregon IDA Initiative Additions

150-101-431 (Rev. 09-30-22) 65 Fund and you’re claiming a credit based on those dona­ tions, you must report the amount you’re deducting as an addition on Schedule OR-ASC using addition code 138 or as a negative modification on Schedule OR-ASC- NP using modification code 648. Nonqualified withdrawal. Did you make a nonquali­ fied withdrawal from your IDA during the year? If so, you must report the amount as an addition on Sched­ ule OR-ASC or OR-ASC-NP. Use addition code 137. Rollover to retirement account. Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP. Use addition code 159. Interest and dividends on government bonds of other states [ORS 316.680 (2)(a)] [Addition code 158] Full-year residents. Oregon taxes interest and divi­ dends on bonds and notes of another state or political subdivision of another state that you didn’t include on your federal return. This income is an addition using Schedule OR-ASC. Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC. See “Federal election on interest and dividends of a minor child.” Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the inter­ est and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident. Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation. Fiduciary returns. Report the addition on Form OR-41, Schedule 2, line 14. No addition code is needed. Related expenses You may reduce your addition by the amount of investment expenses that: • Aren’t deducted elsewhere on your return, and • Could be deducted if the income were included on your federal return. Other federally-exempt obligations You will have an Oregon addition for interest or dividends on obligations of any authority, commis­ sion, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax [ORS 316.680(2)(b)]. Oregon doesn’t tax interest or dividends on obliga­ tions that states can’t tax under federal law. Examples of such obligations are bonds issued by: • Territory of Guam. • Commonwealth of Puerto Rico. • Territory of Puerto Rico. • Territory of Samoa. • Territory of Virgin Islands. Lump-sum distribution from a qualified retirement plan (ORS 316.737) [Addition code 139] Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution wasn't included in your federal AGI. The excluded portion of your distribution must be included as an addition to your Oregon income. Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options, you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R. Example 1: Gary got a $20,000 lump-sum distribution from his employer. Of this, $12,000 was capital gain income, and $8,000 was ordinary income. Using federal Form 4972, he chose to use the 10-year averaging method only on the $8,000 of ordinary income. He chose the 20 percent capital gain election on the $12,000 capital gain income. Gary will add all of his $20,000 lump-sum dis­ tribution to his Oregon income on Schedule OR-ASC. Election to treat the entire distribution as ordinary income and average it. Did you average all of your lump-sum distribution (ordinary income and capital gain portions) on federal Form 4972? If so, you will have an addition for the entire lump-sum distribu­ tion to report on Schedule OR-ASC or OR-ASC-NP. Example 2: John received a $40,000 lump-sum distribu­ tion from his employer; $30,000 was capital gain income and $10,000 was ordinary income. He chose to average the entire distribution of $40,000 as ordinary income on his federal Form 4972. John will add all of his $40,000 lump-sum distribution to his Oregon income. Additions

150-101-431 (Rev. 09-30-22) 66 Election not to average any of your lump-sum distri­ bution. Did you choose not to average any of your lump-sum distribution? If you included it in federal AGI, there is no addition on your Oregon return. Nonresident capital losses and loss carryovers (OAR 150-316-0006) [Addition code 161] Capital losses and losses carried over from prior years may be claimed on an Oregon return only if: • The capital loss was incurred while you were an Oregon resident; or • If you were a nonresident when the capital loss was incurred, the loss was attributable to Oregon sources. If you have a capital loss or are carrying over a loss from a prior year on this year’s return (or are using the loss to offset capital gain), and the loss doesn’t meet these requirements, you will have an addition on your Oregon return. Full-year residents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to offset capital gain on your return, report the loss amount as an addition on Schedule OR-ASC. Part-year residents and nonresidents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to reduce Oregon capital gain on your return, report the loss amount to the extent that it reduces the Oregon gain as an addition on Sched­ ule OR-ASC-NP. Example 1: Louise moved to Oregon and became a resident on June 1. Before she became a resident, Louise incurred a $50,000 capital loss from non-Oregon sources. After she became a resident, Louise recognized a capi­ tal gain of $70,000. On her federal return, she’s offsetting the $70,000 gain with the $50,000 loss, for a net gain of $20,000. Because she wasn’t a resident when she incurred the loss, and the loss wasn’t from Oregon sources, Louise must report a $50,000 addition on Schedule OR-ASC-NP. Example 2: Eric is a Missouri resident who recognizes a $25,000 capital gain from Oregon sources. On his fed­ eral return, Eric offsets the capital gain with $10,000 in capital losses from Missouri sources, for a net gain of $15,000. He reports the $15,000 capital gain in the Ore­ gon column on his nonresident return. Eric must report the $10,000 loss as an addition on Schedule OR-ASC-NP. Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal [ORS 316.680(2)(j)] [Addition code 117] Did you withdraw funds from an Oregon College or MFS 529 Savings Plan account for nonqualified pur­ poses, where the funds were subtracted on a prior year’s Oregon return? Nonqualified purposes include using funds in the account to pay tuition at a K-12 school. If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Sec­ tion 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reasonable method to determine the amount of the addition. Keep a copy of this determina­ tion with your tax records. For more information about these plans see this topic under “Refundable credits.” Oregon Production Investment Fund contributions (ORS 315.514) [Addition code 144] [Modification code 644] If you claimed an itemized deduction on Sched­ ule OR-A or a business expense deduction for the amount you or your business paid for your Oregon Production Investment Fund tax credit, you will have an addition for the amount of your deduction. Example: Beth bid on $2,000 worth of Oregon Produc­ tion Investment Fund credits during this year’s auc­ tion. She won all the credits she bid on and paid $1,900 for them. On her Oregon return Beth will claim an Oregon Production Investment Fund credit of $2,000. If she claims the $1,900 she paid for the credits as an itemized deduction on Schedule OR-A, she must add back that amount to her income. She reports both the credit and the addition on Schedule OR-ASC. For more information on the Oregon Production Investment Fund, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Passive foreign investment company income (ORS 316.737) [Addition code 140] You must add income from a passive foreign invest­ ment company (PFIC) that consists of excess distri­ butions that you received during the year but didn’t include in your gross income under IRC Section 1291. Your addition amount is the income from all PFICs Additions

150-101-431 (Rev. 09-30-22) 67 that you used in the calculation of the increased tax entered on federal Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Com­ pany or Qualified Electing Fund, line 16c. PTE-E tax deducted on entity-level federal return (2022 Or Laws, ch. 82, § 3) [Addition code 167] Certain PTEs may elect to pay Oregon income tax at the entity level (PTE-E tax). If you’re a member of an entity that elected to pay the PTE-E tax, you must report an addition for your share of the tax deducted by the electing entity on an entity-level federal return. The electing entity must send you Schedule OR- 21-K-1, Distributive Share of Proceeds, Addition, and Credit, to report your share of the PTE-E tax deducted on the entity’s federal return. Your addition amount can be found on Schedule OR-21-K-1, line 2. Are you a member of more than one electing entity? If so, your addition amount is the sum of all your shares of PTE-E tax deducted on those entities’ federal returns. Report the addition on your return for the same year that you report your income from each electing entity. Treatment for qualified business income reduced tax rate. If you’re using the qualified business income reduced tax rate to figure your tax, you may include the addition amount in your qualified busi­ ness income to the extent that the ordinary business income passed through from the electing entity qual­ ifies for the reduced tax rate. See “Qualified business income reduced tax rate” in “Oregon tax” for more information. Refundable tax credit. You may claim a refundable tax credit for the taxes paid by an electing entity. See “Pass-through entity elective taxes paid” in “Refund­ able credits.” For more information about the PTE-E tax, see “Pass- through entity elective tax” in “Oregon tax.” Refund of Oregon-only itemized deductions from a prior year [Addition code 136] You may have an addition if you: • Claimed itemized deductions for Oregon but not for federal on a previous year’s return; • Received a refund this year of an item you deducted on the previous year’s Schedule OR-A; and • Don’t have to include the refund as income on this year’s federal return because you didn’t itemize deductions on the previous year’s federal return. You must add back the refunded item only to the extent that you received a tax benefit from the amount refunded. For an explanation of tax benefit with examples, see “Tax benefit doctrine” under “Federal income tax refunds.” Part-year residents and nonresidents. Enter the addi­ tion amount on both the federal and Oregon lines on Schedule OR-ASC-NP, Section C. University Venture Development Fund contributions (ORS 315.640) [Addition code 146] [Modification code 646] If you claimed a deduction on Schedule OR-A for the amount of your University Venture Development Fund contribution, you will have an Oregon addition for the amount of your deduction. Example: Amelia made a contribution to a Univer­ sity Venture Development Fund in the amount of $100,000. She may claim a total credit of 60% of her contribution, or $60,000, limited to her tax liabil­ ity for the year. This year, Amelia’s tax liability is $23,000. On her Oregon return she will claim a credit of $23,000 for her contribution. The rest of her credit is carried forward to a later year. If Amelia claims the $100,000 contribution as an itemized deduction on Schedule OR-A, she must add back the $100,000 to her income on Schedule OR-ASC in the tax year the itemized deduction was claimed. For more information on the University Venture Development Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Unused business credits [ORS 316.680(2)(f)] [Addition code 122] Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon doesn’t allow this deduction. Full-year residents. You must report your federal UBC deduction as an Oregon addition. Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident. Nonresidents. You will have an addition for your fed­ eral UBC deduction related to Oregon credits earned from Oregon sources. Additions

150-101-431 (Rev. 09-30-22) 68 WFHDC medical expenses [Addition code 163] [Modification code 651] Some expenses for the care of qualifying persons who aren’t able to care for themselves may qualify as expenses for purposes of claiming the WFHDC credit and also as medical expenses for purposes of claiming itemized deductions. You can use these expenses for either the WFHDC credit or as a medical expense deduc­ tion, but they can’t be used for both. If you choose to use them for both, you’ll have an addition on your Oregon return. Use the WFHDC medical expense worksheet in the Appendix to figure the Oregon addition. Full-year residents. Report any required add back amount on Schedule OR-ASC. Part-year residents and nonresidents. Use a minus sign to report any required add back amount as a negative modification on Schedule OR-ASC-NP. For more information about the WFHDC credit, see this topic under “Refundable credits” or Schedule OR-WFHDC Instructions, Oregon Working Family Household and Dependent Care Credit. Additions

150-101-431 (Rev. 09-30-22) 69 Subtractions Generally, subtractions are items the federal govern­ ment taxes but Oregon doesn’t. Subtractions reduce your income taxed by Oregon. Numeric codes are provided with the explanation for most subtractions. For part-year residents and nonresidents, some subtractions will be reported as modifications. This is required when an amount you are subtracting must be adjusted for Oregon tax pur­ poses. When this is the case, a modification code is provided with the explanation for that subtraction. Enter the numeric code and the dollar amount of each subtraction or modification on Schedule OR-ASC or Schedule OR-ASC-NP. The total dollar amount of subtractions and modifications is then reported on your return. If a numeric code isn’t provided for a subtraction or modification, the amount is reported directly on your return. ABLE account deposit carryforward (ORS 316.699) [Subtraction code 360] Contributions you made to an Oregon or contract­ ing state’s ABLE account after December 31, 2019 no longer qualify for a subtraction, but they may qual­ ify for a credit. See “ABLE account contributions” in “Refundable credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2022 return is $5,185 if you file a joint return ($2,590 for all others). This maximum applies to the com­ bined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Addition. You may need to add back funds with­ drawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. See this topic under “Additions” for more information. American Indian (ORS 316.777) [Subtraction code 300] Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true: • You are an enrolled member of a federally recog­ nized American Indian tribe, and • Your income is derived from sources within feder­ ally recognized Indian country in Oregon, and • You lived in federally recognized Indian country in Oregon at the time the income is earned. “Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the U.S. government for a tribe. For enrolled members of federally recognized Ameri­ can Indian tribes who live in Indian country in Ore­ gon, income exempt from Oregon income tax includes: • Wages earned for work performed in Indian coun­ try in Oregon. • Income from business or real estate located in Indian country in Oregon. • Retirement income if the contributions to the plan came from or were connected with services per­ formed in Indian country. • Unemployment insurance benefits if the benefits were received as a result of work performed in Indian country. • Interest, dividends, and capital gains from the sale of stocks and other intangibles, regardless of where the accounts are located. • Gambling winnings from Indian gaming centers (casinos). • Indian tribal disbursements from casino earnings. You must live on and have income derived from sources within Indian country in Oregon and be an enrolled member of a federally recognized tribe to subtract the income listed above. You don’t have to live in and have income from the same Indian coun­ try. The areas where you live and derive income must both be Indian country to qualify for the subtraction. To claim the subtraction, you must report your total income on both your federal and Oregon tax returns. Keep a completed copy of Schedule OR-EIS, Exempt Income Schedule for Enrolled Members of a Federally Rec­ ognized Indian Tribe, with your tax records. We may ask for it later. Go to our website to download the schedule or call us. You must include the following information on the schedule: • The street address of the place you worked, • The street address of the place you lived, and • The tribe you are enrolled with and your member­ ship number. Subtractions

150-101-431 (Rev. 09-30-22) 70 You must use the street address of your residence on the schedule so we can verify that you lived in Indian coun­ try when you earned your income. However, you may use your post office box address on your tax return. If you meet all of the requirements for exemption from Oregon withholding, use Form OR-W-4 to declare that your income is exempt using the appro­ priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income earned in Oregon but outside of Indian coun­ try will be taxed by Oregon. Also, any Oregon income earned by a member not living in Indian country will be taxed by Oregon. Each member of a household with income must meet these qualifications in order to claim the subtraction of their income. If you are an enrolled member of a federally recog­ nized tribe and a member of the U.S. Armed Forces stationed in Oregon, you may be entitled to an addi­ tional subtraction. For more information, see “Mili­ tary personnel filing information.” AmeriCorps educational award ORS 316.847 [Subtraction code 362] Were you an AmeriCorps volunteer? If you received a national service, summer of service, or silver scholar educational award from the federal Corporation for National and Community Service this year, you may subtract the award amount to the extent that it is included in your federal taxable income. The amount you are awarded under 42 U.S.C. Section 12602 must be received after your required term of service is com­ pleted. You can’t subtract any amount that you are deducting elsewhere on your return. Artist’s charitable contribution (ORS 316.838) [Subtraction code 301] [Modification code 600] Oregon allows a subtraction to artists who contribute art objects they’ve created to a recognized charitable organization or governmental unit. What qualifies as an “art object?” The art object must be a painting, sculpture, photo­ graph, graphic or craft art, industrial design, costume or fashion design, tape or sound recording, or film that qualifies for a charitable contribution deduction under IRC Section 170. The charitable organization isn’t required to use the art object for the same purpose or function that qualifies it for its federal tax exemption. You may deduct your charitable contribution even if the chari­ table organization sells the art object. You must have an appraisal report showing the fair market value of the art object at the time of the con­ tribution. Keep the appraisal report with your tax records; we may ask for it later. How to calculate the subtraction The subtraction is equal to the difference between: 1. The amount that would have been allowed as an itemized deduction if you could deduct the fair market value of the art (subject to the federal con­ tribution limit)*, and 2. The actual allowable amount as an itemized deduc­ tion under federal tax law. *Federal law limits charitable contributions. Contributions to some organizations are limited to 50 percent of your federal AGI. Contributions to others are limited to 30 per­ cent of your AGI. Use these limits when you figure your deduction. Example: Ronda’s AGI is $10,000. She donated one of her paintings to an organization for display in a building. The painting has a basis (cost) of $300 and a FMV of $6,000. Here is how she computes her subtraction: 1. Amount allowed as a

charitable contribution

if computed using FMV. $ 6,000 2. Amount allowed as a charitable contribution limited to 50% of AGI. $ 5,000 3. Lesser of line 1 or line 2. $ 5,000 4. Amount allowed as a charitable contribution on Schedule OR-A (basis). ($300) 5. Ronda’s subtraction (line 3 minus 4). $ 4,700 Part-year residents and nonresidents. Follow the same rules as a full-year resident. You don’t have to prorate this subtraction. Part-year residents: Enter your subtraction in section D of Schedule OR-ASC- NP using modification code 600. Nonresidents: Enter your subtraction amount on the “Charitable art donation“ line on Form OR-40-N. Capital Construction Fund (CCF) contributions (ORS 316.048) [Subtraction code 339] If you subtracted your contributions to your qualify­ ing CCF account on your federal return, you may also Subtractions

150-101-431 (Rev. 09-30-22) 71 subtract that amount on your Oregon return. See IRS Publication 595, Capital Construction Fund for Commer­ cial Fishermen, for more information. The subtraction for Oregon is the same as the amount you identified as “CCF” and subtracted on your fed­ eral return. Part-year residents and nonresidents. Enter the full subtraction amount on the federal line on Schedule OR-ASC-NP, section C. The amount allowed on the Oregon line is the Oregon percentage of your fishing trade or business that qualifies you for a CCF account. Example: Greg moved out of Oregon in May and con­ tinued his fishing business in California. His Oregon net fishing income is $10,000 and his California net fishing income is $30,000. He put $15,000 into his CCF account during the past year. On Schedule OR-ASC- NP, Greg will enter $40,000 for his fishing income on the federal line and $10,000 on the Oregon line. Greg’s CCF subtraction on the federal line is the full $15,000. Since 25 percent of his eligible income was Oregon source, he is allowed a CCF subtraction of $3,750 ($15,000 x 25%) on the Oregon line. Construction worker and logger commuting expenses (ORS 316.812, 316.824, 316.832) [Subtraction code 303] If you are a qualified construction worker or logger, you may deduct certain commuting expenses from your Oregon taxable income. To claim these expenses, you must have worked at one or more construction projects or logging operation sites more than 50 miles from your home. A construction project is construction, alteration, repair, improvement, moving, or demolition of a structure. A logging operation is the commercial harvesting of forest products. People in other occupa­ tions aren’t eligible for this subtraction. Management personnel aren’t eligible for this subtraction either. Qualifying workers. Loggers must be fallers or buck­ ers who maintain their own equipment and are paid on a per-unit-cut basis. Construction workers must be members of a recognized trade, craft, or union. Qualifying expenses. You may claim only the actual cost of gas, oil, repairs, and maintenance for your vehicle for getting to and from work sites that are more than 50 miles from your home. You can’t use a standard mileage rate to figure expenses. If you use your vehicle both for business and personal purposes, you must determine your portion of business use. Keep a mileage log book during the year to track your business use and record all business trip miles. You should also record your starting and ending odom­ eter reading for your vehicle each year. You may claim only the business portion of your repairs and mainte­ nance as commuting expenses. You can’t claim depre­ ciation. To claim the actual business expenses for your qualified commute miles, you will need to keep your vehicle records during the year. Keep receipts for all your fuel (such as gas, diesel), oil change, repair, and maintenance costs in your permanent tax records. Example: Ewan is a construction worker. He uses his truck for both personal and business purposes. He worked on three construction jobs during the year. Two of the jobs were located more than 50 miles away from his home. Ewan kept a log book in his truck and recorded each trip to and from the construction sites. He also kept a record of all his truck expenses—his receipts for diesel fuel, oil changes, repairs, and main­ tenance for the year. These receipts totaled $4,215. Ewan’s odometer readings were: Year end: December 31 38,306 Year beginning: January 1 26,327 Total miles driven 11,979 Ewan’s mileage log book showed that his mileage to and from qualified construction job sites totaled 4,716 miles. He will use this formula to determine the business use of his truck and the amount of truck expenses which will qualify for this subtraction: Qualified construction miles × actual expenses = Subtraction Total miles driven 4,716 × $4,215 = $1,659 11,979 Ewan will claim a subtraction of $1,659 on Schedule OR-ASC. Duration of project. If you are a construction worker, claim only your expenses for the first year of continu­ ous employment at any one construction site. If your employment continues beyond one year, the job site is considered permanent. You may not subtract any addi­ tional commuting costs for going to and from that site after the first year at that worksite. If your employment at that job site is temporarily interrupted, don’t count the interruption when you figure the one-year limit. If you are a logger, there is no limit on how long you can work at the same job site and still claim expenses. How to claim the subtraction. Claim your commut­ ing expenses on Schedule OR-ASC or OR-ASC-NP. Part-year residents and nonresidents. You can claim only expenses related to income that you included in the Oregon column of your Oregon return. Subtractions

150-101-431 (Rev. 09-30-22) 72 Domestic international sales corporation (DISC) dividend payments (ORS 316.749) [Subtraction code 352] Oregon allows a subtraction for the dividend pay­ ments you received from a DISC. You can claim the subtraction if all of the following are true: • The DISC dividend payments are included in your federal AGI, and • The DISC was formed by January 1, 2014, and • The DISC is subject to the 2.5% tax. Federal gain previously taxed by Oregon [ORS 314.290 (repealed), 316.716] [Subtraction code 306] Oregon law used to require an addition for gain on the sale or exchange of certain property deferred on the fed­ eral return. This statute was repealed in 2001. If you were required to make this addition before 2001, you have already been taxed by Oregon for the gain on the sale or exchange of your property. If this gain is now included in your federal income, you may claim a subtraction for the amount of the gain previously taxed by Oregon. Federal income tax liability (ORS 316.680, 316.685, 316.695) Part A: Federal income tax liability subtraction [Form OR-40, line 10] [Form OR-40-N or OR-40-P, line 40] Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] Current year’s federal income tax liability. Oregon allows a subtraction for your current year’s federal income tax liability after credits. The subtraction for 2022 is limited to $7,250 ($3,625 if your filing status is married filing separately). It may be limited further based on your AGI; see Table 9. The subtraction is based on the accrual method of accounting. This means you subtract the total amount of your federal tax liability after credits for the cur­ rent tax year (not less than zero) as shown on your original return, regardless of when you pay it. The subtraction is limited to income tax. This includes alternative minimum tax, tax on an IRA, and recapture taxes. You can’t include self-employ­ ment tax or Social Security (FICA) tax. You also can’t include penalties, interest, or any shared responsibil­ ity payment required by the federal Affordable Care Act. Federal income tax credits, except for the EITC, reduce your federal tax subtraction. The credits for federal tax on special fuels, special oils, and a regu­ lated investment company won’t reduce your federal tax subtraction. Don’t enter less than $0 or more than your limit. Use the federal tax worksheet to figure your subtraction. RDPs: Use amounts from your actual federal return(s), not your “as if” return. Additional federal income tax paid or determined. If you paid additional federal tax because your federal return was amended or audited, you may be able to claim an additional subtraction or modification for it in the year the tax was paid or determined, which­ ever is later. Your additional prior year’s federal tax plus your current year’s federal tax can't be more than your current year federal tax subtraction limit. This subtraction applies only to additional federal income tax paid because your return was amended or audited. It doesn’t include withholding tax, advance tax payments, interest, penalties, or paying the tax due on your original federal return. Use Part B of the federal tax worksheet to figure your federal tax from a prior year. If you're a resident, report the amount using subtrac­ tion code 309; if you're a part-year resident or nonresi­ dent, report the amount using modification code 602. Amended returns. If your federal tax liability for a prior year is changed, see “Amended returns” to determine whether you should change the amount of the subtraction on your amended Oregon return. Federal tax worksheet Note: All references to federal Form 1040 in this worksheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. Instructions for Part A: Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonre­ fundable credits but before other taxes. This is found on Form 1040, line 22. Line 2: Do you have to repay some of the advance pre­ mium tax credit that you received during the year? If so, enter your excess advance premium tax credit repayment. This is found on Form 1040, Schedule 2, line 2. Otherwise, enter $0. Subtractions

150-101-431 (Rev. 09-30-22) 73 Line 3: Line 1 minus line 2. If the result is less than zero, enter $0. Line 4: Enter the total of any other taxes, plus any additions to tax that include only income tax, such as recapture taxes, from Form 1040, Schedule 2, lines 8, 16, and 17. Also include the amount reported on Schedule 2, line 10, only if you’re repaying a 2008 first-time homebuyer credit and filing federal Form 5405, Repayment of the First-Time Homebuyer Credit. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any addi­ tions to tax from Schedule 2, line 17 that are penal­ ties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter $0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allow­ able premium credit regardless of any excess advance payments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund­ able credits that must be subtracted from your federal income tax liability. Line 9: Line 5 minus line 8. If less than zero, enter $0. This is your federal income tax liability after refund­ able credits (other than the EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 9. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Part A: Federal tax liability subtraction 1. Federal tax liability (Form 1040, line 22). 1. _________ 2. Excess advance premium tax credit (Form 1040, Schedule 2, line 2). 2. _________ 3. Line 1 minus line 2. (If less than $0, enter $0.) 3. _________ 4. Other taxes (see instructions). 4. _________ 5. Line 3 plus line 4. 5. _________ 6. American Opportunity credit (Form 1040 or 1040-SR, line 29). 6. _________ 7. Premium tax credit (Form 8962, line 24). 7. _________ 8. Line 6 plus line 7. 8. _________ 9. Line 5 minus line 8. (If less than $0, enter $0). 9. _________ 10. Maximum subtraction amount from Table 9. 10. _________ 11. Smaller of line 9 or line 10. This is your federal tax liability subtraction. 11. _________ Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] 1. Enter maximum amount from Table 9 (Part A, line 10). 1. _________ 2. Enter federal tax liability subtraction (Part A, line 11). 2. _________ 3. Line 1 minus line 2. If the result is 0, Stop—you can’t deduct your federal tax from a prior year. If greater than $0, continue to line 4. 3. _________ 4. Enter the amount of federal tax you paid in 2022 for a prior year. 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC, section B (subtraction code 309) or Schedule OR-ASC-NP, section D (modification code 602). 5. _________ Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] If your total federal tax subtraction (Part A, line 11 plus Part B, line 5) is $7,250 ($3,625 if your filing status is married filing separately), Stop—you can’t subtract your foreign tax (ORS 316.690). Otherwise, continue to Step 1. 1. Enter $7,250 ($3,625 if your filing status is married filing separately). 1. _________ 2. Enter your total federal tax liability subtraction (Part A, line 11 plus Part B, line 5). 2. _________ 3. Line 1 minus line 2. 3. _________ 4. Enter the amount paid in foreign tax, but not more than $3,000 ($1,500 if your filing status is married filing separately). 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC section B (subtraction code 311) or Schedule OR-ASC-NP section D (modification code 603). 5. _________ Subtractions

150-101-431 (Rev. 09-30-22) 74 Table 9. Federal tax liability subtraction AGI phase-out If your filing status is: and your federal AGI is: then your maximum allowable tax liability subtraction is: at least— but less than— Single 0 $125,000 $7,250 $125,000 $130,000 $5,800 $130,000 $135,000 $4,350 $135,000 $140,000 $2,900 $140,000 $145,000 $1,450 $145,000 or more $0 Married filing separately 0 $125,000 $3,625 $125,000 $130,000 $2,900 $130,000 $135,000 $2,175 $135,000 $140,000 $1,450 $140,000 $145,000 $725 $145,000 or more $0 Married filing jointly Head of household Qualifying surviving spouse 0 $250,000 $7,250 $250,000 $260,000 $5,800 $260,000 $270,000 $4,350 $270,000 $280,000 $2,900 $280,000 $290,000 $1,450 $290,000 or more $0 Federal pension income [ORS 316.680(1)(e)] [Subtraction code 307] You may be able to subtract some or all of your tax­ able federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It doesn’t include disability payments if you haven’t attained the minimum retirement age. The subtrac­ tion amount is based on the number of months of federal service or points earned for retirement before and after October 1, 1991: • If all of your months of federal service occurred or points were earned before October 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return. • If you have no months of service or points earned before October 1, 1991, you can’t subtract any fed­ eral pension. • If your service occurred or points were earned both before and after October 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service or points earned before October 1, 1991, by your total months of service or points earned. Round your percentage to three places (example: 0.4576 = 45.8%). Once you determine the percentage, it will remain the same from year to year. Federal Thrift Savings Plan (TSP). Once a taxpayer is a retiree, withdrawals from federal TSP accounts are eligible for the subtraction based on dates of ser­ vice. Withdrawals prior to retirement aren’t eligible because the taxpayer must be a retiree at the time of withdrawal to be eligible for the subtraction. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no lon­ ger a federal pension. In this case, future withdraw­ als wouldn't be eligible for the subtraction. Full-year residents. If you're eligible for the federal pension income subtraction, enter the amount on Schedule OR-ASC. Part-year residents. If you received the federal pen­ sion income during the part of the year when you were a resident and you're eligible for the subtrac­ tion, enter the amount on both the federal and Ore­ gon lines of Schedule OR-ASC-NP. Include your fed­ eral pension income received during the part of the year when you were a nonresident only if you were domiciled in Oregon during that time. If you were not domiciled in Oregon during the part of the year that you were a nonresident, exclude the income you received during that time from your Oregon income on your part-year return, and don't claim a subtrac­ tion for any portion of that income. Nonresidents. Claim a subtraction for federal pen­ sion income only if you reported it on your Oregon return. Oregon doesn’t tax your retirement income unless you have kept Oregon as your domicile. For more information, see “Income.” Subtractions

150-101-431 (Rev. 09-30-22) 75 Use this worksheet to determine your federal pension income subtraction amount: 1. Federal pension income included in federal AGI. 1. $ ___________ 2. a. Months of service or points earned from _______

(federal service start date) to October 1, 1991. a. ____ months*/points

b. Months of service or points earned from _______

(federal service start date) to _______ (federal

service retirement date). b. ____ months**/points

Divide the number of months or points on line a by the total number of months or points on line b. This is your federal pension subtraction percentage. Round the decimal three places and enter it here. 2. ___________ 3. Multiply line 1 by the decimal on line 2. This is your federal pension subtraction. 3. $ ___________ * Federal service start date: If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service.

If your federal service start date was the 16th through the end of a month, don’t include the first partial month of service. Start counting the months of federal service with the first full month.

** Federal service retirement date: If your federal service retirement date was the 1st through the 15th of a month, don’t count this final partial month when counting the total months of federal service.

If your retirement date was the 16th through the end of the month, include the entire month when counting the total months of federal service.

Keep a copy of this worksheet with your permanent tax records. Use the same percentage from line 2 to determine your federal pension subtraction in future years. Example 1: Jared worked for the U.S. Department of Agriculture from May 1, 1977, until July 31, 2012. He worked a total of 423 months—173 months before October 1, 1991. This year, he received federal pension income of $65,000. He can subtract 40.9 percent (173 ÷ 423) or $26,585 (0.409 × $65,000) of his federal pension. Jared will continue to subtract 40.9 percent of his federal pension from Oregon income in future years. Example 2: Robin served in the U.S. Army Reserves from June 20, 1987 through May 18, 2012. As a retired mem­ ber of the reserves, Robin’s service is easier measured by the retirement points she earned. Her Chronological Statement of Retirement Points shows that she earned 1,917 retirement points before October 1, 1991, out of a total 3,510. Robin received $25,000 in pension benefits this year. This worksheet shows how she will determine her federal pension subtraction. 1. Federal pension income included in federal AGI. 1. $ 25,000 2. a. Points earned before October 1, 1991. a. 1,917 points

b. Total points earned. b. 3,510 points

Divide the number of points on line a by the total number of points on line b. Round the decimal three places. This is Robin’s federal pension subtraction percentage. 2. 0.546 3. Multiply line 1 by the decimal on line 2. This is Robin’s federal pension subtraction. 3. $ 13,650 Federal mortgage interest credit (ORS 316.716) [Subtraction code 320] [Modification code 607] If all of the following are true for you, you may have a subtraction for mortgage interest on your Oregon return: • You’re claiming a mortgage interest credit on your federal return, • You’re claiming your mortgage interest as an item­ ized deduction on federal Schedule A, • You reduced your mortgage interest deduction by the federal mortgage interest credit, and • You’re claiming the same reduced amount of mort­ gage interest on Schedule OR-A. Claim a subtraction for the amount of mortgage interest credit allowed on your federal return. Take the subtraction in the year of the payment even if the federal credit is carried forward. Subtractions

150-101-431 (Rev. 09-30-22) 76 Example 1: Shawn and Phillip pay $5,000 in mortgage interest this year. They are entitled to a 50 percent credit, limited to $2,000, on their federal return. They claim the credit and reduce their itemized deduc­ tion for mortgage interest to $3,000. They include the same $3,000 deduction on Schedule OR-A, and claim a $2,000 subtraction on Schedule OR-ASC. Example 2: Use the same facts as Example 1, except that Shawn and Phillip’s federal tax liability is $1,500. They claim $1,500 as a credit on their federal return, claim a deduction of $3,000 in mortgage interest on Schedule A, and have a $500 credit to carry over to next year. They include the $3,000 deduction on Schedule OR-A and subtract $2,000 on Schedule OR-ASC. They don’t have a carryforward amount for Oregon. Federal tax credits (ORS 316.716) [Subtraction code 340] [Modification code 609] These credits are not related to individual health insurance premium credits allowed by the federal Affordable Care Act. To claim certain federal tax credits, such as the mort­ gage interest credit or the employer credit for paid family leave allowed by IRC Section 45S, you must reduce your business expenses or itemized deduc­ tions on your federal return by the amount of the credit you figured for the year. Oregon allows a subtraction for the amount reduced on your federal return. Subtract the entire reduction amount in the year you first claimed the federal credit, even if the federal credit is carried over. Part-year residents and nonresidents: Report the reduction amount as a subtraction if the item you reduced was reported on a federal form or sched­ ule other than Schedule A. If you were required to reduce an itemized deduction, report the reduction amount as a modification, not as a subtraction. Mortgage interest credit. Were you required to reduce your mortgage interest deduction because you claimed the federal mortgage interest credit? See “Federal mortgage interest credit” for detailed infor­ mation about this subtraction. Health Coverage Tax Credit (HCTC). If you claimed this credit on your federal return, you might be allowed a subtraction on your Oregon return. This credit isn’t related to the premium credit allowed by the federal Affordable Care Act. Oregon allows a subtraction or modification for the self-employed health insurance deduction or itemized deductions you couldn’t claim on your federal return because you claimed the HCTC. Part-year residents and nonresidents doing business in Oregon. If your federal credit is related to a busi­ ness operated entirely in Oregon, don’t prorate your subtraction. If the credit is related to a business not operated solely in Oregon, you must prorate your sub­ traction. Use this formula to determine the amount to subtract on the Oregon line on Schedule OR-ASC-NP: Sales in Oregon × Expenses not allowed on your federal return Sales everywhere Enter the expenses not allowed on your federal return on the federal line on the schedule. Partnerships and S corporations. If your federal credit is from a partnership or S corporation, you may subtract a percentage of the expenses not deductible on your federal partnership or S corporation return. This amount will usually be the same as the percent­ age of total partnership or S corporation income you report on your return. Nonresidents or part-year resi­ dents must use the percentage explained in the previ­ ous paragraph to further prorate the expenses. Film production labor rebate (ORS 316.698) [Subtraction code 336] Companies producing commercials, television shows, or movies in Oregon may be eligible for a cash rebate against payroll taxes if they qualify for the Greenlight Oregon Labor Rebate (GOLR) program. This program is administered by the Oregon Film and Video Office. Visit their website, www.oregonfilm.org, for more information. You may subtract the amount of your GOLR rebate to the extent that it is included in your federal income. First-time home buyer savings account (FTHBSA) contributions and earnings (ORS 316.798, 316.800) [Subtraction code 361] Oregon allows a subtraction for amounts you depos­ ited during the tax year into a designated FTHBSA, along with any earnings on your deposits. Who may claim the subtraction? Any Oregon resident who hasn’t purchased or owned a single-family home, either individually or jointly, in the three years prior to the date they purchase a new home in Oregon and makes deposits into their desig­ nated FTHBSA may qualify for this subtraction. Subtractions

150-101-431 (Rev. 09-30-22) 77 What are the requirements? A FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of open­ ing the account. What costs will qualify? You must use your FTHBSA funds to pay costs asso­ ciated with buying a home, such as: • Down payment. • Title insurance and other closing costs. • Realtor commissions. • Appraisal and inspection fees. • Loan origination fees. What’s the tax benefit of my FTHBSA? Up to $5,000 in deposits and earnings for the year may be subtracted by an individual filer each year— up to $10,000 each year if you’re filing a joint return— for up to ten years or an aggregate total of $50,000. The maximum subtraction amount is limited by your federal AGI as shown in Table 10. Note: Deposits or earnings that exceed the subtraction limit for the year can’t be carried forward to a later year. Only those amounts that were deposited or earned during the tax year may be subtracted from that year’s Oregon taxable income. Table 10. FTHBSA subtraction limits If your filing status is: and your federal AGI is: then your maximum allowable FTHBSA subtraction is: at least— but less than— Married filing jointly 0 $149,000 $10,000 $149,000 $158,000 $8,000 $158,000 $167,000 $6,000 $167,000 $176,000 $4,000 $176,000 $187,000 $2,000 $187,000 or more 0 All others 0 $104,000 $5,000 $104,000 $111,000 $4,000 $111,000 $117,000 $3,000 $117,000 $123,000 $2,000 $123,000 $131,000 $1,000 $131,000 or more 0 Penalty and add back for nonqualified withdrawal. If the funds in your FTHBSA are withdrawn within 10 years of opening the account, but aren’t used to pur­ chase a home, a 5 percent penalty may be imposed on the amount withdrawn. See this topic in “Interest and penalties.” You will also be required to add back any withdrawn amounts you previously subtracted. See this topic in “Additions.” Note: You may trans­ fer funds from your FTHBSA and deposit them into another FTHBSA that you hold at the same or a dif­ ferent financial institution; to avoid the penalty and the add back requirement, the transfer (or the home purchase) must be completed within 60 calendar days of the withdrawal. For more information about the FTHBSA program, contact a participating Oregon financial institution. For help locating a participating institution, visit the Oregon Association of Realtors’ website at www.ore­ gonrealtors.org. Foreign income tax (ORS 316.690) [Subtraction code 311] [Modification code 603] You can subtract taxes paid to a foreign country if on your federal return: • You claimed a credit for taxes you paid to a foreign country; or • You didn’t claim a credit for tax you paid to a for­ eign country and you didn’t claim foreign taxes as an itemized deduction. Your foreign tax subtraction plus the subtraction for your current federal tax liability plus any additional federal tax paid for a prior year can’t be more than $7,250 ($3,625 if your filing status is married filing separately). The foreign tax portion of your federal tax subtrac­ tion can’t be more than $3,000 ($1,500 if your filing status is married filing separately). Itemized deduction. If you claimed foreign income taxes as an itemized deduction on your federal return, you may claim them in full on Schedule OR-A. The amount you may deduct on your Schedule OR-A isn’t subject to the same limit as the subtraction. See the instructions for Schedule OR-A for more information. If you claim the foreign taxes as an itemized deduc­ tion, you may not also claim them as a subtraction. Use Part C of the Federal tax worksheet to figure your foreign tax subtraction. IDA contributions (ORS 316.848) [Subtraction code 314] An IDA is a matched savings account that builds the financial management skills of qualifying Orego­ nians while they save toward a defined goal. An IDA allows an individual in a lower-income household to accumulate assets tax-free. As the account holder, you make deposits to your own account. Your deposits Subtractions

150-101-431 (Rev. 09-30-22) 78 are matched with private donations. Withdrawals made for a qualified purpose are tax free. Qualified purposes include: • Paying higher education expenses or medical expenses; or • Purchasing a primary residence; or • Saving for retirement; or • Starting your own business. Oregon allows a subtraction on your tax return for deposits you make to your IDA through the Neigh­ borhood Partnership Fund. Your subtraction includes the interest earned on your IDA funds if the interest is included in your federal taxable income. Subtract the amount of the deposits made during the year, plus taxable interest earned, on Schedule OR-ASC or OR-ASC-NP. For more information about establishing an IDA, contact The Neighborhood Partnership Fund at 503- 226-3001 or www.neighborhoodpartnerships.org. Income on a composite return (OAR 150-314-0515) [Form OR-40-N/OR-40-P only: Subtraction code 341] If you’re a nonresident PTE owner who elects to join in a composite filing, the PTE will file Form OR-OC, Oregon Composite Return, to report your income and pay tax on your behalf. If you have other Oregon- source income, you must also file your own nonresi­ dent personal income tax return to report and pay tax on this income. Follow the instructions for filing Form OR-40-N if you have income that wasn’t included in a compos­ ite filing. All of your PTE income must be reported on the return, including the income reported on the composite return. However, because the income on the composite return has already been taxed, subtract that income on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Note: Don’t claim the tax paid on your behalf by the PTE as a payment on your Form OR-40-N. That pay­ ment was already used to pay the tax on the income reported on the composite return. Interest and dividends on U.S. bonds and notes [ORS 316.680(1)(a)] [Subtraction code 315] Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest. You may also subtract U.S. government interest (called state exempt-interest dividends) from regu­ lated investment companies and asset pools man­ aged by a fiduciary. These include, but aren’t limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or asset pool must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The sub­ traction is limited to your share of the amount of interest actually earned from qualifying U.S. govern­ ment securities. You can’t subtract amounts when the U.S. govern­ ment only guarantees the security. If you receive dis­ tributions from a retirement plan, you may not sub­ tract pension income received from funds invested in U.S. government securities. Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon. Following is a detailed list of bonds and notes that may or may not qualify for this subtraction. For a list of obligations that are exempt from both state and federal taxation, see “Interest and dividends on gov­ ernment bonds of other states“ in “Additions.“ Qualifies Bond/note Yes Banks for Cooperatives District of Columbia. Yes Commodity Credit Corporation. No* Export-Import Bank. No Farmers Home Administration. Yes Federal Deposit Insurance Corporation. Yes Federal Farm Credit Bank. Yes Federal Financing Bank. No Federal Home Loan Mortgage Corpora- tion (Freddie Mac). Yes Federal Home Loan Bank. Yes Federal Intermediate Credit Bank. Yes Federal Land Bank and Federal Land Bank Association. No Federal National Mortgage Association (Fannie Mae). Yes Federal Savings and Loan Insurance Corporation. No Federal tax refunds. Yes Financing Corporation (FICO). Yes General Insurance Fund. No* Government National Mortgage Asso- ciation (Ginnie Mae). Subtractions

150-101-431 (Rev. 09-30-22) 79 Yes Government Services Administration (GSA Public Building Trust Participation Certificate). No International Bank for Reconstruction and Development. Yes Production Credit Association (PCA). Yes Resolution Funding Corporation (REFCO). No Repurchase agreements (Repos). Yes Series EE, HH, and I Bonds. No* Small Business Administration. Yes Student Loan Marketing Association (Sallie Mae). Yes Tennessee Valley Authority. Yes Treasury bills and notes—interest. No Treasury bills and notes—gain on sale. No U.S. Merchant Marine bonds. Yes U.S. Postal Service bonds. No* Washington (D.C.) Metropolitan Transit Authority. Yes Zero coupon obligations of the U.S. (for example, “CATs,” “STRIPS,” “TIGRs,” etc.). *If the creditor has defaulted and the U.S. government/ Export-Import Bank is paying the interest, it’s nontaxable. Related expenses You must reduce your subtraction for expenses con­ nected with U.S. bonds and notes if the expenses are included in your Oregon itemized deductions on Schedule OR-A. These expenses include interest paid on money borrowed to buy the bonds and notes and costs incurred in the production of income from the bonds and notes. Land donation to educational institutions carryforward (ORS 316.852) [Subtraction code 316] This provision expired December 31, 2007. However, if you had a qualifying donation or sale prior to that date, you may still have contribution amounts to carry forward. This is the last year to subtract your remaining contributions. The subtraction allowed in any tax year is limited to a specific percentage of your contribution base. Your contribution base is federal AGI computed without any NOL carryback. If you donated land to a qualified entity, your Ore­ gon subtraction can’t be more than 50 percent of your contribution base. If you sold land to a qualified entity for less than its fair market value, the Oregon subtraction can’t be more than 25 percent of the contribution base. Carryforward. You can carry forward for a maxi­ mum of 15 years any contribution you don’t subtract because it’s more than the specified percentage of the contribution base. Any contributions not subtracted this year will be lost. Example. In tax year 2007, Marykate sold land with a fair market value of $500,000 to a local school district for $200,000 cash. Her contribution base that year was $100,000. Marykate’s subtraction for her contribution of $300,000 ($500,000 – $200,000) was limited to 25 percent of her contribution base, or $25,000 ($100,000 x 0.25). Marykate carried the remaining $275,000 ($300,000 – $25,000) forward to later tax years, with $30,000 carried forward to tax year 2022. Her contri­ bution base for 2022 is $200,000, so her subtraction is limited to $50,000 ($200,000 x 0.25). She may subtract the remaining $30,000. Legislative Assembly expenses (ORS 171.072) [Subtraction code 335] Members of the Oregon Legislative Assembly receive allowances for expenses they incur while perform­ ing their official duties. Each legislator must choose whether to include their allowance in taxable income. When an allowance is included in taxable income, the legislator may deduct the expenses they incurred while performing their official legislative duties. If the legislator does not include their expense allow­ ance in their taxable income, they can’t claim any deductions for their expenses. Oregon doesn’t tax the allowances received by leg­ islators. If you served as an Oregon legislator dur­ ing 2022 and you chose to include your allowance in your taxable income, you may subtract any allowance amount that you haven’t deducted elsewhere on your return. Example: Peter served as an Oregon senator during the tax year. He chose to have his allowance included in his taxable income. On his Schedule OR-A, he deducts all but $1,000 of the expenses he incurred while performing his official legislative duties. He may claim a subtraction for the remaining $1,000 on his Oregon return. Subtractions

150-101-431 (Rev. 09-30-22) 80 Manufactured dwelling park capital gain exclusion (Notes following ORS 316.792) [Subtraction code 338] Amounts received from the sale of a manufactured dwelling park to certain organizations are exempt from Oregon income tax. If you included this gain in income on your federal return, you may claim a subtraction for the gain amount on your Oregon return. Enter the amount on Schedule OR-ASC or OR-ASC-NP. To qualify, the park must have been: • Sold to a tenants’ association nonprofit organiza­ tion, community development corporation, or a housing authority; or • Destroyed by a natural disaster and sold to a non­ profit corporation or housing authority that will redevelop the site as a manufactured dwelling park. For purposes of this exclusion, a “natural disaster” includes any disaster resulting in the declaration of a state of emergency by the governor of Oregon, or by the governing body of an Oregon city or county, for wildfires, floods, tsunamis, earthquakes or simi­ lar events, including disasters begun by negligent or intentional acts. Manufactured dwelling park closure payments (ORS 316.795) [Subtraction code 344] Payments received from your former landlord because your manufactured dwelling park was closed are exempt from state taxation. These payments must be included in your federal income in order to be sub­ tracted on your Oregon return. If you didn't include them in federal income, don't subtract them. Marijuana business expenses [ORS 316.680(1)(i)] [Subtraction code 359] Did you operate a business as a medical marijuana dispensary or as a producer, processor, wholesaler, or retailer of medical or recreational marijuana with a license issued by the Oregon Health Authority (OHA) or the Oregon Liquor Control Commission (OLCC) under ORS Chapter 475B? If so, you may subtract cer­ tain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cultivation, manufacture, distribution or sale of cer­ tain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and nec­ essary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Controlled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Erin has a business licensed by the OLCC to sell marijuana in Oregon. Her store sold medi­ cal and recreational marijuana products. Her gross sales for the year totaled $750,000. After deducting $350,000 in cost of goods sold, her gross profit was $400,000, which she reported as business income on her federal Schedule C. Along with paying the cost of the goods she sold, Erin had ordinary and necessary retail business expenses. She completed a second Schedule C for Oregon only and determined that her expenses, other than cost of goods sold, totaled $150,000. She claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Matt grows marijuana in his garage and sells it to his coworkers and friends. This year, he made $50,000 from these sales. He spent $15,000 on costs of goods sold during the year, and another $10,000 in other ordinary and necessary business expenses. Matt doesn’t have a license to produce or sell marijuana in Oregon, but he must file federal and Oregon tax returns to report his income. On his fed­ eral return, he must report $50,000 in gross income and can deduct $15,000 for the cost of the goods he sold. He can’t deduct his other business expenses on his federal return. Matt also can’t take an Oregon sub­ traction for those other business expenses because he doesn’t have a license issued by the OHA or OLCC. Subtractions

150-101-431 (Rev. 09-30-22) 81 Oregon College and MFS 529 Savings Plan deposits carryforward (ORS 316.699) [Subtraction code 324] Contributions you made to an Oregon College or MFS 529 Savings Plan account after December 31, 2019 no longer qualify for a subtraction, but they may qualify for a credit. See “Oregon 529 College Savings Net­ work account contributions” in “Refundable credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2022 return is $5,185 if you file a joint return ($2,590 for all oth­ ers). This maximum applies to the combined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Tax year 2023 is the last year that a carryforward may be subtracted. Example: Korey and Keri contributed $25,000 in 2019 to an Oregon College Savings Plan account for their son. They subtracted the maximum of $4,865 on their 2019 return. They carried the $20,135 balance of their contribution forward, claimed the maximum of $4,960 on their 2020 return and the maximum of $5,030 on their 2021 return. For 2022, they claim the maximum of $5,185, and will carry the remaining $4,960 forward to 2023. Nonqualified expenses. You may need to add back funds withdrawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. A nonqualified purpose includes using the funds and earnings to pay K-12 tuition. See “Oregon Col­ lege and MFS 529 Savings Plans nonqualified with­ drawal“ under “Additions.” Oregon income tax refund (ORS 316.695) [Form OR-40-P/Form OR-40-N only: Subtraction code 325] Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon doesn’t allow a subtraction for an income tax refund from any other state. Full-year filers: This subtrac­ tion is claimed on Form OR-40. Part-year and non­ resident filers: Claim this subtraction on Schedule OR-ASC-NP, section C. Oregon Investment Advantage

(ORS 316.778) [Subtraction code 342] Oregon has an income tax exemption program for business development in Oregon. The program is available to both new and expanding businesses. Who is eligible for the exemption? The exemption is a 10-year waiver of all income and excise taxes relating to qualifying business opera­ tions. Business Oregon (the Oregon Business Devel­ opment Department, or OBDD) administers this program. To qualify, a company must create at least five new full-time, year-round jobs that meet minimum pay requirements. Facility operations must be the first of their kind in Oregon for the company and must not compete with existing area businesses. Areas that qualify for development can change from year to year. Local unemployment rates and per capita income as of the date of application for preliminary certification determine eligibility. For a list of qualifying counties, go to www.oregon4biz.com. How is a facility certified? There are two application forms necessary for this program. A preliminary certification is completed before hiring or any construction work is done. An annual certification is then completed for each of the 10 years that the income tax exemption is claimed. To find out more about this program or download an application form, contact Business Oregon at www.oregon4biz.com. How is the subtraction computed? The exempt income is determined by multiplying the taxpayer’s federal taxable income by the ratio of their federal AGI derived from the business over their total federal AGI. The resulting amount is then multiplied by the ratio of the business’ income derived from the business’ sales at the certified facility over its sales from all business activities. Nonresident and part-year resident taxpayers deter­ mine exempt income by multiplying only Oregon- sourced federal taxable income in the first step of the computation above. See our administrative rule for additional informa­ tion on determining income derived from qualifying activities (OAR 150-316-0600). Subtractions

150-101-431 (Rev. 09-30-22) 82 Oregon Lottery winnings (ORS 461.560) [Subtraction code 322] Oregon won’t tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and aren’t eligible for the subtraction. “Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery doesn’t include gambling winnings from other sources, such as tribal gaming centers. If you’re a Native American, see the “American Indian” sub­ traction for more information. Winnings of more than $600 from a single ticket or play are fully taxable and may be reported by the Oregon State Lottery on Form W-2G. Lottery win­ nings that are more than $1,500 must have 8 percent withheld for Oregon taxes. If state income tax wasn’t withheld from your gambling winnings consider making estimated tax payments or increasing your withholding from your wages. To increase your Ore­ gon wage withholding, complete Form OR-W-4. Give the form to your employer. Example 1: Margaret purchased two Oregon Lot­ tery tickets and won $1,000 on one ticket and $500 on the other. She also won $300 from a lottery ticket she bought in Idaho, and $150 on a slot machine at an Oregon casino. Margaret included all $1,950 in winnings on her federal return. Margaret can sub­ tract $500 of her Oregon Lottery ticket winnings on Schedule OR-ASC. Nonresidents: Oregon Lottery winnings are taxable to nonresidents. Oregon Lottery winnings included in federal taxable income are eligible for the subtrac­ tion when winnings per ticket or play are $600 or less. Exception for pre-1998 tickets: You may subtract all Oregon Lottery winnings included in your federal income from tickets purchased prior to January 1, 1998. Did you assign your lottery winnings to a pri­ vate company and receive a lump-sum settlement? If so, your settlement isn’t taxable by Oregon if your winning ticket was purchased before January 1, 1998. Winnings from tickets purchased on or after January 1, 1998 are fully taxable. Gambling loss deduction. If you’re deducting gam­ bling losses related to your tax-exempt lottery win­ nings on Schedule OR-A, you must add back the amount that exceeds the winnings that are taxed by Oregon. See this topic under “Additions” for more information. Previously taxed employee retirement plan contributions (ORS 316.159) [Subtraction code 327] If you are an Oregon resident who made contribu­ tions to a traditional IRA, Keogh, SEP, or certain other retirement plans while you were a nonresident, you may claim a subtraction for your distributions up to the amount of your contributions that were taxed by the state where you were a resident, if all of the fol­ lowing are true. You: • Deducted your contributions on your federal return for the year the contributions were made. • Filed an income tax return with the state where you were a resident for the year when you deducted the contributions on your federal return. • Couldn’t claim the same (or any) deduction on your state income tax return for the contributions you deducted on your federal return. • Weren’t required to file a nonresident Oregon return for the year when the contributions were deducted on your federal return. • Weren’t allowed a credit for taxes paid to another state on an Oregon return which included the con­ tributions in the credit calculation. • Were not allowed to claim a subtraction, deduction, exemption, or other tax benefit in another state for your distributions from the plan before you became an Oregon resident. • Are now receiving distributions from the plan to which you made contributions as a nonresident. • Included the distributions in your federal AGI this year. All distributions you receive after becoming an Ore­ gon resident are initially considered to be a recovery of your contributions. You may claim a subtraction for your distributions each year that you are a resi­ dent, up to the total amount of contributions that were previously taxed, even if you have received dis­ tributions before becoming an Oregon resident. No subtraction is allowed for interest or other invest­ ment income from your contributions, or for contri­ butions that weren’t previously taxed. A statement showing the contributions you made when you were a nonresident and the amounts that were deducted on your federal returns but taxed on your state income tax returns will help you figure your subtraction. Keep this statement with your tax records. Subtractions

150-101-431 (Rev. 09-30-22) 83 Example 1: Peggy was a California resident when she made contributions to her employer-based retirement plan. She deducted the contributions on both her fed­ eral and California returns. After Peggy became an Oregon resident, she started taking retirement dis­ tributions. Because Peggy’s contributions weren’t taxed on her California returns, she can’t take the subtraction. Example 2: Ronald was a Kansas resident when he made contributions to the state’s public employee retirement fund. He deducted the contributions on his federal returns, but his contributions were included in income on his Kansas income tax returns. Ronald became an Oregon resident and this year he started taking distributions from his retirement plan. Because his contributions were previously taxed by Kansas, Ronald can take the subtraction. He can take the subtraction each year until the total amount of his previously taxed contributions has been recovered. Example 3: Harley was a Washington state resident when she made contributions to a traditional IRA. Her contributions were deducted on her federal return. Because Washington doesn’t have a state income tax, she didn’t pay state income tax on the contributions. Last year she became an Oregon resi­ dent, and this year she started taking distributions from her IRA account. Harley can’t take the subtrac­ tion because her contributions weren’t previously taxed by another state. Example 4: Bill was a California resident when he made contributions to a Roth IRA. The contribu­ tions were not deducted on his federal or California returns. Bill is 65 years old and became an Oregon resident last year. He began taking distributions this year from the Roth IRA account, which he held for more than five years. Because he meets the age and holding requirements for his Roth IRA, his dis­ tributions aren’t included in his federal income. He can’t take the subtraction because the income isn’t included in his federal AGI, it wasn’t previously taxed by the other state, and it wasn’t deducted on his federal return. For additional examples, see OAR 150-316-0230. Previously taxed IRA conversions [ORS 316.680(1)(f)] [Subtraction code 348] Oregon allows a subtraction for converting a tra­ ditional IRA to a Roth IRA, if the IRA is taxed by another state. You must include the payments in fed­ eral taxable income to claim the subtraction. Example: Susan lived in New York in March of last year, when she converted her $100,000 traditional IRA to a Roth IRA. In September, she moved to Oregon. New York state will tax her IRA when she becomes a nonresident. Susan can subtract the amount included in federal income when she files her Oregon tax return. Psilocybin business expenses [ORS 316.680(1)(j)] [Subtraction code 385] Did you operate a business as a manufacturer or seller of psilocybin products, an operator of a psilo­ cybin service center, or a facilitator of psilocybin ser­ vices licensed by the Oregon Health Authority (OHA) under ORS Chapter 475A? If so, you may subtract cer­ tain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cul­ tivation, manufacture, distribution, or sale of certain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and necessary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Con­ trolled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, Section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Doug has a business licensed by the OHA to manufacture and sell psilocybin products to licensed psilocybin service centers. His gross sales for the year totaled $100,000. After deducting $20,000 in cost of goods sold, his gross profit was $80,000, which he reported as business income on his federal Schedule C. Along with paying the cost of the goods he sold, Doug had other ordinary and necessary business expenses. He completed a second Schedule C for Oregon only and determined that his expenses, other than cost of goods sold, totaled $15,000. He claimed this amount as a subtraction on Schedule OR-ASC. Subtractions

150-101-431 (Rev. 09-30-22) 84 Example 2: Eleanor grows mushrooms containing psi­ locybin in her basement and sells them to her friends. This year, she made $40,000 from these sales. She spent $3,000 on cost of goods sold during the year, and another $15,000 in other ordinary and necessary business expenses. Eleanor doesn’t have a license to manufacture or sell psilocybin products in Oregon, but she must file federal and Oregon tax returns to report her income. On her federal return, she must report $40,000 in gross income and can deduct $3,000 for the cost of the goods she sold. She can’t deduct her other business expenses on her federal return. Eleanor also can’t take an Oregon subtraction for those other business expenses because she doesn’t have a license issued by the OHA. Public Safety Memorial Fund award [ORS 316.680(1)(g)] [Subtraction code 329] Amounts awarded to you by the Public Safety Memo­ rial Fund Board may be subtracted from Oregon income. The award must be included in federal tax­ able income to claim the subtraction. Public Safety Memorial Fund Awards are for public safety officers with certain job-related permanent total disabilities. These awards are also available to family members of a public safety officer who is killed in the line of duty or while interceding in a crime. Railroad Retirement Board benefits (ORS 316.054) [Subtraction code 330] The Railroad Retirement Act of 1974 prohibits states from taxing certain railroad benefits. This act per­ tains to all benefits issued by the Railroad Retirement Board (RRB). Oregon allows a subtraction for Tier 1 RRB benefits (the same as for Social Security benefits). The subtraction has been extended by administrative rule to the other supplemental RRB benefits including Tier 2, windfall, vested dual, supplemental annuities, unemployment, and sickness (OAR 150-316-0065). Tier 1 benefits. Tier 1 benefits are reported like Social Security on your federal return. Subtract these ben­ efits with Social Security on the Oregon return. Tier 2, windfall, vested dual, supplemental annuities, unemployment and sickness paid by the RRB. These benefits are reported as wages or on the private pen­ sion line of your federal return. Subtract these ben­ efits on Schedule OR-ASC, section B or Schedule OR- ASC-NP, section C. Other benefits. A retired railroad employee may receive other retirement benefits from their employer. Benefits paid by private railroad employers are pri­ vate pensions taxed the same on both the federal and Oregon returns. There is no Oregon subtraction for retirement benefits paid by private railroad employers. Only benefits paid by the RRB qualify for the subtrac­ tion. RRB benefits are reported on Form 1099, except for sickness benefits, which are reported on Form W-2. All 1099s issued by the RRB, other than 1099-G for RRB unemployment benefits, are labeled Form RRB-1099-R. More information on RRB benefits is available on the board’s website at www.rrb.gov. Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claim­ ing the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed. Social Security benefits (ORS 316.054) Oregon doesn’t tax Social Security benefits. Any Social Security benefits included in your federal AGI are subtracted on your Oregon return. Special Oregon medical (ORS 316.693) [Subtraction code 351] You may qualify for the special Oregon medical sub­ traction if: • You or your spouse turned 66 by the end of the tax year; • Your federal AGI doesn’t exceed $200,000 ($100,000 if your filing status is single or married filing sepa­ rately); and • You or your spouse have qualifying medical or dental expenses. Subtractions

150-101-431 (Rev. 09-30-22) 85 Medical or dental expenses qualify if they can be included in itemized deductions. See IRS Publica­ tion 502, Medical and Dental Expenses, to see which expenses qualify. You can’t subtract expenses: • For anyone under age 66; • For dependents, regardless of their age; or • That are deducted elsewhere on your return. Table 11. Special Oregon medical subtraction— maximum amount If your filing status is: And your federal adjusted gross income from Form OR-40, line 7 or Form OR-40-N or OR-40-P, line 29F is: Then your maximum allowable medical subtraction per qualifying taxpayer is: at least— but less than— Married filing jointly, Head of household, Qualifying surviving spouse 0 $50,000 $1,800 $50,000 $100,000 $1,400 $100,000 $200,001 $1,000 $200,001 or more 0 Single or Married filing separately 0 $25,000 $1,800 $25,000 $50,000 $1,400 $50,000 $100,001 $1,000 $100,001 or more 0 The maximum amount you can subtract for each qualifying person is shown in Table 11. Use the table and the Special Oregon medical subtraction work­ sheet to determine the amount of your subtraction. Shared expenses. Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy doesn’t affect the price of the pol­ icy, it’s reasonable to count all children on the policy as one individual. For example, the cost of insurance premiums for a policy covering two adults and four children can be divided by three. Example 1: Chloe and Sam were ages 67 and 62 at the end of the tax year. They filed a joint return with one depen­ dent (Sam’s mother), federal AGI of $55,000, and itemized deductions for Oregon. During the tax year they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in premi­ ums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Oregon medical subtraction because Sam doesn’t meet the age requirement and Sam’s mother is a dependent. Example 2: Peter turned 66 during the tax year. He’s self-employed and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on Schedule OR-A. He also deducted 100 percent of his self-employed health insurance premiums, totaling $2,500, on his fed­ eral return. Only the $3,200 in medical expenses Peter claimed on Schedule OR-A will be used to calculate his special Oregon medical subtraction because they haven’t been fully deducted. The worksheet will help him calculate the amount of his subtraction. Special Oregon medical subtraction worksheet instructions Line 1: Enter each person’s qualifying medical and den­ tal expenses that you’re claiming as itemized deduc­ tions on Schedule OR-A. Enter your expenses in col­ umn (A) and your spouse’s expenses in column (B). If you’re not including medical expenses in your Oregon itemized deductions or you’re claiming the standard deduction on your Oregon return, skip lines 2–4, enter the amount from line 1 on line 5, and go to line 6. Line 2: Enter the total medical and dental expenses you’re claiming as an itemized deduction (Schedule OR-A, line 1), even if they are for a spouse or depen­ dent whose expenses don’t qualify. Line 3: Line 1 divided by line 2. Round to three deci­ mal places. For example, 0.7308 is rounded to 0.731. Line 4: Enter the lesser of the amount you entered on line 2, above, or the amount on line 3 of your Schedule OR-A. Line 5: Multiply line 3 times line 4 and round to whole dollars. (For example: $101.49 is rounded to $101.) Line 6: Enter the maximum allowable medical sub­ traction for your filing status and federal AGI from Table 11. Don’t enter more than $1,800 in each column. Line 7: Enter the smaller of line 5 or line 6. Line 8: Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. Full-year residents. Enter the amount from line 8 on Schedule OR-ASC, section B. Part-year residents and nonresidents. Enter the full amount from line 8 on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Subtractions

150-101-431 (Rev. 09-30-22) 86 Special Oregon medical subtraction worksheet:

Column Column

(A) (B)

You Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ $ 6. Maximum allowable medical subtraction from Table 11. 6. $ $ 7. Enter the smaller of line 5 or line 6. 7. $ $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ Example 3: Leah and Tyler are ages 67 and 61 at the end of the tax year. They file a joint return with fed­ eral AGI of $45,000 and itemize their deductions for Oregon. During the year, they paid $4,700 in medi­ cal and dental expenses claimed on Schedule OR-A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medi­ cal insurance policy covering both of them. Only Leah’s expenses qualify for the special Oregon medi­ cal subtraction because only she met the age require­ ment. Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows:

Column Column

(A) (B)

Leah Tyler 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 2,150 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 4,700 $ 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.457

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 3,375 $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,542 $ 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,800 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,542 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,542

Leah and Tyler will claim $1,542 on Schedule OR-ASC. Example 4: Kenneth and Sophia were both age 66 at the end of the tax year. They file a joint return with fed­ eral AGI of $78,000. Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses dur­ ing the year. They are self-employed and claimed $3,400 for self-employed health insurance premiums on their federal return. They claimed the remaining $8,900 on line 1 of Schedule OR-A. Of this amount, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia calculate their special Oregon medical subtraction as follows:

Column Column

(A) (B)

Kenneth Sophia 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 7,700 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 8,900 $ 8,900 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.135 0.865 4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 5,850 $ 5,850 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 790 $ 5,060 Subtractions

150-101-431 (Rev. 09-30-22) 87 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,400 $ 1,400 7. Enter the smaller of line 5 or line 6. 7. $ 790 $ 1,400 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 2,190 Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they don’t include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that haven’t been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that haven’t been previously deducted, and $1,400, the maximum amount allowed Sophia). Example 5: Margaret is age 67 at the end of the tax year. She’s single and has a federal AGI of $27,000. During the year, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret doesn’t itemize her deductions because her standard deduction is greater than her itemized deductions for Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows:

Column Column

(A) (B)

Margaret Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2 above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,200 $ 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,400 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,200 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,200 The medical expenses paid by Margaret for her 9-year-old granddaughter don’t qualify for the sub­ traction because she is a dependent. Example 6: Same as Example 5, except that Margaret isn’t an Oregon resident. She enters $1,200 on both the federal and Oregon lines of Schedule OR-ASC-NP, section C. State and local government bond interest (ORS 286A.140) [Subtraction code 317] You can subtract interest or dividends on obligations of counties, cities, districts, ports, or other public or municipal corporations or political subdivisions of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by the State of Oregon to the extent included for federal income tax purposes. Related expenses You must reduce your subtraction if you’re including interest you paid on debt incurred to carry the obliga­ tions or securities or other expenses incurred in the production of income from these obligations in your Oregon itemized deductions on Schedule OR-A. Taxable benefits for former RDPs (ORS 314.023, OAR 150-316-0009) [Subtraction code 347] If you and your RDP were legally married or dis­ solved your partnership during the year, you may be allowed an Oregon subtraction for: • The imputed value of certain fringe benefits pro­ vided by your employer for your RDP for the part of the year you were still registered domestic partners. • The transfer of funds from your former domestic partner upon a dissolution decree. The fringe benefits typically include, but aren’t lim­ ited to, health insurance and tuition payments. You must have included the imputed value of the benefits in your federal income to claim the Oregon subtrac­ tion. The imputed value will be included in the total compensation (Box 1) shown on your Form W-2. Subtractions

150-101-431 (Rev. 09-30-22) 88 The transfer of funds typically include, but aren’t limited to, retirement funds. You must have included these amounts in your federal income to claim the Oregon subtraction. Example: Ruth and Jan entered into an RDP eight years ago. They were legally married on June 16 of this tax year. Ruth and Jan must file this year’s tax return as married filing jointly for both federal and Oregon purposes. They won’t file an “as-if” federal return. Instead, they will attach their actual federal return to their Oregon return. Ruth’s employer provides health insurance benefits for Jan, and the imputed value of those benefits were included in Box 1 of Ruth’s W-2 for the portion of the year that Ruth and Jan weren't married (January 1 through June 15). Ruth may claim a subtraction for the value of the imputed benefits included in federal income, as reported on her W-2. U.S. government interest in IRA or Keogh distributions (ORS 316.681) [Subtraction code 331] Interest and dividends on U.S. bonds and notes are exempt from state tax. See “Interest and dividends on U.S. bonds and notes.” Answer these questions to see if you have a subtraction on your Oregon return for exempt income related to your retirement distributions: 1. Did you have any distributions from a self- employed retirement plan or an IRA? 2. Was any part of your self-employed retirement plan or your IRA invested in U.S. bonds and notes? 3. Did you include your self-employed retirement plan or IRA distribution in your 2021 federal AGI? If you answered “yes” to all the questions above, you may take a subtraction on Schedule OR-ASC or OR-ASC-NP for the retirement plan exempt earnings included in your distribution. Use a worksheet like the one shown in the exam­ ple here or in OAR 150-316-0525 to calculate your subtraction. Keep the worksheet with your records; we may ask for it later. Example: Donna retired last year and began tak­ ing distributions of $10,000 each year from her IRA. The IRA is invested in U.S. government securities so Donna uses the following information to calculate her subtraction for years 1 and 2:

Year 1 Year 2 Current year earnings $4,000 $5,000 Current year distribution $10,000 $10,000 Account balance at 12/31 $100,000 $95,000 Total exempt earnings on account at 12/31 $ 40,000 $45,000 Worksheet Year 1 Year 2 1. Total account balance at year end. $100,000 $95,000 2. Current year distribution. + 10,000 + 10,000 3. Line 1 plus line 2. $110,000 $105,000 4. Total exempt earnings on account at year end. $ 40,000 $45,000 5. Total exempt part of distributions from all prior years. – 0 – $3,636 6. Line 4 minus line 5, but not less than zero. $40,000 $41,364 7. Line 6 divided by line 3. Oregon exempt ratio. 0.3636 0.3939 8. Line 2 multiplied by line 7. Oregon exempt portion of current year’s distribution. $3,636 $3,939 Subtractions

150-101-431 (Rev. 09-30-22) 89 Other items Net operating losses (NOLs) (ORS 316.028) [Addition code 116] [Subtraction code 321] An Oregon NOL is figured the same as in IRC Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Ore­ gon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts. Oregon doesn’t allow an NOL from a non-Oregon source that occurred while you were a nonresident. Prohibited amounts Amounts Oregon is prohibited from directly or indi­ rectly taxing include interest earned from Treasury bonds, Treasury notes, and other obligations of the United States. Federal depreciation disconnect If you had an NOL in 2009 or 2010 and also claimed depreciation or expensing not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. See “Deprecia­ tion difference for Oregon.” Computation of the NOL Full-year residents. Generally, the computation of the Oregon NOL for a resident is the same as the federal NOL, except for the prohibited amount modification. (See Prohibited amounts above.) The computation of the Oregon NOL begins with fed­ eral AGI. Reduce AGI by federal exemptions, federal deductions, and the prohibited amount modifica­ tion to arrive at the modified Oregon taxable income (OTI). Then adjust the modified OTI as required by IRC Section 172(d). Required adjustments are: 1. Oregon NOL deduction (NOLD) from prior years included in Oregon income after adjustments. 2. Net Oregon capital loss deduction. 3. Federal personal exemption amount (this will be $0 through tax year 2025). 4. Excess of nonbusiness deductions over nonbusi­ ness income included in modified Oregon taxable income. Example 1: Maria and Jaime filed joint federal and Oregon tax returns for 2022. On their federal return, they reported wages of $56,000, a business loss of $80,000, a gain on the sale of stock of $500, and inter­ est income of $900 from a bank. They reported total itemized deductions of $28,000, which were all non­ business and included $4,000 in Oregon withholding. On their Oregon return, Maria and Jaime reported an addition of $500 of municipal bond interest from California that was exempt from federal income tax. Their Oregon NOL is computed as follows: Federal tax return Wages $ 56,000 Interest income

900 Schedule C loss (80,000) Schedule D stock gain

500 Federal AGI ($ 22,600) Personal exemptions

0 Schedule A deductions (28,000) Federal taxable income ($ 50,600) Computation of Oregon NOL Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions (28,000) Modified Oregon taxable income ($ 50,600 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Nonbusiness deductions in excess of nonbusiness income 26,600 Oregon NOL ($ 24,000 ) Note: The $500 in California municipal bond interest and the $4,000 in Oregon withholding aren't used in this calculation. Compute the Oregon NOL based on federal NOL methods and definitions. Use Oregon sources with­ out Oregon adjustments (modifications, additions, and subtractions), except for prohibited amounts. Other items

150-101-431 (Rev. 09-30-22) 90 Example 2: Use the same facts as in Example 1, except the $900 interest is from U.S. government securities (a prohibited amount). The Oregon NOL for Maria and Jaime is computed as follows: Federal tax return Wages $ 56,000 Interest from U.S. government securities

900 Schedule C loss

( 80,000 ) Schedule D stock gain

500 Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions

(28,000) Federal taxable income ($ 50,600 ) Computation of Oregon NOL Federal AGI ($ 22,600 ) U.S. government interest

(900 ) Personal exemptions

0 Schedule A deductions

(28,000) Modified Oregon taxable income ($ 51,500 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 28,000 Nonbusiness income (1,400 ) Excess nonbusiness deductions

26,600 Oregon NOL ($ 24,900 ) Note: U.S. government interest, a prohibited amount, isn’t used to compute an Oregon NOL. Part-year residents and nonresidents. You’re allowed an Oregon NOL if it’s generated from Oregon sources. Computing an Oregon NOL begins with “income after adjustments” from the Oregon column. Reduce this amount by federal exemptions and deductions (attributable to Oregon sources) to arrive at the modi­ fied OTI. Then adjust the modified OTI as required by IRC Section 172(d). The required adjustments are the same as those listed for full-year residents. You aren’t allowed an NOL or carryover on an Ore­ gon return if the loss was incurred while you were a nonresident and wasn't attributable to Oregon sources. If your Oregon NOL is less than your federal NOL, report the difference as an addition using code 116 on Schedule OR-ASC or OR-ASC-NP. Oregon NOL carryforward or carryback. Oregon fol­ lows the IRS carryforward and carryback laws in IRC Section 172. For more information, see IRS Publica­ tion 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. If you carry an NOL back for federal purposes, you must also carry the Oregon NOL back for Oregon purposes. If you elect to carry the federal NOL for­ ward, you must also carry the Oregon NOL forward. Exception: If you weren’t required to file an Oregon return, carry the Oregon NOL to the year the loss may be first applied. The total number of years an NOL may be carried back or forward is the same for Oregon and federal. Example 1: Joe had an NOL for federal and Oregon purposes for 2020. Joe carried his federal NOL back to his 2015 federal return. Because he carried back his NOL for federal purposes, he must carry his NOL back for Oregon purposes. If he wasn't required to file a 2015 Oregon tax return, he may carry his Ore­ gon NOL back to 2016 or a later year until it can be applied. If he carries the NOL to a tax year after 2020, he’ll limit the deduction to the lesser of the NOLD or 80 percent of his FTI for the year. Example 2: Bud and Jody incurred losses from farming in 2021. They computed a farming NOL of $12,000 and chose to carry the loss forward for federal purposes, which means they also had to carry it forward for Oregon purposes. In 2022, before the loss is applied, Bud and Jody have federal AGI of $36,900, and reported additions of $8,000 and $3,000 in subtractions. They’re claiming the $25,900 standard deduction on their federal return and will claim $10,000 in Oregon itemized deductions on Schedule OR-A that aren’t affected by AGI limits. Bud and Jody will apply the NOL and compute the amount available for carryforward to 2023, if any, as follows: Allowable NOLD:

($ 12,000) Federal AGI on the Oregon return $ 36,900 Add: Capital loss deductions or 0

Capital gain deduction 0 Federal AGI for Oregon as revised $ 36,900 Less: Prohibited amounts 0

Standard or itemized deductions recomputed for revised federal AGI (25,900) Modified Oregon taxable income $11,000 NOL available for carryforward to the next year

$1,000 Other items

150-101-431 (Rev. 09-30-22) 91 Bud and Jody’s allowable NOL for Oregon is absorbed by their modified Oregon taxable income. Bud and Jody will carry $1,000 forward to 2023 for both federal and Oregon purposes. They have no Oregon addition or sub­ traction because their NOLD will flow through from their federal return. Part-year residents and nonresidents. Use the federal method without modifications, except prohibited amounts aren’t considered. Also, the NOLD, carryback, and carryover are based only on amounts attributable to Oregon sources. Example 3: While residents of California, Robin and Valerie incurred losses from an Oregon partnership creat­ ing an $85,000 Oregon-only NOL. Before the loss year, neither Robin nor Valerie needed to file Oregon returns. The next year, Robin and Valerie move to Oregon and file a part-year Oregon return. They report federal income after adjustments of $385,000, Oregon income after adjustments of $235,000, and federal itemized deductions of $72,000 that aren’t subject to AGI limits. Robin and Valerie calculate their Oregon taxable income as follows:

Federal Oregon Income after adjustments $ 385,000 $ 235,000 NOLD

(85,000 ) (85,000 ) Modified income after adjustments $ 300,000 $ 150,000 Additions per Oregon return

7,000 7,000 Subtractions per Oregon return

(2,000 ) (2,000 ) Modified income after subtractions $ 305,000 $ 155,000 Oregon percentage: 155,000 ÷ 305,000 = 50.8% Less: Standard or itemized deductions recomputed for revised federal AGI

(72,000 )

Federal tax subtraction

-0 -* Oregon taxable income as revised $ 233,000 *The federal tax subtraction is $0 when federal AGI is $290,000 or more for joint filers. Example 4: Leslie and Jill live in Vancouver, Washington. Leslie operates a business in Oregon. Leslie and Jill filed a nonresident Oregon return for 2021 reporting an Oregon-only NOL of $6,000. Leslie and Jill carried the NOL forward to 2022. In 2022, Leslie and Jill report Oregon income after adjustments of $1,600, federal income after adjustments of $32,000, and their Oregon percentage is 5 percent ($1,600 ÷ $32,000). Their income after adjustments for both federal and Oregon includes a $2,000 capital loss on the sale of some Oregon property. They are claiming the federal standard deduction, and have Oregon itemized deductions of $13,200. Leslie and Jill calculate their NOLD and the carryforward to the next year as follows: NOL

($6,000) Oregon income after adjustments $1,600 Add: Oregon capital loss deduction 2,000

Oregon capital gain deduction 0 Modified Oregon income as revised

$3,600 Less: Prohibited amounts

(0 )

Oregon percentage of standard or itemized

deductions recomputed for revised federal AGI (0.05 x $13,200)

(660 ) Modified Oregon taxable income (limit for NOLD)

2,940 Carryforward of NOL available for next year

($3,060 ) NOL as a subtraction. Generally, your NOL carryback and carryforward amounts will be reflected in your fed­ eral AGI. However, if you have an NOL carryback or an NOL carryforward for Oregon only, the loss won’t be reflected in your federal AGI. If your NOL isn’t reflected in federal AGI, report your carryback or carryforward on Schedule OR-ASC or OR-ASC-NP. Example 5: Same facts as Example 4. For federal purposes, Leslie and Jill's NOL will be entirely absorbed in 2022. The $3,060 that is available to be carried forward to their 2023 return won't be reflected in their 2023 federal AGI. They'll compute the NOLD amount for 2023 as they did for 2022, and report the amount as a subtraction using code 321 on Schedule OR-ASC-NP. Other items

150-101-431 (Rev. 09-30-22) 92 Depreciation difference for Oregon (ORS 316.707, 316.716, 316.739) [Addition code 152] [Subtraction code 354] Your Oregon depreciation or amortization deduction is generally the same as for federal purposes. It won’t be the same in the following cases: • You transferred property into Oregon’s taxing jurisdiction. • The asset was placed in service in tax years begin­ ning on or after January 1, 1985, and you took a cor­ responding tax credit on your federal return that isn’t available on the Oregon return. • Assets were placed in service between 1981 and 1985 (Accelerated Cost Recovery System [ACRS] assets), and you didn’t make the adjustment align­ ing Oregon basis with federal basis for them. If you made the adjustment on your 1996 tax return, there won’t be a depreciation difference. • The asset was placed in service during tax years 2009 or 2010 and you claimed bonus depreciation or additional expensing under IRC Sections 168(k) or 179. For tax years 2009 and 2010, Oregon gen­ erally allowed the same expensing of qualifying assets under IRC Sections 168(k) and 179 as allowed under 2008 federal law. Because of this disconnect an addition is required, leaving a higher adjusted basis for Oregon to be depreciated over the life of the asset. Most taxpayers with an addition for this disconnect in 2009 or 2010 will have future year subtractions over the remaining life of the asset NOL and federal depreciation disconnect. Your Ore­ gon NOL is the same as your federal NOL. Therefore if you had an NOL in 2009 or 2010 and also claimed depreciation or expenses not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. Example 1: Paula expensed $144,000 in assets under IRC Section 179 in 2010. Because Oregon only allowed expenses of $134,000, she had a $10,000 addition on her 2010 Oregon return. Due to deductions and losses related to her business, Paula had a $15,000 NOL for 2010. Normally, she would have an Oregon basis of $10,000 and could claim Oregon subtractions over the life of those assets. Because Paula’s federal NOL is the same for Oregon purposes, she has already received the benefit in the NOL deduction. When Paula carries the NOL forward or back she isn’t allowed any future year subtractions due to depreciation differences. Example 2: Same as Example 1 except that Paula’s NOL was only $7,000. Paula still had an addition of $10,000 on her 2010 Oregon return. Paula would have been allowed to claim $10,000 in subtractions over the life of the assets bought in 2010 if she didn’t have an NOL. Because Paula had an NOL, the amount claimed in subtractions over the life of the assets bought in 2010 is reduced to $3,000 ($10,000 expens­ ing difference minus $7,000 already allowed as an NOL deduction). She will use a reasonable method to assign the $3,000 in Oregon adjusted basis to one or more of the assets purchased in 2010 to calculate her future years’ differences in depreciation. Oregon Depreciation Schedule. Use Schedule OR- DEPR to determine if your Oregon depreciation is the same as, or different from, your federal depreciation. Oregon depreciation on all property – Federal depreciation on the same property = Oregon difference in depreciation Oregon subtraction. If your Oregon depreciation is more than your federal depreciation on the same property, you’ll have a subtraction (subtraction code 354) for the difference. Oregon addition. If your Oregon depreciation is less than your federal depreciation on the same property, you’ll have an addition (addition code 152) for the difference. Go to our website to download Schedule OR-DEPR, or contact us to order it. Federal depreciation disconnect [Addition code 153] This addition is used for reporting a difference in federal and Oregon depreciation deductions due to a new change in federal law from which Oregon has disconnected. As of the date this publication was last revised, Oregon had not disconnected from any new federal depreciation expense provisions for this tax year. If your depreciation expense deduction for Oregon differs from federal for reasons other than a new fed­ eral disconnect, see “Depreciation difference for Ore­ gon” and Schedule OR-DEPR Instructions, Oregon Depreciation Schedule. Partnership and S corporation modifications for Oregon (ORS 314.712-314.752) [Addition code 119] [Subtraction code 323] If you received Schedule OR-K-1 from a PTE (partner­ ship, S corporation, or LLC filing as either), then you may have Oregon modifications or credits that flow through to your Oregon return. Your modification or credit is based on the total for the business multiplied Other items

150-101-431 (Rev. 09-30-22) 93 by your ownership percentage, which should have been calculated by the business. If the PTE provided you with a specific code for an Oregon addition or subtraction, use that code. Oth­ erwise, use the above codes to identify the addition or subtraction. If the PTE operates both in and out of Oregon, it has an apportionment percentage for the year. This per­ centage shows how much of the PTE’s income was from Oregon sources. If you were a nonresident for all or part of the year, this percentage should appear your Schedule OR-K-1, since it shows you how much of the income from your business is Oregon source. The PTE should have already multiplied your share of Oregon additions and subtractions by the PTE’s apportionment percentage. Business tax credits. Oregon credits that flow through may be required to be multiplied by your Oregon per­ centage on your part-year or nonresident return. See “Credits” for requirements. CPAR adjustments (ORS 314.733) [Addition code 187] [Subtraction code 384] If you’re an owner of a partnership that was subject to a partnership-level audit by the IRS (or you’re an owner of a tiered partner of such a partnership), you may have to increase or decrease your Oregon income as a result of the audit. Report an increase in income using addition code 187 or report a decrease in income using subtraction code 384, whichever is applicable. Use these codes even if another code is assigned for the specific type of increased or decreased income. Visit our website for more information. Basis of business assets transferred into Oregon (ORS 316.707) [Addition code 150] [Subtraction code 358] There are several ways that nonresidents can bring assets into Oregon’s taxing jurisdiction. For example: • You become an Oregon resident and transfer busi­ ness assets into Oregon. • You become an Oregon resident and leave the assets in the other state. • You open a business in Oregon and transfer busi­ ness assets into Oregon. Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller. The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Sec­ tion 179. The fair market value and useful life are fig­ ured when you bring the asset into Oregon. Reduce the federal unadjusted basis or the fair mar­ ket value of the asset by any Oregon depreciation previously allowed. Example: Bob was a California resident. He has owned a business in Yreka, California since 2000. Bob bought an office building in Yreka for $800,000. He placed it in service March 1, 2000. For federal purposes, the build­ ing is 31½-year real property and is being depreciated using the applicable percentages. On January 1, 2019, Bob bought a truck for $45,000. For federal purposes, the truck is five-year property and is being depreci­ ated using the applicable percentages. On January 1, 2022, Bob moved to Ashland, but he con­ tinues to operate his business in Yreka. At that time, the building had a fair market value of $1,473,000, and the truck’s fair market value was $27,000. Because Bob is an Oregon resident, he must determine his Oregon basis to depreciate his assets for Oregon. The Oregon adjusted basis is computed as follows: Building Smaller of: Cost of building (federal unadjusted basis) $ 800,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Net basis $ 800,000

or Fair market value as of January 1, 2022 $ 1,473,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Oregon fair market value $ 1,473,000 Bob will depreciate the building for Oregon using the $800,000 federal unadjusted basis and Modified Accelerated Cost Recovery System (MACRS) depre­ ciation for its original federal applicable recovery period. Truck Smaller of: Cost of truck (federal unadjusted basis) $ 45,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Net basis $ 45,000

or Fair market value as of January 1, 2022 $ 27,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Oregon fair market value $ 27,000 Other items

150-101-431 (Rev. 09-30-22) 94 Bob will depreciate the truck for Oregon using the $27,000 Oregon fair market value and MACRS depre­ ciation for its original applicable federal recovery period. Sale of assets (ORS 316.716) [Addition code 154] [Subtraction code 355] Gain or loss on property you began depreciating after 1980 and before 1985. During the tax year, did you sell property you began depreciating after December 31, 1980, and before January 1, 1985? If you did and didn’t make the one-time adjustment on your 1996 Oregon return, your gain or loss for Oregon may differ from your gain or loss for federal purposes. If you sold this property during the year, you must make an adjustment on your return to reconcile your Oregon basis to your federal basis. To figure your gain or loss for Oregon, use the depre­ ciation you claimed on your Oregon return in prior years. Subtract the total amount of gain or loss for Oregon property you began depreciating after 1980 and before 1985 from your gain or loss for federal purposes for the same property. The difference is an Oregon addition or subtraction. Keep a worksheet with your tax records to show how you figured the difference. Addition or subtraction If Oregon depreciation is less than your federal depreciation, you will have an Oregon subtraction. If Oregon depreciation is more than your federal depre­ ciation, you will have an Oregon addition. Partnerships and S corporations Partnerships report differences between federal and Oregon depreciation on the Oregon partner­ ship return. S corporations report the differences on Schedule SM of the Oregon S corporation return. The differences must also be shown on the partner’s or shareholder’s Schedule K-1 or equivalent. The differences will be added to or subtracted from income on the individual partner’s or shareholder’s Oregon income tax return. Gain on the sale of an Oregon residence (ORS 316.048) [Addition code 152] [Subtraction code 354] Generally, Oregon will tax the gain from the sale of your residence only when the federal government taxes it. Oregon won’t tax any gain excluded on your federal return. This is true even if you reinvest in a home outside Oregon. The Oregon basis of your home is generally the same as your federal basis. If your gain is taxed by the fed­ eral government, Oregon will tax the same amount of gain. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may not be the same as the federal basis due to depreciation differences. Note: If you are also taxed by another state or coun­ try on some or all of the gain, see “Mutually-taxed gain on the sale of residential property“ under “Stan­ dard credits.“ Fiduciary adjustment from Oregon estates and trusts (ORS 316.697) [Addition code 133] [Subtraction code 310] The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Sched­ ule OR-ASC or OR-ASC-NP as an addition using code 133 or as a subtraction using code 310. Example: Frank reported $5,000 of trust income from R&C Farewell Trust on federal Schedule E. Of this, $2,500 was from interest on U.S. obligations, which isn’t taxable by Oregon. He also received interest income of $1,000 from the trust that wasn't included in his federal income. This interest was from Cali­ fornia bonds and is taxable by Oregon. Frank should claim a $1,500 subtraction, the net of both fiduciary adjustment items, using subtraction code 310. Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year. Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income. Market-based sourcing (ORS 314.665) Oregon has changed from sourcing business income from the place where the cost of performance is incurred to the place where the taxpayer's market is located. This change affects nonresidents who do Other items

150-101-431 (Rev. 09-30-22) 95 business in Oregon who are required to apportion their business income among two or more states. Example: Andrew, a tax professional and Washing­ ton state resident, advertises his services in Oregon, Idaho, and Washington and has clients in all three states. He provides services for his clients out of his Washington office. He earned $400,000 from his Oregon clients, $350,000 from his Idaho clients, and $250,000 from his Washington clients. Although his work is performed in Washington state, Andrew would report 40 percent of his sales ($400,000) as Oregon income because 40 percent of his market is in Oregon. Passive activity losses (PALs) (ORS 314.300) [Addition code 155] [Subtraction code 356] Generally, a passive activity is any: • Rental activity including equipment and real estate, regardless of your level of participation; or • Business in which you don’t materially participate on a regular, continuous, and substantial basis. Oregon generally adopted the federal passive loss rules in the federal Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. There are some differences in passive losses for Oregon. How to compute and report passive losses for Oregon 1. Modify the federal passive loss by the applicable additions and subtractions listed under “Oregon modifications to federal passive activity losses.“ 2. Apply the federal passive loss limitations to the Oregon passive loss you computed in step 1 above. This will determine how much is deductible for Oregon. To apply the income limitations, use fed­ eral AGI before modifying for Oregon additions or subtractions. 3. Figure the difference between the passive loss reported on your federal return and the deduct­ ible Oregon loss you figured above. You will claim an addition or subtraction on your Oregon return. 4. Keep a schedule with your tax records showing your computations for steps 1, 2, and 3 above. 5. Also keep a schedule (when applicable) showing the allocation of Oregon modifications between the Oregon passive loss activities and other busi­ ness activities. Example: Depreciation modification. Elijah has deter­ mined that his depreciation for Oregon is more than his federal depreciation by $1,000. Ordinarily, he would report a $1,000 subtraction on his Oregon return for the difference in depreciation. Of the $1,000 difference in depreciation, $600 is allo­ cable to passive activities and $400 is allocable to other business activities. His Oregon passive activity loss is his federal passive activity loss increased by the $600 difference in depreciation. He reports the remaining $400 difference in depreciation allocable to other business activities as a subtraction on his Oregon return. Passive activity credits. You can offset in full the tax credits related to a passive activity against your Ore­ gon tax liability for the taxable year. Active participants in rental real estate activities. The $25,000 offset for rental real estate activities provided in IRC Section 469(i) applies to deductions allowed under federal and Oregon law. Don’t reduce the off­ set by deduction equivalents defined in IRC 469 Sec­ tion (j)(5). The phaseout amounts ($100,000/$150,000) are based on federal AGI regardless of whether you are a full-year resident, part-year resident, or nonresi­ dent of Oregon. Part-year residents. Compute your passive activity losses from activities carried on while an Oregon resident. Add those connected with Oregon sources while a nonresident. Modify the result by applicable additions and subtractions listed here. Nonresidents. Compute your passive activity losses from activities connected with Oregon sources. Modify the loss by the applicable additions and subtractions listed here. The loss must be connected with Oregon sources even if you later become an Oregon resident. Oregon modifications to federal passive activity losses Listed here are some of the modifications you must make for Oregon: 1. Additions: • Interest or dividends on obligations of another state. • Depletion in excess of the adjusted basis of property. • Gain on voluntary or involuntary conversions or exchanges of Oregon property reinvested outside Oregon when no election is made to defer it. 2. Subtractions: • Gain or loss on the sale of public utility stock where dividends were reinvested. • Interest or dividends on obligations of the U.S. government. • Wages you didn’t deduct from federal taxable income because you claimed the federal work opportunity credit. • Interest or dividends on obligations of Oregon political subdivisions. Other items

150-101-431 (Rev. 09-30-22) 96 3. Additions or subtractions: • Differences in depreciation. • Differences in gain or loss from basis differences in the sale of an asset. Note: Items used to modify the federal passive activ­ ity loss must occur in the ordinary course of a trade or business. See OAR 150-314-0110 for more information. Suspended losses (ORS 316.048) [Addition code 156] [Subtraction code 357] Suspended losses are passive activity losses that must be carried over from the loss year to a later tax year. These losses may be used to offset gain when you dispose of your entire interest in the passive activity in a fully taxable transaction under IRC Section 469. You may have an addition if the transaction is taxable by Oregon and a suspended loss was incurred while you were a nonresident. You may have a subtraction if the transac­ tion is not taxable by Oregon but you were a resident dur­ ing the year when the suspended loss was incurred. See “Passive activity losses” for more information. Oregon percentage (ORS 316.117) Part-year residents and nonresidents must compute an Oregon percentage. This determines allowable deduc­ tions, modifications, Oregon tax , and some tax credits. In most cases, you’ll divide your income after sub­ tractions from the Oregon column by your income after subtractions from the federal column. Carry the decimal to three places and enter the figure on the Oregon percentage line. Don’t fill in more than 100 percent or less than 0. Negative income. If the federal column is negative and the Oregon column is positive, your Oregon percentage is 100 percent. If the federal column is positive or nega­ tive and the Oregon column is negative, your Oregon percentage is 0 percent. If both columns are negative, treat both columns as if they were positive and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon number, divide the federal number by the Oregon number. See Table 12 for examples. Example: Lisa reported $30,000 of income after sub­ tractions in the federal column. She reported $10,000 of income after subtractions in the Oregon column. Here’s how she figured her Oregon percentage: $10,000 ÷ $30,000 = 0.333 or 33.3% Table 12. Oregon percentage examples

Federal column Oregon column Oregon percentage ($20,000) $42,000 100.0% $50,000 ($22,000) 0.0% ($25,000) ($15,000) 100.0% ($12,000) ($15,000) 80.0% Deductions and modifications

(ORS 316.695) You may claim either Oregon itemized deduc­ tions or Oregon’s standard deduction, whichever is larger, but not both. You can claim Oregon item­ ized deductions even if you’re claiming the stan­ dard deduction on your federal return. Oregon itemized deductions Oregon Schedule OR-A. Oregon has its own form for reporting itemized deductions. If you're itemizing your deductions for Oregon, include Schedule OR-A with your Oregon return whether or not you're item­ izing deductions on your federal return. You still use federal definitions and AGI to figure any itemized deduction limitations. For more information, see the instructions for Schedule OR-A. Itemized deduction add backs Certain items that you may be including on Sched­ ule OR-A must be modified for Oregon purposes. If you’re claiming a deduction that must be modified for Oregon, you may need to add back some (or all) of the amount you deducted. All deductions that must be added back can be found under “Additions.” Follow these instructions for reporting an itemized deduction add back: • Full-year residents: Enter the amount you’re add­ ing back with the indicated addition code on Sched­ ule OR-ASC, section A. • Part-year residents and nonresidents: Use the indicated modification code and enter the dollar amount with a minus sign to report the add back as a “negative modification” on Schedule OR-ASC- NP, section D. Other Oregon modifications Part-year residents and nonresidents. Most income items that are modified for Oregon are reported as additions or subtractions. However, a few items must be reported by part-year residents and nonresidents as modifications on Schedule OR-ASC-NP. These are: • Artist’s charitable contribution subtraction (part- year filers only). Other items

150-101-431 (Rev. 09-30-22) 97 • Federal income tax refund addition (negative modification). • Subtraction for federal tax from a prior year. • Foreign tax subtraction. See these items under “Additions” or “Subtractions” and the instructions for Schedules OR-ASC and OR- ASC-NP for more information. Oregon standard deduction Use the standard deduction only if it’s larger than your Oregon itemized deductions. If your filing status is married filing separately and your spouse itemizes, your standard deduction is $0. Generally, your standard deduction is based on your filing status: Single …………………………………………… $2,420 Married filing jointly ………………………………$4,840 Married filing separately If spouse claims standard deduction ………$2,420 If spouse claims itemized deductions …………… $0 Head of household …………………………… $3,895 Qualifying surviving spouse ………………… $4,840 Standard deduction—Nonresident aliens. The stan­ dard deduction for nonresident aliens is $0. Standard deduction—Short-period return. Individu­ als filing a short-period return may not claim a stan­ dard deduction. Standard deduction—Age 65 or older, blind. If you or your spouse turned 65 on or before January 1, 2023, or if you or your spouse are blind, you’re entitled to an additional deduction amount. If you checked one or more of the boxes on line 17 of your Oregon Form OR-40 or line 38 of your Oregon Form OR-40-N or OR-40-P, multiply the number of boxes checked by: • $1,000 if married or qualifying surviving spouse. • $1,200 if single or head of household. Add this amount to the standard deduction amount for your filing status from above. Example 1: Matt and Sandy are married and file a joint return. Matt is 67 years old, and Sandy, age 62, is blind. They check boxes 17a and 17d on their Form OR-40. Their total standard deduction is $6,840. They figure their standard deduction as follows:

$4,840 Standard deduction for their filing

status MFJ

$2,000 2 x $1,000

$6,840 Total standard deduction Standard deduction—Single or married filing jointly dependents. If you (or you and your spouse, if fil­ ing jointly) can be claimed as a dependent on another person’s return, use the following worksheets to fig­ ure your standard deduction. Use these worksheets even if the other person doesn’t claim you (or your spouse, if filing jointly). Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually perform, and any part of a scholarship or fellowship grant that you must include in your gross income. Use your earned income from all sources even if you are a part-year resident or nonresident. Standard deduction worksheet for single dependents 1. Enter your earned income. 1. 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,150 5. Enter the larger of line 3 or 4. 5. 6. Basic standard deduction for single. 6. $ 2,420 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2023, enter $1,200; if not, enter $0. 8. 9. If blind, enter $1,200; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 2: Homer is single, age 17, not blind, and claimed as a dependent by his father. He had $1,135 of earned income. Homer’s standard deduction is $1,535, figured as follows: 1. Enter your earned income. 1. $ 1,135 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. $ 1,535 4. Minimum standard deduction, set amount. 4. $ 1,150 5. Enter the larger of line 3 or 4. 5. $ 1,535 6. Basic standard deduction for single. 6. $ 2,420 7. Enter the smaller of line 5 or 6. 7. $ 1,535 8. If age 65 by 1/1/2023, enter $1,200; if not, enter $0. 8. $ 0 9. If blind, enter $1,200; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 1,535 Other items

150-101-431 (Rev. 09-30-22) 98 Standard deduction worksheet for married filing jointly (MFJ) dependents 1. Enter your earned income. 1. 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,150 5. Enter the larger of line 3 or 4. 5. 6. Standard deduction for MFJ. 6. $ 4,840 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2023, enter $1,000; if not, enter $0. 8. 9. If blind, enter $1,000; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 3: Jack and Kris are married and are both full-time college students. Jack is 20 and Kris is 21. Neither is blind. They live in Jack’s parents’ home and are both claimed as dependents by Jack’s par­ ents. Jack and Kris work part-time at the university. Together they had $7,620 of wage income. Jack and Kris will file a joint tax return. They calculate their standard deduction as follows: 1. Enter your earned income. 1. $ 7,620 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. $ 8,020 4. Minimum standard deduction. 4. $ 1,150 5. Enter the larger of line 3 or 4. 5. $ 8,020 6. Basic standard deduction for MFJ. 6. $ 4,840 7. Enter the smaller of line 5 or 6. 7. $ 4,840 8. If age 65 by 1/1/2023, enter $1,000; if not, enter $0. 8. $ 0 9. If blind, enter $1,000; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 4,840 Oregon deferral of reinvested capital gain (1995 Or Laws ch. 809) [Addition code 118] From 1996 to 1999, taxpayers were allowed to defer their Oregon personal income tax on certain capital gains if the gains were timely reinvested in assets used in types of business activities. An addition is required for the tax year when the deferred gain must be recognized. Reasons for recognition include ceasing to use the asset in an approved manner, dis­ posing of the asset, and ending approved business activities. Federal law disconnect [Addition code 131] Use this addition code to report items that were excluded or deducted from your federal taxable income and should be added back for Oregon pur­ poses, where those items don’t already have an assigned addition code. Contact us if you have ques­ tions about a situation involving a disconnect from federal taxable income that isn’t described elsewhere in this publication. Other items

150-101-431 (Rev. 09-30-22) 99 Credits Types of credits There are three types of Oregon tax credits: standard, carryforward, and refundable. In addition, some of these credits require certification from another state agency. Certain credits must be prorated on part-year and nonresident returns. Refer to the instructions for the credit you are claiming for specific details. Standard credits. These credits aren’t refundable. They can’t exceed your tax liability for the current tax year. Unused credit in excess of your tax liability can’t be carried forward to a later tax year. Carryforward credits. These credits aren’t refund­ able. They can’t exceed your tax liability for the cur­ rent tax year, but you may carry forward the unused amount to a later tax year. Refundable credits. Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability will be refunded to you. Certified credits. For certain credits, you must qual­ ify, apply, and be certified before you can claim them on your return. Other agencies, not the Department of Revenue, are responsible for certifying these cred­ its. Contact information can be found in the instruc­ tions for each certified credit in this section. Full-year residents. All credits you qualify for are allowed on Form OR-40. Part-year residents and nonresidents. You must pro­ rate certain Oregon credits by multiplying your total credit by your Oregon percentage from Form OR- 40-N or OR-40-P to figure the amount you can claim on your Oregon return. You must prorate the follow­ ing credits: • ABLE account contributions. • Agriculture workforce housing. • Bovine manure production/collection. • Crop donation. • Earned income. • Employer scholarship. • Fish screening devices. • Oregon 529 College Savings Network contributions. • Oregon Cultural Trust. • Oregon Veterans’ Home physicians. • Personal exemption. • Reservation enterprise zone. • Rural emergency medical technicians. • Rural medical practitioners. • Rural technology workforce development. • Short line railroad rehabilitation. • University Venture Development Fund contributions. • Working family household and dependent care. S corporation shareholders. Certain carryforward credits earned by S corporations pass through to shareholders, who then claim these credits on their personal income tax returns. Each of these credits may only be claimed on an Oregon personal income tax return by shareholders of an S corporation that qualifies for the credit or, if the credit is transferable, is a qualified transferee of the credit from another corporation that earned the credit. Except as noted, each credit is limited to the shareholder’s income tax liability for the year, although the carryforward pro­ visions may vary. For more information about credits available to S corporations, visit our website. Tax recaptures. Forfeited credits are reported as tax recaptures on Schedule OR-ASC, section E, or Sched­ ule OR-ASC-NP, section G, and on your Oregon return as an addition to tax. See “Additions to tax” in “Oregon tax” for more information. Claiming credits. The exemption credit, political con­ tribution credit (full-year filers), and earned income credit are claimed on specific lines on the return. All other credits are reported on Schedule OR-ASC or Schedule OR-ASC-NP. The schedule contains sec­ tions that are specific for each of the three types of credits. Enter the credit code and the amount you are claiming in the applicable section. The total dol­ lar amount of the credits entered in each section is reported on your return. See the explanation for the specific credit on the following pages to find its code number and more detailed instructions. A list of all credits and their code numbers is included in the Appendix. If you claim any credits on Schedule OR-ASC or OR-ASC- NP, include the schedule when you file your return. Credits

150-101-431 (Rev. 09-30-22) 100 Standard credits Exemption credit (ORS 316.085) This year’s maximum credit is $219 for each quali­ fying personal exemption. The exemption amount is indexed for inflation. A personal exemption credit isn’t allowed if your fed­ eral AGI on line 7 of Form OR-40, or line 29F of Form OR-40-N or Form OR-40-P exceeds: • $200,000 for married filing jointly, head of house­ hold, or qualifying surviving spouse; or • $100,000 if your filing status is single or married filing separately. Part-year residents and nonresidents. Multiply your personal exemption credit by your Oregon percentage. Personal exemption The term “personal exemption” refers to an individ­ ual who qualifies for a personal exemption deduction on the federal return under IRC Section 151. Through tax year 2025, the amount of the federal deduction is $0; however, the qualifications for the deduction under IRC Sections 151 and 152 haven’t changed, and neither have the qualifications for claiming the Ore­ gon personal exemption credit. An individual who qualifies for a personal exemption deduction under IRC Sections 151 and 152 includes: • The taxpayer (including both the primary and sec­ ondary taxpayers who file a joint return); • The taxpayer’s spouse, if the taxpayer is filing a separate return and the spouse has no gross income and doesn’t qualify for an exemption deduction on another taxpayer’s return; and • The taxpayer’s qualifying child or qualifying relative. Qualifying child. A qualifying child is an individual who is the taxpayer’s: • Child or the child’s descendant, or • Brother, sister, stepbrother, stepsister; or their descendant. The term “child” includes a son, daughter, stepson, or stepdaughter; and includes legally-adopted children and foster children who have been placed with the taxpayer by an authorized placement agency or by court order. At the end of the calendar year, the child must be: • Under the age of 19; or • A student under the age of 24; or • Permanently and totally disabled, regardless of age. A “student” is an individual who attended an edu­ cational organization on a full-time basis during each of five calendar months during the tax year. The educational organization must have a regular faculty and curriculum, with a regularly-enrolled student body who attend where the organization’s educa­ tional activities normally take place. An individual who is a “permanently and totally dis­ abled” child is one who is unable to engage in any “sub­ stantial gainful activity,” as that term is defined under federal law, due to a physical or mental impairment that is medically determinable and can be expected to result in death, or which has lasted, or can be expected to last, for at least 12 continuous months. Qualifying relative. A qualifying relative is an indi­ vidual for whom the taxpayer pays over one-half of the individual’s support for the year, and who is the taxpayer’s: • Child, brother, sister, stepbrother, or stepsister, or their descendant, who isn’t also a qualifying child of the taxpayer; • Father or mother, or their ancestor; • Stepfather, stepmother, father-in-law, or mother-in-law; • Brother-in-law or sister-in-law; • Uncle or aunt; • Nephew or niece; or • An individual who isn’t listed above but is a mem­ ber of the taxpayer’s household and has the same principal place of abode as the taxpayer. The qualifying relative can’t have gross income for 2022 that exceeds $4,400, and can’t be claimed on another tax­ payer’s return. They must also be a U.S. citizen or national, or a resident of the United States, Mexico, or Canada. Special rule for custodial parents. If a qualifying child receives over one-half of their support from parents who are divorced, legally separated, or living apart for the last six months of the year, and the child is in the custody of one or both parents for more than half of the year, the personal exemption credit for the child may be claimed by the noncustodial parent if the custodial parent (the parent who has custody for the greater part of the year) makes a written statement releasing the exemption to the noncustodial parent for the tax year. The custodial parent’s written statement should be kept with the taxpayer’s records; we may ask for it later. For additional information about requirements for the personal exemption deduction, including details about certain exceptions and support limitations, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information. Credits–Standard

150-101-431 (Rev. 09-30-22) 101 You and your spouse You are allowed one personal exemption credit for yourself if no one else can claim you as a dependent. You are allowed one personal exemption credit for your spouse if no one else can claim your spouse as a dependent and: • You’re filing a joint return, or • Your filing status is married filing separately and your spouse has no income. If someone else can claim you as a dependent, you can’t claim an exemption for yourself. If someone else can claim your spouse as a dependent, you can’t claim their exemption. This is true even if the other person doesn’t claim you (or your spouse) as a dependent. Severely disabled (ORS 316.752 , 316.758) Did you have a severe disability at the end of the tax year? If so, you can claim an additional personal exemption credit if your federal AGI doesn’t exceed $100,000, regardless of your filing status. You may qualify for the severely disabled exemption even if someone else can claim you as a dependent. You’re considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet or legs; or • You permanently lost the use of both hands; or • You’re permanently blind; or • You have a permanent condition or an impairment of indefinite duration that limits your ability to:

— Earn a living, or

— Maintain a household, or

— Transport yourself. Deafness or hearing impairment alone don’t qualify as a severe disability for purposes of this additional exemption credit. This is true regardless of any special equipment you may use in your home or workplace. You don’t qualify for this exemption if: • You have a temporary disability from an injury or illness and are expected to recover; or • Your condition keeps you from doing your former work but not from doing other kinds of work with­ out special equipment; or • Your federal AGI is more than $100,000, regardless of your filing status. If you have a permanent severe disability, your physi­ cian must write a letter describing it. Keep the letter with your permanent health records. If you qualify, check the “Severely disabled” exemp­ tion box on your return. If your spouse qualifies, they may also claim this additional exemption credit. All dependents You are allowed one personal exemption credit for: • Each qualifying child you're able to claim as a dependent, and • Each of your other qualifying relatives. On your Oregon return, you must include the fol­ lowing information for all dependents: first and last name, relationship to you, Social Security number, and date of birth. Child with a disability (ORS 316.099) You may be entitled to an additional exemption credit for your dependent child who has a qualifying dis­ ability. To qualify, all of the following must be true. Your federal AGI must not be more than $100,000, regardless of your filing status, and your child: • Qualified as your dependent for the year, and • Was eligible for early intervention or special edu­ cation services, as defined by the Department of Education, and • Was considered to have a disability as of Decem­ ber 31, 2022, under the federal Individuals with Disabilities Education Act, and • Was age 21 or younger at the end of the tax year. Eligible disabilities and their Oregon Department of Education code numbers include:

— Autism spectrum disorder (82).

— Communication disorder (50).

— Deafblindness (43).

— Developmental delay (98).

— Emotional disturbance (60).

— Hearing impairment (20).

— Intellectual disability (10).

— Orthopedic impairment (70).

— Other health impairment (80).

— Specific learning disability (90).

— Traumatic brain injury (74).

— Visual impairment (40). Each year, you must be able to provide an eligibility statement that confirms one of the disabilities listed above from the child’s Individualized Education Pro­ gram (IEP) or Individualized Family Service Plan (IFSP). Keep the eligibility statement with your per­ manent health records. If your dependent qualifies, mark the “Child with qualifying disability” box by your dependent’s name on your return. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 09-30-22) 102 Income taxes paid to another state on mutually-taxed income (ORS 316.082, 316.131) [Credit code 802] You may be able to claim a credit on your Oregon return if you have income that was taxed by Oregon and another state. If you pay tax to both Oregon and the other state, you have “mutually-taxed income.” Jurisdiction to tax. Certain types of income can be taxed by only one state. This credit is allowed only if Oregon taxed the income and the other state also had a right to tax the same income. For instance, if you live in Oregon, other states can’t tax your pen­ sion income. Only the state you live in can tax your pension income. Therefore, if you pay tax to Oregon and another state on your pension income, you can’t take a credit for that tax. You can’t take a credit for paying tax you don’t owe. State income tax only. This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, alternative min­ imum tax (AMT), property tax, or other state taxes that aren’t based on income. For example, the Idaho Permanent Building Fund Tax and the Washington Business and Occupation (B & O) Tax don’t qualify because they aren’t based on income. Nonresident reciprocity. Oregon is one of five states that allow a credit to be claimed by a nonresident for tax paid to the nonresident’s home state on income that is taxed by Oregon and the home state. The other four states are Arizona, California, Indiana, and Vir­ ginia. If you are a resident of one of those four states, you may claim a credit on your Oregon nonresident return for tax you paid to your home state on the mutually-taxed income. Sale of residence. If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either this credit or the credit for mutually-taxed gain on the sale of residential property. You can’t claim both credits. See “Mutu­ ally-taxed gain on the sale of residential property“ for more information about that credit. When can this credit be claimed? You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit. Tax paid in different years. If you paid tax to Oregon and another state on the same income, but in differ­ ent tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information. Who may claim this credit? Full-year residents. Claim the credit on your Oregon return only if the income is taxed by both Oregon and a state other than Arizona, California, Indiana, or Virginia. If you are a full-year Oregon resident with income that is taxed by Arizona, California, Indiana, or Virginia, you must claim the credit on the nonresident return that you file with that state; don’t claim the credit on your Oregon return. See “Note for full-year residents” and “Exception for Oregon resident partners and S corporation shareholders.” Example 1. Roy is a full-year Oregon resident. He has wages from a job in Idaho and income from rental property he owns in California. His Idaho wages and California rental income are taxed by Oregon as well as those states. Roy may claim a credit on his Oregon return for taxes paid to Idaho. He must claim a credit on his California nonresident return for taxes paid to Oregon. Note for full-year residents. If one of the listed states doesn’t allow the credit on your nonresident return, you may amend your Oregon return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to Arizona, California, Indiana, or Virginia on income that was also taxed by Oregon; 2. You paid that state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the nonresident return you filed with that state; and 4. That state didn’t allow your credit. Part-year residents. Your credit is a combination of an amount based on your mutually-taxed income during the part of the year that you were a nonresi­ dent and an amount based on your mutually-taxed income during the part of the year that you were a resident. • Claim the credit on your Oregon return for the part of the year you were a nonresident of Oregon only if you pay taxes on income that is mutually taxed by Oregon and Arizona, California, Indiana, or Virginia. If the income was taxed by Oregon and a state other than those listed, you must claim a credit for taxes paid to Oregon on the return you file with the other state. See “Note for nonresidents.” • Claim the credit on your Oregon return for the part of the year you were a resident of Oregon if you pay Oregon tax on income that was mutually taxed by a state other than Arizona, California, Indiana, or Virginia (or you meet the “Exception for Oregon Credits–Standard

150-101-431 (Rev. 09-30-22) 103 resident partners and S corporation shareholders”). See “Note for full-year residents“ above. Example 2: Charlotte operates a business in Oregon. She moved from Oregon to Virginia in May, but con­ tinued to have income from her Oregon business after she moved. She also had income during the year from rental properties she owns in Oregon, Virginia, and Georgia. She files a part-year Oregon return, a part-year Virginia return, and a nonresident Geor­ gia return. She will claim a credit for taxes paid to another state on each kind of income as follows: • Oregon business income. Charlotte will pay tax to Oregon for the part of the year she was a resident, and to both Oregon and Virginia for the part of the year she was a nonresident. She may claim a credit on her Oregon return for taxes paid to Virginia for the part of the year that she was a nonresident of Oregon. • Georgia rental income. Charlotte will pay tax to both Oregon and Georgia on this income only dur­ ing the part of the year that she was a resident of Oregon. Once she moved to Virginia and was no longer an Oregon resident, Oregon stopped having the right to tax this income. She may claim a credit on her Oregon return for tax paid to Georgia only for the part of the year that she was an Oregon resi­ dent. She will claim a credit on her Virginia return for tax paid to Georgia for the part of the year that she was a Virginia resident. • Virginia rental income. Charlotte will pay tax to both Oregon and Virginia for the part of the year that she was a resident of Oregon, and only to Vir­ ginia after she moves. She can’t claim a credit on her Oregon return for taxes paid to Virginia on this income when she was an Oregon resident. Instead, she must claim a credit for taxes paid to Oregon on her Virginia return for the part of the year that she was a nonresident of Virginia. Example 3: Kim and Jimmy lived and worked in New Mexico. At the end of August, they quit their jobs and moved to Oregon. In September they both got new jobs in Oregon. Their wages were their only source of income for the year. Kim and Jimmy paid tax to New Mexico only on the wages they earned when they lived in New Mexico, and they paid Oregon tax only on the wages they earned after they moved to Oregon. They can’t claim a credit for tax paid to either state because they didn’t have income that was mutually taxed by both states. Nonresidents. You may claim a credit on your Ore­ gon return for tax paid to your state of residence on mutually-taxed income if your state offers a recipro­ cal credit for Oregon residents. As noted above, the states with a reciprocal credit are Arizona, Califor­ nia, Indiana, or Virginia. If you pay Oregon tax on income that is also taxed by a state other than those listed, you must claim the credit for taxes you paid to Oregon on the return you file with the other state. See “Note for nonresidents.“ Example 4: Elisa, a calendar-year taxpayer, was a resident of Indiana who receives income from an upscale boutique she owns in Oregon. Last year, Elisa claimed a credit for taxes paid to Indiana on the mutually-taxed income from the boutique on her Oregon nonresident return. On January 1 of this year, Elisa moved away from Indiana and became a resident of Hawaii. She still receives income from the boutique in Oregon. Because Hawaii isn’t one of the nonresident reciprocity states, Elisa must claim a credit for taxes paid to Oregon on the return she files with Hawaii. Note for nonresidents. If a state (other than those listed above) doesn’t allow your credit, you may amend your Oregon nonresident return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to a state (other than Arizona, Cali- fornia, Indiana, or Virginia) on income that was also taxed by Oregon; and 2. You paid the other state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the other state’s return; and 4. The other state didn’t allow your credit. How do I calculate the credit amount? The procedure for calculating the credit depends on whether you are a full-year resident, a part-year resident, or a nonresident of Oregon. If you paid tax to multiple states on income that is also taxed by Oregon, calculate the credit for each state separately, without regard to any credit for tax paid to any other state. Use these formulas and definitions to calculate the credit amount according to your residency status. Formula I Modified AGI taxed by both states Modified AGI x Your Oregon tax after all other credits Formula II Modified AGI taxed by both states Total income on the other state’s return x Other state’s tax after all other credits Modified AGI • Full-year residents. Your modified AGI is your fed­ eral AGI modified by certain Oregon additions and subtractions. • Part-year residents and nonresidents. Your modi­ fied AGI is the part of your federal AGI that is Credits–Standard

150-101-431 (Rev. 09-30-22) 104 taxable to Oregon, modified by certain Oregon additions and subtractions. Oregon additions. These are generally items of income that are taxed by Oregon but not by the federal government. See “Additions” for more information. Oregon subtractions. These are generally items of income that are taxed by the federal government but not by Oregon. For example, U.S. bond interest is an Oregon subtraction because it’s income reported on your federal return that isn’t taxed by Oregon. Note: Don’t subtract the federal tax you paid on the sub­ tracted income, because it isn’t an income item. See “Subtractions” for more information. Oregon tax after all other credits Your Oregon tax after all other credits is your tax after standard, carryforward, and refundable cred­ its and tax recaptures, but before any credit for taxes paid to another state on mutually-taxed income. Full-year residents Claim the credit on your Oregon return only if your income is taxed by Oregon and a state other than Ari­ zona, California, Indiana, or Virginia. The credit for a full-year resident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to the other state; or • The amount calculated with Formula I. Note: Full-year residents don't use Formula II. Example 5: Manar's AGI is $44,000. This includes $10,000 of rental income taxed by both Oregon and Idaho and $5,000 of U.S. bond interest. She received $1,000 in interest from municipal bonds from another state. She has a federal tax liability of $3,000. Her Idaho income tax is $300. Her net Oregon tax is $2,000 (before her credit for income taxes paid to another state). Here’s how she calculates her modified AGI and Formula I: Federal AGI $ 44,000 Modifications

Add municipal bond interest + 1,000

$ 45,000

Less U.S. bond interest – (5,000 )

Modified AGI $ 40,000 Note: The federal tax subtraction isn’t used in this computation because it isn’t an income item. Formula I: ($10,000 ÷ $40,000) × $2,000 = $500. Manar’s credit is $300, the smallest of: • Her Oregon tax after all other credits ($2,000); or • The tax actually paid to Idaho ($300); or • The amount from Formula I ($500). Part-year residents Your credit for the part of the year that you were a nonresident is the smallest of: • Your Oregon tax on mutually-taxed income from the nonresident period after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia on that same income; or • The amount figured using Formula I; or • The amount figured using Formula II. For the part of the year that you were a resident, your credit is the smallest of: • Your Oregon tax on mutually-taxed income while you were a resident after all other credits; or • The tax on that same income you actually paid to a state other than Arizona, California, Indiana, or Virginia; or • The amount calculated with Formula I. Important—Don't use Formula II to calculate the credit for the part of the year that you were a resident. Example 6: Ezra moved from Idaho to Oregon on September 1. He sold Oregon property on June 10, and sold Idaho property on October 18. He worked in Idaho all year. His Idaho income tax after credits is $2,000; of this amount, $700 is on income he received when he was an Oregon resident. His Oregon income tax liability after other credits is $400; of this amount, $150 is on income received during the part of the year when he wasn't an Oregon resident. His income on his Oregon and Idaho returns is: Oregon income Sale of Oregon property June 10 $ 13,500 Wages September 1 to December 31

9,000 Interest September 1 to December 31

500 Sale of Idaho property October 18: Idaho capital gain reported + 6,000* Total AGI taxable to Oregon $ 29,000 Idaho income Sale of Oregon property June 10 $ 13,500 Wages January 1 to December 31

27,000 Interest January 1 to August 31

1,000 Sale of Idaho property October 18: Idaho capital gain reported. 6,000 Less Idaho capital gain exclusion* ($3,600) Net capital gain taxed by Idaho 2,400 Total AGI taxable to Idaho $ 43,900 Credits–Standard

150-101-431 (Rev. 09-30-22) 105 *If the other state has any income exclusion that applies to the mutually-taxed income, you must adjust the mutually- taxed income by the exclusion amount. In this example, Ezra’s federal capital gain is $19,500. Idaho allows Ezra to exclude 60 percent, or $3,600, of his $6,000 capital gain from the sale of the Idaho property. Ezra’s mutually-taxed income is $24,900 [($6,000 – $3,600) + 13,500 + 9,000]. Nonresident period. Ezra had $13,500 in mutually- taxed income while he was a nonresident. However, because Idaho isn’t one of the four listed states, Ezra must claim his credit for the tax paid to Oregon while he was an Idaho resident on his Idaho part-year return. Residency period. Ezra had $11,400 in mutually- taxed income when he was an Oregon resident: the $9,000 in wages earned from working in Idaho, and the $2,400 portion of the capital gain taxed by Idaho. His total income while he was a resident was $16,000: the $9,000 in wages, $1,000 in interest, and $6,000 cap­ ital gain from the Idaho property. Ezra compares the tax paid to Oregon and Idaho on income received while he was an Oregon resident to the result he gets from Formula I: Formula I: ($11,400 ÷ $16,000) × $250 = $178 His credit for the resident part of the year is $178, the smallest of: • His Oregon tax after all other credits ($250); • The tax actually paid to Idaho ($700); or • The amount from Formula I ($178). Nonresidents The credit for a nonresident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia; or • The amount figured using Formula I; or • The amount figured using Formula II. Example 7: Mary is a full-year resident of California. She lived in Oregon for 10 years prior to retiring to California. While living in Oregon, she acquired and maintained rental property there. She now receives installment payments from the sale of the property and pays tax to California on the gain and inter­ est. Her California income tax after credits is $100. Because she is an Oregon nonresident, only the gain is taxed on her Oregon nonresident return. Her Ore­ gon tax after credits is $350. Her income is as follows: Oregon income Capital gain on installment sale of real property $ 10,000 Total AGI taxable to Oregon $ 10,000 California income Capital gain on installment sale of real property $ 10,000 Interest on installment sale 5,000 Other interest 8,000 Business loss (20,000) Total AGI taxable to California $3,000 Her income taxed by both states is $10,000. To figure her credit, Mary compares the tax she paid to Oregon and California to the results of both Formula I and Formula II. • Formula I: ($10,000 ÷ $10,000) × $350 ($350). • Formula II: ($10,000 ÷ $3,000) × $100 ($333). Her Oregon credit is $100, the smallest of: • Her Oregon tax after all other credits ($350); or • The tax actually paid to California ($100); or • The amount from Formula I ($350); or • The amount from Formula II ($333). Where do I claim the credit? A credit for taxes paid on income taxed by more than one state is reported on Schedule OR-ASC, section C or Schedule OR-ASC-NP, section E. Use credit code 802. Enter the dollar amount of the credit and the two-letter postal abbreviation for the other state. If you are claiming a credit for taxes paid to more than one state, list each state separately. Include Schedule OR-ASC or OR-ASC-NP when you file your Oregon return, and keep the following with your tax records: 1. A complete copy of the other state’s income tax return; and 2. Proof of payment of the tax, such as:

— A copy of the check written to pay the tax at the time the other state’s return is filed;

— Copies of W-2 statements verifying withhold­ ing paid to the other state;

— A copy of a cashier’s check or other negotiable instrument;

— A copy of a canceled check showing payment of tax or estimated tax payments; or

— A receipt of tax payment. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Itemized deduction You can’t take a credit and a deduction for the same item on your return. If you're claiming a credit for taxes paid to another state on your Oregon return, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Credits–Standard

150-101-431 (Rev. 09-30-22) 106 Fiduciary returns. See the note under “Income taxes paid to another state by a pass-through entity” in “Additions” if the tax on which the credit is based is deducted on federal Form 1041. Exception for Oregon resident partners and S corporation shareholders Pass-through income taxes paid to another state [Credit code 815] Owners of companies taxed in Oregon as partner­ ships or S corporations may be able to claim a credit on their resident Oregon return for their proportion­ ate share of income taxes paid to another state by the entity. The tax must be an income tax, not a mini­ mum tax. For example, Washington state's B & O tax doesn't qualify for this credit. Claim the credit on your resident return, if: • You elected to be included in the entity’s group/ composite filing for the other state and the entity paid your tax liability; or • The entity was taxed directly by the other state. You’re considered to have paid a pro rata share of the income tax imposed on the entity by the other state. For an Oregon resident partner or S corporation shareholder, the allowable credit is the smallest of the following: • Oregon tax on the individual’s return; or • The individual’s pro rata share of the other state’s tax; or • The individual’s pro rata share of the mutually- taxed income from an S corporation or partnership return:

— Divided by the individual’s modified Oregon income, and

— Multiplied by the Oregon tax liability from the individual return. Example 1: Oliver is a full-year Oregon resident with modified Oregon income of $30,400 and Oregon tax (after all other credits) of $1,538. Oliver is a 10 percent shareholder of My Corp., an electing S corporation in California. California has a corporate tax of 1.5 per­ cent of income, with a minimum corporate franchise tax of $800. For this tax year, My Corp. earned $10,000 in ordinary business income, so Oliver’s share is $1,000. The corporation must pay California $800 of tax, and only $150 is attributable to income ($10,000 × 1.5%). Oliver’s share of this tax is $15. The $650 balance paid by My Corp is a minimum franchise tax and doesn’t qualify for this credit. Oliver’s Oregon credit for income taxes paid to another state is $15, the smallest of: • Oregon tax after all other credit: $1,538, • Pro rata share of California’s tax: $15, • ($1,000 ÷ $30,400) × $1,538 = $51. Oliver claims the credit on Schedule OR-ASC using credit code 815. Example 2: Monte, an Oregon resident, receives part­ nership income from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia doesn’t allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Monte can claim a credit on his Oregon resident return. Example 3: Kate, an Oregon resident, receives income from a partnership doing business in Hawaii. She reports AGI of $21,000, including gain on the sale of partnership property in Hawaii of $5,000. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Kate’s modified AGI is $20,000 ($21,000 of AGI minus the $1,000 basis adjustment). The mutually-taxed income is $4,000 ($5,000 gain minus the $1,000 basis adjustment). Her Oregon tax after all other credits is $1,100. Her pro rata share of Hawaii tax is $360. Kate’s Oregon credit for income taxes paid to Hawaii is $220, the smallest of: • Oregon tax after all other credits: $1,100. • Pro rata share of Hawaii’s tax: $360. • Formula I: ($4,000 ÷ $20,000) x $1,100 = $220. Note: Because Kate is an Oregon resident, she doesn’t use Formula II. Addition. If the PTE paid income tax to another state for itself or on your behalf and is deducting the tax on its own return, you’ll need to add the tax payment on your return. See “Income taxes paid to another state by a pass-through entity” in “Additions.” Mutually-taxed gain on the sale of residential property (ORS 316.109) [Credit code 806] If you sell your personal residence, your Oregon taxable gain will be the same as your federal tax­ able gain. Generally, any gain you excluded on your federal return will also be excluded on your Oregon return. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may be different from the federal basis due to depreciation differences. Credits–Standard

150-101-431 (Rev. 09-30-22) 107 You may qualify for this credit only if the gain on the sale of your residential property is taxed by both Oregon and another state or country. You may claim either this credit or the credit for income taxes paid to another state, but not both. You aren’t eligible to claim this credit if you qualify for a credit for income taxes paid to another state on the other state’s tax return. How much is the credit? The credit is the smaller of: • Mutually-taxed gain × Other state’s/coun­ try’s tax after all other credits Total income on the return of the other state/country or • Eight percent of the gain taxed by the other state/ country. Mutually-taxed gain. Your mutually-taxed gain is the total gain from the sale of your personal residence, reduced by any deductions or exclusions allowed by either the other state/country or Oregon. Oregon tax after all other credits. Your Oregon tax after all other credits is your tax after standard, carry­ forward, and refundable credits but before any credit for taxes paid to another state. Your tax includes tax recaptures but doesn’t include interest on installment sales. See “Additions to tax” for more information. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Itemized deduction If you claim this credit, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Oregon Cultural Trust contributions (ORS 315.675) [Credit code 807] Did you make a donation to an Oregon nonprofit cul­ tural organization during the tax year? If so, you can make a matching donation to the Trust for Cultural Development Account and get an Oregon tax credit. How much is the credit? You may get a credit of up to 100 percent of the amount of the matching contribution, to a maximum credit of $500 per taxpayer ($1,000 on jointly filed returns). For spouses who file separate returns, each may claim a share that would have been allowed on a joint return in proportion to the contribution each spouse made. Be sure to keep receipts from both organizations with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. For more information, contact the Oregon Cul­ tural Trust at 503-986-0088 or visit their website at www.culturaltrust.org. Oregon Veterans’ Home physicians (ORS 315.624) [Credit code 808] Physicians who provide medical care to residents of an Oregon Veterans’ Home (OVH) may be eligible for a credit of up to $5,000 per year. Who can claim the credit? Any resident or nonresident individual physician may qualify for the credit. The physician must be licensed to practice in Oregon (ORS chapter 677). They must pro­ vide care to a minimum of at least eight residents at an OVH. S corporation shareholders and partnership mem­ bers may only claim a credit based on the care they pro­ vided. The full amount of the credit shall be allowed to each taxpayer who qualifies in an individual capacity. How much is the credit? The credit is equal to the lesser of: • $1,000 for every eight residents for whom the physi­ cian provides care at an OVH; or • $5,000. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required You must obtain a letter from the OVH where you provided care. The letter must state that you missed no more than 5 percent of your scheduled visits dur­ ing the tax year. Keep the letter with your tax records; we may request it at a later date. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 09-30-22) 108 Political contributions (ORS 316.102) [Credit code 809—Schedule OR-ASC-NP only] Oregon law allows a tax credit for political contribu­ tions. You may not claim this credit if your federal AGI exceeds $150,000 on a jointly filed return, or $75,000 on all other returns. To qualify, you must have contributed money in the tax year you claim the credit. You must reduce the amount of your contribution by the fair market value (FMV) of any items or services you receive in exchange for your contribution. Contributions of goods or services don’t qualify. Keep receipts from the candidate or organization with your tax records. You can use copies of canceled checks as your receipt. How much is the credit? Your credit is equal to your contribution, limited to $100 on a joint return or $50 on a single or separate return. The $3 check-off on the Oregon tax return doesn’t qualify for this credit. Partners or S corporation shareholders can claim a credit for their share of political contributions made by the partnership or S corporation. The contribu­ tion must meet all statutory requirements. The $50 and $100 limits apply individually to each partner’s or shareholder’s return. Which contributions qualify? Candidates and their principal campaign commit­ tees. You can claim a credit for a contribution to a candidate for federal, state, or local elective office, or to the candidate’s principal campaign committee. To qualify, at least one of the following must occur in Oregon in the same calendar year in which you made your contribution: • The candidate’s name must be listed on a primary, general, or special election ballot, • A prospective petition of nomination must be filed by or for the candidate, • A declaration of candidacy must be filed by or for the candidate, • A certificate of nomination must be filed by or for the candidate, • A designation of a principal campaign committee must be filed with the Oregon Secretary of State’s Office. Note: The designation must be made in each year that a contribution is made in order to qualify under this provision. Political action committees. You can claim a credit for contributions to political action committees (PACs). The PAC must have certified the name of its political treasurer with the appropriate filing officer, usually the Secretary of State for statewide or regional elections, your county clerk for county elections, or your city recorder for city elections. PACs registered with the Federal Elections Commission may not be required to register in Oregon. Political parties. Political parties can be national, state, or local committees of major political parties. Oregon also allows a tax credit for contributions made to minor political parties that qualify under state law. Contact the Oregon Secretary of State’s Office in Salem at 503-986-1518 to see if a particular party qualifies. Newsletter fund–credit not allowed. Oregon doesn’t allow a credit for contributions made to a newsletter fund. Example 1: Holly contributes $275 for a fund-raising dinner for a presidential candidate. The FMV of the dinner was $35. Holly’s political contribution is $240, because she must reduce her $275 contribution by the $35 FMV of the dinner she received. Being single, Holly’s political contribution credit is limited to $50. Example 2: Burt donated a desk, chair, and a four- drawer file cabinet to his favorite PAC headquarters. The FMV of the furniture is $410. Burt has a written receipt from the PAC. He can’t claim a political contri­ bution credit because he didn’t contribute money to the PAC. His contribution of office furniture doesn’t qualify for the credit. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Reservation enterprise zone (ORS 315.506) [Credit code 810] Businesses in an Oregon reservation enterprise zone that pay tax to tribal governments can claim a credit against their Oregon income tax. The credit is equal to either: • The tribal property tax on a business facility that is paid or incurred during the tax year; or • Any tribal tax paid or incurred during the tax year the business first begins to operate in the reserva­ tion enterprise zone. The credit is allowed only if the tax is imposed uni­ formly in the territory. Contact the Oregon Economic and Community Development Department for the location of reserva­ tion enterprise zones at: www.oregon4biz.com. Credits–Standard

150-101-431 (Rev. 09-30-22) 109 Who can claim the credit? The credit is available to individuals, partnerships, and corporations. Any business activity qualifies, except property leasing. The business must have begun in 2002 or later. To compute your credit, fill out Schedule OR-REZT, Reservation Enterprise Zone Tax Credit. Download the schedule from our website or call us to order it. Keep the completed schedule with your tax records. Part-year residents and nonresidents. Multiply the credit allowable to a full-year resident by your Ore­ gon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Retirement income (ORS 316.157) [Credit code 811] Who can claim the credit? If you were age 62 or older at the end of the year, and receive taxable retirement income, you may qualify for this credit. Retirement income includes payments in Oregon taxable income from: • State or local government public pensions. • Employee pensions. • Individual retirement plans. • Employee annuity plans. • Deferred compensation plans including defined benefits, profit sharing, and 401(k)s. • Federal pensions (includes military) not subtracted from Oregon taxable income. How do you qualify for the credit? • Your household income is less than $22,500 ($45,000 if married filing jointly); and • Your Social Security and/or Tier 1 Railroad Retire­ ment Board (RRB) benefits are less than $7,500 ($15,000 if married filing jointly), and • Your household income plus your Social Security and Tier 1 RRB benefits is less than $22,500 ($45,000 if married filing jointly). What’s included in household income? Household income generally includes all income (both taxable and nontaxable) each spouse received during the year. Household income includes gross income reduced by adjustments as reported in your federal AGI. You also need to include items not in your federal AGI. These items include but aren’t limited to: • Veteran’s and military benefits. • Gifts and grants (total amount minus $500). • Disability pay. • Nontaxable dividends (other than “return of capital”). • Inheritance. • Insurance proceeds. • Nontaxable interest. • Lottery winnings. • RRB benefits (Tier 2 only). • Scholarships. • IRA conversions included in AGI. See the Household income checklist in the Appen­ dix for more help. Don’t include: • Social Security and Tier 1 RRB benefits. • Your state tax refund. • Pension income excluded from federal AGI that is a return of your contributions. • Pensions that are rolled over into an IRA that aren’t included in AGI. To determine household income, you must separate income (or loss) from businesses, farms, rentals or roy­ alties, and dispositions of tangible or intangible prop­ erty. Combine all income from similar sources for net income or loss. Any net loss from the source is lim­ ited to $1,000. NOL carrybacks or carryforwards aren’t allowed. Capital loss carryforwards aren’t allowed. If the combined total of your depreciation, depletion, and amortization deductions is more than $5,000, you must add the excess back into household income.You must also increase your household income by the Oregon income tax modification for depletion in excess of basis. How much is the credit? Use this worksheet to calculate your credit: 1. Enter the retirement income of the eligible individual(s) included on Form OR-40, line 7; or Form OR-40-N or OR-40-P Oregon column, lines 15S and 16S. (Don’t include Social Security/RRB benefits). 1. 2. Enter any federal pension income subtracted from Oregon income. See “Federal pension income.“ 2. 3. Net Oregon taxable pension. Line 1 minus line 2. 3. 4. Enter $7,500 ($15,000 if married filing jointly). 4. 5. Enter both spouses’ total Social Security and Tier 1 RRB benefits. 5. 6. Line 4 minus line 5, but not less than $0. 6. 7. Enter your household income. See the next section to determine household income. 7. 8. Household income base. Enter $15,000 ($30,000 if married filing a joint return). 8. Credits–Standard

150-101-431 (Rev. 09-30-22) 110 9. Line 7 minus line 8, but not less than $0. 9. 10. Line 6 minus line 9, but not less than $0. 10. 11. Enter the smaller of line 3 or line 10. 11. 12. Multiply line 11 by 9% (0.09). This is your credit. 12. Example 1: Jack owns a farm and has a $4,000 loss. He is also in a partnership whose main activity is farming. Jack has income from the partnership of $1,500. His net farm loss is $2,500. He may claim only $1,000 of this loss to compute his household income. Any net loss Jack has from other sources is also limited to $1,000 each. If Jack is claiming more than a $1,000 loss on any line, he must include a worksheet showing his computations. Example 2: Callie has a business with gross income of $32,000 for the year. She has an $11,000 depreciation deduction. Other business expenses are $24,500. She reports a business loss for federal purposes of $3,500. She recomputed her business income for household income purposes. The allowable depreciation deduc­ tion is limited to $5,000. She reports $2,500 business income, computed as follows: $32,000 – ($5,000 + $24,500) = $2,500. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Rural emergency medical service providers (ORS 315.622) [Credit code 812] A tax credit is available for emergency medical ser­ vice providers in qualifying rural areas of Oregon. The credit is based solely on determination of eligi­ bility by the Office of Rural Health. Who can claim the credit? Emergency medical service providers who provide volunteer services in a qualifying rural area may be eligible to claim this tax credit. However, the volun­ teer services must comprise at least 20 percent of the total services provided by the individual in the tax year. A qualifying rural area is an area in Oregon that is located at least 25 miles from any city with a population of 30,000 or more. How much is the credit? The credit is the lesser of $250 or your tax liability for the year. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Forms are available on their website at www.ohsu.edu/oregonruralhealth. Contact Rural Health in Portland at 503-494-4450 if you have questions or need assistance. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Rural health practitioners (ORS 315.613) [Credit code 813] A tax credit is available for health practitioners in certain rural areas of Oregon. The credit is based on eligibility requirements determined by the Office of Rural Health. Who can claim the credit? Physicians, dentists, podiatrists, optometrists, physi­ cian assistants, certified registered nurse anesthetists, and nurse practitioners can qualify for the credit. You qualify for the credit if during the tax year you: • Engage in a rural practice for at least 20 hours per week, averaged over the month. • Remain willing to serve patients with Medicare coverage and medical assistance. • Have AGI of $300,000 or less (unless you meet an exception). The AGI limitation doesn’t apply to a physician who does one of the following:

— Practices as a general surgeon.

— Specializes in obstetrics.

— Specializes in family or general practice and provides obstetrical services.

— Practices emergency medicine in a frontier rural practice county. The percentage of your patients who have Medicare coverage or receive medical assistance must bear the same or greater proportion to the ratio of such persons in need of care in the county served by your practice. This ratio is determined by the Office of Rural Health and may not exceed 20 percent Medicare patients or 15 percent medical assistance patients. S corporations and partnerships don’t qualify for the credit. However, shareholders and partners can Credits–Standard

150-101-431 (Rev. 09-30-22) 111 take the credit on their individual Oregon income tax returns if they meet the eligibility requirements. The credit may be claimed each year for up to a max­ imum of ten years. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Visit their website at www. ohsu.edu/oregonruralhealth for more information. Con­ tact Rural Health in Portland at 503-494-4450 to request an application. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. How much is the credit? The credit is based on the distance from your prac­ tice or hospital where you have a membership and a major population center in a metropolitan statistical area. The credit is the lesser of the amount shown in Table 13 and certified by the Office of Rural Health, or your tax liability for the year. You can claim the credit as long as you have a qualifying practice. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Table 13. Rural health practitioner credit Distance between practice/hospital and major population center, in miles Credit amount At least 10, but less than 20 $3,000 At least 20, but less than 50 $4,000 50 or more $5,000 Credits–Standard

150-101-431 (Rev. 09-30-22) 112 Carryforward credits These credits aren’t refundable. They can’t exceed your tax liability for the current tax year, but you may carry forward the unused amount to a later tax year. For each credit you claim, you’ll report on Schedule OR-ASC or OR-ASC-NP: • Any unused amount of the credit that was avail­ able to use (“awarded”) from a prior year and car­ ried forward to this year; • Any amount awarded for the first time this year; and • The total amount you’re using this year. Report any amounts carried forward from a prior year or awarded for the first time in 2022 even if you’re not using the credit this year. Use credits that expire soonest first. Note: You can’t claim an amount carried forward from a prior year unless you filed a return and claimed the credit for that year, even if none of the credit was used. Refer to the instructions for the credit you are claiming for specific details. Transferable credits. Certain carryforward credits may be transferred to another taxpayer. If you will be transferring a credit, you and the transferee must complete and submit Form OR-TFR, Transfer Notice for Certain Credits, on or before the earliest of: • Thirty days after the transfer takes place; • The date that the transferee files their return on which they claim the credit; or • The due date of the transferee’s return, including extensions. For more details about credit transfer requirements, see Form OR-TFR Instructions. Download the form and instructions from our website or contact us to order a copy. Agriculture workforce housing (ORS 315.164) [Credit code 835] Who can claim the credit? You may be eligible for a credit if you construct or rehabilitate agriculture workforce housing for sea­ sonal or year-round agricultural workers and their immediate families in Oregon. The housing must be occupied at some time during the year by an agricul­ tural worker to qualify for the credit. Housing can’t be used for any purpose except housing for agri­ cultural workers. Your family members aren’t con­ sidered agricultural workers under this credit. The credit is available for projects that physically began on or after January 1, 1990. The project must be com­ pleted before you can claim the credit. S corporations and partnerships. Individual share­ holders must claim the tax credit based on their percentage of S corporation ownership interest. Indi­ vidual partners must claim the tax credit based on their distributive share of partnership income. Your percentage should be listed on your Oregon K-1. Part-year residents and nonresidents. The credit is available to nonresidents and part-year residents who build or restore agriculture workforce housing located in Oregon. Multiply the credit amount allow­ able to a full-year resident by your Oregon percentage. How much is the credit? The total credit is 50 percent of the eligible costs actu­ ally paid or incurred to complete the agriculture workforce housing project. The credit may be taken in any of the ten consecutive tax years beginning with the tax year the agriculture workforce hous­ ing project is completed. The amount of the credit allowed in any one tax year is 20 percent of the total credit. The amount of credit you can use in any one tax year, however, can’t exceed the lesser of: • Twenty percent of the total credit; or • Your tax liability for the year. Construction and rehabilitation costs include those for financing, construction, excavation, installation, and permits. Construction costs also include acquisi­ tion of new or used prefabricated or manufactured housing. However, rehabilitation costs don’t include the costs of acquiring a building or an interest in a building. In either type of project, construction or rehabilitation, acquisition costs of land and existing improvements on that land used for the project aren’t eligible costs. Depreciation and basis. Depreciation and amortiza­ tion expenses associated with the agriculture work­ force housing project aren’t decreased by the amount of the tax credit. Your adjusted basis in the housing project isn’t decreased by the tax credit. Certification required Oregon Housing and Community Services (OHCS) must inspect the agriculture workforce housing proj­ ect prior to occupancy. For an application, call OHCS in Salem at 503-986-2000 or visit their website at www.oregon.gov/ohcs. If your project qualifies, you’ll get a tax credit approval letter. Keep the letter with your tax records. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 113 Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to nine years after the year it was first allowed (awarded). If you don’t use the carryforward within nine years, it’s lost. Example 1: Ann completes an agricultural workforce housing project in tax year 1 with eligible costs of $1,500,000. She receives a tax credit approval letter certifying a credit of $750,000 ($1,500,000 x 0.50). Ann may choose to claim her credit in any of the 10 con­ secutive tax years beginning with tax year 1. Chart A shows Ann’s tax liabilities for the next 12 years. Because Ann’s tax liability is relatively small for tax years 1 and 2, she chooses to claim her credit in tax year 3. Ann is allowed $150,000 (0.20 x 750,000) of her credit in any given tax year. She reports the allowed amount on the “Amount awarded this year” line on Schedule OR-ASC. Chart A shows the allowed amounts she will report as “awarded” each year on Schedule OR-ASC, and the credit remaining after each year. Chart A: Ann’s allowed and remaining credits per year Year Tax liability Amount awarded this year Remaining credit 1 $500 $0 $750,000 2 $1,000 $0 $750,000 3 $90,000 $150,000 $600,000 4 $127,000 $150,000 $450,000 5 $170,000 $150,000 $300,000 6 $50,000 $0 $300,000 7 $95,000 $150,000 $150,000 8 $40,000 $0 $150,000 9 $32,000 $0 $150,000 10 $60,000 $150,000 $0 11 $0 $0 $0 12 $250,000 $0 $0 Chart B shows Ann’s tax liability and amount allowed each year from Chart A. It also shows the amount she uses each year and any unused amount carried for­ ward as they’d be entered on Schedule OR-ASC. The amount she can use each year is limited to her tax liability for the year or $150,000, whichever is less. For example, in Year 3, Ann uses $90,000 of the $150,000 awarded for the year; for Year 4, she reports $60,000 ($150,000 – $90,000) as the amount carried forward from a prior year. Chart B: Ann’s prior year, awarded, and used credit amounts Year Tax liability Amount from prior year Amount awarded this year Amount used this year 1 $500 N/A $0 $0 2 $1,000 N/A $0 $0 3 $90,000 N/A $150,000 $90,000 4 $127,000 $60,000 $150,000 $127,000 5 $170,000 $83,000 $150,000 $150,000 6 $50,000 $83,000 $0 $50,000 7 $95,000 $33,000 $150,000 $95,000 8 $40,000 $88,000 $0 $40,000 9 $32,000 $48,000 $0 $32,000 10 $60,000 $16,000 $150,000 $60,000 11 $0 $106,000 $0 $0 12 $250,000 $106,000 $0 $106,000 Example 2: Use the same facts as Example 1, except that Ann decides to transfer her credit in tax year 6, when Chart A shows she has $300,000 available to transfer. Chart B shows that if she transfers the remaining credit in tax years 6 and 7, Ann would still have $33,000 carried forward from the credit allowed in tax year 5. She may use this amount until it’s gone or until the carryforward expires in tax year 14 (the ninth year after tax year 5), whichever happens first. Alternative qualified research activities carryforward (ORS 317.154) [Credit code 837] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit was allowed to corporations that incurred qualified research expenses. It was last awarded for tax years beginning before January 1, 2018. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 114 Bovine manure production/ collection carryforward (ORS 315.176) [Credit code 869] This credit was for producers or collectors of bovine (cattle) manure that was used in Oregon as biofuel or to produce biofuel. The credit was last awarded for tax years beginning before January 1, 2022. Any unused credit could be carried forward for up to four years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. Business energy carryforward (ORS 315.354, 315.357) [Credit code 839] These credits were available for businesses that invested in certain types of energy conservation projects. The credit was last awarded for projects receiving final certification before January 1, 2013. Some credits were required to be claimed over a period of five years. Any unused amount could be carried forward for up to eight years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Child Care Fund contributions carryforward (ORS 315.213) [Credit code 841] This credit was for contributions made to the Child Care Fund to help address child care affordability, provider compensation, and quality assurance issues in Oregon. The credit was last awarded for tax years beginning before January 1, 2022. Any unused credit could be carried forward for up to four years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. College Opportunity Grant Fund contributions (auction) (ORS 315.643) [Credit code 871] You may be able to claim a tax credit if you participated in the College Opportunity Grant tax credit auction conducted by the Department of Revenue, in coopera­ tion with the Higher Education Coordinating Commis­ sion (HECC). Proceeds from the auction go to Oregon’s Opportunity Grant Fund. Total credits certified by the HECC each fiscal year are limited to $14 million. You may claim the credit for the tax year in which you participated in the auction or for the prior tax year, if the auction is held by April 15 and you haven’t yet filed the prior year’s return. Visit the HECC website, www.oregon.gov/highered, for information about the Opportunity Grant Fund, and our website for information about upcoming auctions, auction rules, and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on the certificate issued by the HECC. Keep this certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contributions, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Crop donation (ORS 315.156) [Credit code 843] Oregon allows a tax credit for crops donated to a glean­ ing cooperative, food bank, or other charitable organi­ zation that distributes food without charge. The orga­ nization receiving the donation must have a principal or ongoing purpose of distribution of food to children, homeless, unemployed, elderly, or low-income indi­ viduals. The organization must be located in Oregon and exempt from federal income taxes under the IRC. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 115 To qualify for this credit, you must: • Be in the business of growing a crop to be sold for cash; and • Donate the crop to a tax-exempt organization located in Oregon; and • Complete Form OR-CROP, Crop Donation Tax Credit, which must be signed by the organization receiv­ ing the donation. The crop must be fit for human consumption. The food must meet all quality and labeling standards imposed by federal, state, or local laws, even though the food may not be readily marketable due to appear­ ance, age, freshness, grade, size, surplus, or other condition. Eligible crops include, but aren’t limited to, bedding plants that produce food, orchard stock that produces food, and livestock that may be processed into food for human consumption. How much is the credit? The credit is 15 percent of the value of the quantity of the crop donated, computed at the wholesale market price at the time of donation. The wholesale market price is determined by either: • The amount paid to the grower by the last cash buyer of the particular crop, or • In the event there is no previous cash buyer, a price based on the market price of the nearest regional wholesale buyer or a regional u-pick market price. Example: 5,000 pounds of potatoes at $ 0.10/lb.

5,000 x 0.10 = $500 (market value)

15% (0.15) x $500 = $75 (credit allowed) Certification required Keep the completed Form OR-CROP with your tax records to verify your donation. The organization where you donate the crop may have this form avail­ able, or you may download it from our website. Also, if there was a previous cash buyer, you must keep a copy of an invoice or other statement identifying the price received for crops of comparable grade or quality. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Electronic commerce zone investment carryforward (ORS 315.507) [Credit code 845] This credit was available to individuals and busi­ nesses that engage in electronic commerce in an Oregon enterprise zone or city designated for elec­ tronic commerce. The credit was last awarded for tax years beginning before January 1, 2018. Any unused amount could be carried forward for up to five years after the year it was first awarded. Enter your car­ ryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Employer scholarship (ORS 315.237) [Credit code 847 ] A tax credit is allowed to Oregon employers who have scholarship programs for their employees and their employees’ dependents. How much is the credit? The credit is the smaller of: • Fifty percent of the amount of qualified scholar­ ship funds actually paid to or on behalf of qualified scholarship recipients during the tax year; or • $50,000. Certification required The credit must be certified by the Office of Student Access and Completion. Keep the certificate with your tax records. For an application and more information, contact the commission in Eugene at 541-687-7400 or toll-free from an Oregon prefix at 800-452-8807, or go to their website at www.oregonstudentaid.gov. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 116 Energy conservation project (ORS 315.331) [Credit code 849] This credit was for energy conservation projects certi­ fied by the Oregon Department of Energy. The credit was last awarded for tax years beginning before Janu­ ary 1, 2018. Some credits were required to be claimed over a period of five years. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you have a credit that is claimed over multiple years, enter only the amount for tax year 2022 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line, and enter any amount carried forward on the “Amount from prior year” line. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Fish screening devices (ORS 315.138) [Credit code 850] A tax credit is available to taxpayers who pay to install fish screening devices required by the Oregon Department of Fish and Wildlife (ODFW). Who can claim the credit? The credit is available to individuals, partners, sole proprietorships, and S corporation shareholders. Shareholders and partners can claim the credit based on their pro rata share of the certified costs. How much is the credit? Full-year residents. The credit is equal to the smaller of: • Fifty percent of the net costs of installing the device, or • $5,000. You can still claim any depreciation or amortization otherwise allowed. Don’t reduce your basis in the property by the credit amount. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required ODFW will send you a preliminary certificate within 90 days of the receipt of plans, specifications, and other information it requests from you. After you complete the project, ODFW will send you a final cer­ tificate that includes the verified costs of the installa­ tion. Contact ODFW in Salem at 503-947-6000 or toll- free from an Oregon prefix at 800-720-6339, or go to www.dfw.state.or.us. Keep the final ODFW certificate with your tax records. Also keep a statement showing the computation of the allowed credit, if this isn’t on the certificate. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: affordable housing (ORS 317.097) [Credit code 854] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Schedule OR-K-1. This transferable certified credit is available to lending institutions making qualifying loans to finance cer­ tified housing projects for low-income households. Annual certification by Oregon Housing and Com­ munity Services is required. Part-year residents and nonresidents. You may claim the full amount of the credit, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: energy conservation carryforward (ORS 317.112) [Credit code 848] This credit is only available to shareholders of an S corporation that qualified for the credit. New for tax year 2022: You may claim a credit on your 2022 return for donations made no later than April 15, 2023. This credit was awarded to commercial lend­ ing institutions that made loans to owners of oil- or wood-heated residential property, to finance energy conservation measures. The credit was last awarded for tax years beginning before January 1, 2012. Any unused credit could be carried forward for up to 15 years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 117 The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within 15 years after it was first awarded, it’s lost. Long-term enterprise zone facilities (ORS 317.124) [Credit code 853] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Schedule OR-K- 1. This certified credit was available to corporations that constructed and operated facilities in a quali­ fied rural enterprise zone, where the facility was eli­ gible for long-term exemption from property tax. The credit was last awarded for facilities certified on or before June 30, 2018, and was required to be claimed over a five- to 15-year period. Any unused credit could be carried forward for up to five years after the year it was first awarded. <new paragraph> If you have a credit that is being claimed over mul­ tiple years, enter only the amount for tax year 2022 on the “Amount awarded this year” line on Sched­ ule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line and enter any carryforward amount on the “Amount from prior year” line. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Oregon IDA Initiative Fund donation (ORS 315.271) [Credit code 852] IDAs are matched savings accounts that build the financial management skills of qualifying Orego­ nians with lower incomes while they save toward a defined goal. Oregon allows a tax credit for dona­ tions made to the Oregon IDA Initiative Fund during the tax year. The total amount of credits allowed to all taxpayers in any tax year may not exceed $7.5 million. How much is the credit? The credit amount is the percentage determined by the fiduciary agency, but may be no more than 90 percent of the donation made. The maximum credit amount allowed for any taxpayer in any tax year, including amounts carried forward from an earlier tax year, is $500,000. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. You may carry forward any unused credit for three years after the year when you made the donation. If you don’t use the carryfor­ ward within three years, it’s lost. For information on how to make a donation to the Oregon IDA Initiative Fund, contact The Neighbor­ hood Partnership Fund at 503-226-3001 or visit their website at www.neighborhoodpartnerships.org. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your donation, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Oregon Low-Income Community Jobs Initiative/New Markets (ORS 315.533) [Credit code 855] The New Markets tax credit was available for a quali­ fied equity investment made before July 1, 2016 in a qualified community development entity. For more information on qualifying investments and entities, visit www.oregon4biz.com, or contact the Oregon Business Development Department at 503-986-0123. How much is the credit? The credit is equal to 39 percent of the purchase price of the qualified equity investment. It must be claimed over a period of seven years, beginning with the year of investment. The allowable tax credit for each of the seven years is: • Zero percent in the first and second years. • Seven percent of the purchase price in the third year. • Eight percent of the purchase price in each of the fourth through seventh years. Certification required You must have obtained certification from the Ore­ gon Business Development Department indicating the amount of your tax credit. Keep your certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. This credit can’t be trans­ ferred or sold. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 118 Oregon Production Investment Fund contributions (auction) (ORS 315.514) [Credit code 856] You may be able to claim a tax credit if you partici­ pated in the Oregon Production Investment Fund tax credit auction we conducted in cooperation with the Oregon Film and Video Office. Proceeds from the auction go to the Oregon Production Investment Fund. Total credits certified by the Oregon Film and Video Office are limited to $20 million for each fiscal year starting on or after July 1, 2021. You may claim the credit for the tax year in which you participated in the auction or for the prior tax year, but only if the auction is held by April 15 and you haven’t yet filed the prior year’s return. Visit the Oregon Film and Video Office website, www.oregon­ film.org, for information about the Oregon Produc­ tion Investment fund, and our website for informa­ tion about upcoming auctions, and auction rules and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on your certificate issued by the Oregon Film and Video Office. Keep the certifi­ cate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Qualified research activities carryforward (ORS 317.152) [Credit code 858] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit was allowed to corporations that increased their qual­ ified research expenses and basic research payments (IRC Section 41). The credit was last allowed for amounts paid or incurred in tax years beginning before January 1, 2018. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Renewable energy resource equipment manufacturing facility carryforward (ORS 315.341) [Credit code 860] This tax credit was certified by the Business Devel­ opment Department or Department of Energy. The deadline for filing an application for final certifica­ tion of a facility was December 31, 2013. The credit was required to be claimed over a period of years. Any unused credit could be carried forward for up to eight years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Residential energy carryforward (ORS 316.116) [Credit code 861] This certified credit was for taxpayers who pur­ chased various energy-efficient devices for residen­ tial use. The credit was last awarded for tax years beginning before January 1, 2018. Some credits had to be claimed over a four-year period. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your car­ ryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Credits–Carryforward

150-101-431 (Rev. 09-30-22) 119 Credits–Refundable Rural technology workforce development (ORS 315.523) [Credit code 868] A tax credit is allowed to Oregon employers located in certain areas of the state who establish and imple­ ment an employee training program in collaboration with a local community college. The employer must be located in a county with these characteristics: • Population between 60,000 and 80,000; • Located outside the urban growth boundary of the Portland metro area or a city with population greater than 30,000; • Unemployment rate at least 1.5 percentage points greater than the statewide rate; • Has an agreement with an institute of higher edu­ cation to coordinate efforts to promote business enterprise throughout the county; • Is the site of a U.S. military base that employs at least 750 civilian and armed forces personnel; and • Has sufficient internet service to conduct electronic commerce. How much is the credit? The credit is 12 percent of the costs to establish and implement the employee training program. Records sufficient to prove these costs must be kept for at least five years. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can't be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first allowed (awarded). If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Short line railroad rehabilitation (ORS 315.593) [Credit code 872] A transferable tax credit is allowed for short line rail­ roads that pay or incur costs for rehabilitation proj­ ects in Oregon. The project costs must be directly related to the work necessary to maintain, recon­ struct, or replace tracks, switches, sidings, roadbeds, railroad bridges, or industrial leads owned or leased in Oregon. “Short line railroad” refers to a class II or class III railroad as defined in title 49 of the Code of Federal Regulations, part 1201. Costs that are funded by or used to qualify for state or federal grants or to claim a federal tax credit don’t qualify for the credit. The credit doesn’t take the place of any depreciation or amortization deduction allowed for the rehabilita­ tion project or decrease the taxpayer’s adjusted basis for determining gain or loss. How much is the credit? The credit amount depends on whether the short line railroad is in Tier I or Tier II: • Tier I. The total length of short line railroad track owned or leased in Oregon is at least 200 miles. • Tier II: Any short line railroad that isn’t a Tier I short line railroad, or is one that is owned or leased by the state, a city, a county, a port, or any other public or municipal corporation. The credit amount is the smaller of: • $1,000 (Tier I) or $3,500 (Tier II) times the number of miles of track owned or leased in Oregon on the day the project is completed; or • Fifty percent of the rehabilitation project costs paid or incurred by the taxpayer during the tax year in which the credit is claimed. Certification required This credit is certified by the Oregon Department of Transportation (ODOT). Final certification of the reha­ bilitation project is required before the credit may be claimed. Visit ODOT’s website, www.oregon.gov/odot, for more information. Transfer. If the credit will be transferred, download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If the carryforward isn’t used within five years, it’s lost. The carryforward may not be transferred. Transportation projects (ORS 315.336) [Credit code 863] All transportation project credits certified by the Department of Energy have expired. Any unused credit could be carried forward for up to five years after the year it was first awarded.

150-101-431 (Rev. 09-30-22) 120 Credits–Carryforward If you have an alternative fuel vehicle project credit that is claimed over multiple years, enter only the amount for tax year 2022 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line and any amount car­ ried forward on the “Amount from prior year” line. For more information about these credits, see earlier editions of this publication. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. University Venture Development Fund contributions (ORS 315.640) [Credit code 864] A tax credit is available for contributions to Oregon University Venture Development Funds. Who can claim the credit? Any taxpayer who makes a qualifying charitable contribution to an Oregon University Venture Devel­ opment Fund is eligible for the credit. S corpora­ tions and partnerships may claim a credit for their contributions. How much is the credit? The credit is 60 percent of the amount contributed, as stated on the tax credit certificate, but can’t be more than $600,000. The amount of the credit allowed to be taken on your Oregon tax return may not be more than your tax liability for the year. Certification required The university that established the fund will issue a tax credit certificate to you. Keep this certificate with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Oregon itemized deduction If you're claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.”

150-101-431 (Rev. 09-30-22) 121 Credits–Refundable Refundable credits Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability is treated like an overpayment of tax and may be refunded to you. ABLE account contributions (ORS 315.650) [Credit code 897] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contribu­ tions to an Oregon Achieving a Better Life Experi­ ence (ABLE) account. The credit is allowed only for contributions made on or after January 1, 2020. Con­ tributions may be made up until the date the return is filed or the due date (not including extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see this topic in “Subtractions.” What is an ABLE account? An ABLE account is a state-sponsored savings account, established through the Oregon Savings Network, that allows a person with disabilities to save money for disability-related expenses without affect­ ing their eligibility for government or other benefits. ABLE accounts qualify for special tax status under IRC Section 529A. Once you open an account and select an investment option, the Oregon Savings Net­ work board and a private investment company man­ age your investment. The earnings on these accounts aren’t taxed. ABLE account funds don’t affect a ben­ eficiary’s eligibility for government or other benefits. Funds withdrawn to pay qualified expenses related to the beneficiary’s disability won’t be taxed. These include expenses for education, housing, transporta­ tion, assistive technology, personal support services, employment training and support, and fees for legal and financial services, among others. For more information about ABLE accounts, go to www.oregonablesavings.com. Rollovers. Rollovers to an ABLE account don’t qual­ ify for a credit if an Oregon subtraction or credit has already been based on the funds rolled over. Tax recapture for nonqualified withdrawals. If you claim a credit based on your contributions and later use the funds for a nonqualified purpose, you must forfeit your credit if you received a tax benefit from the withdrawn contributions. Report a tax recap­ ture on your return for the year when the funds are withdrawn. See “Additions to tax” in “Oregon tax” for more information about the tax recapture. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an earlier year, see “Additions.” How much is the credit? Your AGI determines the percentage of the contribu­ tions you made during the year that you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 14 to find your percentage. Table 14. Credit percentage If your AGI is at least: But not more than: your percentage is: $0 $30,000 100 $30,001 $70,000 50 $70,001 $100,000 25 $100,001 $250,000 10 $250,001 5 Example. Jesse and Stacey make a $4,000 contribution to an ABLE account they opened for their daughter, who has a disability. Their AGI is $150,000. Their per­ centage from Table 14 is 10 percent. They may claim the lesser of 10 percent of their contribution ($4,000 x 0.10 = $400) or $300. Their credit is $300. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Claim of right income repayment (ORS 315.068) [Credit code 890] Did you repay more than $3,000 of income taxed by Oregon in a prior year and claim a federal claim of right income repayment deduction or credit under IRC Section 1341(a)? If so, you may claim an Oregon credit based on the Oregon tax you paid in that ear­ lier year on the income that you later repaid. Repay­ ments of $3,000 or less don’t qualify for an Oregon credit. See the instructions for Worksheet OR-CRC to cal­ culate your Oregon credit. Worksheet OR-CRC is

150-101-431 (Rev. 09-30-22) 122 available from our website or contact us to order it. Claim the credit on Schedule OR-ASC or OR-ASC-NP. Note: If you’re claiming the federal deduction instead of the federal credit, see this topic in “Additions.” Earned income credit (EIC) (ORS 315.266) You’re allowed an Oregon EIC only if you qualify for the earned income tax credit (EITC) on your federal return. Your Oregon EIC is 12 percent of your federal EITC if you have a qualifying dependent who was younger than 3 years old at the end of the tax year; otherwise, your credit is 9 percent of your federal EITC. This credit is claimed on your return. Part-year residents and nonresidents. Multiply your Oregon EIC by your Oregon percentage. Filers using ITINs. If you can’t claim the federal EITC because you, your spouse, or your qualifying child(ren) don’t have an SSN that is valid for work, see “Oregon EIC for ITIN filers.” Manufactured dwelling park closure ORS 316.090 [Credit code 891] Did you move out of a manufactured dwelling park because the park was closing? If so, you may be eli­ gible for a credit. To qualify, you must meet all of the following requirements: • Owned your manufactured dwelling; and • Rented space in a manufactured dwelling park that closed during the tax year; and • Occupied your manufactured dwelling as your principal residence; and • Received notice from the landlord that the park was closing, and • Moved out of the manufactured dwelling park (along with all members of your household) because of the park closure notice. If you qualify, you can claim a $5,000 refundable credit on your tax return for the year that your house­ hold moved out of the park. To claim this credit, fol­ low the instructions for Schedule OR-MPC, Oregon Mobile Home Credit, and enter the credit amount on Schedule OR-ASC or OR-ASC-NP. You can download Schedule OR-MPC from our website or contact us to order it. Include Schedule OR-MPC with your tax return. Note: If you qualify for this credit, you may have received a payment from your landlord of $5,000, $7,000, or $9,000 depending on the size of your manu­ factured dwelling. These payments can be subtracted on your Oregon return if they are included in taxable income on your federal return. See this topic under “Subtractions” for more information. Oregon 529 College Savings Network account contributions (ORS 315.650) [Credit code 896] A tax credit of up to $150 ($300 if married filing jointly) is available for taxpayers who make contri­ butions to an Oregon 529 College Savings Network account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. Contributions may be made up until the date the return is filed or the due date (not includ­ ing extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see “Subtractions.” What is an Oregon 529 College Savings Network account? These state-sponsored plans qualify for special tax status as qualified tuition programs under (IRC Sec­ tion 529). Account holders can save money for college for any designated beneficiary. Once you open an account and select an investment option, the Oregon Savings Network board and a private investment company manage your investment. Qualified withdrawals. Funds that are withdrawn from the account must be used to pay for the des­ ignated beneficiary’s qualified higher education expenses. These include expenses for tuition, fees, books, supplies, equipment, and room and board at an eligible educational institutional anywhere in the United States and certain foreign countries. A list of eligible institutions can be found on the U.S. Depart­ ment of Education’s website at www.fafsa.ed.gov. Qualified withdrawals also include: • Rollovers to an ABLE account for the same desig­ nated beneficiary or a member of their family. • Expenses related to apprenticeship programs reg­ istered and certified under the National Appren­ ticeship Act (29 U.S.C. 50). • Principal and interest payments on up to $10,000 of the designated beneficiary’s (or their sibling’s) qualified education loans, as allowed by IRC Sec­ tion 529. Rollovers. Rollovers from a 529 college savings plan in another state qualify as a new contribution for Credits–Refundable

150-101-431 (Rev. 09-30-22) 123 purposes of the credit. However, you can’t claim a credit based on any amount rolled over from an IDA or from any rollover funds that have been allowed as an Oregon subtraction or an Oregon credit . Nonqualified withdrawals Tax recapture. If you claim a credit based on your con­ tributions and later use the funds for a nonqualified purpose, you must forfeit the credit if you received a tax benefit from the withdrawn contributions. Report a tax recapture on your return for the year when the funds are withdrawn. See “Additions to tax” in “Ore­ gon tax” for more information. Note: Nonqualified withdrawals include funds with­ drawn from an Oregon 529 savings plan account that are used to pay K-12 tuition if those funds were sub­ tracted or claimed as a credit on an Oregon return. Addition. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an ear­ lier year, see “Additions.” How much is the credit? Your AGI determines the percentage of your contri­ butions made during the year you may claim, up to the maximum of $150 ($300 if married filing jointly). Use Table 14 under “ABLE account contributions” to find your percentage. Example. Carol is single and contributes $800 to an Oregon 529 College Savings Plan account she opened for her grandson. Her AGI is $72,000. Her percentage from Table 14 is 25 percent. Carol may claim the lesser of 25 percent of her contribution ($1,000 x 0.25 = $250) or $150. Her credit is $150. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. For more information about Oregon higher education savings plans, call the Oregon College Savings Plan at 1-866-772-8464 or go to www.oregoncollegesavings.com Oregon EIC for ITIN filers [ORS 315.266(2)] [Credit code 898] You may be able to claim Oregon’s EIC for ITIN filers if you would have qualified for the federal EITC this year but couldn’t claim some or all of the credit only because you, your spouse, or qualifying child(ren) don’t have an SSN that is valid for work. If you don’t qualify for the federal EITC for any other reason, you can’t claim Oregon’s EIC for ITIN filers. You must use Schedule OR-EIC-ITIN, Oregon Earned Income Credit for Filers Using Individual Taxpayer Iden­ tification Numbers, to calculate your credit amount. Include the schedule when you file your Oregon return. The schedule and instructions are available in English and Spanish. Download them from our website or contact us to order them. Part-year residents and nonresidents. Your credit must be multiplied by your Oregon percentage. See Schedule OR-EIC-ITIN Instructions for more information. Pass-through entity elective taxes paid (2021 Or Laws, ch. 589, § 8) [Credit code 900] Certain PTEs may elect to pay Oregon income tax at the entity level (PTE-E tax). If you’re a member of an entity that elected to pay the PTE-E tax, you may claim a refundable credit for your share of the tax paid by the electing entity. The electing entity must send you Schedule OR-21-K-1 to report your share of the PTE-E tax paid by the entity. Your credit amount can be found on Schedule OR- 21-K-1, line 3. Are you a member of more than one elect­ ing entity? If so, your credit amount is the sum of all your shares of PTE-E tax paid by those entities. Claim the credit on your return for the same year that you report your income from each electing entity. Addition required. You must report an addition for any PTE-E tax that was deducted by an electing entity. See “PTE-E tax deducted on entity-level federal return” in “Additions.” For more information about the PTE-E tax, see “Pass- through entity elective tax” in “Oregon tax.” Working family household and dependent care (WFHDC) (ORS 315.264) [Credit code 895] This refundable credit is available to low- to mod­ erate-income working families who paid for depen­ dent care during the year for one or more qualify­ ing individuals. For more information, see Schedule OR-WFHDC Instructions. Credits–Refundable

150-101-431 (Rev. 09-30-22) 124 What are the income limitations for this credit? Your federal AGI or your Oregon AGI, whichever is greater, must be at or below the allowable limit for your household size to be eligible for this credit. Table 15. WFHDC AGI limits Household size AGI limit 2 $54,930 3 $69,090 4 $83,250 5 $97,410 6 $111,570 7 $125,730 8 or more $139,890 How much is the credit? The credit amount is based on your income, care expenses paid, household size, and the age of your youngest qualifying individual. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. New rules for students Beginning with tax year 2022, new rules apply for students claiming the credit for expenses they paid for care in order to attend school. See Schedule OR- WFHDC Instructions for more information. Oregon itemized deduction for medical expenses Certain medical expenses that can be included in your Oregon itemized deductions are also quali­ fied expenses for this credit. If you claim medical expenses on Schedule OR-WFHDC, you may have to add back some or all of those expenses if you’re including them in your Oregon itemized deductions. See this topic in “Additions.” How do I claim the credit? Download Schedule OR-WFHDC from our website or contact us to order a copy. You’ll also need a copy of your federal Form 2441, Child and Dependent Care Expenses. Figure your federal and Oregon AGI and complete Form 2441 before you calculate your credit. Review the instructions for Schedule OR-WFHDC carefully to see if you qualify for the credit. Make sure all the information you provide on Schedule OR- WFHDC is complete and correct. We may ask you to verify the information you provide. If your informa­ tion is incorrect or incomplete, your credit might be delayed or denied. Claim the credit on Schedule OR-ASC or OR-ASC-NP. Be sure to include this schedule and Schedule OR- WFHDC when you file your Oregon return. Penalty: You may be charged a penalty if you know­ ingly claim or knowingly assist someone in claiming this credit falsely. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjust­ ment or denial of the credit. Oregon surplus credit (ORS 291.349) The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. Every two years, the Oregon Department of Admin­ istrative Services (DAS) determines whether there is a surplus and the amount to be returned to taxpay­ ers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refundable tax credit or donated to the State School Fund. The kicker credit is available only on the return for an odd-numbered year. If there’s no surplus, or if the tax year is even- numbered, no kicker is available. There is no kicker available for tax year 2022. Credits–Refundable

150-101-431 (Rev. 09-30-22) 125 Interest on underpayment of estimated tax Do I owe underpayment interest? If you were required to make estimated payments but paid less than the required amounts due by each pay­ ment date, you have an underpayment of estimated tax. Oregon charges interest on underpayment of the estimated tax due. If your 2022 tax after all credits, tax recaptures, and withholding is $1,000 or more, you must complete Oregon Form OR-10, Underpayment of Oregon Estimated Tax, and submit it with your return. The form and instructions for calculating underpay­ ment interest can be found on our website or contact us to order them. Figure your required annual payment Required annual payment To calculate your underpayment interest, you must determine your required annual tax payment. Your required annual payment is the total amount of all tax payments, including estimated tax and withhold­ ing, you must make in order to avoid paying under­ payment interest. Your required annual payment is the lesser of: • Ninety percent of the net tax shown on your 2022 tax return; or • One hundred percent of the tax shown on your 2021 Oregon return (commonly called Safe Harbor). Annual estimated tax payment Your annual estimated tax payment is your required annual payment minus your withholding. Required installment payment Your annual estimated tax payment may be paid all at once or you may pay it in up to four installments. If you make the payment in installments, determine the required installment amount using one of these two methods: • Regular installment: Divide your annual estimated payment by the number of installment periods. • Annualized installment: Your installment is based on your actual income for the installment period. This method may benefit part-year residents and taxpayers whose income isn’t received evenly throughout the year. See Form OR-10 Instructions to calculate your required installment amount. 2022 required installment due dates If you made one annual estimated payment, the due date was April 18, 2022. If you paid in installments and you’re a calendar-year filer, your 2022 install­ ment payments were due on: April 18, 2022 June 15, 2022 September 15, 2022 January 17, 2023 Underpayment interest calculation Underpayment interest is calculated on estimated tax that is due but isn’t paid by the installment due date. The interest rate is 4 percent per year for 2022. The interest rate is 6 percent per year for 2023. Interest is calculated daily, based on a 365-day year. Use the worksheets in Form OR-10 Instructions to cal­ culate your underpayment interest. Report the total amount on Form OR-10 and your return. Include Form OR-10 when you file your return. Exceptions to paying interest on an underpayment of estimated tax If you qualify for one of the following exceptions, you don’t have to pay interest on an underpayment of estimated tax. See Form OR-10 Instructions for more information about claiming an exception on both Form OR-10 and your return. Exception 1—Farmers and commercial fishermen. If at least two-thirds (66.7 percent)* of your 2021 or 2022 gross income is from farming, oyster farming, or fish­ ing, you won’t have to pay underpayment interest. *Only reported income from specific federal forms and schedules are considered in this calculation. The form or schedule must be included when you file your return. Exception 2—Prior year. You don’t need to pay inter­ est on an underpayment of estimated tax if all of the following were true for you: • You had no Oregon tax liability* for 2021, or you weren't required to file an Oregon return; and • Your 2021 tax year was a full 12-month period; and • You were a full-year Oregon resident for 2021. *Your Oregon tax liability is your liability after tax credits, but before withholding and estimated tax payments. Interest on underpayment of estimated tax

150-101-431 (Rev. 09-30-22) 126 Exception 3—You retired at age 62 or older or became disabled in 2021 or 2022, and you had a rea­ sonable cause for the underpayment. Include a state­ ment explaining the cause. Exception 4—Underpayment was due to casualty, disaster, or other unusual circumstances, and it would be unfair to impose underpayment interest. Include a statement with your return explaining the unusual circumstance. An unusual circumstance isn’t the same as reasonable cause. Exception 5—First-year S corporation shareholders who are nonresidents or were part-year residents. No interest is due on underpayment of S corporation income as a shareholder if: • The income is for the first year that S corporation status is elected; and • You’re a nonresident for 2022; or • You were a part-year resident for 2021. Interest on underpayment of estimated tax

150-101-431 (Rev. 09-30-22) 127 Estimated tax Should I pay estimated tax? Oregon law requires some taxpayers to pay esti­ mated tax. Oregon’s estimated tax system is similar to the federal system, but when you figure estimated tax for Oregon: • Use Oregon income tax laws and tax rates. • Don’t include Social Security tax (FICA), self-employ­ ment tax, or household employment tax. In most cases, you must make estimated tax payments if your 2023 tax after all credits and withholding will be $1,000 or more when you file your return. Pay estimated tax for tax year 2023 if: You expect your 2023 tax after all credits, tax recap­ tures, and withholding will be $1,000 or more when you file your return and you estimate that your total withheld tax will be less than: • One hundred percent of the tax shown on your 2022 income tax return that covered all 12 months of the year; or • Ninety percent of the tax to be shown on your 2023 income tax return; or • Ninety percent of the tax on your 2023 annualized income. You can make estimated tax payments even if you expect that your 2023 tax after all credits, tax recap­ tures, and withholding will be less than $1,000. For instructions and examples, download Publication OR-ESTIMATE from our website or contact us to order it. Note: Estimated tax payments aren’t a substitute for withholding Oregon income tax from wage income. If you need to increase the amount of Oregon tax withheld from your wages or other income, give an updated Form OR-W-4 to your employer or other payer. You can download Form OR-W-4 from our website or contact us to order it. Exceptions Farmers and commercial fishermen Farmers and fishermen aren’t required to pay esti­ mated tax if at least two-thirds of their 2022 gross income or two-thirds of their 2023 estimated gross income from all sources is from farming or fishing. This includes oyster farming. See “Interest on under­ payment of estimated tax.” Fiduciaries You don’t need to pay estimated tax on behalf of an estate or trust. Special situations Nonresidents and part-year residents Nonresidents figure Oregon estimated tax only on income that is: • Subject to Oregon tax; or • From conducting a trade or business within Oregon; or • Single ticket Oregon lottery winnings greater than $600. S corporation, LLC, or partnership income If you’re a shareholder in an S corporation, a mem­ ber of an LLC, or in a partnership with income from Oregon sources, you may need to make estimated tax payments. Undistributed income should be com­ puted on a per share, per day basis and reported as earned evenly through the year. Part-year residents. For the part of the year you were a nonresident, you are subject to Oregon tax on your share of the Oregon income reported by the S corpo­ ration, LLC, or partnership. Partners must also report guaranteed payments. For the part of the year you were a resident, you’re subject to Oregon tax on your share of all the S corporation, LLC, or partnership income. Nonresidents. You’re subject to Oregon tax on your share of the Oregon income reported by the S corporation, LLC, or partnership. You’re also subject to Oregon tax on any guaranteed payments from the partnership. The payments are apportioned using the partnership’s percentage. Retirees If you’re retired or will soon retire, you may need to make estimated tax payments if you’re unable to have Oregon income tax withheld from your retire­ ment income. Contact the payer of the income to see if withholding is possible. If so, complete Form OR-W-4 and give it to the payer. Retirees who are Oregon residents but not living in Oregon may be subject to tax on their Oregon-source pensions. This law applies to retirees who still have Oregon as their domicile but file as nonresidents. See “Retirement income” under “Income.” Nonresident aliens Estimated tax filing requirements are the same for both U.S. citizens and nonresident aliens. Nonresi­ dent aliens can be either Oregon residents or nonresi­ dents. If you, or your spouse, are a nonresident alien, you must make separate estimated tax payments. Estimated tax

150-101-431 (Rev. 09-30-22) 128 Appendix Contents 2022 Household Income Checklist WFHDC Medical Expense Worksheet Capital Loss Carryover Difference Worksheet 2022 Numeric Codes Appendix

150-101-431 (Rev. 09-30-22) 129 Household income checklist Use this list to decide if an item must be included in total household income. Alimony and separate maintenance Yes Annuities and pensions (reduced by cost recovery) Yes Business income (reduced by expenses) (losses limited to $1,000) Yes Cafeteria plan benefits

No Capital loss carryover

No Capital losses (in year determined) (losses limited to $1,000) Yes Child support Yes Child support included in public assistance Yes Clergy’s rental or housing allowance, in excess of expenses claimed to determine federal AGI Yes Compensation for services performed Back pay Yes Bonuses Yes Clergy fees Yes Commissions Yes Director fees Yes Fees in general (trustee, executor, jury duty) Yes Lodging for convenience of employer

No Meals for convenience of employer

No Salaries Yes Severance pay Yes Tips and gratuities Yes Wages Yes Deferred compensation Contributions made

No Payments received Yes Depletion in excess of basis Yes Depreciation, depletion, and amortization in excess of $5,000 Yes Disability income (entire amount) Yes Dividends, taxable and nontaxable Credit union savings account “dividends” (interest) Yes Insurance policy “dividends” (return of premium)

No Return of capital dividends

No Stock dividends Yes Tax-exempt dividends Yes Earned income credit, advanced

No Estate and trust income (also see “Inheritance”) (losses limited to $1,000) Yes Farm income (reduced by expenses) (losses limited to $1,000) Yes Agricultural program payments Yes Patronage dividends Yes Proceeds from sale of crops and livestock Yes Rents Yes Sale of services Yes Fellowships Yes Foreign income excluded from federal AGI Yes Foster child care (reduced by expenses)

No Funeral expenses received

No Gains on sales (receipts less cost) Yes Excluded gain for Oregon on sale of residence

No Gambling winnings (without reduction for losses) Yes Gifts and grants (totaling more than $500 in value) Cash Yes Gifts from nonspouse in the same household Yes Gifts from spouse in the same household

No Gifts other than cash (report at fair market value) Yes Payment of indebtedness by another person Yes Grants and payments by foreign governments not included in federal AGI Yes Grants by federal government for rehabilitation of home

No Gratuities and tips Yes Hobby income Yes Honoraria Yes IRA Conventional IRA Payments received Yes Payments contributed

No Rollovers or conversions not included

in AGI

No

Rollovers or conversion

included in AGI Yes Roth IRA Payments received

No Payments contributed Yes Rollovers or conversions not included

in AGI

No Rollovers or conversion

included in AGI Yes Inheritance Yes From spouse who resided in the same household

No Insurance proceeds Accident and health Yes Disability payments Yes Employee death benefits Yes Life insurance Yes Household income checklist

150-101-431 (Rev. 09-30-22) 130 Personal injury damages (less attorney fees) Yes Property damage if included in federal income Yes Reimbursement of medical expense

No Sick pay (employer sickness and injury pay) Yes Strike benefits Yes Unemployment insurance benefits Yes Workers’ compensation Yes Interest, taxable and nontaxable Contracts Yes Municipal bonds and other securities Yes Savings accounts Yes Tax-exempt interest Yes U.S. Savings Bonds Yes Losses on sales (to extent used in determining AGI) (losses limited to $1,000) Yes From sales of real or personal property (nonbusiness)

No Lottery winnings Yes Lump-sum distribution (less cost recovery) Yes Military and veteran’s benefits (taxable and nontaxable) Combat pay Yes Disability pensions Yes Educational benefits (GI Bill) Yes Family allowances Yes Pensions Yes NOL carryback and carryover

No Partnership income (reduced by expenses) (losses limited to $1,000) Yes Parsonage (rental value) or housing allowance in excess of expenses used in determining federal AGI Yes Pensions and annuities (taxable and nontaxable) (reduced by cost recovered in the current year) Yes Prizes and awards Yes Public assistance benefits Aid to blind and disabled Yes Child care payments Yes Child support included in public assistance Yes Direct payments to nursing home

No Fuel assistance

No In-home services approved by the Department of Human Services

No Medical mileage reimbursements Yes Medical payments to doctors

No Oregon Supplemental Income Program (OSIP) Yes Payments for medical care, drugs, medical supplies, and services for which no direct payment is received

No Reimbursements of expenses paid or incurred by participants in work or training programs

No Special Shelter Allowance

No Supplemental Nutrition Assistance Program (SNAP) benefits

No Surplus food

No Temporary assistance for needy families (TANF) Yes Women, Infants, and Children program (WIC)

No Railroad Retirement Board benefits Yes Refunds Earned income credit

No Federal tax

No Property tax

No Oregon income tax

No Other states’ income tax (if included in federal AGI) Yes Prior-year rental assistance payment

No Reimbursements in excess of expenses Yes Rental allowances paid to ministers not included in federal AGI Yes Rental and royalty income (reduced by expenses) (losses limited to $1,000) Yes Residence sales (see “Gains on sales”) Yes Retirement benefits (see “Pensions” and “Social Security”) Scholarships (excess more than $500) Yes Sick pay Yes Social Security (taxable and nontaxable) Children’s benefits paid to parent Yes Children’s benefits paid to your child

No Disability pension Yes Medicare payments of medical expenses

No Medicare premiums deducted from Social Security Yes Old-age benefits Yes Social Security Disability Insurance (SSDI) Yes Supplemental Security Income (SSI) Yes Survivor benefits Yes Stipends (excess more than $500) Yes Strike benefits Yes Support from parents who don’t live in your household Yes Trust income Yes Unemployment insurance benefits Yes Wages Yes Household income checklist

150-101-431 (Rev. 09-30-22) 131 WFHDC medical expense worksheet 1. Enter your expense limit (Schedule OR-WFHDC, line 27). 1. $ __________________ 2. Enter the total expenses you paid for care (Schedule OR-WFHDC, line 10). 2. $ __________________ 3. Enter the expenses from step 2 that are also included in your medical expenses

on Schedule OR-A, line 1. 3. $ __________________ 4. Step 2 minus step 3. These are your non-medical WFHDC care expenses. 4. $ __________________ Compare step 4 to step 1. If step 4 is more than step 1, your non-medical expenses are more than your expense limit and you don’t have an add back. If step 4 is less than step 1, continue to step 5. 5. Step 1 minus step 4. 5. $ __________________ 6. Enter your medical and dental expenses from Schedule OR-A, line 1. 6. $ __________________ 7. Enter your medical expense deduction from Schedule OR-A, line 4. 7. $ __________________ 8. Step 7 divided by step 6. Round to three decimal places. 8. ___________________ 9. Step 8 times step 3. This is the portion of your WFHDC medical care expenses

that you included in itemized deductions. 9. $ __________________ 10. Enter the smaller of step 5 or step 9. This is the portion of the medical care

expenses you deducted and on which you based your credit. 10. $ __________________ 11. Enter your Oregon itemized deductions from Schedule OR-A, line 23. 11. $ __________________ 12. Enter the Oregon standard deduction for your filing status plus any

additional standard deduction you could claim if you didn’t itemize

deductions (see “Other items”). 12. $ __________________ 13. Step 11 minus step 12. This is the difference between your itemized

deductions and standard deduction. 13. $ __________________ 14. Enter the smaller of step 10 or step 13. This is the amount you must add back.

Use addition code 163 on Schedule OR-ASC, section A, or enter this amount

with a minus sign and use modification code 651 on Schedule OR-ASC-NP,

section D. 14. $ __________________ WFHDC medical expense worksheet

150-101-431 (Rev. 09-30-22) 132 Capital loss carryover difference worksheet Capital loss carryover difference worksheet This worksheet is used to calculate an addition if the tax benefit of a capital loss carryover on your federal return is different from the tax benefit on your Oregon return. Use this worksheet only if all of the following are true: • You filed federal and Oregon returns for 2021; • You deducted a capital loss on your 2021 federal return; • Your AGI was less than your federal standard deduction or itemized deductions; • You carried over some or all of your 2021 capital loss deduction to 2022; • If you filed a part-year or nonresident return for tax year 2021, at least some of your 2021 capital losses were from Oregon sources; and • Your 2021 federal AGI was within the applicable range in Table 7 (see “Additions”). If all of the above are true, you’ll need to have these items in order to complete the worksheet: • Your federal return with Schedule D for 2021 and 2022, and • Your 2021 Oregon return. Part-year or nonresident return filed for tax year 2021. Capital losses may be claimed on an Oregon return only if they are from Oregon sources—that is, from Oregon sources while a nonresident, or from all sources while an Oregon resident. If you filed a part-year or nonresident return for 2021 and your capital losses included Oregon-source losses, complete the following before you start the Oregon worksheet: (a) Enter your net short-term capital loss or gain from your 2021 Schedule D, line 7. (a) $ ____________

(b) Enter the portion of the amount in (a) that is from Oregon sources. (b) $ ____________ (c) Line (b) divided by line (a). Round to three decimal places. (c) ____________ (d) Enter your net long-term capital loss or gain from your 2021 Schedule D, line 15. (d) $ ____________ (e) Enter the portion of the amount in (d) that is from Oregon sources. (e) $ ____________ (f) Line (e) divided by line (d). Round to three decimal places. (f) ____________ Part A. Figure your Oregon loss carryforward amount. 1. Enter your 2021 Oregon taxable income (Form OR-40, line 19; Form OR-40-N, line 45; or Form OR-40-P, line 43 times line 35). If less than $0, enclose in parentheses. 1. $ ____________ 2. Full-year residents: Enter the capital loss deduction from your 2021 Form 1040, line 7, as a positive amount. Part-year residents and nonresidents: Enter the Oregon amount from your 2021 Form OR-40-N or Form OR-40-P, line 13S, as a positive amount. 2. $ ____________ 3. Line 1 plus line 2. If zero or less, enter $0.

3. $ _____________ 4. Enter the smaller of line 2 or line 3. 4. $ ____________ If line 7 of your 2021 Schedule D shows a loss, go to line 5; otherwise, enter $0 on line 5 and go to line 9. 5. Enter the net short-term loss from your 2021 Schedule D, line 7, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above, as a positive amount.

5. $ _____________ 6. Enter the net long-term gain, if any, from your 2021 Schedule D, line 15. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above. If a loss, enter $0. 6. $ ____________

150-101-431 (Rev. 09-30-22) 133 Capital loss carryover difference worksheet 7. Line 4 plus line 6.

7. $ _____________ 8. Oregon short-term capital loss carryover for 2022. Line 5 minus line 7. If zero or less, enter $0.

8. $ _____________ If line 15 of your 2021 Schedule D is a loss, go to line 9; otherwise, skip to Part B. 9. Enter the net long-term loss from your 2021 Schedule D, line 15, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above, as a positive amount.

9. $ _____________ 10. Enter the net short-term gain, if any, from your 2021 Schedule D, line 7. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above. If a loss, enter $0. 10. $___________ 11. Line 4 minus line 5. If zero or less, enter $0. 11. $___________ 12. Line 10 plus line 11.

12. $ _____________ 13. Oregon long-term capital loss carryover for 2022. Line 9 minus line 12. If zero or less, enter $0.

13. $ _____________ Part B. Figure your Oregon addition. 14. Enter your federal short-term capital loss carryover from your 2022 Schedule D, line 6, as a positive amount. 2021 part-year residents and nonresidents: Multiply this amount times the decimal in (c), above; round to the nearest dollar. 14. $___________ 15. Oregon tax benefit from 2021 short-term loss. Line 14 minus line 8.

15. $ _____________ 16. Enter your federal long-term loss carryover from your 2022 Schedule D, line 14, as a positive amount. 2021 part-year residents and nonresidents: Multiply this amount times the decimal in (f), above; round to the nearest dollar. 16. $___________ 17. Oregon tax benefit from 2021 long-term loss. Line 16 minus line 13.

17. $ _____________ 18. Line 15 plus line 17. This is your Oregon addition.

18. $ _____________ Full-year filer for 2022. Enter the amount from line 18 on Schedule OR-ASC, section A, using code 162. Part-year or nonresident filer for 2022. Enter the amount from line 18 on both the federal and Oregon lines on Schedule OR-ASC-NP, section B.

150-101-431 (Rev. 09-30-22) 134 Numeric codes Numeric codes Numeric codes are required when you are claiming or reporting an adjustment, addition, subtraction, modifi­ cation, or credit on Schedule OR-ASC or OR-ASC-NP. If you have multiple items that use the same code, other than a credit for income taxes paid to another state, add them together and enter the total as a single item. Modifications marked with + must be entered as a negative number. Credits marked with * must be prorated by part-year residents and nonresidents. Include Schedule OR-ASC or OR-ASC-NP when you file your return. (Note: For page numbers, see the item’s listing in the Index.) Adjustments—Nonresident and part-year resident filers only, Schedule OR-ASC-NP, Section A Code Certain business expenses of reservists, performing artists, and fee-basis government officials —Form 1040, Schedule 1, Line 12 ..............................................................................................................................002 Health savings account deduction—Form 1040, Schedule 1, Line 13 ..................................................................003 Penalty on early withdrawal of savings—Form 1040, Schedule 1, Line 18.........................................................004 Other adjustments on Form 1040, Schedule 1, Lines 23 and 25 ............................................................................005 Additions—Schedule OR-ASC, Section A or OR-ASC-NP, Section B Code Claim of right income repayments ...........................................................................................................................103 Disposition of inherited Oregon farmland or forestland......................................................................................106 Federal election on interest and dividends of a minor child ................................................................................107 Federal income tax refunds .......................................................................................................................................109 Net operating loss—non-Oregon source .................................................................................................................116 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal ..........................................117 Oregon deferral of reinvested capital gain ..............................................................................................................118 Partnership and S corporation modifications for Oregon ....................................................................................119 Unused business credits ............................................................................................................................................122 Federal subsidies for employer prescription drug plans ......................................................................................123 Federal law disconnect ...............................................................................................................................................131 Accumulation distribution from certain domestic trusts .....................................................................................132 Fiduciary adjustment from Oregon estates and trusts .........................................................................................133 Gambling losses claimed as an itemized deduction..............................................................................................134 Refund of Oregon-only itemized deductions from a prior year ..........................................................................136 IDA nonqualified withdrawal ...................................................................................................................................137 Oregon IDA Initiative Fund donation credit add back .........................................................................................138 Lump-sum distribution from a qualified retirement plan ...................................................................................139 Passive foreign investment company income .........................................................................................................140 Child Care Fund Contributions ................................................................................................................................142 Oregon Production Investment Fund contributions .............................................................................................144 University Venture Development Fund contributions ..........................................................................................146 Income taxes paid to another state by a pass-through entity ...............................................................................148 Basis of business assets transferred into Oregon ...................................................................................................150 Depletion in excess of property basis ......................................................................................................................151 Depreciation difference for Oregon .........................................................................................................................152 Federal depreciation disconnect ...............................................................................................................................153 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................154 Passive activity losses .................................................................................................................................................155 Suspended losses ........................................................................................................................................................156 Federal estate tax .........................................................................................................................................................157 Interest and dividends on government bonds of other states ..............................................................................158 Federal subtraction for retirement savings rollover from IDA ............................................................................159 Disqualified charitable donations ............................................................................................................................160 Nonresident capital losses and loss carryovers ......................................................................................................161 Capital loss carryover difference ..............................................................................................................................162 WFHDC medical expenses ........................................................................................................................................163 ABLE account subtraction nonqualified withdrawal ............................................................................................164 College Opportunity Grant Fund contributions ....................................................................................................165

150-101-431 (Rev. 09-30-22) 135 Numeric codes First-time homebuyer savings account nonqualified withdrawal .......................................................................166 PTE-E tax deducted on entity-level federal return ................................................................................................167 CPAR addition .............................................................................................................................................................187 Subtractions—Schedule OR-ASC, Section B or OR-ASC-NP, Section C Code American Indian .........................................................................................................................................................300 Artist’s charitable contribution .................................................................................................................................301 Construction worker and logger commuting expenses ........................................................................................303 Federal gain previously taxed by Oregon ...............................................................................................................306 Federal pension income .............................................................................................................................................307 Federal income tax paid for a prior year .................................................................................................................309 Fiduciary adjustment from Oregon estates and trusts ..........................................................................................310 Foreign income tax ......................................................................................................................................................311 IDA contributions ........................................................................................................................................................314 Interest and dividends on U. S. bonds and notes ..................................................................................................315 Land donation to educational institutions carryforward .....................................................................................316 State and local government bond interest ...............................................................................................................317 Military pay .................................................................................................................................................................319 Federal mortgage interest credit ...............................................................................................................................320 Net operating loss for Oregon ...................................................................................................................................321 Oregon Lottery winnings ..........................................................................................................................................322 Partnership and S corporation modifications for Oregon ....................................................................................323 Oregon College and MFS 529 Savings Plan deposits carryforward ....................................................................324 Oregon income tax refund .........................................................................................................................................325 Previously taxed employee retirement plan contributions ...................................................................................327 Public Safety Memorial Fund award .......................................................................................................................329 Railroad Retirement Board benefits .........................................................................................................................330 U.S. government interest in IRA or Keogh distributions ......................................................................................331 Scholarship awards used for housing expenses.....................................................................................................333 Legislative Assembly expenses .................................................................................................................................335 Film production labor rebate—Greenlight Oregon Labor Rebate Fund ............................................................336 Manufactured dwelling park capital gain exclusion .............................................................................................338 Capital Construction Fund contributions ...............................................................................................................339 Federal tax credits .......................................................................................................................................................340 Income on a composite return...................................................................................................................................341 Oregon Investment Advantage .................................................................................................................................342 Manufactured dwelling park closure payments ....................................................................................................344 Taxable benefits for former RDPs .............................................................................................................................347 Previously-taxed IRA conversions ...........................................................................................................................348 Special Oregon medical .............................................................................................................................................351 DISC dividend payments ...........................................................................................................................................352 Depreciation difference for Oregon .........................................................................................................................354 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................355 Passive activity losses .................................................................................................................................................356 Suspended losses ........................................................................................................................................................357 Basis of business assets transferred into Oregon ...................................................................................................358 Marijuana business expenses ....................................................................................................................................359 ABLE account deposit carryforward ........................................................................................................................360 First-time home buyer savings account contributions and earnings ..................................................................361 AmeriCorps educational award ................................................................................................................................362 CPAR subtraction ........................................................................................................................................................384 Psilocybin business expenses ....................................................................................................................................385 Modifications—Part-year and nonresident filers only, Schedule OR-ASC-NP, Section D Code Artist’s charitable contribution (Part-year filers only) ...........................................................................................600 Federal income tax refunds + ....................................................................................................................................601 Federal income tax paid for a prior year .................................................................................................................602

150-101-431 (Rev. 09-30-22) 136 Foreign income tax ......................................................................................................................................................603 Gambling losses claimed as an itemized deduction + ..........................................................................................604 Federal estate tax + .....................................................................................................................................................605 Federal mortgage interest credit ...............................................................................................................................607 Federal tax credits .......................................................................................................................................................609 Child Care Fund contributions +..............................................................................................................................642 Oregon Production Investment Fund contributions + ..........................................................................................644 University Venture Development Fund contributions + ......................................................................................646 Oregon IDA Initiative Fund donation credit add back + ......................................................................................648 Claim of right income repayment + .........................................................................................................................649 Disqualified charitable donations + .........................................................................................................................650 WFHDC medical expenses + ....................................................................................................................................651 College Opportunity Grant Fund contributions + .................................................................................................652 + Must be entered as a negative number Standard credits—Schedule OR-ASC, Section C or OR-ASC-NP, Section E Code Income taxes paid to another state on mutually-taxed income............................................................................802 Mutually-taxed gain on the sale of residential property ......................................................................................806 Oregon Cultural Trust contributions * .....................................................................................................................807 Oregon Veterans’ Home physicians *.......................................................................................................................808 Political contributions (Part-year and nonresident filers only) ............................................................................809 Reservation enterprise zone * ....................................................................................................................................810 Retirement income ......................................................................................................................................................811 Rural emergency medical service providers * ........................................................................................................812 Rural health practitioners * ........................................................................................................................................813 Pass-through income taxes paid to another state ...................................................................................................815 Carryforward credits—Schedule OR-ASC, Section D or OR-ASC-NP, Section F Code Agriculture workforce housing * ..............................................................................................................................835 Business energy carryforward ..................................................................................................................................839 Child Care Fund contributions carryforward ........................................................................................................841 Crop donation * ...........................................................................................................................................................843 Electronic commerce zone investment carryforward ...........................................................................................845 Employer scholarship * ..............................................................................................................................................847 Energy conservation project ......................................................................................................................................849 Fish screening devices * .............................................................................................................................................850 Oregon IDA Initiative Fund donation ......................................................................................................................852 Oregon Low Income Community Jobs Initiative/New Markets .........................................................................855 Oregon Production Investment Fund contributions (auction) .............................................................................856 Renewable energy resource equipment manufacturing facility carryforward .................................................860 Residential energy carryforward ..............................................................................................................................861 Transportation projects ..............................................................................................................................................863 University Venture Development Fund contributions ..........................................................................................864 Rural technology workforce development * ...........................................................................................................868 Bovine manure production/collection carryforward ............................................................................................869 College Opportunity Grant Fund contributions (auction) ....................................................................................871 Short line railroad rehabilitation * ............................................................................................................................872 Carryforward credits—Available only to S Corporation shareholders Code Alternative qualified research activities carryforward (S corporation) ..............................................................837 Lender’s credit: affordable housing (S corporation) ...............................................................................................854 Lender’s credit: energy conservation carryforward (S corporation) ...................................................................848 Long-term enterprise zone facilities carryforward (S corporation) .....................................................................853 Qualified research activities carryforward (S corporation) ..................................................................................858 Tax recaptures—Schedule OR-ASC, Section E or OR-ASC-NP, Section G Code Tax recapture—ABLE account nonqualified withdrawal .....................................................................................950 Tax recapture—Oregon 529 College Savings Network account nonqualified withdrawal .............................951 Numeric codes

150-101-431 (Rev. 09-30-22) 137 Refundable credits—Schedule OR-ASC, Section F or OR-ASC-NP, Section H Code Claim of right income repayment .............................................................................................................................890 Manufactured dwelling park closure ......................................................................................................................891 Working family household and dependent care (WFHDC) * ..............................................................................895 Oregon 529 College Savings Network account contributions * ............................................................................896 ABLE account contributions * ...................................................................................................................................897 Oregon EIC for ITIN filers *.......................................................................................................................................898 Pass-through entity elective taxes paid ...................................................................................................................900 * Credit must be prorated by part-year residents and nonresidents. Numeric codes

150-101-431 (Rev. 09-30-22) 138 Index Symbols 2-D barcode filing for Oregon .............................................. 11 529 plans—see Oregon 529 College Savings Network A ABLE Account Contributions—credit .........................................................69 Deposit—subtraction ..........................................................69 Nonqualified withdrawal—addition ...............................59 Nonqualified withdrawal—tax recapture .......................30 Abusive tax avoidance transaction (ATAT) penalties .......40 Accumulation distribution from a trust—addition ...........59 Additions ABLE account subtraction nonqualified withdrawal ....59 Accumulation distribution from a trust ..........................59 Basis of business assets transferred into Oregon ............93 Capital loss carryover difference ......................................59 Child Care Fund contributions .........................................59 Claim of right income repayment .....................................60 College Opportunity Grant Fund contributions ............60 CPAR adjustment ................................................................93 Depletion in excess of property basis ...............................60 Depreciation difference for Oregon ..................................92 Disposition of inherited Oregon farmland or forestland ...60 Disqualified charitable contributions ...............................61 Federal business income deduction .................................61 Federal depreciation disconnect .................................89, 92 Federal election on interest and dividends of a minor child ...61 Federal estate tax .................................................................62 Federal income tax refunds ...............................................62 Federal law disconnect .......................................................98 Federal subsidies for employer prescription drug plans .....63 Fiduciary adjustment from Oregon estates and trusts ....94 First-time home buyer savings account nonqualified withdrawal .................................................................63 Gain on the sale of an Oregon residence .........................94 Gambling losses claimed as an itemized deduction ......64 Income taxes paid to another state by a pass-through entity ............................................................................64 Individual development account Donation credit ..................................................................64 Nonqualified withdrawal ................................................65 Rollover to retirement account........................................65 In general ..............................................................................59 Interest and dividends on government bonds of other states ............................................................................65 Lump-sum distributions ....................................................65 Nonresident capital losses and loss carryovers ..............66 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal .....................66 Oregon deferral of reinvested capital gain ......................98 Oregon Production Investment Fund contributions .....67 Partnership and S corporation modifications for Oregon ...92 Passive activity losses ...................................................94, 95 PTE-E tax deducted on entity-level federal return ........67 Refund of Oregon-only itemized deductions from a prior year .................................................................67 Sale of assets ........................................................................94 Suspended losses ................................................................96 University Venture Development Fund contributions ..............................................................67 Unused business credits .....................................................67 WFHDC medical expenses ................................................67 Additions to tax ......................................................................25 Addresses ..............................................................................143 Adjustments—Centralized partnership audit regime ......93 Adjustments to income Alimony paid .......................................................................54 Educator expenses ..............................................................55 Fee-basis government officials, business expenses of ...54 Health Savings Account deduction ..................................55 In general ..............................................................................54 IRA or self-employed SEP and SIMPLE contributions ....55 Moving expenses .................................................................56 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ............................................................57 Penalty on early withdrawal of savings ..........................56 Performing artists, business expenses of .........................54 Reservists, business expenses of .......................................54 Self-employed health insurance ........................................56 Self-employment tax ...........................................................57 Student loan interest ...........................................................57 Agriculture workforce housing—credit ........................... 112 Air carrier employees ............................................................47 Alimony Paid, deduction—adjustment ............................................54 Received, income ................................................................48 Alternative qualified research activities–credit ............... 113 Amended returns ...................................................................36 American Indian—subtraction .............................................69 AmeriCorps educational award—subtraction ...................70 Amtrak Act ..............................................................................49 Annual estimated tax payment ..........................................125 Appeals Appealing a deficiency based on federal audit reports or audit reports of other states ...................43 Conference ...........................................................................43 Doubtful liability .................................................................44 Interest ............................................................................43, 44 Notice of Assessment..........................................................42 Notice of Deficiency ............................................................42 Oregon Tax Court ................................................................44 Paying your taxes during the appeal ...............................44 Penalty or interest ...............................................................43 Revenue Online .......................................................42, 43, 44 Written objection .................................................................43 Appendix ...............................................................................128 Application of refund ............................................................33 Artist’s charitable contribution—subtraction ....................70 “As if” federal returns ...........................................................17 Audit .......................................................................................41 B Basis of business assets transferred into Oregon ...............93 Bona fide residence test .........................................................14 Bond interest ...............................................................65, 78, 87 Bovine manure production/collection—credit ............... 114 Business energy—credit ...................................................... 114 Business income or loss .........................................................48 Business income reduced tax rate ........................................26 C Capital Construction Fund—subtraction ...........................70 Capital gain .................................................................28, 48, 65 Capital loss carryover difference—addition ......................59 Capital loss carryover difference worksheet ....................132 Index

150-101-431 (Rev. 09-30-22) 139 Certain business expenses of reservists, performing artists, and fee-basis government officials .............54 Centralized Partnership Audit Regime Addition ...............................................................................93 Adjustments report .............................................................41 Amount in lieu of tax paid by partners ...........................30 Subtraction ...........................................................................93 Child Care Fund contribution Addition ...............................................................................59 Credit .................................................................................. 114 Child with a disability .........................................................101 Claim of right income repayments Addition ...............................................................................60 Credit ..................................................................................121 College Opportunity Grant Fund contributions Addition .................................................................................60 Credit ................................................................................... 114 Combat zone/Contingency area ..........................................23 Commercial fishermen Estimated tax .....................................................................127 Underpayment interest ....................................................125 Community property income .........................................18, 47 Commuting expenses, construction worker/logger— subtraction ..................................................................71 Composite return, filing ........................................................16 Income on, subtraction .......................................................78 CPAR adjustments .................................................................93 CPAR amount in lieu of tax paid by partners ....................30 Credit card payments ............................................................32 Credits and payments............................................................25 Credits, carryforward Agriculture workforce housing ...................................... 112 Alternative qualified research activities ........................ 113 Bovine manure production/collection .......................... 114 Child Care Fund contribution ......................................... 114 College Opportunity Grant Fund contributions .......... 114 Crop donation .................................................................... 114 Electronic commerce zone investment ........................... 115 Employer scholarship ....................................................... 115 Energy conservation project ............................................ 116 Fish screening devices ...................................................... 116 Lender’s credit: affordable housing ............................... 116 Lender’s credit: energy conservation ............................. 116 Long-term enterprise zone facilities ............................... 117 New Markets ..................................................................... 117 Oregon IDA Initiative Fund donation ........................... 117 Oregon Low-Income Community Jobs Initiative ......... 117 Oregon Production Investment Fund contributions ... 118 Qualified research activities ............................................ 118 Renewable energy resource equipment manufacturing facility ............................................. 118 Residential energy ............................................................. 118 Rural technology workforce development .................... 119 Short line railroad rehabilitation ..................................... 119 Transportation projects ..................................................... 119 University venture development fund contributions ...120 Credits, refundable ABLE account contributions ............................................121 Claim of right income repayment ...................................121 Earned income ...................................................................122 Manufactured dwelling park closure .............................122 Oregon 529 College Savings Network account contributions ............................................................122 Oregon EIC for ITIN filers ...............................................123 Oregon surplus credit (kicker) ........................................124 Pass-through entity elective tax paid .............................123 Working Family Household and Dependent Care (WFHDC) ..................................................................123 Credits, standard Exemption ..........................................................................100 Income taxes paid to another state on mutually-taxed income ...........................................102 Mutually-taxed gain on the sale of residential property ...106 Oregon Cultural Trust contributions ..............................107 Oregon Veterans’ Home Physicians ...............................107 Pass-through income taxes paid to another state .........106 Political contributions ......................................................108 Reservation enterprise zone ............................................108 Retirement income ............................................................109 Rural emergency medical service providers ................. 110 Rural health practitioners ................................................ 110 Credit transfers ..................................................................... 112 Credit types .............................................................................99 Crop donation—credit ......................................................... 114 D Dam workers; hydroelectric .................................................48 Deceased person’s return ........................................................8 Deductions and modifications .............................................96 Itemized deductions ...........................................................96 Standard deduction ............................................................97 Age 65 or older, blind .......................................................97 Single or married filing jointly dependents ..................97 Dependent ...........................................................................9, 97 Depletion in excess of property basis—addition ...............60 Depreciation difference for Oregon .....................................92 Direct deposit of refund ........................................................33 Disaster area ............................................................................15 Disaster relief workers .............................................................9 DISC dividend payments—subtraction ..............................72 Disposition of inherited Oregon farmland or forestland—addition .................................................60 Disqualified charitable donations—addition .....................61 Dividend income ..............................................................49, 78 Domicile ...................................................................................13 E Earned income—credit ........................................................122 Educator expenses—adjustment ..........................................55 Electronic commerce zone investment—credit ................ 115 Electronic filing for Oregon .................................................. 11 Employee retirement plans, previously taxed —subtraction ..............................................................82 Employer scholarship—credit ............................................ 115 Energy conservation project—credit ................................. 116 Estimated tax ........................................................................127 Exempt income Air carrier employees, nonresident ..................................47 Amtrak Act ...........................................................................49 Hydroelectric dam workers ...............................................48 Interstate transportation wages Amtrak Act ...................49 Railroad Retirement Board benefits .................................52 Social Security benefits .......................................................52 Waterway workers, nonresident .......................................53 Extensions of time to file .......................................................15 Index

150-101-431 (Rev. 09-30-22) 140 F Failure to file ...........................................................................45 Appeal procedure ...............................................................45 Assessment of tax ................................................................45 Penalty, 25 percent ..............................................................39 Penalty, 100 percent ............................................................40 Farmers Estimated tax .....................................................................127 Underpayment interest ....................................................125 Farm income averaging .........................................................29 Farm liquidation long-term capital gain tax rate ..............28 Federal audits .........................................................................41 Federal business income deduction—addition .................61 Federal depreciation disconnect ..........................................92 Federal election on interest and dividends of a minor child—addition ............61 Federal estate tax—addition .................................................62 Federal income tax refunds—addition ...............................62 Federal income tax liability—subtraction Additional tax paid .............................................................72 Amended returns—how to report ....................................37 Worksheet .............................................................................72 Federal law connection............................................................7 Federal law disconnect—addition .......................................98 Federal mortgage interest credit—subtraction ..................75 Federal or other state corrections to tax returns ................35 Federal pension income—subtraction ................................74 Federal return “As if” ....................................................................................17 Audit of ................................................................................42 Extensions of time to file ....................................................15 Filing status ..........................................................................16 Need for ................................................................................ 11 RDPs ......................................................................................19 Federal Schedule E and F income ........................................48 Federal subsidies for employer prescription drug plans—addition .........................................................63 Federal tax credits—subtraction ..........................................76 Federal tax law .........................................................................7 Federal tax worksheet ...........................................................72 Fee-basis government officials, business expenses of— adjustment ..................................................................54 Fiduciaries Exception to paying estimated tax .................................127 Federal business income deduction—addition ..............61 Federal estate tax—addition ..............................................62 Income taxes paid to another state—addition ................64 Interest and dividends on government bonds of other states—addition ...............................................65 Returns....................................................................................8 Tax ......................................................................................31 Fiduciary adjustment from Oregon estates and trusts .....94 Filing an Oregon return .........................................................13 Filing requirements ..................................................................9 Nonresidents ........................................................................10 Part-year residents ..............................................................10 Filing status .............................................................................16 Film production labor rebate—subtraction ........................76 First-time home buyer savings account (FTHBSA) contributions and earnings ......................................76 Addition for nonqualified withdrawal ............................63 Nonqualified withdrawal penalty ....................................40 Subtraction ...........................................................................76 Fish screening devices—credit ........................................... 116 Foreign income tax—subtraction .........................................77 G Gain, loss, and distributions .................................................48 Gain on the sale of an Oregon residence ............................94 Gambling losses claimed as an itemized deduction— addition .......................................................................63 General information ................................................................9 Global intangible low-taxed income (GILTI) .....................48 H Health savings account deduction—adjustment...............55 Household income checklist ...............................................129 Housing expenses, scholarships used for—subtraction .......84 Hydroelectric dam workers ..................................................48 I Important mailing addresses ..............................................143 Important reminders ...............................................................7 Income .....................................................................................47 Air carrier employees .........................................................47 Alimony received ................................................................48 Amtrak Act ...........................................................................49 Business income or loss ......................................................48 Federal Schedule E and F income ....................................48 Gain, loss, and distributions ..............................................48 Global intangible low-taxed income ................................48 Hydroelectric dam workers ...............................................48 Individual Retirement Account distributions .................49 Interest and dividend income ...........................................49 Interstate Transportation Wages .......................................49 Like-kind exchange or involuntary conversion..............51 Railroad Retirement Board benefits .................................52 Retirement income ..............................................................52 Salaries ..................................................................................53 Social Security benefits .......................................................52 State and local income tax refunds ...................................52 Taxable to Oregon ...............................................................47 Unemployment insurance benefits ..................................52 Wages ....................................................................................53 Waterway workers ..............................................................53 Income averaging, Farm .......................................................29 Income on a composite return—subtraction ......................78 Income taxes paid to another state on mutually-taxed income By a pass-through entity—addition .................................64 Credit, full-year residents ................................................104 Credit, generally ................................................................102 Credit, nonresidents .........................................................105 Credit, part-year residents ...............................................104 Sale of residential property ..............................................105 Income taxes paid to another state by a pass-through entity—addition .........................................................64 Income tax refund, federal—addition .................................62 Income tax refund, Oregon—subtraction ...........................81 Individual Development Account Addition Donation credit ..................................................................64 Nonqualified withdrawal ................................................65 Rollover to retirement account........................................65 Initiative Fund donation credit ....................................... 117 Subtraction ...........................................................................77 Individual Taxpayer Identification Number ......................19 Inherited farmland/forestland—addition..........................60 Index

150-101-431 (Rev. 09-30-22) 141 Index Interest Appeals .................................................................................43 Income ..................................................................................49 Installment sales, addition to tax ......................................30 Refunds .................................................................................38 Underpayment of estimated tax .....................................125 Unpaid tax ............................................................................38 Interest/dividends on government bonds of other states—addition .........................................................65 Interest/dividends on U.S. bonds/notes—subtraction....78 Interest income ...........................................................49, 65, 78 Interest on certain installment sales ....................................30 Interstate Transportation Wages ..........................................49 IRA conversions, previously taxed—subtraction ..............83 IRA or self-employed SEP and SIMPLE contributions—adjustment .......................................55 Itemized deductions and add backs ....................................96 K Kicker (Oregon surplus credit)...........................................124 L Land donation to educational institutions carryforward—subtraction .......................................79 Legislative Assembly expenses—subtraction ....................79 Lender’s credit: affordable housing .................................. 116 Lender’s credit: energy conservation ................................ 116 Like-kind exchange or conversions of property ................51 Long-term enterprise zone facilities—credit .................... 117 Lottery winnings—subtraction ............................................82 Lump-sum distributions—addition Capital gains income ..........................................................65 Ordinary income .................................................................65 M Mailing addresses ................................................................143 Manufactured dwelling park Capital gain exclusion—subtraction ................................80 Closure credit .....................................................................122 Closure payments—subtraction .......................................80 Marijuana business expenses—subtraction .......................80 Market-based sourcing ..........................................................94 Medical subtraction, special Oregon ...................................84 Military pay subtractions ......................................................21 Military personnel filing information .................................20 Minor child, federal election on interest and dividends—addition .................................................61 Minor child’s return .................................................................8 Miscellaneous Oregon income tax information for tax years 2019–2022 .................................................145 Mortgage interest credit—subtraction ................................75 Moving expense deduction, military personnel ................20 Moving expenses—adjustment ............................................56 Moving expenses of military spouses .................................24 Mutually-taxed gain on the sale of residential property—credit ......................................................106 N Net operating losses (NOLs) ................................................89 New information ......................................................................7 New Markets—credit .......................................................... 117 Nonresident capital losses and loss carryovers .................66 Nonresident—Form OR-40-N ..............................................15 Nonresidents Adjustments .........................................................................54 Composite return filed by pass-through entity ..............16 Earned income credit ........................................................122 Estimated tax .....................................................................127 Exemption credit ...............................................................100 Filing requirements .............................................................10 Form OR-40-N .....................................................................15 Income taxes paid to another state on mutually-taxed income .......................................................................102 Married taxpayers with different residency status ........16 Nonresident aliens ............................................................127 Oregon percentage ..............................................................96 Rental property in Oregon .................................................10 Residency .............................................................................14 Nonresident spouse of military member stationed in Oregon .........................................................................23 Nonresidents stationed in Oregon, military ......................22 Numeric codes ......................................................................134 O Open estimated tax account .................................................34 Oregon 529 College Savings Network account contributions Addition, nonqualified withdrawal .................................66 Credit ..................................................................................122 Subtraction ...........................................................................81 Tax recapture, nonqualified withdrawal .........................30 Oregon Cultural Trust contributions—credit ...................107 Oregon deferral of reinvested capital gain .........................98 Oregon EIC for ITIN filers ..................................................123 Oregon IDA Initiative Fund donation—credit ................ 117 Oregon income tax refund—subtraction ............................81 Oregon Low-Income Community Jobs Initiative—credit ... 117 Oregon percentage .................................................................96 Oregon Production Investment Fund (auction) Addition ...............................................................................66 Credit .................................................................................. 118 Oregon residents living in a foreign country .....................13 Oregon surplus credit ..........................................................124 Oregon tax ...............................................................................25 Oregon Veterans’ Home Physicians—credit ....................107 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25—adjustments ..................................57 Other federally-exempt obligations ....................................65 Other gain or loss ...................................................................48 Other individual taxes ...........................................................31 Other items ..............................................................................89 Other Oregon modifications .................................................96 Oyster farmers Estimated tax .....................................................................127 Underpayment interest ....................................................125 P Partnership and S corporation modifications for Oregon ....92 Part-year resident—Form OR-40-P ......................................15 Part-year residents Adjustments .........................................................................54 Earned income credit ........................................................122 Estimated tax .....................................................................127 Exemption credit ...............................................................100 Filing requirements .............................................................10 Form OR-40-P ......................................................................15 Income taxes paid to another state .................................102 Married taxpayers with different residency status ........16 Net operating losses ...........................................................90 Oregon percentage ..............................................................96 Residency .............................................................................14

150-101-431 (Rev. 09-30-22) 142 Index Passive activity losses ............................................................95 Passive foreign investment company income ....................66 Pass-through entities Composite tax return ..........................................................16 Elective tax ...........................................................................29 Income on a composite return—subtraction ...................78 Income taxes paid to another state—addition ................64 Income taxes paid to another state—credit ...................106 Nonresident withholding ..................................................16 Reduced tax rate ..................................................................26 Pass-through entity elective tax ...........................................29 Pass-through entity elective taxes paid—credit ..............123 Pass-through income taxes paid to another state —credit ...106 Payment options .....................................................................32 Payments and refunds ...........................................................32 Penalties ...................................................................................39 Abusive Tax Avoidance Transactions ...............................40 Failure to file, 25 percent, additional ................................39 Failure to file, 100 percent ..................................................40 False claim, Working Family Household and Dependent Care credit ............................................124 Filing or paying late ............................................................39 First-time home buyer savings account nonqualified withdrawal ..........................................40 Frivolous return...................................................................40 Intent to evade tax...............................................................40 Substantial understatement of net tax .............................40 Penalty on early withdrawal of savings—adjustment .....56 Performing artists, business expenses of—adjustment ....54 Personal exemption—credit ...............................................100 Personal income tax rates .....................................................25 Political contributions—credit ...........................................108 Prescription drug plans, employer subsidies—addition...63 Previously taxed employee retirement plans—subtraction ...82 Previously taxed IRA conversions—subtraction ...............83 Prohibited amounts for Oregon NOLs ...............................89 Protective claim for refund ...................................................36 Psilocybin business expenses—subtraction .......................83 PTE-E tax deducted on entity-level federal return—addition ...67 PTEs with nonresident owners ............................................16 Public Safety Memorial Fund Awards—subtraction ........84 Q Qualified business income reduced tax rate ......................26 Qualified research activities—credit ................................. 118 R Railroad Retirement Board benefits—subtraction ............84 Reasons to file an amended return ......................................36 Record-keeping requirements .............................................. 11 Refund of Oregon-only itemized deductions from a prior year—addition .................................................67 Refunds ....................................................................................32 Amended returns ................................................................36 Application to open estimated tax account ...............33, 34 Deceased taxpayer ..............................................................32 Delays ...................................................................................34 Direct deposit .......................................................................33 Injured spouse refund claims ............................................35 Interest ..................................................................................38 Minimum................................................................................8 Oregon statute of limitations .............................................35 Processing.............................................................................34 Protective claim ...................................................................36 Unclaimed property ...........................................................32 Registered domestic partners ...............................................19 Renewable energy resource equipment manufacturing facility carryforward—credit ...... 118 Requesting a waiver of penalty or interest .........................46 Required annual payment ..................................................125 Required installment payment ...........................................125 Reservation enterprise zone—credit .................................108 Reservists, business expenses of—adjustment ..................54 Residency ................................................................................13 Bona fide residence test ......................................................14 Domicile ...............................................................................13 Foreign country ...................................................................13 Military personnel...............................................................20 Military spouses ..................................................................23 Nonresidents ........................................................................14 Part-year residents ..............................................................14 Physical presence test .........................................................13 Special-case Oregon residents ...........................................13 Tax treaties ...........................................................................14 Resident—Form OR-40 .........................................................15 Residential energy—credit .................................................. 118 Retirement income .................................................................52 Credit ..................................................................................109 Revenue Online ........................................................................7 Rural technology workforce development—credit ......... 119 S Salary income ..........................................................................53 Sale of assets............................................................................94 Sales of Oregon real property by nonresidents .................15 Scholarships used for housing expenses—subtraction ....84 Self-employed health insurance—adjustment ...................56 Self-employment tax—adjustment ......................................57 Severely disabled, exemption credit ..................................101 Short line railroad rehabilitation—credit ........................... 119 Social Security and Railroad Retirement Board benefits ...52 Social Security benefits—subtraction ..................................84 Special Oregon medical—subtraction .................................84 Special Oregon medical subtraction worksheet instructions .................................................................85 Standard credits ....................................................................100 Standard deduction ...............................................................97 State and local government bond interest ..........................87 State and local income tax refunds ......................................52 Statewide transit tax ..............................................................31 Statute of limitations Generally ..............................................................................12 Net operating loss carryback .............................................37 Notice of deficiency for listed transaction .......................40 Refunds .................................................................................35 Student loan interest—adjustment ......................................57 Substantial understatement of net tax penalty ..................40 Subtractions ABLE account deposit ........................................................69 American Indian .................................................................69 AmeriCorps educational award .......................................70 Artist’s charitable contribution .........................................70 Basis of business assets transferred into Oregon ............93 Capital Construction Fund contributions .......................70 Commuting expenses, construction worker/logger .....71 CPAR adjustment ................................................................93 Depreciation difference for Oregon ..................................92 DISC dividend payments ..................................................72 Federal gain previously taxed by Oregon .......................72 Federal income tax liability ...............................................72

150-101-431 (Rev. 09-30-22) 143 Federal pension income .....................................................74 Federal mortgage interest credit .......................................75 Federal tax credits ...............................................................76 Fiduciary adjustment from Oregon estates and trusts ...94 Film production labor rebate .............................................76 First-time home buyer savings account contributions and earnings ......................................76 Foreign income tax ..............................................................77 Gain on the sale of an Oregon residence .........................94 IDA contributions ...............................................................77 Income on a composite return ...........................................78 Individual Development Account ....................................77 In general ..............................................................................69 Interest and dividends on U.S. bonds and notes ............78 Land donation to educational institutions carryforward .....79 Legislative Assembly expenses .........................................79 Lottery winnings .................................................................82 Manufactured dwelling park capital gain exclusion .....80 Manufactured dwelling park closure payments ............80 Marijuana business expenses ............................................80 Net operating losses for Oregon .......................................89 Oregon College and MFS 529 Savings Plan deposits ....81 Oregon income tax refund .................................................81 Oregon Investment Advantage .................................................81 Oregon Lottery Winnings ...........................................................82 Partnership and S corporation modifications for Oregon ...92 Passive activity losses .........................................................95 Previously taxed employee retirement plans..................82 Previously taxed IRA conversions ....................................83 Psilocybin business expenses ............................................83 Public Safety Memorial Fund awards ..............................84 Railroad Retirement Board benefits .................................84 Sale of assets ........................................................................94 Scholarships used for housing expenses .........................84 Social Security benefits .......................................................84 Special Oregon medical ......................................................84 State and local government bond interest .......................87 Suspended losses ................................................................96 Taxable benefits for former RDPs .....................................87 U.S. government interest in IRA or Keogh distribution ....88 Suspended losses....................................................................96 T Tables Table 1: Filing thresholds for full-year residents ..............9 Table 2: Filing thresholds for part-year residents and nonresidents........................................................10 Table 3: Spouses with different residency status ............17 Table 4: Tax on qualified business income.......................26 Table 5: Partnership and S corporation employee requirements ...............................................................27 Table 6: Refund applied as estimated tax payment .......34 Table 7: Interest percentage rates ......................................38 Table 8: Capital loss carryover difference ........................59 Table 9: Federal tax liability subtraction AGI phase-out.....................................................................74 Table 10: FTHBSA subtraction limits ................................77 Table 11: Special Oregon medical subtraction —maximum amount .................................................85 Table 12: Oregon percentage examples ............................96 Table 13: Rural health practitioner credit .......................111 Table 14: Credit percentage ..............................................121 Table 15: WFHDC AGI limits ..........................................124 Taxable benefits for former RDPs—subtraction ................87 Tax benefit doctrine................................................................62 Tax recaptures .........................................................................30 Tax treaties ...............................................................................14 Transit self-employment tax .................................................31 Transportation projects—credit .......................................... 119 Two-tiered interest on deficiencies and delinquencies .....38 Two-tiered interest on refunds .............................................39 U Underpayment of estimated tax, interest on ....................125 Appeals .................................................................................42 Exceptions ..........................................................................125 Unemployment compensation Income ..................................................................................52 Railroad Retirement Board benefits—subtraction .........84 University venture development fund contributions Addition ...............................................................................67 Credit ..................................................................................120 Unused business credits—addition .....................................67 U.S. bonds and notes, interest on—subtraction .................78 U.S. government interest in IRA or Keogh distribution—subtraction .........................................88 W Wage income ...........................................................................53 Waterway workers .................................................................53 Working Family Household and Dependent Care (WFHDC) Credit ..................................................................................123 Medical expenses claimed as itemized deduction .........68 Penalty for false claim ......................................................124 Written objection ....................................................................43 Index

150-101-431 (Rev. 09-30-22) 144 Important mailing addresses If you are responding to a specific notice or letter, use the address and contact information listed on that correspondence. Send all returns and forms to the address listed on it or its instructions. See our website for additional mailing addresses. Physical address: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Forms and publications requests: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Federal ITIN information: Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Tax Information Authorization and Power of Attorney for Representation form: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Fax: 503-945-8735 Return after tax has been assessed: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Donations to State School Fund: Oregon Department of Education Attention: OFA Cashier 255 Capitol Street NE Salem OR 97310-1206 Injured spouse refund requests: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Written objections, conference requests, and requests for interest or penalty adjustments: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Appeals to the Oregon tax court: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 Appeals of interest on underpayment of tax: UND Team Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018

Miscellaneous Oregon income tax information for tax years 2019–2022 (Refer to prior year return instructions before filing delinquent or amended returns) Tax year 2019 2020 2021 2022 Return due date (Calendar year filer) 7/15/20 5/17/21 4/18/22 4/18/23 Standard deduction Single (can be claimed on another’s return) $1,100* $1,100* $1,100* $1,150* Single $2,270 $2,315 $2,350 $2,420 Married filing jointly or qualifying surviving spouse $4,545 $4,630 $4,700 $4,840 Married filing separately $2,270† $2,315† $2,350† $2,420† Head of household $3,655 $3,725 $3,780 $3,895 Federal tax subtraction maximum $6,800–$0‡ $6,950–$0‡ $7,050–$0‡ $7,250–$0‡ Exemption credit $206 or $0x% $210 or $0x% $213 or $0x% $219 or $0x% Oregon College and MFS 529 Savings Plans and ABLE account contribution maximum Joint return $4,865 $4,960# $5,030# $5,185# All others $2,435 $2,480# $2,515# $2,590# Marginal tax rates Single Married filing separately 5% First $3,550 4.75% First $3,600 First $3,650 First $3,750 7% $3,351–$8,900 6.75% $3,601–$9,050 $3,651–$9,200 $3,751–$9,450 9% $8,901–$125,000 8.75% $9,051–$125,000 $9,201–$125,000 $9,451–$125,000 9.9% Over $125,000 9.9% Over $125,000 Over $125,000 Over $125,000 Married filing jointly Head of household Qualifying surviving spouse 5% First $7,100 4.75% First $7,200 First $7,300 First $7,500 7% $7,101–$17,800 6.75% $7,201–$18,100 $7,301–$18,400 $7,501–$18,900 9% $17,801–$250,000 8.75% $18,101–$250,000 $18,401–$250,000 $18,901–$250,000 9.9% Over $250,000 9.9% Over $250,000 Over $250,000 Over $250,000 * Greater of amount shown or earned income plus $400, but not more than the standard deduction for a single filer. † If your spouse itemizes deductions, your standard deduction is $0. ‡ If federal AGI is $125,000 or greater, the federal tax subtraction is limited. Use the federal tax subtraction worksheet. x If federal AGI is more than $100,000 ($200,000 for a joint return), the exemption credit amount is $0. % The additional exemption credit for a disabled child or severely disabled taxpayer or spouse is $0 if AGI is over $100,000, regardless of filing status. # Carryforward of pre-2020 contributions only.

150-101-431 (Rev. 06-17-24) 2023 OREGON Publication OR-17 Individual Income Tax Guide

Important updates June 17, 2024 The instructions for the PTE-E tax refund included on entity-level federal return subtraction have been revised to clarify the amount of the subtraction. February 6, 2024 The instructions for the Paid Leave Oregon benefits subtraction have been revised to remove specific references to federal treatment of this type of income. January 12, 2024 In the instructions for calculating the credit for taxes paid to another state on mutually-taxed income, the defi­ nition of “Oregon tax after all other credits” has been updated to include the Oregon surplus (“kicker”) credit and the credit for pass-through entity elective (PTE-E) taxes paid as exceptions. See “Standard credits” for more information about this credit.

This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax (For Individuals). This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 questions.dor@dor.oregon.gov Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include .txt files in your email, but we are unable to open any other type of attachment. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. • Personal and partnership income tax: prac.revenue@dor.oregon.gov. • Pass-through entity elective tax: businessalternative.incometax@dor.oregon.gov. • Corporate income or excise tax: corp.help.dor@dor.oregon.gov. • Corporate minimum tax: corp.help.dor@dor.oregon.gov. • Corporate nexus and voluntary disclosure: nexus.help.dor@dor.oregon.gov. • Corporate activity tax: cattax.questions@dor.oregon.gov. • Payroll and business tax: payroll.help.dor@dor.oregon.gov. • Fiduciary/estate/inheritance tax: estate.help.dor@dor.oregon.gov. • Transit self-employment taxes: tse.help.dor@dor.oregon.gov. • Agricultural overtime: ag.overtime@dor.oregon.gov. Revenews. To receive emailed information from us, subscribe to Revenews using the link on our Tax professionals webpage.

150-101-431 (Rev. 06-17-24) 4 Contents Federal tax law ....................................................................7 New information .................................................................7 Important reminders ..........................................................7 General information ..................................................9 Do I have to file an Oregon income tax return? .............9 Electronic filing for Oregon ............................................11 2-D barcode filing for Oregon .........................................11 Why Oregon needs a federal return ..............................11 Record-keeping requirements .........................................11 Filing an Oregon return .........................................13 Residency ...........................................................................13 Extensions of time to file .................................................15 Which form do I file? ........................................................15 Filing status........................................................................16 Registered domestic partners (RDPs) ............................19 Individual Taxpayer Identification Number .................19 Military personnel filing information ...........................20 Oregon tax ....................................................................25 Personal income tax rates ................................................25 Qualified business income reduced tax rate ................26 Farm liquidation long-term capital gain tax rate .........28 Farm income averaging ...................................................29 Pass-through entity elective tax ......................................29 CPAR tax ............................................................................30 Interest on certain installment sales ..............................30 ABLE account or Oregon 529 College Savings Network account tax recapture .................................30 Other individual taxes .....................................................31 Payments and refunds ...........................................32 Payment options ................................................................32 Refunds ...............................................................................32 Direct deposit of refund ...................................................33 Application of refund .......................................................33 Refund processing ............................................................34 Injured spouse refund claims .........................................35 Oregon statute of limitations on refunds .....................35 Amended returns .....................................................36 How do I amend my Oregon return? ............................36 Interest and penalties.............................................38 Interest ................................................................................38 Penalties ..............................................................................39 Audits and appeals ...................................................41 What to do if your return is audited ..............................41 Appeals ...............................................................................42 Failure to file an Oregon income tax return ...45 Filing a return after tax is assessed ................................45 Income ............................................................................47 What income is taxable to Oregon? ................................47 Air carrier employees .......................................................47 Alimony received ..............................................................47 Business income or loss ....................................................48 Discharge of indebtedness ..............................................48 Federal Schedule E and F income ...................................48 Gain, loss, and distributions ...........................................48 Global intangible low-taxed income (GILTI) ................48 Hydroelectric dam workers .............................................48 Individual Retirement Account (IRA) distributions ...49 Interest and dividend income .........................................49 Interstate transportation wages (Amtrak Act) ..............49 Like-kind exchange or involuntary conversion ...........51 Market-based sourcing ....................................................52 Retirement income ............................................................52 Social Security and Railroad Retirement Board benefits ...52 State and local income tax refunds ................................52 Unemployment insurance (UI) benefits and other taxable income ..............................................................53 Wages, salaries, and other pay for work ........................53 Waterway workers ............................................................53 Adjustments .................................................................54 Alimony paid .....................................................................54 Certain business expenses of reservists, performing artists, and fee-basis government officials ...............54 Educator expenses ............................................................55 Health savings account (HSA) deduction .....................55 IRA or self-employed SEP and SIMPLE contributions ...55 Moving expenses ..............................................................56 Penalty on early withdrawal of savings ........................56 Self-employed health insurance ....................................56 Self-employment tax ........................................................57 Student loan interest ........................................................57 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ........................................57 Additions ........................................................................59 ABLE account subtraction nonqualified withdrawal ....59 Accumulation distribution from certain domestic trusts ...59 Capital loss carryover difference ....................................59 Claim of right income repayments .................................59 College Opportunity Grant Fund contributions ..........60 Depletion in excess of property basis ............................60 Disposition of inherited Oregon farmland or forestland ...60 Disqualified charitable donations ..................................61 Federal business income deduction ...............................61 Federal election on interest and dividends of a minor child ...61 Federal estate tax ...............................................................61 Federal income tax refunds .............................................62 Federal subsidies for employer prescription drug plans ....63 First-time home buyer savings account nonqualified withdrawal ............................................63 Gambling losses claimed as an itemized deduction ...63 Income taxes paid to another state by a pass-through entity .....................................................64 Individual development account (IDA) .........................64 Interest and dividends on government bonds of other states ................................................................65 Lump-sum distribution from a qualified retirement plan .................................................................................65 Nonresident capital losses and loss carryovers ............66 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal .......................66 Oregon Production Investment Fund contributions ...66 Passive foreign investment company income ...............66 PTE-E tax deducted on entity-level federal return ......67

150-101-431 (Rev. 06-17-24) 5 Refund of Oregon-only itemized deductions from a prior year ....................................................................67 University Venture Development Fund contributions ...67 Unused business credits ..................................................67 WFHDC medical expenses..............................................68 Subtractions .................................................................69 ABLE account deposit carryforward .............................69 American Indian ...............................................................69 AmeriCorps educational award .....................................70 Artist’s charitable contribution .......................................70 Capital Construction Fund (CCF) contributions ..........70 Casualty loss from state-declared emergency ..............71 Construction worker and logger commuting expenses ...71 Domestic international sales corporation (DISC) dividend payments ......................................................72 Federal gain previously taxed by Oregon .....................72 Federal income tax liability .............................................72 Federal tax worksheet ......................................................73 Federal mortgage interest credit .....................................74 Federal pension income ...................................................74 Federal tax credits ................................................................76 Film production labor rebate ...........................................76 First-time home buyer savings account (FTHBSA) contributions and earnings ........................................77 Foreign income tax ...........................................................77 IDA contributions .............................................................78 Income on a composite return ........................................78 Interest and dividends on U.S. bonds and notes ..........78 Legislative Assembly expenses ......................................79 Manufactured dwelling park capital gain exclusion ...79 Manufactured dwelling park closure payments ..........80 Marijuana business expenses .........................................80 Oregon College and MFS 529 Savings Plan deposits carryforward .................................................80 Oregon income tax refund ..............................................81 Oregon Investment Advantage .......................................81 Oregon Lottery winnings ................................................81 Paid Leave Oregon benefits deducted on federal Schedule A ....................................................................82 Previously taxed employee retirement plan contributions ...83 Previously taxed IRA conversions .................................83 Psilocybin business expenses .........................................84 PTE-E tax refund included on entity-level federal return .............................................................................84 Public Safety Memorial Fund award .............................84 Railroad Retirement Board benefits ...............................84 Scholarship awards used for housing expenses ..........85 Social Security benefits ....................................................85 Special Oregon medical ...................................................85 State and local government bond interest .....................88 Taxable benefits for former RDPs ...................................88 U.S. government interest in IRA or Keogh distributions .................................................................88 Other items ...................................................................90 Net operating losses (NOLs) ...........................................90 Depreciation difference for Oregon ...............................92 Federal depreciation disconnect .....................................92 Partnership and S corporation modifications for Oregon ...........................................................................93 CPAR adjustments ............................................................93 Basis of business assets transferred into Oregon .........93 Gain or loss on sale of depreciable property with different basis for Oregon ...........................................94 Gain on the sale of an Oregon residence .......................94 Fiduciary adjustment from Oregon estates and trusts ......................................................................94 Passive activity losses (PALs) ..........................................95 Suspended losses ..............................................................96 Oregon percentage ............................................................96 Deductions and modifications ........................................96 Oregon deferral of reinvested capital gain ...................98 Federal law disconnect .....................................................98 Credits ............................................................................99 Types of credits ..................................................................99 Standard credits ......................................................100 Exemption credit .............................................................100 Income taxes paid to another state on mutually-taxed income .............................................102 Exception for Oregon resident partners and S corporation shareholders ..........................................106 Mutually-taxed gain on the sale of residential property .......................................................................106 Oregon Cultural Trust contributions ...........................107 Oregon Veterans’ Home physicians ............................107 Political contributions ....................................................108 Reservation enterprise zone ..........................................108 Retirement income ..........................................................109 Rural emergency medical service providers ..............110 Rural health practitioners ..............................................110 Carryforward credits .............................................112 Agriculture workforce housing ....................................112 Alternative qualified research activities carryforward ...113 Bovine manure production/collection carryforward ... 114 Business energy carryforward ...................................... 114 Child Care Fund contributions carryforward ............ 114 College Opportunity Grant Fund contributions (auction) ....................................................................... 114 Crop donation .................................................................. 114 Electronic commerce zone investment carryforward ...115 Employer scholarship .....................................................115 Energy conservation project carryforward .................115 Fish screening devices ....................................................116 Forest conservation .........................................................116 Lender’s credit: affordable housing ..............................117 Lender’s credit: energy conservation carryforward ....117 Long-term enterprise zone facilities ............................117 Oregon IDA Initiative Fund donation .........................117 Oregon Low-Income Community Jobs Initiative/New Markets ............................................118 Oregon Production Investment Fund contributions (auction) ..............................................118 Qualified research activities carryforward ................118 Renewable energy resource equipment manufacturing facility carryforward .....................119 Residential energy carryforward .................................119 Rural technology workforce development carryforward...............................................................119 Short line railroad rehabilitation ..................................119 Transportation projects carryforward .........................120 University Venture Development Fund contributions ...120 Refundable credits .................................................121 ABLE account contributions ..........................................121 Agricultural employer overtime tax credit (AEOTC)....121 Claim of right income repayment ................................122

Earned income credit (EIC) ...........................................122 Manufactured dwelling park closure ..........................122 Oregon 529 College Savings Network account contributions ...............................................................123 Oregon EIC for ITIN filers .............................................123 Oregon Kids Credit .........................................................124 Oregon surplus credit ....................................................124 Pass-through entity elective taxes paid .......................124 Working family household and dependent care (WFHDC) ....................................................................124 Interest on underpayment of estimated tax ...126 Do I owe underpayment interest? ................................126 Figure your required annual payment ........................126 Exceptions to paying interest on an underpayment of estimated tax ...............................126 Estimated tax .............................................................128 Should I pay estimated tax?...........................................128 Exceptions ........................................................................128 Special situations ............................................................128 Appendix ......................................................................129 Contents ............................................................................129

150-101-431 (Rev. 06-17-24) 7 Federal tax law No extension to pay. Oregon doesn’t allow an extension of time to pay your tax, even if the IRS is allowing an extension. Your 2023 Oregon tax is due April 15, 2024. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2022. Oregon exceptions to federal tax law: • Internal Revenue Code (IRC) Section 139A tax exemp­ tion for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. • IRC Section 529 tax exemption for earnings on col­ lege savings plan funds used for K-12 tuition. Ore­ gon College & MFS 529 Savings Plans may be used for higher education expenses only. • IRC Section 199A deduction for noncorporate quali­ fied business income (QBID). Oregon is discon­ nected from the QBID. This deduction doesn’t flow through to the Oregon personal income tax return, so there is no addition to report; however, the deduc­ tion must be added back on fiduciary returns. References to federal return forms. In this publica­ tion, references to the federal return or to Form 1040 also include a reference to Forms 1040-SR, 1040-NR, and 1040-X, unless otherwise indicated. New information Kicker refund. Oregon’s surplus credit, known as the “kicker,” will be claimed as a credit on your 2023 tax return. The credit is a percentage of your 2022 tax liabil­ ity. You may donate your kicker credit to the Oregon State School Fund. Our form instructions contain more information and instructions for calculating your credit. Oregon Kids Credit. A new refundable tax credit is available to certain taxpayers with a qualifying child age five or younger. See “Refundable credits” for more information. Paid Leave Oregon benefits. Oregon’s new program providing medical, family, and safe leave began paying benefits September 3, 2023. Changes to your return may be necessary if you received benefits under the program. See “Subtractions” for more information. National Guard subtraction. Pay for active service in the National Guard can now generally be subtracted from taxable income if the service is authorized by the governor. This change also applies retroactively to tax years 2021 and 2022. If you received National Guard pay during those years, you will need to amend your return to take advantage of the subtraction. See “Mili- tary personnel filing information” for details. Casualty loss from state-declared emergency. If you experienced a loss in Oregon due to a state-declared emergency and weren’t able to deduct it on your fed­ eral return, you may be able to take a subtraction on your Oregon return. This subtraction applies to tax years 2020, 2021, and 2022, as well as future years. If you meet the requirements for the subtraction for those years, you’ll need to amend your return to take advantage of the subtraction. See “Subtractions” for more information. Agricultural employer overtime tax credit (AEOTC). A new tax credit is available for agricultural employ­ ers who pay overtime wages to their employees. To claim the credit, an employer must file an application with us during January following the year in which the wages were paid. See “Refundable credits” for more information. Elective tax for partnerships and S corporations changes. The pass-through entity elective tax has been extended to apply through tax years beginning before January 1, 2026. Additionally, there is now a subtraction available on the personal income tax return that may be claimed for refunds of the elec­ tive tax that were included as income on your fed­ eral return. See “Pass-through entity elective tax” in “Oregon tax” for more information. Forest conservation credit. A new tax credit is avail­ able to small forestland owners that choose to create a forest conservation area. The forest conservation area requires restrictions on harvest to be followed for 50 years. See “Carryforward credits” for more information about this credit. Federal tax liability subtraction. The federal tax subtraction limit is $7,800 ($3,900 if married filing separately) for 2023. It may be limited further based on your adjusted gross income (AGI). See “Federal income tax liability” in “Subtractions.” Important reminders Revenue Online. Revenue Online provides conve­ nient, secure access to tools for managing your Ore­ gon tax account. With Revenue Online, you can: • Check the status of this year’s refund. • View and print letters from us. • Make or schedule payments. • Securely communicate with us. • Check balances and view your tax account history. • Submit your requests (such as penalty waivers or appeals) or information we’ve requested from you. • View your Form 1099-G, if applicable. Federal tax law

150-101-431 (Rev. 06-17-24) 8 Tax professionals with third party access have addi­ tional benefits, such as viewing clients’ accounts. For more information and instructions on setting up your personal Revenue Online account, go to www. oregon.gov/dor and click on Revenue Online. Data security breaches. Tax professionals suffering a data security breach associated with tax return prep­ aration must report the breach to us promptly. See our Tax professionals webpage for details. Military pay. Oregon doesn’t tax your military pay if you aren’t an Oregon resident. For more information about residency and the Oregon military pay subtrac­ tions, see “Military personnel filing information.” Federal centralized partnership audit regime (CPAR). Oregon recognizes CPAR, the federal regime for auditing partnerships. See “Oregon tax” and “Audits and appeals.” Special Oregon medical subtraction. You or your spouse must be age 66 or older at the end of the tax year to qualify for the subtraction. See “Special Ore- gon medical subtraction.” Fiduciary returns. This publication includes infor­ mation for Oregon fiduciary return filers, where the treatment of an item may differ from the treatment on personal income tax returns. Also, see the instruc­ tions for Form OR-41, Oregon Fiduciary Income Tax Return. Statewide transit tax (STT). This income tax funds public transportation services and improvements within Oregon. See “Oregon tax” for filing require­ ments and other details. Market-based sourcing. Nonresident taxpayers must apportion their business income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See ORS 314.665, ORS 314.666, and OAR 150-314-0435. Payment options. We accept tax payments by check, money order, debit card, and credit card. See “Pay- ments and refunds.” Direct deposit. Instead of receiving your refund check in the mail, you may have your refund depos­ ited directly into your account that accepts electronic deposits. See “Direct deposit of refund” in “Pay- ments and refunds.” You can also have your refund deposited directly into an Oregon College or MFS 529 Savings Plan account. You may choose up to four accounts. See our full-year and part-year/nonresident booklets for more information. Minimum refund. Under Oregon law, the minimum refund that can be issued is $1. Minor child’s return and signature. If your child must file a tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By (your signature), parent (or legal guardian) for minor child.” Deceased person’s return. A final return for a person who died during the calendar year must be filed if a return would normally be required. If a return must be filed, check the “Deceased” box after the person’s name on the return. If you filed a final return with a refund and are unable to cash the refund check, you will need to return the check to us along with Form OR-243, Claim to Refund Due a Deceased Person. Go to our website to download the form or contact us to order it. If you are a court appointed personal representative or have filed a small estate affidavit and you need more information about trusts or estates, contact our Estate Unit at estate.help.dor@dor.oregon.gov. Additional exemption credits. Additional exemption credits for severely disabled taxpayers and for dis­ abled children aren’t available for taxpayers whose AGI is more than $100,000, regardless of filing sta­ tus. For more information, see “Exemption credit” in “Standard credits.“ Registered domestic partners (RDPs). For Oregon tax purposes, same-sex RDPs are treated the same as married couples. References to “spouse” within this publication include RDPs. Nonresident disaster relief workers. You don’t need to file a return if you worked in Oregon solely to pro­ vide relief during a declared disaster or emergency. See “General information” for more details. Mailing address. Always include your current mail­ ing address when filing a return so that we can reach you if needed. If you’re filing a return for a previous tax year, don’t use the address that you had during that tax year unless it is still your current mailing address. Important reminders

150-101-431 (Rev. 06-17-24) 9 General information Do I have to file an Oregon income tax return? Use the following charts and examples to determine whether you are required to file an Oregon personal income tax return. See the explanations in this publi­ cation if you are unsure about: • Residency status—see “Residency.“ • Filing status—see “Filing status.“ • Taxable income—see “What income is taxable to Oregon?” • Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Oregon income tax withheld, even if you aren’t oth­ erwise required to file a return. Note: You don’t have to file an Oregon return if you are an out-of-state employee or the operator of an out-of-state business and you were in Oregon solely for purposes of performing disaster or emergency- related work (ORS 401.690). Full-year residents You need to file if your gross income is more than the amount shown for your filing status in Table 1. Note: The amounts in Table 1 apply to gross income from all taxable sources. Table 1. Filing thresholds for full-year residents Your filing status is: Number of boxes checked below line 17 of Form OR-40: And your gross income is more than: Single, can be claimed on another’s return Any See “Dependents” Single 0 $7,305 1 $8,505 2 $9,705 Married filing jointly 0 $14,605 1 $15,605 2 $16,605 3 $17,605 4 $18,605 Married filing separately 0 $7,305 1 $8,305 2 $9,305 Head of household 0 $9,165 1 $10,365 2 $11,565 Qualifying surviving spouse 0 $10,180 1 $11,180 2 $12,180 In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages. Dependents. If you can be claimed as a dependent on another person’s return, you must file your own return if your income is more than the lesser of: • The standard deduction allowed on your federal return, or • The Oregon standard deduction for a single filer. You can use this worksheet, which has the federal amounts, to help you figure out if you need to file your own return. 1. Enter gross income from all 1. $ ________ taxable sources.

2. Earned income $_____ plus $400. 2. $ ________ Enter total. 3. Set federal amount. 3. $ 1,250 4. Enter the larger of line 2 or 3. 4. $ ________ 5. Enter the Oregon standard 5. $ ________ deduction for a single person: • Basic standard deduction: $2,605. • Age 65 or older, or blind: $3,805. • Age 65 or older and blind: $5,005. 6. Enter the smaller of line 4 or 5. 6. $ ________ If line 1 is more than line 6, you must file an Ore­ gon return. If line 6 is more than line 1, you aren’t required to file an Oregon return. Example 1: Emily is single, age 20, and a full-time college student. Her parents claim her as a depen­ dent. Emily has earned income of $800 from her job. She also has $29 of interest income from her savings account. 1. Enter gross income from all 1. $ 829 taxable sources. 2. Earned income $800 plus $400. 2. $ 1,200 Enter total. General information

150-101-431 (Rev. 06-17-24) 10 3. Set federal amount. 3. $ 1,250 4. Enter the larger of line 2 or 3. 4. $ 1,250 5. Enter the Oregon standard 5. $ 2,605 deduction for a single person: • Basic standard deduction: $2,605. • Age 65 or older, or blind: $3,805. • Age 65 or older and blind: $5,005. 6. Enter the smaller of line 4 or 5. 6. $ 1,250 Because line 6 ($1,250) is more than line 1 ($829), Emily isn’t required to file an Oregon return. Note: If Emily had any Oregon income tax withheld from her income, she must file an Oregon return to claim a refund. Example 2: Norman, age 77, is claimed as a depen­ dent by his son. Norman has income of $3,015 from a pension and interest. He doesn’t have any other tax­ able income. 1. Enter gross income from all 1. $ 3,015 taxable sources. 2. Earned income $0 plus $400. 2. $ 400 Enter total. 3. Set federal amount. 3. $ 1,250 4. Enter the larger of line 2 or 3. 4. $ 1,250 5. Enter the Oregon standard 5. $ 3,805 deduction for a single person: • Basic standard deduction: $2,605. • Age 65 or older, or blind: $3,805. • Age 65 or older and blind: $5,005. 6. Enter the smaller of line 4 or 5. 6. $ 1,250 Because line 1 ($3,015) is more than line 6 ($1,250), Norman is required to file an Oregon return. Example 3: Katrina is single, age 19, a full-time stu­ dent, and claimed as a dependent by her mother. Katrina didn’t work but had $1,300 of unearned inter­ est income. 1. Enter gross income from all 1. $ 1,300 taxable sources. 2. Earned income $0 plus $400. 2. $ 400 Enter total. 3. Set federal amount. 3. $ 1,250 4. Enter the larger of line 2 or 3. 4. $ 1,250 5. Enter the Oregon standard 5. $ 2,605 deduction for a single person: • Basic standard deduction: $2,605. • Age 65 or older, or blind: $3,805. • Age 65 or older and blind: $5,005. 6. Enter the smaller of line 4 or 5. 6. $ 1,250 Because line 1 ($1,300) is more than line 6 ($1,250), Katrina is required to file an Oregon return. Part-year residents and nonresidents You need to file an Oregon return if your gross income is more than the amount shown for your fil­ ing status in Table 2. Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident and gross income from all taxable sources while an Oregon resident. Table 2. Filing thresholds for part-year residents and nonresidents Your filing status is: And your Oregon gross income is more than: Single, can be claimed on another’s return $1,250* Single $2,605 Married filing jointly $5,210 Married filing separately If spouse claims standard deduction $2,605 If spouse itemizes deductions 0 Head of household $4,195 Qualifying surviving spouse $5,210 * The larger of $1,250 or your earned income plus $400, up to your standard deduction amount. If your Oregon income is less than the amount in Table 2, you aren’t required to file a return unless you had $1 or more of Oregon tax withheld from your wages. Nonresidents with rental property in Oregon You don’t have to file an Oregon return if: • Your only Oregon-source income is from rental property, and • You have a loss from the rental activity for the year. However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-tax­ able transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return. General information

150-101-431 (Rev. 06-17-24) 11 Electronic filing for Oregon Electronic filing is a fast, efficient, and accurate way to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Practitioners are automatically approved for Oregon electronic filing after the IRS accepts your online application to become an authorized e-file provider. There is no separate registration required for Oregon. Paid preparers who meet the requirements of the fed­ eral e-file mandate must also e-file Oregon personal income tax returns. For information on waivers of this requirement, see the information for tax profes­ sionals on our website. The copy of a tax return provided to a client must be an exact copy of the tax return submitted to us. When filing electronically, don’t send us a paper copy of your tax return. 2-D barcode filing for Oregon 2-D barcode filing is an alternative way to file a paper Oregon return. Oregon-approved tax software pack­ ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on the tax return is a “picture” of the information on the return, which is printed on the top right-hand cor­ ner of the return’s front page. A machine reads the barcode information so it doesn’t have to be entered manually into our computer system. If changes are made to the return after it has been printed, the entire return must be re-printed so that the barcode will reflect the correct information. The copy of a 2-D barcode return provided to a tax­ payer must be an exact copy of the tax return you submit to us. Why Oregon needs a federal return Most information to support the amounts on your Oregon return comes from your federal return. Even when Oregon law differs from federal law (such as additions, subtractions, and credits), we still need information from your federal return (ORS 314.380). If you file an electronic return, we will receive your federal return with your Oregon return. If you are filing a paper return, you must include a copy of the front and back of your federal return with Schedules 1 through 3 (if applicable). Also include any “as if” federal returns. If you’re not required to file a federal return, prepare a federal return as if you were actually filing it and include it with your Oregon return. Don’t include extension requests or federal schedules other than those listed above, but keep a copy of those with your tax records. We may ask for copies later. Record-keeping requirements Why is record-keeping important? • Keeping records of your income and deductions will help you prepare an accurate tax return and pay the correct tax. • You must be able to prove all items on your return with adequate records and sufficient evidence. Keep records that verify the income, deductions, credits, and other items reported on your tax return. Estimates or approximations don’t qualify as proof. • Accurate records will help you if we select your tax return for audit. Usually, an audit will occur one to three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from various sources. You may also have to pay more tax if you can’t prove the figures you used. How should I keep my records? You must keep accurate records, but no particular system is required for keeping them. Your records should contain all the information you used to fig­ ure your income, deductions, credits, and other items shown on your income tax return. What records should I keep? If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list of records you should keep: • Receipts and sales documents for deductible busi­ ness expenses, self-employment, farm, rentals, sale of assets, etc. • Dated and signed receipts for any cash payments that might be deductible. • Income statements, including Form W-2 for your wages and Form 1099 for interest, dividends, rents, and nonemployee compensation. • All payroll records, including copies of W-2 and 1099 forms you’ve issued. • Pay statements if you have deductible expenses withheld from your paycheck. • Receipts and certificates to verify Oregon tax cred­ its claimed. • Copies of your tax returns, including complete fed­ eral returns with all required schedules, or an “as if” return if you don't have a federal filing requirement. General information

150-101-431 (Rev. 06-17-24) 12 • Copies of your “as if” returns if you were required to prepare them to claim a special filing status. • Worksheets, summary statements, calendars, log books, journals, etc. • Canceled checks, substitute checks or carbon cop­ ies of checks, bank deposit slips, and receipts. • Checking and savings account statements for both personal and business accounts. • If you deduct alimony payments, keep copies of canceled checks and the divorce, separate main­ tenance, or support decree or a written separation agreement. • For property you own, keep proof of the purchase price, any purchase expenses, the cost of any improvements, and any other basis adjustments, such as depreciation and deductible casualty losses. If you received property as a gift, you must have records that show the donor’s adjusted basis just before the property was given to you, its fair market value on the date of the gift, and any gift tax paid on it. • The sale of a capital asset (and certain other assets). This type of sale is reported as a capital gain or loss. Your records must show when and how the asset was acquired, how it was used, and when and how you disposed of it. Records must also show your cost or other basis, the gross selling price, and the expenses of the sale. • Year-end statements showing total interest paid on loans, mortgages, or notes. • Statements and canceled checks, mortgage state­ ments, and other documents for your real estate and personal property taxes paid. • Proof of payment to your care provider if you are claiming the Oregon WFHDC credit. How do I document deductible expenses? A receipt is the best evidence to prove the amount of an expense. A canceled check, together with a bill or invoice from the payee, ordinarily establishes the cost. A canceled check might not prove a business expense without other evidence to show that it was for a business purpose. All records should show: • The date, • The amount, and • The purpose of the expense. To be deductible, a business expense must be both ordinary and necessary. How do I document car or truck expenses? You must have written records to verify your vehicle expenses. To deduct car or truck expenses, you must be able to prove: • The amount of each separate expense for a vehicle, such as the cost of purchase, capital improvements, lease payments, maintenance, and repairs. • The mileage for each business or investment use of the vehicle and the total miles for the tax year. • The date of the expense or use. Keep a trip log at the time of use, showing the date and mileage for each business use, including odometer readings. • The business or investment reason for the expense or use of the vehicle. Keep the proof you need for these items in an account book, diary, log, statement of expense, trip sheet, etc. Include all documents needed to verify the item. How long should I save my records? Keep records that support an item of income or a deduction on your return at least until the statute of limitations expires for that return. A statute of limita­ tions is the period of time after which no legal action can be brought. Usually this is three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. Returns filed before the due date are treated as if they were filed on the due date. Exceptions: There are times you should keep records longer, including the following: • Keep records that support your basis in property for at least four years after you sell or dispose of the property (including all capital improvements). • If you’re depreciating property, keep records related to each item’s depreciation expenses for its entire recovery period plus three years. • If your return was audited by the federal govern­ ment, Oregon has two years from the date we receive the federal audit report to review your Ore­ gon return for adjustments. • If you have employees, we recommend you keep all of your employment tax records for at least five years after the date the tax becomes due or is paid, whichever is later. This includes copies of Form W-2 for each employee, and all payroll records. • If you didn’t report some income and it’s more than 25 percent of the income shown on your return, the return may be audited within five years after it was filed. If a return is false or fraudulent or if no return is filed, there is no time limit. What if I don’t have all of my records? If records have been destroyed and your return is selected for audit, the auditor will advise you about reconstructing your records. General information

150-101-431 (Rev. 06-17-24) 13 Filing an Oregon return In order to correctly file an Oregon personal income tax return, you must know: • Your residency status. • Which form to file. • Your filing status. Residency (ORS 316.027) General rule. Oregon taxes residents on all sources of income. Oregon taxes nonresidents on income from Oregon sources. Residents An Oregon resident is someone who is domiciled in this state. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan to return after an absence. Domicile isn’t the same as home, abode, or residence. Intent is the deciding factor when you determine your domicile. The law assumes you have a domicile somewhere. It also assumes you have only one domicile. Home. If you have one home, your domicile is gen­ erally where that home is located. If you have two homes, your domicile follows your center of activity. To determine your center of activity and your domi­ cile, consider: • Physical characteristics of the place. • Time you spend there. • Things you do there. • People and property there. • Your attitude toward the place. • Your intent to return to the place when you are away. Family relations. Generally, spouses living together have the same domicile. The domicile of minor chil­ dren is determined by the domicile of the person who has legal custody of them. When living apart, spouses each may establish their own domicile if they meet the requirements for a change of domicile. Change of domicile. Intent is the most important factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your domicile. Once domicile is established, it’s never lost until all of the following happen: • You intend to abandon the old domicile, and • You intend to acquire a specific new domicile, and • You are physically present in the new domicile. The important points are physical presence at a new dwelling and the intent to make the new dwelling a home. Non-domiciled residents. An Oregon resident may also be someone who isn’t domiciled in Oregon, but: • Maintains a residence in Oregon, and • Spends a total of more than 200 days in Oregon during the taxable year. A fraction of a day is considered to be a whole day when figuring the 200 days. We won’t consider you to be a resident if you are in Oregon for a temporary purpose. The burden of proof is on you to show your stay here is only temporary. Consider both your domicile and the place where you live to determine how you are taxed. Special-case Oregon residents (Oregon residents liv­ ing in another US state). Even if you are domiciled in Oregon, you will be taxed as a nonresident if you meet all of the following requirements: • You don’t maintain a permanent residence in Ore­ gon for yourself or your family during any part of the year, and • You maintain a permanent residence outside Ore­ gon during the entire year, and • You spend less than 31 days of the year in Oregon. Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be taxed as foreign nonresidents. In general, you’re considered to be a foreign non­ resident if you meet the residency requirements for foreign earned income or housing exclusion under federal law. To qualify as a foreign nonresident, you must meet one of these two federal tests: • The “physical presence” test; or • The “bona fide residence” test. Note: You may be treated as an Oregon nonresident for tax purposes if you are in the civil service or mili­ tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel filing information” for more details. Physical presence test. To meet the requirements of the physical presence test: • Your tax home must be in a foreign country, and • You must be present in a foreign country or coun­ tries for 330 full days out of any consecutive 12-month period. “Tax home” is generally your regular place of busi­ ness or the location where you work, regardless of Filing an Oregon return

150-101-431 (Rev. 06-17-24) 14 where you live. For more information on tax home, refer to IRS Publication 17, Your Federal Income Tax for Individuals. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may begin on any date in the calendar year. The period ends the day before that same date, one year later. For example, a 12-month period beginning October 10 would end October 9 of the following year. The 330 full days must fall within that 12-month period. Example 1: Juan arrives in England on April 24, 2022, at noon. He establishes his tax home in England and remains there until 2 p.m. on March 21, 2024, when he leaves England to return to the United States. Juan is physically present in a foreign country for 330 full days during at least one 12-month period: • One 12-month period starts on his first full day in England, April 25, 2022, and ends April 24, 2023. • Another 12-month period starts on March 21, 2023, and ends March 20, 2024, his last full day in England. Juan may use any 12-month period that begins after his arrival in England and ends before he returned to the United States to meet the physical presence test. Juan qualifies for nonresident treatment for the months he was out of the country during 2022, 2023, and 2024. He should file Oregon part-year returns for 2022 and 2024, and a nonresident return for 2023. Example 2: Use the facts in Example 1, but change Juan’s arrival date to June 23, 2023. In this case, Juan won’t qualify for nonresident treatment because he wasn't physically present in a foreign country for 330 days. He must file a full-year resident return for 2023 and 2024 as well as 2022. Bona fide residence test. To meet the requirements of the bona fide residence test, you must: • Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country, and • Maintain a bona fide residence for an uninter­ rupted period that includes a full tax year. Example 3: Sandra is a calendar-year taxpayer. She establishes a bona fide residence in Russia on August 12, 2022. On June 10, 2023, she moves out of her residence and spends six weeks at a hotel in Alaska. On July 22, 2023, she establishes a bona fide residence in South Korea. She is transferred back to the United States on May 8, 2024. She doesn’t meet the requirements of the bona fide residence test because she doesn’t maintain a bona fide residence for an uninterrupted period that includes a full tax year. She also doesn’t qualify for the physical presence test because she isn’t physically present in a foreign coun­ try for 330 full days out of a consecutive 12-month period. Example 4: Use example 3, but instead of going to South Korea, Sandra continues to work in Russia until February 2024. She would now qualify under the bona fide residence test. Her residence was estab­ lished for a full tax year. Sandra should file a nonresi­ dent return for 2023. Sandra also qualifies for non­ resident treatment for the months in 2022 and 2024 that she maintained the bona fide foreign residence. She should file Oregon part-year returns for 2022 and 2024. For more information about physical presence or bona fide residence, see IRS Publication 54, A Tax Guide for U.S. Citizens and Resident Aliens Abroad. Tax treaties. If a U.S. tax treaty changes the meaning of terms used in determining federal taxable income, Oregon accepts the changed meaning as it applies to affected taxpayers. We may ask you to provide records showing how a particular treaty affects your taxable income. Nonresidents If you were domiciled outside Oregon and lived out­ side Oregon for the entire year, you were a nonresi­ dent of Oregon. If you are a nonresident, Oregon taxes only income you earned in Oregon and received from Oregon sources. In some cases, however, a taxpayer domiciled in Oregon can be treated as a nonresident. See “Special-case Oregon residents.“ Example 1: Misha was a permanent California resi­ dent in 2023. She temporarily worked in Medford as a computer consultant for two months in 2023. Misha is a nonresident of Oregon. She will pay Oregon tax on the income she earned in Oregon. California will also tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax her income, Misha may claim a credit for taxes paid to another state. For information about this credit, see “Income taxes paid to another state.” Example 2: Nash is a permanent Nevada resident. He has rental property in Oregon. Nash is a nonresident of Oregon. He will pay Oregon tax on the income from his Oregon rental property. Part-year residents If you were domiciled in Oregon for part of the year and in another state for part of the year, you were a part-year Oregon resident. Oregon taxes all of your income for the part of the year you were an Oregon resident. Oregon also taxes any income earned in Filing an Oregon return

150-101-431 (Rev. 06-17-24) 15 Oregon or received from Oregon sources for the part of the year you were a nonresident. Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and established a new domicile here. Gustav is considered to be a part-year Oregon resident for the tax year. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because she doesn’t abandon her Oregon domicile when she works in Alaska. Extensions of time to file If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For 2023 returns, this means you have until October 15, 2024 to file. An extension of time to file your return doesn’t mean you have more time to pay your taxes. You must pay any tax you expect to owe by April 15, 2024. If you don’t, you will owe interest on the unpaid balance from April 15, 2024 until the date it’s paid, and will be subject to a minimum penalty of 5 percent of the unpaid tax. To avoid penalty and interest charges, include enough payment with your extension to cover your tax liability. Once you file your return, if you have overpaid, we'll refund the overpayment. See “Interest and penalties” for more information. Were you stationed in a designated combat zone? If you were in the military and stationed in a desig­ nated combat zone, you may qualify for an automatic extension of time to file your return. See “Military personnel filing information.” Was your home or business located in a presidentially-declared disaster area? Did you receive additional time to file your federal tax return and pay your federal tax? If so, you may qualify for additional time to file your Oregon return and pay your Oregon tax. Check the “Federal disas­ ter relief” box on your return. Extension for filing returns Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to file your Oregon return and you owe tax, see Publica­ tion OR-40-EXT, Instructions for Automatic Extension of Time to File Oregon Individual Income Tax Return. Your extension payment must be received by April 15, 2024, to avoid penalties and interest. Download Publication OR-40-EXT from our website or contact us to order it. Whether you owe tax or are expecting a refund, mark the “Extension filed” box on your Oregon return and file your return by October 15, 2024. Which form do I file? Oregon has three types of personal income tax forms. The form you use depends on your residency status. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Part-year resident—Form OR-40-P Use Form OR-40-P if any one of the following is true: • You are a part-year resident; or • You are filing jointly and one spouse is a full-year Oregon resident and one is a part-year resident; or • You qualified as an Oregon resident living abroad for part of the year. Nonresident—Form OR-40-N Use Form OR-40-N if any one of the following is true: • You are a nonresident; or • You are a special-case Oregon resident (see “Resi- dency”); or • You and your spouse are filing jointly and one (or both) of you is a nonresident; or • You meet the military personnel nonresident requirements (see “Military personnel filing infor- mation”); or • You qualified as an Oregon resident living in a for­ eign country for the entire year (see “Residency”). You may need to file supplemental schedules or forms, depending on your circumstances. Nonresident trusts. If you file a federal Form 1040- NR and you’re filing an Oregon return for a nonresi­ dent trust, you must file using Form OR-41. Don’t file using Oregon Form OR-40-N. Sales of Oregon real property by nonresidents Withholding on real property sales. Authorized escrow agents may be required to withhold taxes due when a nonresident sells real property located in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: • Four percent of the consideration; • The net proceeds from the sale; or • Eight percent of the gain includible in Oregon tax­ able income. Filing an Oregon return

150-101-431 (Rev. 06-17-24) 16 For more information about this requirement and its exceptions, see the instructions for Form OR-18-WC, Report of Tax Payment or Written Affirmation for Oregon Real Property Conveyance, available on our website. If required, the nonresident transferor uses Form OR- 18-WC to calculate their gain or claim an exemption from withholding, then gives the form to the escrow agent. The escrow agent completes the rest of the form and submits it and any required payment to the department. Keep a copy of this form for your own records. Pass-through entities (PTEs) Partnerships. Except for publicly-traded partner­ ships taxed as corporations, every partnership with one or more Oregon resident partners, and every partnership having income or loss derived from or connected with Oregon sources, must file Form OR-65, Oregon Partnership Income Return. Partnership income is generally taxable to the partners rather than the partnership. See the Form OR-65 instruc­ tions for further details. Note: Oregon follows fed­ eral filing guidelines including the due date for fil­ ing a partnership return. If you aren’t required to file a federal partnership return, you don't need to file one for Oregon. S corporations. S corporations doing business in Oregon or receiving income from Oregon sources are required to file Form OR-20-S, Oregon S Corporation Tax Return. S corporation income is generally tax­ able to the shareholders rather than the corporation. However, S corporations do pay Oregon tax on cer­ tain kinds of income. For more information, see the instructions for Form OR-20-S on our website. LLCs. Oregon LLCs and foreign LLCs doing business in Oregon are taxed and classified the same as for federal income tax purposes. • An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax Return, or Form OR-20-INC, Oregon Corporation Income Tax Return. • A multiple-member LLC that chooses to be taxed as a partnership files Form OR-65. • A single-member LLC that chooses to be taxed as a sole proprietorship and files Schedule C, Sched­ ule E, or Schedule F with their federal individual income tax return files the same way for Oregon. PTEs with nonresident owners (ORS 314.778, 314.784) Composite tax return. A PTE must file Form OR-OC, Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For forms and instructions, see our website. Nonresident withholding. A PTE must withhold tax on a nonresident owner’s share of Oregon-source income if the nonresident owner elects not to be included on Form OR-OC, unless the nonresident owner’s share of Oregon-source income is less than $1,000 or other exceptions listed in ORS 314.784 apply. For more information, see the instructions for Form OR-19, Annual Report of Pass-through Entity Owner Tax Payments. Filing status General rule The filing status on your Oregon return must be the same as your filing status on your federal return, unless you’re married and have a different residency status than your spouse or you’re an RDP who isn’t married. Example 1: Minerva filed her federal return using the filing status of single. She must use the single filing status on her Oregon return. Example 2: Peter and Della are married and both are full-year Oregon residents. They filed a joint federal return. Peter and Della must use the married filing jointly filing status on their Oregon return. Example 3: Tia and Colin are married and choose the married filing separately filing status on their federal returns. They must use the married filing separately filing status on each of their separate Oregon returns. Exception: Filing status for married taxpayers with different residency status If you and your spouse file a joint federal return but only one of you was an Oregon resident (either full- year or part-year), you have a choice of two different filing statuses to use for Oregon: • You and your spouse may file one Oregon return using the married filing jointly status; or • You and your spouse may each file a separate Oregon return using the married filing separately status. You may not file as head of household (ORS 316.122). Note: This exception doesn’t apply to unmarried RDPs or married non-U.S. citizens without perma­ nent resident status because these taxpayers may not file joint federal returns. For information on RDP fil­ ing, see “Registered domestic partners.” Which forms do we file? Use Table 3 to determine which return form to use if you file a joint return or separate returns for Oregon. Filing an Oregon return

150-101-431 (Rev. 06-17-24) 17 Table 3. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns, use: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P Note: If you file separate federal returns, you must file separate Oregon returns. If you are a married nonresident without Oregon income, and you and your spouse are filing separate returns, you aren’t required to file an Oregon return. What information goes on each return? On each spouse’s separate Oregon return, enter the filer’s name and Social Security number first, then the spouse’s name and Social Security number. Mark the “Married filing separately” box. “As if” federal returns. You must include an “as if” federal return showing how the return would have appeared if you had filed a separate federal return, along with a copy of the joint federal return that you actually filed. Label the “as if” federal returns and mark the “Calculated using ‘as if’ federal return” box on each Oregon return. If you are filing paper returns, mail both Oregon returns, the “as if” federal returns, and the actual federal return in the same envelope, but don’t staple them together. Income and deductions. You and your spouse each report your own share of income and deductions. Also, report your share of any Oregon additions, sub­ tractions, modifications, or adjustments, including the federal tax subtraction. Use the following guidelines when preparing your return: Your percentage. Use this formula to compute your share of certain deductions: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI If your share is less than $0, your percentage is 0. Federal tax subtraction. Each spouse may subtract their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (after all credits except the EIC) by your percentage to determine your federal tax subtraction, with the applicable AGI limitation. Itemized deductions. Multiply each itemized deduc­ tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Itemized Deductions, if you can't clearly determine each spouse’s deductions. For more information about itemized deductions, see the instructions for Schedule OR-A. • Standard deduction. The Oregon standard deduc­ tion is $2,605 for each spouse. • Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or before January 1, 2024, or if they’re blind. The addi­ tional deduction is $1,000 for married taxpayers filing separately. A taxpayer who is both age 65 or older and blind may claim two additional deduc­ tions plus the basic standard deduction. • Exception: If one spouse claims itemized deduc­ tions, the other spouse can’t claim the standard deduction. The other spouse may only claim item­ ized deductions. Exemption credits. You can’t prorate exemptions. You may claim exemptions for yourself and any dependents allowed on your federal return. You can’t claim an exemption for the same dependent claimed on your spouse’s return. Example: Jim worked and lived in Oregon all year. Mary moved from Idaho to Oregon in July and mar­ ried Jim. They filed a joint federal return and are fil­ ing separate returns for Oregon. Mary earned $30,000 in Oregon and $22,000 in Idaho. Jim earned $41,000 in Oregon. Their total federal AGI was $93,000. Jim and Mary claimed the standard deduction on their joint federal return. They had $12,200 in Oregon itemized deductions, including $4,000 in property tax and $6,400 in mortgage interest on their Oregon home, and $1,800 in charitable contributions. Their joint fed­ eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his income of $41,000. On the return, he enters his own name and Social Security number (SSN) first, then enters Mary’s information, and marks the “Married filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal return” box on the Oregon return, and claims the fol­ lowing federal tax liability and deductions: His share: $41,000 ÷ $93,000 = 0.44 (44%) Federal tax: 0.44 × $14,400 = $6,336 (His subtraction is limited to $3,900; see “Federal income tax liability” in “Subtractions.”) Filing an Oregon return

150-101-431 (Rev. 06-17-24) 18 Oregon itemized deductions:

Property tax: 0.44 × $4,000 = $1,760 Mortgage interest: 0.44 × $6,400 = $2,816 Charitable contributions: 0.44 × $1,800 = $792 Total Oregon itemized deductions:

$5,368 Jim will have Oregon itemized deductions of $5,368. He follows the line instructions for Oregon Form OR-40 and Schedule OR-A to complete his return. Mary, a part-year resident, files Form OR-40-P and reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and SSN first, then enters Jim’s information, and marks the “Married filing separately” box. She creates an “as if” federal return, marks the ”Calculated using 'as if' federal return” box on the Oregon return, and claims the following federal tax liability and deductions: Her share: $52,000 ÷ $93,000 = 0.56 (56%) Federal tax: 0.56 × $14,400 = $8,064 (Her subtraction is also limited to $3,900.) Oregon itemized deductions:

Property tax: 0.56 × $4,000 = $2,240 Mortgage interest: 0.56 × $6,400 = $3,584 Charitable contributions: 0.56 × $1,800 = $1,008 Total Oregon itemized deductions:

$6,832 Mary will have Oregon itemized deductions of $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. Married filing separately with community property income An Oregon resident whose spouse lives in a commu­ nity property state may have community property income that is taxable by Oregon. There are nine com­ munity property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Some residents of community property states aren’t subject to community property laws for various rea­ sons. You will need to check with your community property state for details. IRS Publication 555, Com­ munity Property, also contains information that may be helpful to you. Here are examples of how to file for Oregon: Example 1: Paul and Marie are married, but they are legally separated. Paul is an Oregon resident. Marie is a resident of California, a community property state. They maintain separate households, don’t combine funds, and have no plans to get back together. They file a joint return with the IRS. When Paul files his separate return for Oregon on Form OR-40, he doesn’t have to include any community property income because California’s community property laws don’t apply to him and Marie. Example 2: Renton is an Idaho resident. His wife, Julie, lives in Oregon. Julie plans to move to Idaho next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap­ ital gain, and $100 in interest. Because Renton is domiciled in Idaho, he and Julie are subject to Idaho’s community property laws. His income for the year is $60,000 in wages and $500 in interest. They plan to file a joint return with the IRS, but aren’t sure whether they want to file jointly for Oregon. If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain all of Julie’s income, because Oregon taxes all of her income from all sources. In addition to Julie’s sepa­ rate income, she has $30,250 of community property income for the year—half of Renton’s wages and bank interest. Line 34F (federal column) of their joint Form OR-40-N is $103,600, which is equal to their federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community property income ($40,000 + $3,000 + $100 + $30,250). They are also eligible for a credit for taxes paid to Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state on mutually -taxed income“ for more information on this credit.) If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal return as if she had filed separately. She will include $73,350 in separate income and community property income. This amount flows through to Line 7 of her Oregon Form OR-40. She is eligible for a credit for taxes paid to Idaho, because she must also file a non­ resident Idaho return to report her community prop­ erty income of $30,250. Example 3: Kevin lives and works in California and is subject to California’s community property laws. Lori, his wife, moved to Oregon with their kids two years ago. Kevin supports them and will be ready to transfer to Oregon within the next two years. Kevin has $110,000 in wages. Kevin and Lori have joint income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. They decide to file separate federal returns. Lori’s federal AGI is $63,000: half of Kevin’s wages, half of their joint income, and all of her business income. Filing an Oregon return

150-101-431 (Rev. 06-17-24) 19 Kevin’s federal AGI is $58,000; half of his wages and half of their joint income. Lori must file using the married filing separately filing status for Oregon on Form OR-40 because she did so on her federal return. She is eligible for a credit for taxes paid to another state, but must claim it on her California nonresident return. Kevin isn’t required to file for Oregon. Important: You must check the laws of the commu­ nity property state to see if you, or your spouse, are subject to those laws even if your situation is similar to one of the examples. Registered domestic partners (RDPs) (ORS 314.023) Filing your Oregon income tax return The following section applies only to Oregon same-sex RDPs who haven’t been legally married. If you were legally married at the end of the tax year, you are considered mar­ ried for federal and Oregon purposes. You don’t need to complete an “as-if” federal return. Instead, attach your actual federal return to your Oregon return and follow the instructions for married individuals. In Oregon, a domestic partnership is a civil contract entered into between two individuals of the same sex, where at least one of the individuals is an Oregon res­ ident. RDPs are subject to the same tax statutes and regulations that apply to married filers. As an RDP, you are no longer eligible to use the single filing sta­ tus on your Oregon return; generally, you must use the married filing jointly or married filing separately status. See IRS Publication 17 for information about other filing status requirements. To correctly figure your Oregon tax liability, you need to complete an “as if” federal income tax return as if you are filing as married filing jointly or married filing separately for federal purposes. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return. You won't submit your “as if” fed­ eral return to the IRS, but you must include a copy with your Oregon tax return. Mark the “Calculated using ‘as if’ federal return” box on the Oregon return. General filing instructions for RDPs If you were an Oregon RDP on December 31, or if you were an RDP during the year and your partner died and you didn’t enter into a new registered domestic partnership or marry before the end of the year, fol­ low these directions for filing your income tax return: 1. Complete your federal return forms for each part- ner using the appropriate federal filing status, such as single or head of household. File these returns with the IRS. 2. Use another federal form to complete an “as if” federal return. Use all the same IRS rules and procedures that apply to married couples, except for the federal tax liability. Important: Don’t file this “as if” federal return with the IRS. Note: If your wage statement includes the imputed value of health or education benefits you received from your employer for your partner or qualifying dependents, subtract the amount included in your wages as “other income” on Schedule 1 of your “as if” federal return. 3. Complete your Oregon return using the same fil- ing status you used on the “as if” federal return. Information used to fill out the Oregon return must be taken from the “as if” federal return and not the individual federal return that you actually filed with the IRS, except for the federal income tax liability subtraction. Use the amount each partner actually paid in federal tax to compute the correct federal tax subtraction. 4. Submit both of your actual federal returns, your “as if” federal return, and your Oregon return to us. If you and your partner file separate Oregon returns, send the returns in the same envelope, but don’t staple your separate returns together. It’s very important to keep copies of all “as if” fed­ eral returns with your tax records for future refer­ ence. For more information on filing your tax return as an Oregon RDP, visit our website and search for RDP information. Individual Taxpayer Identification Number The IRS issues individual taxpayer identification numbers (ITINs) to taxpayers and their dependents who don’t have SSNs. If you have your own SSN, don't apply for an ITIN; use your SSN. If you already have an ITIN, enter your ITIN wherever an SSN is requested. Requesting an ITIN from the IRS If you don’t have an ITIN, you must file your fed­ eral return and attach Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS will issue an ITIN, associate the ITIN with your return, and process your return. For Form W-7, go to the IRS website at www.irs.gov or call 800-829-3676. Filing your Oregon return before receiving your ITIN You may file your Oregon return without an SSN or ITIN. Follow these instructions if you, your spouse, or your dependents don’t have an ITIN when you file your Oregon return: Filing an Oregon return

150-101-431 (Rev. 06-17-24) 20 1. Complete and file each ITIN application (federal Form W-7) according to IRS instructions. 2. On your Oregon tax return, mark the “Applied for ITIN” box wherever the SSN is required for you or your family members who have applied for an ITIN. You don’t need the ITIN(s) to file your Ore- gon tax return. Don’t attach your ITIN application to your Oregon tax return. 3. File your 2023 Oregon tax return by April 15, 2024. 4. The IRS will send you a letter with your ITIN information. We need this information to issue your refund and correctly apply your future tax payments to your account. Refunds won’t be issued without a valid SSN or ITIN. Send us your: • Name (and the name of your spouse and dependents if they applied for an ITIN). • Current address. • Previous SSNs or ITINs used when filing an Oregon return (if any); and • A copy of each of the letters you receive from the IRS with the ITINs for you, your spouse, or your dependents. Send this information to:

Oregon Department of Revenue

PO Box 14999

Salem OR 97309-0990 Military personnel filing information Federal laws determine how a state may tax the income of military personnel and their spouses. These federal laws include the Servicemember’s Civil Relief Act (SCRA) and the Military Spouse Residency Relief Act (MSRRA). Your residency status deter­ mines how Oregon treats your military pay or other income for tax purposes. Moving expense deduction Your unreimbursed moving expenses may be deducted on your Oregon return only if: • You are on active duty in the U.S. Army, Navy, Air Force, Marines, or Coast Guard, • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move), • Your new duty station is in Oregon, and • You have taxable income from employment (mili­ tary pay or other employment, including self- employment) performed in Oregon. Note: Are you the spouse of a military member? See “Military spouses.“ Residency of military personnel Domicile. Generally, you are considered to be an Ore­ gon resident if your domicile is in Oregon. Your domi­ cile is the place that you consider to be your home. It’s the place where you are from, and where you plan to return when you are away. Your domicile doesn’t change if you are assigned to perform military ser­ vice in another state, unless you take other actions to establish a new domicile there. Domicile and resi­ dency are explained in more detail in “Residency.“ Exceptions to Oregon residency Even if you are domiciled in Oregon, you may be treated as a nonresident for tax purposes if you meet the requirements listed in A, B, or C: A. Special-case nonresident. You are treated as a “special-case” nonresident of Oregon if you are stationed outside of Oregon and all three of the following are true: 1. You didn’t have a permanent residence in Ore- gon for yourself or your family during any part of the tax year, and 2. Your permanent residence was outside Oregon during the entire tax year, and 3. You spent less than 31 days in Oregon during the tax year. B. DFAS address outside of Oregon. You are treated as a nonresident of Oregon, no matter where you are stationed, if both of the following are true: 1. You are performing “active service,” as defined in 10 United States Code (U.S.C.) Section 101(d) (3), other than annual training duty or inactive- duty training, and 2. You are a resident of another state according to DFAS payroll records. C. Military domicile election. Under federal law, a member of the military and the member’s spouse may choose to be treated as a resident of any of the following for tax purposes: 1. The residence or domicile of the member. 2. The residence or domicile of the spouse. 3. The permanent duty station of the member. If you meet the requirements in either A or B above or you make the election under C to treat another loca­ tion as your domicile, you are treated as a nonresident for Oregon tax purposes and Oregon won’t tax your military pay. You will owe Oregon tax only if you had income from another Oregon source. This income may be from an Oregon property sale, a business, or rental property located in Oregon. If you have had Oregon income tax withheld from your military pay, you should file an Oregon nonresident tax return to get a refund of the withheld tax. If you continue to Filing an Oregon return

150-101-431 (Rev. 06-17-24) 21 be a nonresident, file an Oregon-only withholding certificate with your pay clerk as described in “With- holding exemption.” Oregon residents Stationed in Oregon. If you are domiciled in Oregon and stationed in Oregon, you are generally taxed on income from all sources, both inside and outside Oregon. This includes your military pay for service in Oregon if either of the following is true for you: • Your address in the DFAS payroll records is in Ore­ gon; or • Your military pay is from annual training duty, inactive-duty training, or other service in Oregon that isn’t “active service” as defined in 10 U.S.C. Section 101(d)(3). If neither of these are true, see the Exceptions to Ore­ gon residency, above, to see if you qualify for treat­ ment as a nonresident for tax purposes. Stationed outside Oregon. If you are domiciled in Oregon, but you are stationed outside of the state, see the Exceptions to Oregon residency, above, to find out whether you can be treated as a nonresident of Oregon for tax purposes. If you don’t qualify as a nonresident, you will be taxed as a resident on your income from all sources, both inside and outside Oregon. Military pay subtractions [Subtraction code 319] You may qualify for more than one subtraction for military pay. To be eligible for the subtractions, the military pay must be included in federal AGI. Mili­ tary pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual train­ ing, weekend drills, and inactive duty training. The Oregon military pay subtractions are: • Stationed outside Oregon. As of August 1, 1990, you can subtract military pay earned while sta­ tioned anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. The date wasn't set when this material was last revised. You aren’t required to be stationed in a designated com­ bat zone to be eligible for this subtraction. • Guard and reserve away from home. National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time. • Active service in Oregon National Guard. Oregon National Guard members may subtract their mili­ tary pay earned while in active service of the state or on state active duty under the authority of the governor. • Other military pay. You can subtract any remain­ ing taxable military pay after taking the above sub­ tractions, up to $6,000. Total subtraction. You may qualify for more than one military pay subtraction. However, your total subtraction can’t be more than the total military pay included in federal AGI. Note: Certain forms of military pay that aren’t included in federal AGI, such as combat pay, aren’t taxed in Oregon. They aren’t subtracted on your return because they aren’t included in your federal taxable income. The following examples show the military pay sub­ tractions described above. Example 1: Seth, an Oregon resident, enlisted in the Navy. He earned $10,000 of active duty pay in Spain and $8,000 of military pay inside Oregon during the year. His address in the DFAS payroll records is in Oregon. He included the $18,000 in his federal AGI. Seth’s total military pay subtraction is $16,000. Seth can subtract the $10,000 earned outside Oregon, and $6,000 of his military pay earned in Oregon. Seth files Oregon Form OR-40 and claims his military pay sub­ traction on Schedule OR-ASC. Example 2: Brett is an Oregon resident and files jointly with his wife, who lives and maintains a resi­ dence in Oregon. Brett served in a designated combat zone for five months this year and earned $8,000 in combat pay. He served in Germany for the rest of the year and earned $15,000 of military pay. The presi­ dent didn’t declare an end to combat zone activities this year. Because Brett excluded his combat pay on his federal return, he doesn’t have to subtract it on his Oregon return. Therefore, Brett’s Oregon subtraction is the $15,000 of military pay earned outside Oregon and included in federal AGI. Brett and his wife will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Example 3: Jessica is an Oregon resident and a mem­ ber of the Oregon National Guard. She was called into active service of the state this year as part of a drug interdiction operation authorized by the gover­ nor and earned $4,000 in military pay. She included the pay in her federal AGI. Jessica will file Oregon Form OR-40 and claim the whole amount as a sub­ traction on Schedule OR-ASC. Example 4: Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a com­ bat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and Filing an Oregon return

150-101-431 (Rev. 06-17-24) 22 again for two weeks in November. He served in Ore­ gon when away from home, but was called up by the president into federal service. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and Merlin will include $31,500 of military pay in their federal AGI. Then they will determine their Oregon subtraction. • Stationed outside Oregon: All $21,000 of Ger­ trude’s active duty pay is eligible for this subtrac­ tion because she was stationed outside Oregon. • Guard and reserve away from home: $8,000 of Merlin’s pay is eligible for this subtraction because he was away from home for more than 21 consecu­ tive days from April to July. The pay he received for the two weeks he was away from home in Novem­ ber doesn’t qualify because he served in Oregon but wasn’t serving under the authority of the governor. • Other military pay: Gertrude doesn’t have any other military pay not already eligible for the other subtractions. Merlin’s remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500. Combined, Gertrude and Merlin have a military pay subtraction of $31,500, because all of their military pay is eligible for at least one of Oregon’s military pay subtractions. They will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Nonresidents stationed in Oregon Oregon doesn’t tax your military pay if you are domi­ ciled in another state. You don’t need to file an Oregon return unless you had other income from an Oregon source or had Oregon tax withheld from your pay. Examples of Oregon-source income include: • Wages from a job held on off-duty hours. • Earnings from an Oregon business or rental property. Note: Nonresidents’ interest income from an Oregon bank account generally isn’t taxable by Oregon. If you had Oregon tax withheld from your military pay, you should file a return to claim a refund. You should also contact your payroll clerk to stop with­ holding Oregon taxes if Oregon isn’t your state of domicile. A nonresident with a permanent duty station in Oregon may elect to be taxed as an Oregon resi­ dent. See “Exceptions to Oregon residency” for more information. Example 1: Selina is a nonresident of Oregon in the U.S. Navy stationed in Portland. She has no other Oregon-source income and doesn’t have Oregon income tax withheld from her military pay. Selina isn’t required to file an Oregon return. Example 2: Jared is a nonresident of Oregon in the U.S. Coast Guard stationed in Astoria. In his off-duty hours he works part-time for an Oregon employer. Because Jared has Oregon income other than his mil­ itary wages, he will file Oregon Form OR-40-N as a nonresident. Example 3: Caitlyn was domiciled in Oregon when she joined the U.S. Army in 2018, and she hasn’t estab­ lished a new domicile in another state. Since July 2022 she has been stationed at the Army’s chemical depot in Umatilla, and her DFAS address is her apartment in Kennewick, Washington. Along with her mili­ tary pay, in 2023 she earned interest from a savings account in an Oregon bank and has wages from an off-duty job in Kennewick. Since Caitlyn is treated as a nonresident for tax purposes, her military pay isn’t taxed by Oregon. The interest she earned from the Oregon bank isn't taxed because she is considered to be a nonresident. She also isn't taxed on the wages from her Kennewick job. Caitlyn isn’t required to file an Oregon return for 2023 unless Oregon tax was withheld from her military pay. Filing your nonresident return If you have other income from Oregon sources, use Form OR-40-N. Enter your military income on line 7 in the federal column only. Don’t enter your mili­ tary pay in the Oregon column. Report other income taxable by Oregon in the Oregon column. On Sched­ ule OR-ASC-NP, enter the military wage income you reported in the federal column on line 7, but only in the federal column. In the Oregon column, enter $0. It’s important to enter your military pay this way because it affects the amount of deductions and cred­ its you’re entitled to claim. Mark the “Military” box on the return. If you and your spouse file a joint federal return, and you are both nonresidents of Oregon, you must file a joint Oregon return as well. Use Form OR-40-N. If your spouse is an Oregon resident, you have the option of using the married filing separately status for Oregon. Your spouse would file Form OR-40, or Form OR-40-P if a part-year Oregon resident, and you would file Form OR-40-N. If you file a joint return, use Form OR-40-N. Filing and payment date The due date for filing a calendar year return and payment of the tax is usually April 15. If the 15th falls on a Saturday, Sunday, or legal holiday, the due date Filing an Oregon return

150-101-431 (Rev. 06-17-24) 23 is the next working day of the month. If you are out­ side the United States for military duty on the due date, the due date is extended by two months. Mark the “Extension filed” box on your return. See “Exten- sions of time to file” for more information. If you owe tax on your Oregon income tax return, you must pay the entire amount by the due date. Interest and penalty will be added to all unpaid balances. Extension for filing your return You can get an extension to file your return, but you can’t get an extension to pay your tax. More informa­ tion can be found under “Extensions of time to file.” Combat zone/Contingency area. Were you sta­ tioned in a combat zone or contingency area? Did you receive additional time from the IRS to file your federal return and pay your tax? If both are true, Oregon allows the same additional time to file and pay your Oregon tax. Mark the “Extension filed” and “Military” boxes on your return. Keep your payroll records or other proof of your combat zone/contin­ gency area service and the IRS extension with your tax records; we may request a copy at a later date. Note: Oregon follows federal law regarding the treatment of combat pay and related remedies. If you served in the Sinai Peninsula of Egypt at any time after June 9, 2015 and you’re amending your federal return to exclude this military pay, you may also amend your Oregon return if Oregon taxed this income. If you were assessed related penalties or interest, contact us for further instructions. Interest and collections If your active duty service (Title 10) has materially affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity while on active duty and up to 180 days thereafter. The interest rate on tax debt owed by mili­ tary members is limited to 6 percent annually. File a claim for relief by writing to us within 180 days after your active duty service has ended. Relief may not be available for the period prior to receiving your request. Include a copy of orders showing your active duty status and dates. You may qualify for relief of interest and collection activity under Oregon law if you meet all of the fol­ lowing requirements: • You have a tax liability that came due while on active duty under Title 10, • You have been on active duty for more than 90 con­ secutive days, • Your active duty service (Title 10) occurred on or after September 11, 2001, and • You notify us within 180 days after your active duty service has ended. Guard members called into active state service by the governor under Title 32 may qualify for relief of inter­ est and collection activities on any tax owed prior to active state service. Send a written request for relief to us within 180 days after the active state service has ended. Include a copy of your orders. Relief may not be available for the period prior to receiving your notification. Withholding exemption You have the option to stop Oregon withholding from your military pay if all of the following are true: • You had a right to a refund of all 2023 Oregon income tax withheld because you had no tax liabil­ ity, and • You expect a refund of all 2024 Oregon income tax withheld because you reasonably believe you won’t have any tax liability, and • For all of 2024, you expect to be stationed outside of Oregon or continue to have an address outside of Oregon in the DFAS payroll records. If all of the above are true and you don’t want Oregon tax withheld from your military pay, you must file an additional withholding certificate with your payroll office. Use Form OR-W-4, Oregon Withholding State­ ment and Exemption Certificate, and follow the instruc­ tions to declare that your military pay is exempt using the appropriate code. Give Form OR-W-4 to your pay clerk, and submit a new form by February 15 of each year that you’re claiming the exemption. Military spouses If you’re a military spouse, the state where you live may be different from the state where you are domi­ ciled. See “Residency” for more information about determining your domicile. Under the SCRA, for tax purposes you may elect to be treated as a resident of the same state as the mili­ tary member. Under MSRRA, your income may not be taxable to Oregon if your spouse is stationed in Oregon, you are living in Oregon to be with your spouse, and you are domiciled outside of Oregon. In addition, your income may not be taxable if you are domiciled in Oregon, but you are living in another state where your spouse is stationed. See “Special- case Oregon residents” in “Residency” for details. Nonresident spouse of military member stationed in Oregon MSRRA prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you’re living in Oregon only to be with your spouse who is stationed Filing an Oregon return

150-101-431 (Rev. 06-17-24) 24 here, and you’re domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and aren’t considered to be Oregon-source income. You aren’t required to file an Oregon return unless you had other income from an Oregon source or Ore­ gon taxes were withheld from your pay. Examples of Oregon-source income include: • Non-military wages earned by your spouse (the military member) in Oregon. • Income from a business you operate in Oregon. • Rental income from Oregon property. If you file an Oregon return, use Form OR-40-N. Include all of your wages on line 7 in the federal col­ umn only. Don’t include your exempt income (or your spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the subtraction for your spouse’s military pay, see “Filing your nonresident return”, above. Example: Staff Sergeant Wilson, USAF, and his spouse, Tracy, are Arizona residents living in Klam­ ath Falls where SSgt Wilson is stationed. In addition to his military duty, SSgt Wilson works part-time at a local car dealership where Tracy works as the finance manager. They must file an Oregon nonresi­ dent return to report SSgt Wilson's wages from the car dealership. They report his military pay and all of their wages in the federal column of Form OR-40-N, and only his wages from the car dealership in the Oregon column. To stop withholding of Oregon income tax from your exempt wages, complete an additional withholding certificate. Use Form OR-W-4 and follow the instruc­ tions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Your employer may require proof that you qualify for the exemption. Oregon resident spouse of military member stationed outside Oregon If your spouse is stationed outside of Oregon, but you are an Oregon resident living in Oregon, your income is taxable for Oregon purposes. If you file a joint return with your spouse, use Form OR-40-N, and include all of your income in the Oregon column. If you and your spouse file a joint federal return, and your spouse isn’t a resident of Oregon, you have the option to file joint or separate returns. If you file a joint return, use Form OR-40-N; if you use the mar­ ried filing separately status, use Form OR-40 (or Form OR-40-P if you’re a part-year resident) and your spouse with Oregon-source income uses Form OR- 40-N. If your spouse doesn’t have income taxable to Oregon, they aren’t required to file a separate Oregon return. Use the general instructions for all taxpayers. Do you qualify to be treated as a nonresident because you meet the “special-case resident” requirements or you’re making the election under the SCRA? If so, you aren’t taxed on your out-of-state wages or self- employment income. This is the case even if the other state can’t tax you because of MSRRA. You don’t have to file an Oregon return unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. See “Special-case Oregon residents” in “Residency” for details. If you file an Oregon return, use Form OR-40-N. Moving expenses of military spouses As the spouse of an active duty member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, your unreimbursed moving expenses may be deducted on your Oregon return only if: • Your expenses are deductible on your federal return, • You relocate to, or within, Oregon when the mili­ tary member is ordered to relocate due to a perma­ nent change of duty station (known as a PCS move), and • You have taxable income from employment, includ­ ing self-employment, performed in Oregon. Filing an Oregon return

150-101-431 (Rev. 06-17-24) 25 Oregon tax Your Oregon income tax is based on your taxable income. Oregon taxable income is your federal taxable income with the additions, subtractions, and modifica­ tions described in Oregon’s tax laws and this publica­ tion. For Oregon residents, your income tax is based on your taxable income from all sources. The income tax for nonresidents is based on taxable income from Oregon sources. If you’re a part-year resident, your tax is figured the same way as a resident’s, and then your Oregon percentage is applied to the tax. Personal income tax rates (ORS 316.037) For individuals, the Oregon tax rate that applies to your taxable income increases as your income increases from one bracket to the next. The tax rates and bracket amounts for 2020 through 2023 are shown on the last page of this publication. This section provides a general outline of how to figure your tax. You can find detailed examples in the instruc­ tions for your Oregon personal income tax return. Full- year residents use either the tax tables or the tax rate charts published inside Form OR-40 Instructions. Non­ residents and part-year residents use the tax rate charts published inside Form OR-40-N and Form OR-40-P Instructions. Alternative tax rates. Most taxpayers use either the tax tables or rate charts in the return instructions to figure their Oregon income tax. However, there are special methods if your income includes any of these items: • Qualified business income. • Income from farming. • Capital gain from the sale of farming property. These items are described in more detail later. Elective tax for partnerships and S corporations. For tax years beginning on or after January 1, 2022 and before January 1, 2026, certain partnerships and S corporations may elect to pay income tax at the entity level. See “Pass-through entity elective tax” for more information. Amount in lieu of tax for federally-audited partner­ ships. Partnerships audited at the federal level may pay an amount in lieu of Oregon income tax owed by its partners on the audit adjustments. See “CPAR tax.” Additions to tax You may have the following additions to your Ore­ gon income tax to report on your return: • Interest on installment sales. • Tax recapture for nonqualified withdrawal from Oregon 529 college savings network accounts. • Tax recapture for nonqualified withdrawal from ABLE accounts. These items are described in more detail later. Credits and payments Credits. After you figure your income tax and any addi­ tions to tax, determine if you are eligible for any tax credits. A few of Oregon’s tax credits are refundable, meaning you may receive a refund of any amount that is more than your tax for the year. Most are nonrefund­ able and can’t be more than your tax liability for the year. Some nonrefundable credits allow any unused amount to be carried forward to a later year. Qualifica­ tions and other detailed information for Oregon’s tax credits can be found in “Credits,” in the Schedule OR- ASC and OR-ASC-NP Instructions, and in the instruc­ tions for your Oregon income tax return. Payments. After you determine your total tax, includ­ ing any additions to tax, and subtract your tax cred­ its, figure the total payments you have already made for the year. Payments may include the following: • Income tax withheld from your wages by your employer. • Tax withheld from lottery winnings, annuities, and pensions. • Estimated tax payments. • Refund from a prior year applied to this year’s esti­ mated tax. • Payment made with an extension request. • Tax payments made on your behalf by a PTE. • Tax withheld from the sale of Oregon real property by a nonresident seller. Refundable credits are also considered to be tax payments. For more information about these different types of payments, see the instructions for your Oregon per­ sonal income tax return and the following forms and publications: • Form OR-W-4 and Form OR-W-4 Instructions for information about withholding. • Publication OR-ESTIMATE, Oregon Estimated Income Tax Instructions, and the “Estimated tax” section of this publication. • Publication OR-40-EXT for information about request­ ing an Oregon extension to file your return. • Schedule OR-K-1, Distributive Share of Income, Deduc­ tions, Credits, etc., and Schedule OR-K-1 Instructions for owner taxes paid by a partnership. Oregon tax

150-101-431 (Rev. 06-17-24) 26 • Form OR-19 Instructions for tax withheld by a PTE on behalf of a nonresident owner. • Publication OR-OC for amounts in lieu of tax paid by a partnership following a CPAR adjustment. • Form OR-18-WC and Form OR-18-WC Instructions for tax withheld from the sale of Oregon real prop­ erty by a nonresident seller. Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment when you file your Oregon return, com­ pare your total payments with your total tax. If you are entitled to a refund, see the instructions for your Oregon return and the “Refunds” section of this pub­ lication for your options. If you have a balance due, see “Payment options” for information about ways to pay your Oregon income tax. Interest and penalties You may owe penalties and interest if you don’t make your tax payments on time. If you are required to make estimated tax payments, you may owe under­ payment interest if your installment payments aren’t made by the due dates, even if you are receiving a refund. See “Interest and penalties” and “Interest on underpayment of estimated tax” in this publication and Form OR-10 Instructions for details. Qualified business income reduced tax rate (ORS 316.043) If you have qualifying business income from a sole proprietorship, a partnership, or an S corporation, you may elect to calculate your Oregon income tax using a reduced tax rate for that income. The tax on the first $5 million in qualifying business income is shown in Table 4: Table 4. Tax on qualified business income Amount of qualifying business income Tax At least But not more than $0 $500,000 7 percent $500,001 $1,000,000 $35,000 plus 7.5 percent of the amount above $500,000 $1,000,001 $2,500,000 $72,500 plus 8 percent of the amount above $1,000,000 $2,500,001 $5,000,000 $192,500 plus 9 percent of the amount above $2,500,000 Qualifying business income that is more than $5 mil­ lion is taxed at the maximum personal income tax rate of nine and nine-tenths percent. The qualified business income reduced tax rate is an irrevocable election for each tax year that must be made on the original return. You can’t amend to revoke or make the election after your original return is filed unless you file an amended return on or before the original due date of April 15, 2024, or if filing on extension, before the extension due date of October 15, 2024. The election is made by submitting the Schedule OR-PTE, Oregon Business Income Reduced Tax Rate Schedule, appropriate for your residency status and checking the PTE box on your Oregon income tax return. No additions, sub­ tractions, or deductions other than depreciation are allowed in the calculation of the tax on qualifying income. The schedule and instructions are available for download from our website, or you can contact us to order them. You can find answers to common questions on our website. Visit www.oregon.gov/dor and search for “reduced tax rate.” Qualifications General requirements To be eligible for the reduced tax rate, you must: • Have qualified business income from the business; • Materially participate in the business; and • Employ one or more employees in Oregon who meet the employee requirements explained below. Partnership or S corporation requirements In addition to the general requirements, for a part­ ner or shareholder, the partnership or S corporation must: • Have ordinary business income that doesn’t exceed $5 million; and • If ordinary business income is more than $250,000, comply with the employee-to-owner ratio require­ ment shown in Table 5 or meet the income distribu­ tion requirement described below. Employee-to-owner ratio requirement. Unless the income distribution requirement is met, partner­ ships and S corporations with more than $250,000 in ordinary business income must have, at a minimum, the number of qualifying employees in Oregon per owner as shown in Table 5. The combined total of hours worked by the qualifying employees, up to 1,200 hours per employee, must be at least the num­ ber shown in Table 5. Oregon tax

150-101-431 (Rev. 06-17-24) 27 Table 5. Partnership and S corporation employee requirements Ordinary business income is at least But not more than Employees required Aggregate hours worked by employees $0 $250,000 One 1,200 $250,001 $500,000 One per owner 1,200 per owner $500,001 $1,000,000 Two per owner 2,400 per owner $1,000,001 $2,500,000 Four per owner 4,800 per owner $2,500,001 $5,000,000 Ten per owner 12,000 per owner Income distribution requirement. A partnership or S corporation with more than $250,000 in ordinary busi­ ness income may still qualify for the reduced tax rate even if the employee-to-owner ratio shown in Table 5 isn’t met, so long as income distributions don’t exceed 25 percent of ordinary business income. Calculate the percentage using the total distributions and total ordi­ nary business income for the current tax year and up to two of the most recent tax years. Treat an annual amount of less than zero as zero for that year. Qualified business income. Qualified business income is income other than from passive activities as that term is defined in IRC Section 469. Income from trusts, estates, qualified joint ventures, and disregarded enti­ ties doesn’t qualify. Note for tiered entities: Qualified business income passed through to a higher-tier entity from a lower-tier entity will qualify for the reduced tax rate if the lower-tier entity meets the ordinary business income and the employee or distribution requirements. PTE-E tax addition. Certain partnerships and S cor­ porations may elect to pay Oregon income tax at the entity level. Individuals who are direct or indirect members of an electing entity must report an addi­ tion for any PTE-E tax deducted on an entity-level federal return. The addition amount may be included in qualified business income, but only to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. Individuals must use the federal Schedule K-1 and Oregon Schedule OR-21-K-1 issued by the electing entity and this formula if not all of the ordinary busi­ ness income passed through from the entity qualifies for the reduced tax rate: Qualifying business income from electing entity x Addition from Schedule OR-21-K-1, line 2 = Amount to include in qualified business income Ordinary business income from Schedule K-1, box 1 See “Pass-through entity elective tax” for more information. Example 1: Bryant and Marcus are each the sole share­ holders of an S corporation. The S corporations are each 50 percent owners in a partnership. Bryant and Marcus both materially participate in the partnership, which has ordinary business income of $2 million. The partnership employs seven full-time employees who perform their work in Oregon all year long. Bryant and Marcus receive a distributive share of nonpassive income from the partnership that passes through their respective S corporations. Each also receives a salary for work performed for the partnership. The distribu­ tive share of nonpassive income they receive from the partnership qualifies for the reduced tax rate because the partnership meets the ordinary business income and employee requirements. However, the salary each received from the partnership doesn’t qualify for the reduced rate. Material participation. A taxpayer materially partici­ pates in an activity if the taxpayer works on a regular, continuous, and substantial basis in operations of the business. Under certain circumstances, related entities may be grouped into a single activity in order to meet this requirement. Refer to IRC Section 469 and the related IRS regulations for more detailed information. Employee requirement. The business must have the required number of employees who performed work for the entity in Oregon for the required number of hours during the tax year. An employee must work at least 30 hours in a week for that week’s hours to count. An employee can’t be an owner, a member, a limited partner, or the sole proprietor, but hours worked by an employee who is a spouse or other family member (who isn’t an owner, member, limited partner, or sole proprietor) can be used to meet the hour requirement. Example 2: Alpha Partnership has $200,000 in ordi­ nary business income for the year. Alpha’s employee, Ralph, worked a total of 1,496 hours during the year in Oregon. Ralph worked 32 hours per week for 31 weeks and 24 hours per week for 19 weeks. Alpha can only count the hours for the 31 weeks that Ralph worked at least 30 hours. Alpha’s qualifying hours total 992 (32 hours x 31 weeks). This is less than the 1,200 hours required, so Alpha’s nonpassive income doesn’t qualify for the reduced tax rate. Example 3: Beta Corp, an S corporation, has three shareholders. Beta Corp has ordinary business income of $900,000, of which $300,000 is included in annual Oregon tax

150-101-431 (Rev. 06-17-24) 28 income distributions. It doesn’t meet the income dis­ tribution requirement, so Beta Corp must meet the employee requirement to qualify for the reduced tax rate. The business must have at least six employees (two for each owner) who work a combined total of 7,200 quali­ fying work hours (1,200 hours per employee) during the year. Seven employees (who aren’t shareholders) worked in Oregon for Beta Corp during the year. Three of the employees worked 40 hours per week for 50 weeks, for a total of 6,000 hours (3 x 40 x 50). Two employees worked 32 hours per week for 30 weeks, for a total of 1,920 hours (2 x 32 x 30). Two other employees worked 20 hours per week for 40 weeks, for a total of 1,600 hours (2 x 20 x 40). Together they worked a total of 9,520 hours (6,000 + 1,920 + 1,600). However, only the hours worked by the five employ­ ees working 30 or more hours per week count toward the total required hours, and no more than 1,200 hours per employee. The employees worked a total of 5,520 qualifying hours [(3 x 1,200) + 1,920)]. For this reason, Beta Corp’s nonpassive income doesn’t qualify for the reduced tax rate. Example 4: Charlie, a sole proprietor, had three employ­ ees working at his Oregon business during the year. One employee worked 32 hours a week for 20 weeks (total 640 hours) and the other two employees each worked 40 hours per week during the same 20 weeks (total 800 hours each). The hours for each employee qualify because each employee worked at least 30 hours a week. The aggregate number of hours worked by all three employees (2,240 hours) meets the 1,200-hour requirement. Therefore, Charlie’s business meets the employee requirement for the reduced tax rate. Example 5: Delta Inc. is an S corporation with two shareholders and annual ordinary business income of $800,000. It has three employees, all of whom work 35-hour weeks. The office manager and the two share­ holders each work 50 weeks a year, a sales clerk works for 30 weeks a year, and a delivery driver works 20 weeks a year, for a total of 3,500 hours worked by non- owner employees. Annual income distributions to the shareholders include $150,000 in ordinary business income. With only three employees, Delta Inc. doesn’t meet the employee ratio requirement; however, because it distributes less than 25 percent of its ordinary busi­ ness income to the shareholders each year, Delta’s non­ passive income still qualifies for the reduced tax rate. Temporary or “leased” employees. If the business contracts with a professional employer organiza­ tion to employ temporary or “leased” employees, the business can use the hours worked in Oregon by those employees to qualify for the reduced tax rate if the employee requirements are otherwise met. Amended returns Amending to elect or revoke. You can’t amend to revoke or make the election after your 2023 return is filed unless you file an amended return on or before the original due date of April 15, 2024; or if filing on extension, before the extension due date of October 15, 2024. Example 6: Liam filed his original return on March 1, 2024, and didn’t elect the qualified business income reduced tax rate. He files an amended return on April 12, 2024, to make the election to use the reduced tax rate. Liam will be allowed the qualified business income reduced tax rate because the amended return was filed before the original due date. Example 7: Maggie filed her original return with a timely-filed extension on August 19, 2024, and elected the qualified business income reduced tax rate. She files an amended return on October 10, 2024, to revoke the election. Maggie will be allowed to revoke the qualified business income reduced tax rate because the amended return was filed before the extended due date. Amended Schedule OR-PTE. You must amend Sched­ ule OR-PTE if you elected to use the reduced tax rate and: • An IRS or other state audit resulted in a change that affects your Oregon return; • You amended your federal or other state return and the changes you made affect your Oregon return; • You have an NOL; or • You need to correct income or deductions you orig­ inally reported. If you amend Schedule OR-PTE after the due date for the return (April 15, 2024, or October 15, 2024, if fil­ ing on extension), you must report the tax using the reduced rate on the amended tax worksheet even if the amount of tax using the ordinary tax rate is less. This is because the election to use the reduced tax rate is irrevocable and can’t be changed by filing an amended return after the due date for the return. See the instructions for Schedule OR-PTE-FY, Sched­ ule OR-PTE-NR, or Schedule OR-PTE-PY for addi­ tional information. Farm liquidation long-term capital gain tax rate (ORS 316.045) If you sold or exchanged capital assets used in farming activities during the tax year, you may be able to apply a reduced tax rate to your net long-term capital gain. Farming activities include: Oregon tax

150-101-431 (Rev. 06-17-24) 29 • Raising, harvesting, and selling crops. • Feeding, breeding, managing, or selling: livestock, poultry, fur-bearing animals, or honeybees or the product thereof. • Dairying and selling of dairy products. • Stabling or training horses, including providing rid­ ing lessons, training clinics, and schooling shows. • Propagating, cultivating, maintaining, or harvest­ ing: aquatic species, birds, and other animal species. • Growing and harvesting cultured Christmas trees or certain hardwood timber. • On-site construction and maintenance of equip­ ment and facilities used in farming activities. • Preparing, storing, or disposing of products or by- products raised for human or animal use on land employed in farming activities. Farming activities don’t include growing and har­ vesting trees of a marketable species, other than growing and harvesting cultured Christmas trees or certain hardwood timber. General rules. The sale or exchange must end all of your ownership interests in a farming business or in property that is used in a farming business. You may not claim the special tax rate on a sale or exchange to a relative, as that term is defined by IRC Section 267. A farm dwelling or farm homesite isn’t considered to be property used in the trade or business of farming. If you have a net loss from all the assets you sold or exchanged during the year, you don’t qualify for the reduced rate on the sale or exchange of your farm assets. Partnerships or S corporations. The sale of owner­ ship interests in a farming corporation, partnership, or other entity qualifies for the special tax rate. The taxpayer must have had at least a 10 percent owner­ ship interest in the entity before the sale or exchange. Computing the tax. Use Publication OR-FCG, Farm Liquidation Long-Term Capital Gain Tax, to figure your tax using the reduced rate. Download the publica­ tion from our website or contact us to order it. Check the box labeled “Worksheet FCG” on your Oregon tax return. Don’t include the worksheet with your return; keep it with your tax records. Farm income averaging (ORS 314.297) You can figure your Oregon income tax by averaging this year’s farm income using your farm income from the previous three (base) years. This may result in less tax if this year’s farm income is higher than your tax­ able income for one or more of the three prior years. A farming business is the trade or business of cultivat­ ing land or raising or harvesting any agricultural or horticultural commodity. Your elected farm income is the amount of your taxable income from farming that you elect to include in the calculation. You don’t have to include all of your taxable income from farming. It may be to your advantage to include less than the full amount. Schedules. Use our farm income averaging (FIA) schedules and instructions to figure your Oregon income tax. They can be downloaded from our web­ site or ordered by contacting us. Be sure to mark the FIA box on your return to indi­ cate that you figured your tax by averaging your farm income. Don’t include the schedules with your return; keep them with your tax records. Pass-through entity elective tax (Or Laws 2021, ch 589) Certain pass-through entities (PTEs) may elect to pay income tax at the entity level and pass along an Ore­ gon tax benefit to its members. Oregon’s PTE elective tax (PTE-E tax) is available for tax years beginning on or after January 1, 2022 and before January 1, 2026. Electing PTE. An electing PTE must be a partnership, an S corporation, or a limited liability company (LLC) taxed as a partnership or S corporation. All of the PTE’s members must be individuals or other PTEs whose members are all individuals. Grantor trusts and single-member LLCs taxed as individuals are treated as individuals for purposes of the PTE-E tax. Tax rate. The tax is on the sum of the PTE members’ shares of distributive proceeds from Oregon sources. An electing PTE pays tax of 9 percent on the first $250,000 and 9.9 percent on proceeds exceeding $250,000. Making the election. The PTE makes the election by filing Form OR-21, Oregon Pass-through Entity Elective Tax Return. Form OR-21 can be filed through Revenue Online or electronically through an approved soft­ ware provider. Note: Filing Form OR-21 does not sat­ isfy the PTE’s requirement to file an Oregon income or excise tax return. Tax credit and addition. An individual member of an electing PTE (or a member of a PTE that is a member of an electing PTE) is allowed to claim a refundable tax credit equal to the individual’s share of the PTE-E tax paid. A credit may be claimed only on a member’s per­ sonal income tax return, including a composite return joined by a nonresident member. The individual mem­ ber must also report an addition for their share of the PTE-E tax that the PTE deducts on its federal return. Example: Atlas and Daughters, a partnership, has seven partners who are all individuals. The sum of the distributive proceeds from Oregon sources for all of its partners is $400,000. It elects to file Form OR-21 and pay the PTE-E tax for calendar year 2023. The PTE calculates the tax as follows: Oregon tax

150-101-431 (Rev. 06-17-24) 30 Sum of distributive proceeds $400,000 Subtract the first $250,000 - 250,000 Amount in excess of $250,000 $150,000 Tax rate on excess amount (9.9%) x 0.099 Tax on excess amount $14,850 Tax on first $250,000 at 9% (0.09) + 22,500 Total PTE-E tax $37,350 On the PTE’s federal partnership return, it deducts $37,350 in state taxes to arrive at the amount of business income distributed to its partners. For Oregon, the PTE will report each partner’s share of the $400,000 in distributive proceeds from Oregon sources, their share of the $37,350 PTE-E tax that it paid, and their share of the $37,350 in state taxes that the PTE deducted on its federal return. On their individual returns, each partner will report their dis­ tributive share of business income, as reported on the PTE’s federal partnership return, in the usual man­ ner. Each partner will claim a credit for their share of the PTE-E tax paid by the PTE and report an addition for their share of the state taxes that the PTE deducted on its federal return. PTE-E addition and qualified business income reduced tax rate. Individual members who are using the qualified business income reduced tax rate to cal­ culate their Oregon income tax may include the addi­ tion amount in their qualified business income, to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. See “Qualified business income reduced tax rate” for details. PTE-E tax subtraction. If the electing PTE received a refund of the PTE-E tax that it deducted on its prior- year federal return, your distributive share of the refund will be reported to you as “other income” on Schedule K-1. You may subtract the amount that you include on your federal return from your Oregon income. See “PTE-E tax refunds included on federal return” in “Subtractions” for details. See Form OR-21 Instructions or our website for more information about the PTE-E tax. Individual PTE members can find information about the tax credit and addition under “Refundable credits“ and “Additions.” CPAR tax (ORS 314.733) Partnerships with income adjustments resulting from a federal CPAR audit may elect to pay an amount in lieu of taxes owed by its partners. The amount is based on adjustments to income from Oregon sources and is calculated using the highest marginal tax rate applicable to corporate or noncorporate partners. See Publication OR-OC, Oregon Composite Return Instructions for Pass-through Entities, for instructions for paying the tax. Interest on certain installment sales (ORS 314.302) Do you have installment sales for which you had to pay interest on the deferred tax liability for fed­ eral purposes? If so, you must also pay interest for Oregon. The interest is reported as an addition to tax on your Oregon return, just as it is on your federal return. The amount due is computed the same way as for federal. The interest rate for 2023 is 6 percent per year, or 0.5 percent (0.005) per month. The inter­ est rate for 2024 is 8 percent per year, or 0.67 percent (0.0067) per month. Part-year residents. For the part of the year you were a nonresident, include only those installment obligations that were from dispositions of property in this state. For the part of the year you were a resident, consider all installment obligations. Nonresidents. Include only those installment obliga­ tions from dispositions of Oregon property. ABLE account or Oregon 529 College Savings Network account tax recapture (ORS 315.653) [Recapture code 950 or 951] If you claimed a tax credit for contributions made to an ABLE account or an Oregon 529 College Sav­ ings Network account and later made a nonquali­ fied withdrawal of funds from the account, you may have to forfeit your tax credit. A forfeited tax credit is reported as a tax recapture on your return for the year when you made the nonqualified withdrawal. Types of nonqualified withdrawals include: • Spending the funds for a purpose that is unrelated to the purpose of the account. • Using college savings plan funds to pay tuition or other expenses for elementary or secondary school. Tax benefit. Before you report a tax recapture, you must find out if you received a tax benefit from the contributed funds that were used for a nonqualified purpose. You received a tax benefit if the contribu­ tion made a difference in the amount of credit you received. Example: Jordan contributed $500 to an Oregon 529 College Savings Network account for the first time in 2020. Her AGI was $28,000, so she was allowed a credit for 100 percent of her contributions, up to the $150 limit for a single filer. She claimed a $150 credit Oregon tax

150-101-431 (Rev. 06-17-24) 31 on her 2020 Oregon return. In 2023, she withdrew $100 from the account and used it for a nonqualified purpose. To determine her tax benefit from the $100 she withdrew, she starts by subtracting it from her total contribution. The remaining contribution equals $400 ($500 - $100). Next, Jordan figures her credit for a $400 contribution in 2020. She finds that the credit amount would still be $150. The $100 contribution that she withdrew for a nonqualified purpose didn’t make a difference, so there was no tax benefit from it. Jordan doesn’t have to report a tax recapture on her 2023 return. Due to the fact that Oregon has also offered a sub­ traction for these contributions for tax years before 2020, figuring your tax benefit could be complex. For a detailed explanation and examples, see OAR 150- 315-0065. Keep a statement showing how you calcu­ lated the recapture amount with your tax records. Reporting the recapture. Report the recapture on Schedule OR-ASC, Section C or Schedule OR-ASC- NP, Section E. If the recapture is due to a nonquali­ fied withdrawal of contributions to an ABLE account, use code 950. If the recapture is due to a nonqualified withdrawal of contributions to an Oregon 529 Col­ lege Savings Network account, use code 951. Other individual taxes Statewide transit tax (STT) (ORS 320.550) This tax on wages funds public transportation services and improvements within Oregon. It’s not reported on your Oregon income tax return. The tax is equal to one-tenth of one percent (0.1% or 0.001) of the wages received by an employee who is an Oregon resident or a nonresident employee who performs services in Oregon. Oregon employers are required to automatically withhold the STT from your wages. If you’re an Oregon resident who earns wages from an employer outside of Oregon, your employer isn’t required to withhold the STT on your behalf, but they may choose to do so voluntarily. If your out-of-state employer doesn’t withhold the STT from your wages, you must file Form OR-STI, State­ wide Transit Individual Tax Return, and pay the tax. If your employer withheld too much STT from your wages because you were working outside Oregon, you must file Form OR-STI to claim a refund. The due date for your return and payment is the same as the due date for your Oregon income tax return and payment. See Form OR-STI Instructions for more information. Transit self-employment tax The department collects self-employment taxes owed to TriMet Transportation District (TriMet) and Lane Transit District (LTD). This tax is on the self-employ­ ment earnings of taxpayers doing business or provid­ ing services to a location within the transit districts. It is not reported on your personal income tax return. See Publication OR-TRAN-SE, Oregon Transit Self- employment Taxes, for more information. Fiduciary tax Oregon personal income tax is imposed on the tax­ able income of estates and trusts, except for trusts taxed as corporations. See Form OR-41 Instructions for more information. Oregon tax

150-101-431 (Rev. 06-17-24) 32 Payments and refunds Payment options Payment is due on April 15, 2024, regardless of any extension you may have to file your return. If pay­ ment isn’t made by the due date, interest and penal­ ties may be charged. See “Interest and penalties” for more information. Electronic payments from your checking or savings account You can pay your prior year income taxes, current year income taxes, and 2024 estimated income taxes directly from your checking or savings account. You also have the option to pay by direct debit when you file your return. There is no fee for this. Visit our website for more information. Credit card payments You can pay your current year balance due, make esti­ mated tax payments for 2024, and pay prior year taxes with your Discover, MasterCard, or Visa credit card. To make an online payment, go to Revenue Online on our website. A convenience fee may be charged for this service. Keep the payment confirmation number for your records. Payment by check or money order • Make your check or money order payable to Oregon Department of Revenue. • Write the tax year, the form number or type of pay­ ment you’re making, and the last four digits of your SSN or ITIN on your check. • Use blue or black ballpoint pen. Don’t use red or purple ink or gel pens. • Don’t send cash or a postdated check. • If you’re mailing a payment with your return, send your payment in the same envelope with your return. Don’t use a payment voucher. • If you’re mailing a payment separate from your return, include the payment voucher, Form OR- 40-V, with your payment. Form OR-40-V is avail­ able in our tax booklets and on our website. Refunds If the amount of tax you paid is more than the amount of tax due on your return, we will usually refund the amount of your overpayment. A refundable tax credit, such as the earned income credit, will be treated like an overpayment even if you didn’t pay any tax. Time limit for claiming a refund. If you have an overpay­ ment of $1 or more, you must file to claim your refund within the time limit allowed by law. See “Oregon stat- ute of limitations on refunds” for more information. Refund offset. In some instances, your overpayment won’t result in a refund coming to you. If you (or your spouse, if married) owe money to the state for reasons other than this year’s tax, or if you owe money to the federal government, your refund may be used to pay the amounts you owe. This is known as an “offset.” Some common types of offsets include delinquent tax from prior years, past-due child support, delinquent student loans, and legal judgments. If you have ques­ tions about a refund offset, contact us for assistance. Refund applications. When you file a return show­ ing an overpayment, you may request that some or all of your refund be used to make an estimated pay­ ment of next year’s tax or applied in other ways. See “Application of refund” for your options. Direct deposit. If you will be receiving a refund, you may request it to be deposited directly into your checking or savings account. See “Direct deposit of refund” for details. Paper check. A refund that isn’t offset, applied to next year’s tax or other application, or deposited directly into a bank account will be printed out and mailed to you at the address shown on your return. • Direct deposit information is invalid. If the direct deposit information you provide to us is invalid or if we are unable to complete the deposit for any reason, your refund will be issued to you by paper check instead. • Lost refund check. If your paper refund check is lost, you may request that we reissue it to you. The lost check must be at least 30 days old before it can be reissued. Contact us for assistance. • Check returned to the Department of Revenue. If the address shown on your return isn’t your cur­ rent address, or if the U.S. Postal Service is unable to deliver it for any reason, your paper refund check may be returned to the Department of Reve­ nue. Contact us for assistance with your unclaimed refund. • Uncashed paper checks more than two years old. If you don’t cash the paper check within two years from the date it was issued, your refund will be transferred to the Oregon State Treasury and held as “unclaimed property.” If you want to claim the refund after it has been transferred, you will have to request it from Treasury. Visit their website at www.oregon.gov/treasury for information. Refunds owed to a deceased taxpayer. If a taxpayer who was owed a refund has died, the refund may be Payments and refunds

150-101-431 (Rev. 06-17-24) 33 claimed by the taxpayer’s personal representative, heir, or the trustee of the taxpayer’s estate. See Form OR-243 Instructions for more information. Interest on refunds. Interest may be paid on some types of refunds if we are unable to issue the refund within a certain period of time. Not all types of refunds bear interest. See “How to figure interest on refunds of personal income tax” for interest rate information and examples. Kicker refunds. The Oregon surplus rebate, known as the “kicker,” is available when the state declares that a minimum amount of budget surplus exists for the biennium (the state’s two-year budget period). In past years, the kicker was paid to taxpayers as an automatic refund. Now, the kicker is a refundable credit that is claimed on the return in odd-numbered tax years when a surplus has been declared. See “Refundable credits” for more information. Direct deposit of refund We can deposit your income tax refund directly into an account you designate, such as a checking, sav­ ings, or certain type of retirement account. Requirements for direct deposit: • The account must have routing and account num­ bers and be able to accept Automated Clearing House (ACH) payments. • The final destination for the deposit can’t be out­ side the United States. • If you are filing a joint return, both you and your spouse must sign the return. Note: Some accounts may not accept direct deposits. Also, some institutions don’t permit the deposit of a joint refund into an individual account. Contact your financial institution to verify your rout­ ing and account numbers and to make sure your deposit will be accepted. • Routing numbers are nine digits and must begin with 01 through 12, 21 through 32, or 61 through 72. • Account numbers can be up to 17 characters, both numbers and letters. Include hyphens, but don’t include spaces or special symbols. If your account number is fewer than 17 characters, leave the unused boxes (on your return) blank. See the sample check diagram for help with identify­ ing these numbers. Caution: It’s your responsibility to make sure your information is correct. These numbers can’t be changed after your return is filed, and we can’t undo a deposit that was made to the wrong account. We aren’t responsible when an institution rejects a direct deposit. If your direct deposit is rejected, we will issue a check and send it to the mailing address shown on your return. Application of refund If your original or amended return shows a refund, you may apply some or all of it to: • Make an estimated tax payment for a later tax year. • Donate to a charitable organization. Payments and refunds Direct deposit—necessary numbersDirect deposit—necessary numbers

150-101-431 (Rev. 06-17-24) 34 • Make a deposit to one or more Oregon College or MFS 529 Savings Plan accounts. • Contribute to a political party (Form OR-40 filers only). Estimated tax payment. If you apply your refund as an estimated tax payment for a later tax year, the payment will be credited to your open estimated tax account as of the date shown in Table 6. Table 6. Refund applied as estimated tax payment If you file: The payment will be credited as of: An original return on or before the due date, without extension The date that the first estimated payment of the open tax period is due (usually April 15). An original return on extension, on or before the extension due date The later of: • The due date for the first estimated payment of the open tax period (usually April 15), or • The date of the pay­ ment that resulted in the refund. An original or amended return: • After the due date, without extension; or • On extension, after the extension due date The later of: • The date the return was filed, or • The date of the payment that resulted in the refund. You can’t revoke your choice to apply your refund as an estimated tax payment. Example 1: Beth made four estimated tax payments for tax year 2023; her last payment was made on Janu­ ary 16, 2024. On September 9, 2024, Beth filed her 2023 return on extension. Beth’s return showed a $500 refund. She chose to have the refund applied as an estimated payment. The $500 refund will be credited to Beth’s 2024 tax account as of April 15, 2024 (the first estimated payment due date for the open tax period). Example 2: Ray filed his 2022 return on May 13, 2024. Ray overpaid his 2022 tax by $2,500. He chose to apply $2,000 of the refund as an estimated tax pay­ ment. Because Ray’s 2022 return was filed after the due date, the $2,000 will be applied as an estimated tax payment as of May 13, 2024, the date he filed his return. Ray will claim $2,000 as an estimated pay­ ment when he files his 2024 return. Two open tax accounts. An estimated tax account is “open” for accepting payments from the first day of the tax year until 15 days after the last day of the tax year. For most taxpayers, this means they will have two “open” accounts from January 1 through January 15, one account for the later year that opens on Janu­ ary 1, and one account for the earlier year that closes on January 15. If a payment from an applied refund is credited at a time when two accounts are open, the payment will be automatically applied to the later year. If you want your payment to be applied to the earlier year instead, you must contact us in writing before the account for the earlier year closes (usually January 15). Example 3: Sally filed her 2021 Oregon return in April 2022 with tax to pay. On January 10, 2024, Sally filed an amended 2021 return showing a $1,500 refund. She elected to apply the refund as an estimated pay­ ment. Sally’s refund is automatically applied to her 2024 estimated tax account as of January 10, 2024, the date she filed her amended return. Sally can contact us in writing no later than January 16, 2024, the date that her estimated tax account closes for 2023, and ask that the $1,500 payment be applied to tax year 2023 instead. Other refund applications. See your return instruc­ tions for details on using your refund to donate to a charitable organization, contribute to the politi­ cal party of your choice (Form OR-40 filers only), or make a deposit in up to four Oregon College or MFS 529 Savings Plan accounts. Refund processing How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of the return. Electronically- filed returns generally process faster. Paper returns must have all supporting documentation included to ensure smooth processing. Paper returns can also take longer as the due date approaches, when the largest number of returns are received. To check the status of your refund, go to www.oregon.gov/dor, click on “Revenue Online,” and click on “Where’s my refund?” Refund delays Several things might delay processing of your tax return or your refund: • Failure to respond timely to requests for informa­ tion. If we send you a letter requesting informa­ tion to process your return, it’s important that you respond by the due date on the letter. Otherwise, we may adjust or invalidate your return. Contact us if you have questions about our letter. You may view most of the letters we send by logging into Revenue Online. Note: If we’re requesting infor­ mation about your WFHDC credit, replying to our request for information via Revenue Online allows us to respond faster. Payments and refunds

150-101-431 (Rev. 06-17-24) 35 • Change in name. If you have a different name in our records from a previous filing, special han­ dling will be required. • If you notified us about identity theft, special han­ dling will be required. • Change in SSN. • Application for an ITIN. • Failure to attach proof of Oregon withholding (such as Form W-2 or 1099). • Failure to attach a copy of your federal return (with Schedules 1 through 3, if applicable). • Failure to include required schedules, such as Sched­ ule OR-A if you’re claiming itemized deductions. • Claiming the WFHDC or manufactured dwelling park closure credit. These refundable tax credit claims are reviewed manually and take additional time to process. • Failure to identify additions, subtractions, adjust­ ments, modifications, or credits. Numeric codes for identifying these are shown in the Appendix. • Debt to other agencies. If you, or your spouse, owe money to state or federal agencies (for such things as student loans, unpaid parking tickets, or back child support), your refund might be delayed or used to offset your debt. • Incorrect bank account information. Verify your bank account information for direct deposit refunds. If your bank information is incorrect, we must wait for the bank to return the funds before issuing a refund check. Injured spouse refund claims [ORS 314.415(7)] Are you filing a joint return with a spouse who is sepa­ rately liable for a debt to a state or federal agency? If so, you may request that your joint refund be apportioned. When your return is processed, we will notify you of our intent to apply the joint refund to any debts owed. Within 30 days of the date of our notice, send us your request to apportion the refund. You may use federal Form 8379, Injured Spouse Alloca­ tion, and fill in the Oregon refund numbers, or create your own worksheet. Separate your withholding, tax payments, and items of income. Income from jointly held property must be split evenly, including interest earned on joint bank accounts. You may submit an apportionment request through Revenue Online or mail it to this address: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Visit www.oregon.gov/dor and search for “injured spouse” information to find answers to common questions. Oregon statute of limitations on refunds Oregon law limits the time you have to claim a refund of Oregon tax. The allowable time depends on your circumstances. Withholding and estimated tax refunds You must file your original return within three years of the due date to claim a refund of tax withheld or esti­ mated tax payments. The due date doesn’t include exten­ sions. If you file more than three years after the due date, the excess tax withheld or estimated tax payments can’t be refunded or applied to tax you owe for another year. Amended returns If your original return was filed within three years of the due date, you may amend (change) your return and file for a refund of an overpayment of tax by the date which is the latest of: • Three years from the due date of your original return; or • Three years from the date you filed your original return; or • Two years from the date you paid your tax or paid any part of your tax. If you file your amended return after three years, but within two years of the date you paid tax, your refund can’t be more than the amount of tax you paid during that two-year period. Note: If we adjusted items on your return and your right to appeal has expired, you can’t use the above rules. You can't claim a refund for those items. Example: Bob filed his 2020 Oregon return and paid $300 tax due on time. In March 2023, he discovered he had forgotten to report some interest income. He amended his return. He paid $220 additional tax on April 3, 2023. On August 5, 2024, Bob discovers he failed to claim a large charitable contribution he made in 2020. Bob must amend his 2020 return by April 3, 2025. His refund will be limited to $220, the additional tax he paid within the last two years. Federal or other state corrections to tax returns Sometimes the IRS or another state corrects your return with changes that could affect your Oregon return, resulting in a refund. You have two years from the date of the correction to amend your Oregon return and claim a refund, even if the three-year stat­ ute of limitations has expired. Payments and refunds

150-101-431 (Rev. 06-17-24) 36 Amended returns Reasons to file an amended return • An IRS audit (or other state audit) resulted in a change to your original return that affects your Oregon return. • You amended your federal (or other state) return and the changes you made affect your Oregon return. • You made an election on federal Form 4684, Casual­ ties and Thefts, to carry back a casualty loss result­ ing from a federally-declared disaster. • You are required to recapture a federal education credit for a tax year when you claimed an Oregon tuition and fees subtraction. • You have a net operating loss (NOL) to carry back, so you need to amend your return for the carry­ back year. • You need to correct the income, deductions, or credits you originally reported. How do I amend my Oregon return? You will need the following items: • The tax form and instruction booklet for the year that you are amending. This will usually be the same form type as your original return, unless you filed the incorrect form for your residency status. Use the correct form type to amend. • A copy of the Oregon tax return that you originally filed for the year being amended; this will provide the guidance needed for completing your amended return. • A copy of any previously amended returns you filed for the year being amended. • A copy of all notices from us, another state, or the IRS for the tax year being amended. Follow these steps to amend your return: 1. Read through these instructions before filling out your form. 2. Mark the “Amended” box on the return. 3. If we sent you a notice with corrections to your return, use the figures from that notice when amending your return. 4. Use the worksheet for amended returns in the instruction booklet to determine your amended refund or tax to pay. Complete the entire work- sheet using the corrected information. 5. If the amended return shows a refund, you can elect to apply it as a payment of estimated tax or make other refund applications, but you can’t change any election you made on your original return. See “Application of refund“ in “Paymentsand refunds.“ “Paymentsand refunds.“ 6. Use the “Amended statement” section of the return to explain why you are amending your tax return. 7. Mail or drop off your amended tax return or, if your software allows it, you may file your amended return electronically. Be sure to include a copy of the federal or other state’s corrected return or audit report. If you’re amending your Oregon return only, include a copy of your origi- nal federal return. If you don’t have a copy of your original Oregon tax return, you may request a transcript or a copy of the return from us. You can obtain copies of prior years’ returns for a small fee by going to our website, log­ ging into Revenue Online, and selecting “Request Photocopies,” or by requesting copies by mail. You can also request a return transcript for free by send­ ing a message in Revenue Online or by calling us directly. Mailing address. Use your current mailing address when filing an amended return, even if your current mailing address is different than the one entered on your original return. This will help us to contact you if needed. Partnership returns. Our website has information for partnerships that need to: • File an amended Form OR-OC, • Report audit adjustments made under CPAR, or • Make tax payments on behalf of partners due to CPAR adjustments. Also see “Audits and appeals.” How long do I have to file for a refund? In most cases, you must file for a refund within three years from the due date of your original return, or the date you filed your original return, whichever is later. For more information about time limits for filing a return to claim a refund, see “Oregon statute of limi- tations on refunds.” When should I file and pay if I owe additional tax? File your amended return as soon as you know that a change needs to be made. Interest is calculated from the day after the due date of the original return up to the date the tax is paid. Pay any tax and interest due as soon as possible to avoid additional interest. There may also be a penalty. Amended returns

150-101-431 (Rev. 06-17-24) 37 How do I file a protective claim for refund? You can file a protective claim for refund when the outcome of a court case or legislative action is expected to be known after the time for requesting a refund has expired. Use Form OR-PCR, Protective Claim for Refund, when your claim to a refund is con­ tingent on a pending court decision or legislative action. Notify us every six months on the status of the claim. If the court decision or legislative action changes your Oregon income tax, file an amended return within 90 days of the determination. How long will it take to process my amended return? Processing time for amended returns varies. It may take six months or longer to process your amended return. How do I amend for an NOL? You may claim a refund from an NOL carryback within three years after the due date (including extensions) of the return that showed the NOL. Mark the “Amended return” box and enter the year of the NOL. See “NOLs for Oregon” in “Other items“ for more instructions. Do I change my federal tax liability on my amended return? Usually not, but there are a few exceptions to this general rule. Change allowed Changing the federal tax liability amount on your amended return is allowed only if one of these excep­ tions applies: • Failure to claim on original return. You qualified for this subtraction on your original Oregon return but failed to claim it. If so, you may claim the subtraction based on your original federal income tax liability or the amount allowed by one of the other exceptions. • Correction notice from us. Did we correct the fed­ eral tax subtraction on your original return? If so, change the amount on your amended return. Use the corrected amount from our notice. • Federal return amended before due date. Did you amend your federal return before the due date of the original return? If so, change the amount on your amended return. The federal tax on your amended federal return filed before the due date is the amount you will use for your amended Oregon return. • Different AGI phase-out limit. Does a different phase-out limit apply to your amended AGI? The amount of federal tax liability you may subtract on your return is limited if your AGI is within a cer­ tain range. These ranges and limitation amounts can be found in Table 9 under “Federal income tax liability“ in “Subtractions.“ If your amended AGI is now within a different range, change the amount on your amended return only if the taxes you are deducting were paid or accrued during the tax year you are amending. Increase or decrease the subtraction to match the limitation amount that applies to your amended AGI. Change not allowed Unless one of the above exceptions applies, you can’t change the amount of your federal tax liability on your amended return. However, you might have a subtraction or addition on your return for the year in which you file the amended return. • More federal tax paid. Did you pay additional federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Claim the additional federal tax as a subtraction on your Oregon return in the year you paid the additional tax. • Federal tax refund. Did you get a refund of federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Show the federal tax refund as an addition on your Oregon return in the year you received the refund, but only if you received a tax benefit. See “Federal income tax refunds“ in “Additions” for more information about the tax benefit doctrine. Example 1: Sergei received a notice from us in May and is filling out an amended return in July. The notice stated that his federal tax subtraction was reduced from $3,500 to $3,000. He will use the corrected fed­ eral tax subtraction of $3,000 on his amended return. Example 2: Alicia paid additional federal tax in 2023 for an audit adjustment on her 2020 federal tax return. She will include the adjusted items when she com­ pletes her amended 2020 Oregon tax return, but won’t change the 2020 federal tax subtraction. Because she paid the additional tax in 2023, she will subtract this amount, up to the annual limit, on her 2023 Oregon return. See “Federal income tax liability” in “Subtrac- tions“ for the federal tax subtraction limits. Example 3: Tonya, a single taxpayer, timely filed her original 2022 return, with an AGI of $138,000. She paid $35,000 in federal taxes during 2021. Her federal tax subtraction was limited to $2,900 because of her AGI. In 2023, she amended her 2022 federal return to claim expenses she had left off of her original return. Her amended AGI is now $133,000. Tonya may change her federal tax liability on her amended return to $4,350, the amount she could have claimed on her original return, because her limitation amount has changed. Amended returns

150-101-431 (Rev. 06-17-24) 38 Interest and penalties Interest Interest rates are the same for taxes owed and for refunds. Interest is charged and paid on tax only. Interest isn’t charged on penalties. We don’t charge compound interest. Table 7 shows interest rates since 2018. For previous interest rates, see prior versions of this publication or contact us. Table 7. Interest percentage rates Interest as of: Annual Daily January 1, 2018 5% 0.0137% January 1, 2019 6% 0.0164% January 1, 2021 4% 0.0110% January 1, 2023 6% 0.0164% January 1, 2024 8% 0.0219% As of January 1, 2018, interest is figured daily, based on a 365-day year. The annual interest rate is 6 percent for 2023. The annual interest rate is 8 percent for 2024. The interest rate may be changed once per calendar year. Additional interest of 4 percent per year is charged as described under “Two-tiered interest on deficien­ cies and delinquencies.“ How to figure interest on tax you owe Your 2023 tax must be paid by April 15, 2024, even if you requested an extension to file your return. Inter­ est starts accruing on April 16 and continues to accrue every day, including the date of your payment. To figure your interest for 2024, count the number of days starting with April 16, 2024 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply by 0.000219 (the daily rate converted to a decimal). If you’re entering the interest amount on your return, round the total to the nearest whole dollar. Amended return. If you file an amended return, or if your taxable income changed because of a federal or state audit, and you have tax to pay, you will be charged interest starting the day after the due date of the original return until the date of your payment. Calculate interest based on the additional amount of tax you must pay. Example: Nick filed an amended income tax return for tax year 2022 on March 13, 2024. His original 2022 return was due on April 18, 2023. He paid additional tax of $500 with his amended return. Here is how Nick figures the interest that he owes: April 19, 2023 to December 31, 2023 257 days at 0.0164% 0.000164 x $500 x 257 days ...........................= $ 21.07 January 1, 2024 to March 13, 2024 73 days at a daily rate of 0.0219% 0.000219 x $500 x 73 days ..............................= $ 7.99 Total interest $29.06 Two-tiered interest on deficiencies and delinquencies Additional interest of 4 percent per year will be charged on deficiencies or delinquencies if: • You have filed a return showing tax due (a self- assessed tax liability) and don’t pay the tax due within 60 days after the date of our Notice of Assessment, or • We have assessed an existing deficiency, and you don’t pay the assessment within 60 days after the date on the Notice of Assessment. If you appeal to us (or, in a hardship situation, to the Oregon Tax Court) without paying the tax, the increased interest rate will start 61 days after: • The date of our written objection decision; or • The date of our conference decision letter (CDL); or • The date the Magistrate Division enters its final decision; or • The date the Tax Court or the Oregon Supreme Court enters its final judgment. How to figure interest on refunds of personal income tax Generally, interest is paid on refunds issued more than 45 days after the later of: • The due date of the original return (without exten­ sions), or • The date you file your original return. Note: If your refund results from a payment you made after the due date of your return (without extensions), interest will be paid if the refund is issued more than 45 days from the date of that payment. Example 1: Irina filed her original 2022 income tax return on February 16, 2024, to claim a $1,900 refund of withheld tax. The return was due on April 18, 2023. We issued the refund on May 8, 2024, more than 45 days after Irina filed the return. The interest on the refund is calculated as follows: February 17, 2024 to April 1, 2024 45 days, no interest paid April 2, 2024 to May 8, 2024 0.000219 x $1,900 x 37 days $ 15.40 Example 2: Jean filed her original 2022 return on April 18, 2023. She then filed an amended 2022 return on Febru­ ary 5, 2024, which shows a $1,000 refund of estimated tax. Interest and penalties

150-101-431 (Rev. 06-17-24) 39 Here is how we figure the interest due on Jean’s refund, as of the date she filed the amended return: April 19, 2023 to June 2, 2023 45 days, no interest paid June 3, 2023 to December 31, 2023 0.000164 x $1,000 x 212 days .........................= $ 34.77 January 1, 2024 to February 5, 2024 0.000219 x $1,000 x 36 days ...........................= $ 7.88 Total interest $ 42.65 Note: Interest is calculated on the amount that is a refund of tax paid, including any refund amount that you choose to donate by charitable check-off, contrib­ ute to a political party, or deposit into an Oregon Col­ lege or MFS 529 Savings Plan account. Refunds that don’t accrue interest. Interest isn’t paid on the portion of a refund attributable to the EIC, the Oregon Kids Credit, the AEOTC, or the WFHDC credit. Also, interest doesn’t accrue on refunds applied as an estimated payment to a later year’s tax. See “Application of refund” in “Payments and refunds.“ Tax credit auction bid payments that are returned to the bidder don’t accrue interest. Two-tiered interest on refunds The interest rate will increase if we are unable to issue a refund within 60 days from the date of a Tax Court or Supreme Court judgment. The annual rate will increase by 4 percent beginning 61 days after the date the final judgment is entered. Penalties Penalties for filing or paying late Your 2023 return must be filed by April 15, 2024. If you requested an extension, your return must be filed by October 15, 2024. Your 2023 tax must be paid by April 15, 2024, even if you requested an extension to file your return. If you’re entering a penalty amount on your return, round the total to the nearest whole dollar. Five percent failure to pay penalty. You must pay a penalty if you don’t pay your tax by the original due date of the return, even if you have an extension of time to file. The failure-to-pay penalty is 5 percent of the tax (after all credits, withholding, and payments) that wasn't paid by the original due date. You won’t be charged the 5 percent failure-to-pay penalty if you do all of the following: • File federal Form 4868, Extension of Time to File U.S. Individual Income Tax Return (the automatic extension of time to file), or send us a payment according to the instructions in Publication OR-40-EXT; • Pay at least 90 percent of your tax after credits (including recaptures) by the original due date*; • File your return within the extension period; • Pay the balance of tax due when you file your return; and • Pay the interest on the balance of tax due when you file your return or within 30 days of the date of the bill you receive from us. *To find your tax after credits, start with your tax after tax recaptures, then subtract refundable credit amounts. If you file with a valid extension but didn’t pay 90 percent of your tax by the original due date, you will be charged the 5 percent failure-to-pay penalty. Twenty percent failure-to-file penalty. You must pay a penalty if you don’t file your return within three months after the due date (including extensions). The penalty is 20 percent of the tax (after all credits, tax recaptures, withholding, and payments) that wasn’t paid by the original due date. You won’t be charged the 20 percent failure-to-file penalty if you: • File federal Form 4868 (the automatic extension of time to file); or • Make a payment according to the instructions in Publication OR-40-EXT, and • File the return within three months after the due date (including extensions). Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax (after all credits, tax recaptures, withholding, and payments) that wasn’t paid by April 15, 2024. Example. Emir filed his 2023 return on November 18, 2024. His return was due April 15, 2024, and he didn’t have an extension. Emir paid the tax due of $2,000 with the late-filed return. His penalties total 25 per­ cent of the $2,000 tax: Failure-to-pay penalty: 0.05 x $2,000 ..................... $100 Failure-to-file penalty: 0.20 x $2,000 ......................$400 Total penalties: 0.25 x $2,000 $500 Note: Emir will also owe interest on the $2,000 tax. Additional 25 percent failure-to-file penalty If you fail to file a return within three months of the due date (including extensions), we may send you a notice with a demand that you file. If you don't file a return within 30 days of the date the demand let­ ter was mailed, we will figure the tax for you and an additional penalty of 25 percent of the unpaid tax will be assessed for a total penalty of 50 percent. Interest and penalties

150-101-431 (Rev. 06-17-24) 40 One hundred percent failure–to–file penalty If you don’t file returns for three consecutive years by the due date of the third year’s return, including extensions, you must pay a 100 percent failure-to-file penalty on the tax due for each year. Penalty for intent to evade tax Filing a falsely prepared return with the intent to avoid tax will result in a penalty equal to 100 percent of the tax deficiency determined by the Department of Revenue. In addition, you could be charged with tax evasion, a class C felony. You could be fined up to $125,000, serve a jail sentence, or both. Total penalties The total of these penalties can’t be more than 100 per­ cent of the tax due. Exceptions: Penalties for substan­ tial understatement of net tax, filing a frivolous return, falsely claiming the WFHDC credit, making a non- qualified withdrawal from a first-time home buyer savings account, and abusive tax avoidance transac­ tions may be imposed in addition to other penalties. Substantial understatement of net tax penalty If we determine that you have substantially under­ stated your net tax on your return, you must pay a penalty equal to 20 percent of the understated tax. A penalty will be assessed if net tax for 2023 has been understated by more than $2,850 ($4,150 for a C corporation). Substantially understated net tax also includes net tax on income attributable to an abusive tax shelter, even if fully disclosed. This penalty is in addition to all other penalties pro­ vided by law. $250 frivolous return penalty If you file a frivolous return that is meant to deliber­ ately delay or block the administration of tax laws, you must pay a $250 penalty. “Frivolous” includes, but isn’t limited to: • An argument, without any good basis, that there has been a violation of your constitutional rights. • Reliance on a “gold standard” or “war tax” deduction. • An argument that wages or salary aren’t taxable income. • An argument that the 16th Amendment to the U.S. Constitution wasn't properly adopted. • An argument that “unenfranchised, sovereign, free­ men, or natural persons” aren’t subject to tax laws. This penalty is in addition to all other penalties pro­ vided by law. Working family household and dependent care (WFHDC) credit false claim penalty You may be charged a penalty if you knowingly falsely claim (or knowingly assist someone else in falsely claiming) the WFHDC credit. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjustment or denial of the credit. This penalty can be charged to each person involved with the false claim. This penalty is in addition to all other penalties pro­ vided by law. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal A penalty of 5 percent of the funds withdrawn from your FTHBSA may be imposed if you withdraw the funds from the account for a purpose other than pur­ chasing a home. No penalty will be imposed if: • The account holder: — Dies. — Files bankruptcy. — Becomes permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties provided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions.” Abusive tax avoidance transaction (ATAT) penalties Penalties can be imposed on income items identified by the IRS as ATATs, including listed transactions, reportable transactions, and promotion of tax shel­ ters, as follows: • A penalty of 60 percent of the understated net income from a listed transaction understatement. This penalty is in addition to and not in lieu of any other penalties. • Failure to report a reportable transaction will result in a penalty of $3,300 for an individual taxpayer or $16,700 for a corporation. • If the reportable transaction is also a listed transac­ tion, the penalty is $33,000 for an individual tax­ payer and $66,000 for a corporation. • A promoter of tax shelters will be assessed a pen­ alty of 100 percent of the gross income derived from promoting the shelter. This penalty is in addition to and not in lieu of any other penalties. The ATAT penalties are in addition to all other penal­ ties provided by law. In addition to these penalties, if we find there is a deficiency in tax paid as a result of the use of a listed transaction reported or reflected by the return, the statute of limitations for issuing a notice of that deficiency is increased from three years to nine years from the date the return was filed. Interest and penalties

150-101-431 (Rev. 06-17-24) 41 Audits and appeals What to do if your return is audited General information We audit returns for several reasons. Many audits are based on adjustments made by the IRS, with whom we share information. Other returns are selected because there are sections of tax law that require additional focus due to difficulties or frequent errors in tax law application. An audit is the process of reviewing a return to make sure it was prepared correctly. If your return is cho­ sen for an audit, it doesn’t mean you made an error or are dishonest. By law, we must keep your tax information private. In rare situations involving returns filed after Decem­ ber 31, 2017, we may share information between tax­ payers who have claimed the same item on their indi­ vidual returns in order to efficiently resolve the mat­ ter—for example, divorced taxpayers who both claim an exemption credit for the same dependent. Other­ wise, we are prohibited from sharing your informa­ tion with anyone without your consent. People who prepare your return or represent you must also keep your information confidential. You have the right to know why we are asking for information, exactly how we will use any information you provide, and what might happen if you don’t provide the information. Our goal is to treat taxpayers fairly. We strive to be responsive to the issues and reasonable in our deci­ sions and actions. We will explain any changes we make to your return. We encourage you to ask about anything you don’t understand. For more information, read our publication Your Rights as an Oregon Taxpayer. You can find the publica­ tion at www.oregon.gov/dor/forms or contact us to order a copy. Types of reviews Processing adjustments. Processing adjustments are corrections we make to a return while we process it. We make some adjustments without the need for additional information, such as math errors. If we need additional information, we’ll send a letter. It’s important that we get a response by the date speci­ fied in the letter. Federal audits. These audits are based on informa­ tion from the IRS. This information includes their CP2000 program and federal Revenue Agent Reports. The CP2000 program matches Form W-2 and 1099 information reported by payers to what is shown on a return. A Revenue Agent Report is a federal audit report showing adjustments the IRS made to a return. If you received either of these reports from the IRS, you need to determine if the changes made by the IRS affect your Oregon return. If they do, you should amend your Oregon return as soon as possible. Inter­ est charges accrue until all tax is paid. If you don’t amend your Oregon return, you may receive a notice from us showing adjustments we have made to your return. Correspondence audits. These are written requests asking you to confirm items on a return. The letter will explain what items we are reviewing and what we need to verify them. You will be asked to send copies of the documents to the auditor who will review the information and notify you of the results. Correspondence audits usually don’t require a meet­ ing with the auditor. Field audits. These audits are more in-depth and typically involve a review of business income and expenses. Field audits usually require a meeting with the auditor. The time and place of the meeting will be arranged between you and the auditor. Partnership audits. The IRS makes audit adjust­ ments and collects taxes at the partnership level for partnerships subject to CPAR, IRC Sections 6225 to 6227. Oregon’s CPAR provisions can be found in ORS 314.731 to 314.739. If an IRS audit under CPAR results in adjustments that affect any partner’s Oregon tax, the partnership must follow certain procedures and timelines for reporting the adjustments to Oregon. The partnership may elect to pay an amount in lieu of tax owed by the partners resulting from the adjust­ ments. See Publication OR-OC or visit our website for more information. What records will I need for the audit? You’ll get a letter from us asking questions and requesting copies of specific documents. Answer the questions completely and send copies of the requested documents by the deadline in the letter. It’s important that you have a complete copy of your state and federal tax records and provide copies, as requested. See “Record-keeping requirements” in “General information” for additional tips. You should also keep a copy of your response to the audit letter. If you get a letter asking you to make an appoint­ ment, contact the auditor who sent the letter. We try to schedule audit appointments at your convenience. It may be held at the business location, at your repre­ sentative’s office, or at one of our field offices. The letter will explain the records needed for the audit. Organize the information for the appointment. Audits and appeals

150-101-431 (Rev. 06-17-24) 42 The auditor may ask you to make copies of the records. Generally, your return is examined in the district where you live. If your return can be examined more quickly and easily in another district (such as where the books and records are located), you may ask to have the audit transferred. Who can represent me? Throughout any audit, you can represent yourself, have someone accompany you, or designate some­ one to represent you. You may represent yourself in all stages of your audit and appeal. However, if your case is hard to understand or involves many issues, you may want someone to help you. Also, if some­ one else prepared the return, you may want their help. You may authorize someone to receive your confidential information (tax information authoriza­ tion), or you may designate someone to represent you (power of attorney for representation) who would be able to make decisions for you. People who can repre­ sent you are Oregon-licensed: • Lawyers. • Public accountants or certified public accountants. • Tax consultants. • Enrolled agents. Out-of-state CPAs may practice in Oregon if they meet the substantial equivalency requirements (ORS 673.010): 1. Licensed in another state; and 2. Have an accredited baccalaureate degree with at least 150 semester hours; and 3. Passed the Uniform CPA exam; and 4. Have a minimum of one year of experience. If you own a business and have an employee who regularly does your tax work, that employee can also represent you. You must give written authorization to a person you want to represent you. Use our Tax Information Autho­ rization and Power of Attorney for Representation form. The auditor handling the case can provide a copy of this form, or you can download it from our website or call us to order a copy. What if I disagree with the audit results? When we propose changes to your return, we will explain the reasons for them. It’s important that you understand why we propose changes before they become final. Ask about anything that is unclear to you. If you disagree with the final changes, you can appeal. Appeal rights will be included with the notice you receive. What if the IRS or another state has audited my return? We have an agreement with the IRS to exchange tax return information. If the IRS audits an Oregon tax­ payer's return, we may receive a copy of that infor­ mation. If your federal return or the return you filed with another state is adjusted, you should amend your Oregon tax return if that adjustment also affects your Oregon return. If your return was previously audited by the IRS and the notice you receive from us has a different adjust­ ment, send a copy of the final audit adjustments or cancellation from the IRS to us. If you filed an appeal with the IRS or the other state and you get a notice from us, send a copy of the IRS or other state appeal notification. We will suspend further action until your IRS or other state case is resolved. You have two years from the date of the correction to claim a refund of Oregon tax as a result of the audit adjustment. See “Oregon statute of limitations on refunds” in “Payments and refunds” for more information. Appeals If you disagree with an action we've taken, you have the right to appeal. Follow the appeal procedures out­ lined here if you have a disagreement with: • A Notice of Deficiency or Notice of Proposed Refund Adjustment. • Our notice based on a federal audit report or an audit by another state. • Penalties or interest charges shown on our notice. • Interest charged on underpayment of estimated tax. • A Notice of Assessment. You may be able to resolve certain issues without a formal appeal process. Contact us if your disagree­ ment concerns: • The date or amount of payments made to your account. • A withholding adjustment. Appealing a Notice of Deficiency or Notice of Proposed Refund Adjustment within 30 days If you disagree with a Notice of Deficiency or a Notice of Proposed Refund Adjustment, you may submit an appeal online by logging in to Revenue Online within 30 days and following the instructions on your notice. Or, you may submit an appeal in writing within 30 days from the date on our notice. Audits and appeals

150-101-431 (Rev. 06-17-24) 43 To make your appeal, choose just one of these two options: written objection or conference request. Written objection. Write to us explaining why you disagree with the Notice of Deficiency or Notice of Pro­ posed Refund Adjustment. Include any new informa­ tion you have. We will review your explanation, try to resolve the matter, and send you a written deci­ sion. If an auditor adjusted your return, that auditor will review your explanation, along with any infor­ mation you provide, and send you a written decision. Conference. Request a conference by sending us an explanation of why you disagree with our Notice of Deficiency or Notice of Proposed Refund Adjustment. Include any new information you have. Be sure to indicate that you are requesting a conference. A conference officer will discuss the matter with you or with someone you choose to represent you, usu­ ally by phone. The conference officer will send you a written decision. You may choose to receive the deci­ sion by either regular or certified mail. If you disagree with our decision, you may continue your appeal and will receive new appeal instructions. Appealing a Notice of Proposed Refund Adjustment after 30 days have passed If you don’t send us a written objection or conference request, but you still want to appeal a Notice of Pro­ posed Refund Adjustment, you must file a complaint with the Magistrate Division of the Oregon Tax Court no later than 120 days from the date of the notice. If you don’t file a complaint within 120 days, your appeal rights will expire and the adjustment can’t be changed. See “Appealing to the Oregon Tax Court” for more information. Appealing a deficiency based on federal audit reports or audit reports of other states Do you have an appeal in progress with the IRS or another state? If so, you may have extra time to file an appeal with the Magistrate Division of the Oregon Tax Court. To see if the appeal rights apply to you, answer the following questions: 1. Did you receive an Oregon notice of a deficiency on the same item billed by the IRS or another state? 2. Did you file a timely appeal with the IRS or another

state? If you answered “no” to either question, use the appeal procedures included with your Oregon notice. If you answered “yes” to both questions, you need to send us proof of your appeal to the IRS or other state. This should include a copy of the notice from the IRS or other state, plus a copy of your written appeal request. The time allowed for filing your proof of federal or other state’s appeal varies: • Did you receive a Notice of Deficiency from us? If so, send us proof of your IRS or other state appeal within 30 days of the date on the Notice of Deficiency. Your account will be assessed without penalty and held until the appeal with the IRS or other state is resolved. • Did you receive a Notice of Assessment from us before sending us proof of the appeal? If so, send us proof of your IRS or other state appeal as soon as possible. After you file proof of your appeal, we will delay any further action on your account until the appeal process is completed. Note: Interest will continue to accrue on any unpaid tax. You must notify us within 30 days of the final resolu­ tion of your appeal with the IRS or the other state. We will review the information and determine whether any adjustments need to be made to your Oregon tax return. You will receive written notification of our determination. If you disagree with our determina­ tion, you may appeal within 90 days to the Magis­ trate Division of the Oregon Tax Court. Your com­ plete appeal rights will be explained with the written determination. Appealing penalty or interest Do you believe there is reasonable cause for a reduc­ tion of penalties or interest? If so, you may ask for a waiver or reduction of part or all of the penalty and interest charges. However, we generally won’t waive interest charges. Waiver criteria are outlined in Oregon Administrative Rule (OAR) 150-305-0068. You must explain how your situation meets any of the criteria. We will review your waiver request and let you know our decision in writing. You’ll receive further appeal instructions to follow if you disagree with the decision. How to start the appeal process All appeals must be submitted through Revenue Online or sent to us in writing. If you are sending us a written appeal, you may submit it by regular mail, fax, or email. Your written appeal must include: • Your full name. • Your current mailing address. • Your SSN or ITIN. • The tax year(s) involved. • A detailed explanation of why you are appealing. Audits and appeals

150-101-431 (Rev. 06-17-24) 44 • Proof of your IRS or other state appeal, if applicable. • The waiver criteria if you are requesting a reduc­ tion of penalty or interest (OAR 150-305-0068). • Any new information you want us to consider; and • A daytime phone number. Be sure to indicate whether you are making a writ­ ten objection, requesting a conference, or requesting a waiver or reduction of penalties or interest. Keep us informed of any changes to your address or phone. Regular mail. Send your written appeal to: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Email. If you are appealing a determination made by an auditor, you may send a written objection or request for a conference to that auditor by email. You should note, however, that we are unable to guarantee the security of any information sent to us by email. Fax. You may fax your written appeal to 503-945-8738. Revenue Online. You may submit your appeal using your Revenue Online account. After logging in, sim­ ply click on the link for your personal income tax account, then select the “Appeals” link and follow the instructions. Be sure that the type of appeal you select is the one you intend to choose. Go to our web­ site for more information about setting up your Rev­ enue Online account. Appealing to the Oregon Tax Court If you disagree with a Notice of Assessment or a writ­ ten determination following your written objec­ tion or conference, you have the right to appeal. You must appeal to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the Notice of Assessment or our written determination. Complaint forms for appealing to the Magistrate Division are available from the Tax Court’s website, www.courts.oregon.gov/courts/tax, or you may con­ tact the Oregon Tax Court by mail or phone: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 Mail the signed complaint form along with the fil­ ing fee and a copy of the Notice of Assessment or other written determination to the above address. Note: You can’t appeal tax that you said you owed when you filed your return. Further appeal rights Tax paid in full. If you pay the tax due in the Notice of Deficiency in full, your deficiency is considered to be assessed either on the date of your payment or 30 days from the date of the notice, whichever is later. If you don’t file a timely appeal, you have two years from the date your liability is paid in full to appeal the assessment. Appeal to the Magistrate Division of the Oregon Tax Court as outlined above. Doubtful liability. In certain situations, we may con­ sider your case even if you didn’t file a timely appeal. Visit our website or contact us to see if you meet the conditions for “doubtful liability” relief. Interest charges Appealing a deficiency or an assessment won’t stop interest from accruing on the taxes owed. Interest is computed from the day after the due date of the original return, without extensions, to the date of payment. Interest is charged even if you have a valid extension. If your appeal results in a reduction of the tax due, the interest charges will also be reduced. Paying your taxes during the appeal You may pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the notice, but it does stop interest from accruing on your liability. If you don’t pay before the tax is assessed, a 5 percent failure-to-pay penalty will be added to your balance due. If your appeal is successful, you will receive a refund of any overpayment, including interest. See “Payments and refunds“ for payment options, and “Interest and penalties“ for more information about the failure-to-pay penalty. Audits and appeals

150-101-431 (Rev. 06-17-24) 45 Failure to file an Oregon income tax return For information about penalties for failing to file an Oregon income tax return, see “Penalties.” Filing a return after tax is assessed When you don’t file a tax return but were required to file, we will “assess” your tax. This means we com­ pute how much tax you owe based on information we have available. You will then receive a Notice of Assessment. Even if we have assessed your tax for one or more years, you may still file returns for those years. Why you should file We compute your tax assessment using the infor­ mation available to us about your income, filing sta­ tus, exemptions, and withholding or estimated tax payments. Because we don’t have all your tax information, we may not be able to give you all the deductions or credits you may be entitled to. Once you file a tax return, we may be able to change the tax we assessed. You may receive a refund If your withholding and/or estimated tax payments add up to more than the tax due, we may be able to refund the excess to you. However, there are time limits. If you paid more tax than you should have, a refund will be allowed only if you file your return within three years of the due date of the original return, not including extensions. For example: • The return for 2020 was due on May 17, 2021. Three years after that date is May 17, 2024. To receive a refund of excess tax payments for 2020, your return must be postmarked by May 17, 2024. • The return for 2021 was due April 18, 2022. Three years after that date is April 18, 2025. To receive a refund of excess tax payments for 2021, your return must be postmarked by April 18, 2025. Where to mail your return after tax is assessed Send paper returns, with a copy of your federal return (including Schedules 1 through 3, if applicable) to: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Reviewing your return After reviewing your return, if we agree with the tax you show, we will change the tax assessed. If the income, deductions, credits, or payments shown on your return don’t match our information, we will notify you. The notice we send will explain our adjustments and what to do if you disagree. Your return must include information about filing status, exemptions, income, deductions, credits, tax, and payments. It must be signed and include a state­ ment that, to the best of your knowledge and belief, it’s true, correct, and complete. The full statement is printed on the forms provided by us and appears directly above the signature lines. If you change this statement on the form, your return may not be accepted. Your return also may not be accepted if: • It contains a frivolous argument concerning the payment of taxes; or • You file a return you know isn’t true or correct. You will receive a Notice of Rejection if your return isn’t accepted. This notice can be appealed to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the notice, but only if your return was sent to us within 90 days of the date on the Notice of Assessment. Appealing the Notice of Assessment to the Oregon Tax Court You may also choose to file an appeal with the Mag­ istrate Division of the Oregon Tax Court. Your appeal must be made within 90 days of the date of the Notice of Assessment or within two years after the tax, pen­ alty, and interest shown on the notice is paid in full. If you file an appeal with the Magistrate Division, you will usually be required to file a tax return before the court will change our assessment. You can get a complaint form for filing an appeal at: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 www.courts.oregon.gov/courts/tax Within 90 days of the date on your notice, mail the following items to the address above: • Your completed and signed complaint form. • Your filing fee, and • A copy of the Notice of Assessment. Failure to file

150-101-431 (Rev. 06-17-24) 46 Appealing doesn’t stop interest from being charged on the tax you owe. If you appeal and your tax assess­ ment is reduced, the penalty and interest charges will also be reduced. Paying your taxes during the appeal process You can pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the assessment, but it does stop interest from accruing on the assessed tax. If you pay, you can still appeal any time within two years of the date you pay the tax, penalty, and interest shown on the Notice of Assessment. See “Payments and refunds” for payment options. Requesting a waiver of penalty or interest You can ask for a discretionary waiver of part or all of the penalty and interest charges (OAR 150-305- 0066, 150-305-0068). We can resolve most penalty and interest charge disagreements. For more information about requesting a discretionary waiver, see “Appeal- ing penalty or interest” in “Audits and appeals.“ If you believe part or all of the penalty and interest charges should be adjusted, write to: Oregon Department Revenue PO Box 14725 Salem OR 97309-5018 Failure to file

150-101-431 (Rev. 06-17-24) 47 Income What income is taxable to Oregon? Full-year residents (Form OR-40). You are taxed on income from all sources. Part-year residents (Form OR-40-P). You are taxed on income from all sources earned or received while an Oregon resident. For the period of time you were not an Oregon resident, Oregon taxes only certain income from Oregon sources. Nonresidents (Form OR-40-N). You are taxed on income from Oregon sources. This includes income shown on your federal return from Oregon wages or Oregon fees or for services performed in Oregon. Other income from Oregon sources includes: • Businesses, S corporations, partnerships, and limited liability companies taxed as partnerships located or doing business in Oregon, and in some cases, work that is performed in another state for Oregon customers. • Unemployment insurance benefits received because of an Oregon job. • Severance pay you received because of an Oregon job. • Oregon farms. • Oregon estates and trusts. • Sales of Oregon property. • Rents and royalties for use of Oregon property. • Wages for services performed in Oregon by employ­ ees who also telecommute from outside the state. Note: Community property income. Oregon isn’t a community property state. If you’re a resident of Ore­ gon and your spouse is a resident of a state with com­ munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you are taxed on any of your spouse’s income. See “Filing sta­ tus” for more information about community property. Air carrier employees (OAR 150-316-0173) Nonresidents. You are exempt from Oregon tax on wages earned while working on aircraft in Oregon, if you meet all of the following qualifications: • You are a nonresident of Oregon; and • You perform regularly assigned duties on aircraft in Oregon and at least one other state as an employee of an air carrier; and • Your scheduled flight time in Oregon is 50 percent or less of your total scheduled flight time during the calendar year. Additionally, the air carrier you work for must provide: • Interstate or foreign air transportation of passen­ gers or property by aircraft as a common carrier for compensation; or • Interstate or foreign transportation of mail by aircraft. If you are a federal, state, or local government employee, you may not exclude your income under this section. (U.S. Postal Service employees are considered employ­ ees of the federal government.) If you meet all of these qualifications, file Form OR- 40-N and mark the “Employment exception” box on the return. [For more information about the “Employ­ ment exception” box, see “Interstate transportation wages (Amtrak Act).“] Show that your income is exempt by excluding it from the Oregon column. Example 1: Chantell is a nonresident who works as a pilot for an Oregon-based corporation, transporting the corporation’s executives to various job locations in the United States. Chantell isn’t exempt from Ore­ gon tax because she doesn’t work for an air carrier that provides air transportation for compensation. Her wages are subject to Oregon tax to the extent ser­ vices are performed in Oregon. Example 2: George is a nonresident who works as an office manager for an air carrier. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his pilot’s license. George doesn’t qualify as exempt from Oregon tax because his “regularly assigned duties” aren’t on an aircraft, but as a manager in an office. Example 3: Allison is a nonresident and works as a flight attendant for Delta Airlines. She regularly works on flights in California, Oregon, and Washington. Her scheduled flight time in Oregon amounts to 35 percent of her total scheduled flight time this year. Because Allison meets the qualifications mentioned above, she can exclude, from the Oregon column, all of her wages from Delta Airlines on her Oregon nonresident return. Oregon withholding. To stop withholding of Oregon income tax from your exempt wages, use Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Alimony received Oregon only taxes alimony payments received that must be included on your federal return. Full-year residents. Oregon taxes all alimony you received during the year that is included on your federal return. Income

150-101-431 (Rev. 06-17-24) 48 Part-year residents. Oregon taxes any alimony you received for the part of the year you were a resident of Oregon that is included on your federal return. Nonresidents. Oregon doesn’t tax any alimony you received while a nonresident of Oregon. Business income or loss Full-year residents. Oregon taxes all of your business income (or allows your business loss) received during the year. Part-year residents. Oregon taxes all of your business income (or allows your business loss) while you’re an Oregon resident. Oregon also taxes income (or allows losses) from an Oregon business while a nonresident. Nonresidents. Oregon taxes your income (or allows your business loss) from an Oregon business. This includes apportioned business income and allocated nonbusiness income from sole proprietorships. Discharge of indebtedness (ORS 316.048) Oregon doesn’t tax discharged debt that you are excluding from your federal gross income under IRC Section 108(a) or other federal law unless the Oregon legislature has created a specific addition for it. The term “discharge of indebtedness” conveys forgive­ ness of, or release from, an obligation to repay. As of the latest revision date of this publication, there is no Oregon addition for discharged debt that isn’t included as income on your federal return. Federal Schedule E and F income Full-year residents. Oregon taxes the income reported on federal Schedules E and F, including rent, royalty, Real Estate Mortgage Investment Conduits (REMIC), Real Estate Investment Trust (REIT), partnership, S corporation, estate, trust, and farm income. Part-year residents. Oregon taxes the income reported on federal Schedules E and F that you received while you were an Oregon resident. Oregon also taxes this income if you received or earned it from Oregon sources while a nonresident. Nonresidents. Oregon taxes the income reported on federal Schedules E and F that you received or earned from Oregon sources. Gain, loss, and distributions Capital gain, loss, and distributions Full-year residents. Oregon taxes your gain or dis­ tribution received (or allows losses you incurred) during the year. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Part-year residents. Oregon taxes your gain or distri­ bution received (or allows losses you incurred) while you were an Oregon resident. Oregon also taxes gain or distributions received (or allows losses you incurred) from Oregon sources while a nonresident. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Nonresidents. Oregon taxes your gain or distribution (or allows your loss) from Oregon sources. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Note: See “Capital loss carryover difference” under “Additions” for information about an addition to Ore­ gon income for capital losses carried over from last year’s return under certain unusual circumstances. Other gain or loss Full-year residents. Oregon taxes your gain (or allows your loss) received during the year. Part-year residents. Oregon taxes your gain (or allows your loss) while an Oregon resident. Oregon also taxes the amount from Oregon sources while a nonresident. Nonresidents. Oregon taxes your gain (or allows your loss) from Oregon sources. Global intangible low-taxed income (GILTI) This category of foreign income is included as "other income" on the federal return. It must be reported as income when it's deemed received, even if it isn't actually received by the taxpayer during the tax year. Full-year residents. This income flows through to your Oregon return. Part-year residents. Report this income in the Oregon column if you were an Oregon resident on the date you received it (actual or deemed receipt) or if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon while a nonresident. Nonresidents. Report this income in the Oregon col­ umn if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon. Hydroelectric dam workers [ORS 316.127(8)] Full-year residents. Oregon taxes all of your wages earned while working on the McNary, John Day, The Dalles, or Bonneville dams. Income

150-101-431 (Rev. 06-17-24) 49 Part-year residents. Oregon taxes all the income you earned during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, the wages you earned while working on any of the listed dams are exempt from Oregon tax. Mark the “Employment exception” box on your return and include only the wages you earned while working on any of the listed dams while you were an Oregon resident. Nonresidents. You are exempt from Oregon tax on wages earned while working on any of the listed dams. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. If you have any other income from Oregon sources, you must show that income in the Oregon column. Oregon withholding. To stop withholding of Ore­ gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Individual Retirement Account (IRA) distributions Full-year residents. Oregon taxes any taxable IRA distribution you received during the year and any amounts reported in federal income that you con­ verted from a traditional IRA into a Roth IRA. Part-year residents. Oregon taxes any taxable IRA distribution you received while you were an Oregon resident. Oregon also taxes income amounts from IRA conversions if you were an Oregon resident at the time of the conversion. Nonresidents. Oregon doesn’t tax any amount unless you are a nonresident domiciled in Oregon. If you are domiciled in Oregon but otherwise taxed as a non­ resident, your Oregon-source IRA will still be taxed by Oregon. See “Retirement income.“ Interest and dividend income Interest Generally, interest income is only taxed by your state of residence. It includes any interest received or cred­ ited to your account that you could withdraw and any interest you received on tax refunds. See the following exceptions: • Interest and dividends on government bonds of other states. • Interest and dividends on U.S. bonds and notes. Full-year residents. Oregon taxes the interest income you received and reported on your federal return. Part-year residents. Oregon taxes the interest income you received while you were an Oregon resident. Oregon also taxes Oregon business activity interest income received while a nonresident. Nonresidents. Oregon taxes the interest income you received on funds used for business activity in Ore­ gon. Oregon doesn’t tax interest received on install­ ment sales. Dividends Generally, dividend income is only taxed by your state of residence. Include the stock dividends you received under a public utility dividend reinvestment plan in Oregon income. Full-year residents. Oregon taxes the dividends you received during the year. Part-year residents. Oregon taxes all dividends you received while an Oregon resident that are included on your federal return. Oregon also taxes any divi­ dends passed through to you during the part of the year you were a nonresident from an S corporation or partnership that has no business activity outside Oregon. Nonresidents. Oregon taxes dividends passed through to you from an S corporation or partnership that has no business activity outside Oregon. These are divi­ dends your S corporation or partnership received on the stock of another corporation. Interstate transportation wages (Amtrak Act) (OAR 150-316-0173) Nonresidents. Are you a nonresident of Oregon with regularly assigned duties in Oregon and at least one other state? If you meet certain qualifications (listed below), Oregon won’t tax you on these wages. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. State income tax provisions in the federal Amtrak Reauthorization and Improvement Act of 1990, Pub­ lic Law 101-322, can be found in U.S.C. Sections 11502 and 14503. These provisions, which we refer to as the “Amtrak Act,“ prohibit states and local governments from taxing compensation of certain nonresident employees who have regularly assigned duties in more than one state. If you are a federal, state, or local government employee, you may not exclude your income under these federal laws. (U.S. Postal Service employees are considered employees of the federal government.) Income

150-101-431 (Rev. 06-17-24) 50 Who qualifies? To qualify, you must work for: • An interstate railroad; or • An interstate motor carrier; or • An interstate motor private carrier. In addition, you must: • Be a nonresident of Oregon; and • Have regularly assigned duties in more than one state (that is, you perform duties in each state on a regular basis; duties you perform on an “on-call” or “as-needed” basis or on a sporadic or intermittent basis during the year aren’t considered “regularly assigned”); and • Be subject to the jurisdiction of the U.S. Secretary of Transportation; and • Not be covered under the overtime requirements of the Fair Labor Standards Act. Note: You may receive overtime payment at the dis­ cretion of your employer and be subject to the juris­ diction of the U.S. Secretary of Transportation. Refer to your employer to determine if you are subject to the jurisdiction of the U.S. Secretary of Transporta­ tion or to the Fair Labor Standards Act. You can’t be subject to both. For employees of interstate motor carriers or motor private carriers, you must meet both of the following requirements: • Perform work that directly affects the safety of a commercial motor vehicle. This means you are required by your regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be direct and hands-on, requiring you to physically move, touch, or affect the vehicle or its contents. Super­ visory, managerial, consulting, or other duties that indirectly affect the safety of a motor vehicle don’t meet the definition of “directly affects”. • Work as:

— An operator of a commercial motor vehicle;

— A mechanic;

— A freight handler; or

— Someone, other than an employer, who directly affects the safety of a motor vehicle. A commercial motor vehicle is any self-propelled or towed vehicle used on highways in interstate com­ merce to transport passengers or property if such vehicle: • Has a gross vehicle weight rating of more than 10,000 pounds; or • Is designed or used to transport passengers for compensation, except for vehicles providing taxi cab service when the vehicle has a capacity of eight or fewer passengers and isn’t operated on a regular route or between specified places; or • Is designed to transport more than 15 passengers, including the driver, and isn’t used to transport passengers for compensation; or • Is used and labeled for the transportation of haz­ ardous materials. Example 1: Adam and Natalya are married non­ residents who are filing a joint federal return. Adam works for an Oregon interstate motor carrier as a com­ mercial motor vehicle driver. He has a regular route from Idaho to Oregon, delivering products in Oregon. Because Adam is the driver of a commercial motor vehicle and has regularly assigned duties in more than one state, this income is exempt from Oregon tax. Natalya is a chef at an Oregon restaurant. They must file a joint Form OR-40-N. Only Natalya’s wages are entered in the Oregon column; Adam’s wages are exempt and aren’t included in the Oregon column. Example 2: Brenda is a nonresident who works for an interstate motor carrier as a mechanic directly affect­ ing the safety of commercial motor vehicles engaged in interstate commerce. She has regular duties in a Washington terminal and an Oregon terminal. She works one day a week in Washington and four days a week in Oregon. Because Brenda directly affects the safety of a com­ mercial motor vehicle in interstate commerce and performs regularly assigned duties in two states, she is exempt from Oregon tax. It doesn’t matter that the majority of her work is performed in Oregon. Brenda must file a Form OR-40-N but she won’t include these wages in the Oregon column. Example 3: Jorge is a nonresident who works as a mechanic for an interstate motor carrier, directly affecting the safety of commercial motor vehicles engaged in interstate commerce. He regularly works in Medford but is required to be on-call some week­ ends to perform minor repair work. Several times a year he may travel to California to repair a flat tire, do minor engine work, etc. Jorge doesn’t have regularly assigned duties in more than one state. Duties that are performed on an on- call or as-needed basis aren’t considered to be regu­ larly assigned. Jorge’s wages earned in Oregon are taxable by Oregon. He must file Form OR-40-N and report his wages in the Oregon column. Example 4: Carl is a nonresident who works for an interstate motor carrier as a driver. Carl picks up a lumber delivery truck every morning in Washing­ ton and receives delivery assignments for the day. Depending on where the lumber needs to be deliv­ ered, he may not come to Oregon on a daily basis. Carl may pick up and deliver lumber only within Income

150-101-431 (Rev. 06-17-24) 51 Washington or only within Oregon. Carl drives to Oregon at least once a month. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself doesn’t know what each day’s delivery route will be until customers place orders. Although Carl may not have a regular route in Wash­ ington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have regularly assigned duties in two states, as long as all routes are assigned randomly among all drivers on a regu­ lar basis. Carl’s wages earned in Oregon are exempt from Oregon tax. Carl must file Form OR-40-N but he won’t include these wages in the Oregon column. Example 5: Ed is a nonresident who works for an Ore­ gon wholesaler as a shipping clerk. The company has one terminal in Oregon and one terminal in Washing­ ton. Ed regularly works in both terminals. Although he has regularly assigned duties in two states, Ed’s Oregon wages aren’t considered exempt within the scope of the Amtrak Act. He isn’t a driver, mechanic, or freight handler. His duties don’t directly affect the safety of a vehicle. Ed’s wages earned in Oregon are taxable by Oregon. He must file Form OR- 40-N and include this income in the Oregon column. Example 6: Frieda is a nonresident who works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occa­ sionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda doesn’t have “regularly assigned duties in more than one state” and she doesn’t work for an interstate motor carrier. Her Oregon-source wages are taxable by Oregon. Frieda must file Form OR-40-N and include this income in the Oregon column. Example 7: Butch is a nonresident who works for an Oregon-based interstate trucking carrier as a super­ visor. His regular duties within the state of Oregon include safety training. Also, Butch frequently drives to Washington to conduct safety training. Wages for performing supervisory duties don’t qualify as exempt under the Amtrak Act. The employee’s duties must directly affect the safety of a commercial vehicle. Conducting safety training only indirectly affects the safety of a commercial motor vehicle. Butch’s wages are taxable by Oregon. He must file Form OR-40-N and include his wages in the Oregon column. Example 8: Connie Sue is a nonresident who works for an interstate trucking carrier at her company’s Oregon and Washington yards. She has a variety of duties, including helping load trucks. Connie Sue is allowed overtime as a result of being subject to the Fair Labor Standards Act. Because she is covered under the Fair Labor Stan­ dards Act and isn’t subject to the jurisdiction of the Secretary of Transportation, Connie Sue doesn’t qualify for the Amtrak Act exemption. Her wages are taxable by Oregon. She must file Form OR-40-N and include her wages in the Oregon column. Employer withholding If your wages are exempt from Oregon tax under the Amtrak Act, Oregon tax doesn’t have to be withheld from your pay. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer and attach an explanation of your quali­ fying duties. Submit a new form and explanation by Feb­ ruary 15 of each year that you’re claiming the exemption. You must still file an Oregon tax return even if you claim exemption from withholding under the Amtrak Act. Like-kind exchange or involuntary conversion (ORS 316.738, 317.327) You may elect to defer gain on like-kind business or investment property not held primarily for sale that is exchanged, in the case of real property under IRC Section 1031, or involuntarily converted under IRC Section 1033. If Oregon real property is exchanged for real property in another state, or if property located in Oregon is involuntarily converted into similar prop­ erty located outside of Oregon, include Form OR-24 with your Oregon return in the year of the exchange or conversion, or submit it to us through Revenue Online. Submit the form to us each year, until you've disposed of the like-kind property, even if you don't have to file an Oregon income tax return. Download the form from our website or call us to order it. Full-year residents. Report your Oregon gain on the sale or other disposition of the acquired property when it’s reported on your federal return. Part-year residents and nonresidents. If you were an Oregon resident at the time of the exchange or invol­ untary conversion, file an Oregon return and report the Oregon portion of the gain when you report the gain on your federal return. If you were a nonresi­ dent at the time you exchanged or converted your Oregon property or you're a nonresident when the gain is reported on your federal return, you will need to file an Oregon Form OR-40-N to report the gain. Income

150-101-431 (Rev. 06-17-24) 52 Market-based sourcing (ORS 314.665) Oregon has changed from sourcing business income from the place where the cost of performance is incurred to the place where the taxpayer’s market is located. This change affects nonresidents who do business in Oregon who are required to apportion their business income among two or more states. Example: Andrew, a tax professional and Washington state resident, advertises his services in Oregon, Idaho, and Washington and has clients in all three states. He provides services for his clients out of his Washing­ ton office. He earned $400,000 from his Oregon clients, $350,000 from his Idaho clients, and $250,000 from his Washington clients. Although his work is performed in Washington state, Andrew would report 40 percent of his sales ($400,000) as Oregon income because 40 percent of his market is in Oregon. Retirement income Full-year and part-year residents. Most retirement income is subject to Oregon tax when received by an Oregon resident. This is true even if you were a non­ resident when you earned the income. However, if you have federal pension income, you may subtract some or all of it from Oregon income. See “Federal pension income” in “Subtractions” for more information. For other exceptions, see “Previously taxed employee retirement plans” and “Previously taxed IRA conver- sions” in “Subtractions.” Nonresidents. Oregon doesn’t tax your retirement income if you are a nonresident who isn’t domiciled in Oregon. If you are an Oregon nonresident who is still domiciled in Oregon, any Oregon-source retirement income is taxable by Oregon. This applies to most forms of retirement income taxed by Oregon, including public pension plans, corporate retirement plans, Keogh plans, simplified employee pensions (SEPs), and IRAs. For the definition of domicile, see “Residency.” Example: Hiro has always resided and worked in Ore­ gon, which he thinks of as his home. He recently retired and now receives his pension and interest income from Oregon. Earlier this year, he sold his Oregon residence, bought an RV, and went to Arizona, where he rents space year-round in an RV park. He intends to stay in Arizona for a year or two and then return to Oregon. Hiro hasn’t given up his Oregon driver’s license. His RV and vehicles are registered with the state of Oregon. He hasn’t changed his voter registration to any other state. Hiro hasn’t shown an intent to give up Oregon as his home, and he hasn’t maintained a permanent home elsewhere. Based on these facts, Hiro's domicile is in the state of Oregon. Although Hiro may be treated as a nonresident for tax purposes on other forms of income (his interest income isn’t taxed by Oregon), because his domicile is still Oregon, his Oregon- source retirement income is taxable by Oregon. Retirement income means income from: • Qualifying employer pension and profit-sharing plans exempt from federal tax [IRC Section 401(a)]. • Annuity plans [IRC Sections 403(a) and 403(b)]. • Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]. • Simplified employee pension plans [IRC Section 408(k)]. • Individual retirement arrangements [IRC Sections 408(a) and 408(b)]. • Plans for federal, state, or local government employ­ ees [IRC Section 414(d)]. • Pay for uniformed service members under chapter 71 of Title 10 of the United States Code. • Trusts that were created before June 25, 1959 [IRC Section 501(c)(18)]. Payments received after termination of employ­ ment qualify if the payment is made under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described above. Payments received from nonqualified deferred com­ pensation plans [as described in IRC Section 3121(v) (2)(C)] qualify as retirement income if the payments are part of a series of substantially equal periodic payments made for a period of at least ten years or for the life or life expectancy of the recipient. Retirement income doesn’t include income received from: • Stock options. • Restructured stock plans. • Severance plans. Social Security and Railroad Retirement Board benefits (ORS 316.054) Oregon doesn’t tax any amount of your Social Security, Railroad Retirement Board, or railroad unemployment benefits. For information on the Railroad Retirement Board and Social Security benefits subtractions, see the related sections under “Subtractions.” State and local income tax refunds If you received a refund of income tax from another state or local government that is included in your fed­ eral income, and you deducted those taxes on a prior Income

150-101-431 (Rev. 06-17-24) 53 year’s Oregon return, include the refund in your Oregon income. This refund isn’t taxable to Oregon if you didn’t deduct the taxes on an Oregon return. See “Subtractions” for information on the Oregon income tax refund subtraction. Unemployment insurance (UI) benefits and other taxable income Full-year residents. Oregon taxes UI benefits and any other taxable income you received during the year. Part-year residents. Oregon taxes UI benefits and any other taxable income you received while an Ore­ gon resident. Oregon also taxes any UI benefits and other taxable income from Oregon sources or based on Oregon sources received while a nonresident. Nonresidents. Oregon taxes any UI benefits and any other taxable income included in federal AGI received from Oregon sources or based on Oregon sources. Wages, salaries, and other pay for work Full-year residents. Oregon taxes all of your earnings for services you performed inside and outside Oregon. Part-year residents. *Oregon taxes all of your earn­ ings while an Oregon resident. Oregon also taxes the amount you earned working in Oregon while you were a nonresident. If your Oregon wages aren’t stated separately on your W-2, compute your Oregon-source income using the formula at the end of this section. Nonresidents. *Oregon taxes the income you earned while working in Oregon. Oregon doesn’t tax any amount you earned while you were working outside Oregon. Nonresident telecommuters who work for an Oregon employer are taxed only on the income earned from work performed in Oregon, including sick pay or other benefits. *Nonresident exceptions: To see if you qualify to exclude certain income, see “Air carrier employees,“ “Interstate transportation wages (Amtrak Act),“ or “Hydroelectric dam workers“ above, or “Waterway workers“ below. If the amount you earned working in Oregon differs from the Oregon wages shown on your Form W-2, compute your Oregon-source income using the for­ mula at the end of this section. You should ask your employer to provide you with a signed explanation of the wage difference, written on company letterhead. Keep the explanation with your tax records, as we may ask for it at a later date. Important information for using this formula: When you count the number of days you actually worked in Oregon and the number of days you actually worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. Use this formula to determine total wages taxable by Oregon: Days actually worked in Oregon × Total wages = Oregon wages Total days actually worked everywhere If you only worked in Oregon, don’t use the formula above. All your earnings are taxable by Oregon, and you must report them on your Oregon return. Waterway workers (ORS 316.127) Full-year residents. Oregon taxes all the income you earned while working on a watercraft in interstate waters. Part-year residents. Oregon taxes all the income you earned while working on a watercraft in inter­ state waters during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, see the following guidelines. Nonresidents. Certain nonresident employees serv­ ing on watercraft who have regularly assigned duties in interstate navigable waters aren’t subject to Oregon income tax. To qualify you must: • Be engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. Section 7101 or licensed or authorized under the laws of the state; or • Perform regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating in navigable waters in two or more states. If you qualify, Oregon won’t tax these wages. File Form OR-40-N (or Form OR-40-P if a part-year resi­ dent) and exclude your wages from your Oregon income. Mark the “Employment exception” box on your return. See “Interstate transportation wages (Amtrak Act)” for more information. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income

150-101-431 (Rev. 06-17-24) 54 Adjustments Adjustments are deductions from your gross income. They result in “adjusted gross income,” or AGI, on your federal return. For full-year residents, these items flow through to your Oregon return. Part-year residents and nonresidents report most of these items directly on Form OR-40-P or OR-40-N. Enter the fed­ eral amount in the federal column and the Oregon amount, if any, in the Oregon column. If the item has an adjustment code, enter the federal and Oregon amounts in section A of Schedule OR-ASC-NP, then enter the totals from section A on your return. Your Oregon adjustment can’t be more than the adjust­ ment on your federal return. Alimony paid Oregon allows a deduction for alimony paid under a divorce decree or separation agreement if the deduc­ tion is allowed on your federal return. The alimony you paid must be taxable income to your former spouse. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the alimony you paid while an Oregon resident with a partial deduction for alimony paid while a nonresi­ dent if you had Oregon-source income and the deduc­ tion was allowed on your federal return. Use the for­ mula under Nonresidents to determine the nonresi­ dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for alimony you paid while a nonresident if you had Ore­ gon-source income and the deduction was allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Alimony you paid while a nonresident = Nonresident deduction Total income received while a nonresident Certain business expenses of reservists, performing artists, and fee-basis government officials [Adjustment code 002] Reservists If you were a National Guard or reserve member of the U.S. Armed Forces who traveled more than 100 miles from your home to perform services, you may be able to deduct certain business expenses you paid or incurred in connection with that service. For more information, see the instructions for federal Form 2106, Employee Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Oregon doesn’t tax the reservist income of nonresidents, so you can’t deduct expenses you incurred while you were a nonresident. You may deduct only the expenses you incurred while you were an Oregon resident. Your Oregon deduction while you were a nonresident is $0. Performing artists If you were a qualified performing artist, you may be able to deduct business expenses you paid or incurred in connection with your services in the per­ forming arts as an employee. For qualifications and other information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the expenses you paid while you were an Oregon resident, along with a partial deduction for the expenses you paid while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for these business expenses while you were a non­ resident if you had income from an Oregon source. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Performing artist employee business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Fee-basis government officials If you are a government official who is paid on a fee basis instead of wages or salary, you may be able to deduct certain business expenses you paid or incurred Adjustments

150-101-431 (Rev. 06-17-24) 55 in connection with services you performed. For more information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the expenses you paid while you were an Oregon res­ ident with a partial deduction for the expenses you paid while you were a nonresident if you had Ore­ gon-source income. Use the formula under Nonresi­ dents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the expenses you paid while you were a nonresi­ dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Official business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Educator expenses If you were an eligible educator in 2023, you can deduct up to $300 of qualified expenses you paid in 2023. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $600. For information about eligibility and qualified expenses, see the instructions for your federal return or IRS Publication 529, Miscellaneous Deductions. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the qualified educator expenses you paid while you were an Oregon resident with the expenses you paid while working in an Oregon elementary or sec­ ondary school while you were a nonresident. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for the expenses you paid while working in an Oregon ele­ mentary or secondary school. Your Oregon deduc­ tion can’t be more than the deduction allowed on your federal return. If you didn’t work in an Oregon elementary or secondary school, your Oregon deduc­ tion is $0. Health savings account (HSA) deduction [Adjustment code 003] You may be able to take this federal deduction if you made contributions to an HSA during 2023. For more information about this deduction, see the instruc­ tions for federal Form 8889 or IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the HSA contributions you made while you were an Oregon resident with a partial deduction for contributions you made while you were a non­ resident if you had Oregon-source income. Use the formula under Nonresidents to determine the non­ resident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduc­ tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for HSA contributions you made while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × HSA contribution made while a nonresident = Nonresident deduction Total income from all sources while a nonresident IRA or self-employed SEP and SIMPLE contributions These federal deductions are for contributions made to an IRA, SEP (simplified employee pension), SIM­ PLE (savings incentive match plan for employees), or other qualified retirement plan for yourself or, if you’re a sole proprietor or partner in a small busi­ ness, your employees. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. For more Adjustments

150-101-431 (Rev. 06-17-24) 56 information about these deductions, see these IRS publications: • Publication 590-A, Contributions to Individual Retire­ ment Arrangements (IRAs). • Publication 560, Retirement Plans for Small Business. • Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Note: If any part of your contribution deduction came from the rollover of an individual develop­ ment account (IDA), you must add back the amount already subtracted as an IDA contribution. See “Indi- vidual development account” under “Additions” for more information. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. You may be limited in the amount of IRA or other retirement plan contributions you can deduct for Oregon. Use these formulas to figure your deduction: IRA formula. For the part of the year you were a non­ resident, use this formula to determine your Oregon deduction: Oregon compensation while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Self-employed SEPs, SIMPLEs, and other qualified plans. Use this formula to determine your Oregon deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × Contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Moving expenses (ORS 316.048) This deduction is only allowed for active-duty mem­ bers of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or their spouses, who are ordered to relocate to or within Oregon due to a permanent change in duty station (known as a PCS move), if the deduction is allowed on the federal return. See “Military personnel filing information” for more information. Penalty on early withdrawal of savings [Adjustment code 004] This federal deduction is for taxpayers who paid a penalty to a financial institution for early withdrawal of funds from a time savings account, certificate of deposit, or similar type of deposit. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction is the portion of the penalty amount you claimed on your federal return that is related to interest income that is taxed by Oregon. If the penalty isn’t related to interest income taxed by Oregon, your Oregon deduction is $0. Example: Liam claimed a deduction of $1,800 on his federal return for an early withdrawal penalty. Only 30 percent of the interest income related to this penalty is taxable by Oregon. Liam’s Oregon deduction is also limited to 30 percent of the penalty, so his deduction will be $600 ($1,800 x 0.30). Nonresidents. Because Oregon generally doesn’t tax interest income of a nonresident, your Oregon deduc­ tion is $0. Enter the full amount on the federal line on Schedule OR-ASC-NP and $0 on the Oregon line. Self-employed health insurance If you’re self-employed, you may be able to claim this federal deduction for the amount you paid for health insurance for yourself, your spouse, and your dependents. This deduction is limited to earned income from your trade or business for which the insurance plan was established. For more information about this deduc­ tion, see IRS Publication 535, Business Expenses. Adjustments

150-101-431 (Rev. 06-17-24) 57 Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is 100 percent of your health insurance premiums related to your self-employment for the part of the year you were an Oregon resident com­ bined with the health insurance premiums paid by an Oregon business from which you received self- employment income while a nonresident. Your total Oregon deduction is limited to the earnings from self-employment reported in the Oregon column. Self-employment tax If you were self-employed, you may deduct up to one-half of your self-employment tax on your federal return. For more information about this deduction, see the instructions for federal Schedule SE, Self- Employment Tax. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is the proportional amount of self-employ­ ment tax that is related to earnings taxed by Oregon. Your Oregon deduction can’t be more than your fed­ eral deduction. Use this formula to determine your Oregon deduction: Self-employment earnings taxed by Oregon × Federal deduction for self-employment tax = Oregon deduction Total self-employment earnings Student loan interest You may be able to take this federal deduction if you paid interest in 2023 on a qualified student loan, your filing status isn’t married filing separately, your AGI is less than the federal threshold, and you (or your spouse, if filing jointly) aren’t claimed as a dependent on someone else’s return. For more information, see the instructions for your federal return or IRS Publi­ cation 970, Tax Benefits for Education. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the student loan interest you paid while you were an Oregon resident with a partial deduction for interest you paid while you were a nonresident if you had Oregon- source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the student loan interest you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Your Oregon deduc­ tion can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 [Adjustment code 005] These deductions from federal income are included on Form 1040, Schedule 1, lines 23 through 25: • Archer MSA deduction. • Jury duty pay you gave your employer because your employer paid your salary while you served on the jury. • Deductible expenses related to income from the rental of personal property for profit. • Nontaxable amount of Olympic, Paralympic, and U.S. Olympic Committee income. • Reforestation amortization and expenses. • Repayment of supplemental unemployment ben­ efits under the Trade Act of 1974. • Contributions to Section 501(c)(18)(D) pension plans. • Contributions by certain chaplains to Section 403(b) plans. • Attorney fees and court costs for actions involv­ ing certain unlawful discrimination claims to the extent of gross income from such actions. • Attorney fees and court costs you paid in connec­ tion with an award from the IRS for helping them detect tax law violations, up to the amount of the award includible in your gross income. • Housing deduction from Form 2555. • Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). • Other write-in adjustments listed on Schedule 1, line 24z. Add together the amounts from Schedule 1, lines 23 and 25. Full-year residents. These adjustments flow through to your Oregon return via your federal AGI. Don’t claim any additional deductions on your Oregon return. Part-year residents. Your Oregon deduction com­ bines the amount of any adjustment(s) you incurred while you were an Oregon resident with any adjust­ ment that is deductible from Oregon-source income Adjustments

150-101-431 (Rev. 06-17-24) 58 while you were a nonresident. Combine these amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduc­ tions allowed on your federal return. Nonresidents. Oregon allows a deduction for adjust­ ments that are deductible from Oregon-source income. Your Oregon deduction can’t be more than the deduc­ tions allowed on your federal return. If none of your adjustments are deductible from Oregon-source income, your Oregon deduction is $0. Adjustments

150-101-431 (Rev. 06-17-24) 59 Additions Generally, additions are items the federal govern­ ment doesn’t tax but Oregon does. Additions increase your income taxed by Oregon. Numeric codes are provided with the explanation for most additions. A modification code is provided if an addition must be reported as a “negative modifica­ tion” by a part-year resident or nonresident. Enter the numeric code and the dollar amount of each addition or modification on Schedule OR-ASC or OR-ASC- NP. Your total additions and modifications are then reported on your return. If a numeric code isn’t provided for an addition or modification, the amount is reported directly on your return. Itemized deduction add backs. The items listed below are related to itemized deductions. If you’re claiming any of these as itemized deductions on Schedule OR-A, you may have to report an addition on Schedule OR-ASC or a negative modification on Schedule OR-ASC-NP. • Claim of right income repayments. • College Opportunity Grant Fund contributions. • Donations to disqualified charitable organizations. • Federal estate tax on income in respect of a decedent. • Gambling losses related to tax-exempt lottery winnings. • Oregon IDA Initiative Fund donations. • Oregon Production Investment Fund contributions. • University Venture Development Fund contributions. • Medical expenses claimed for the WFHDC credit. Fiduciary additions. If the instructions for reporting an addition on a fiduciary return are different from the instructions for reporting an addition on a per­ sonal income tax return, they are noted within each section. ABLE account subtraction nonqualified withdrawal [ORS 316.680(2)(L)] [Addition code 164] Did you withdraw funds from an Oregon ABLE account for a purpose other than paying for quali­ fied disability expenses? If the withdrawn funds were from contributions previously subtracted on your Ore­ gon return, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. Qualified disability expenses are defined in IRC Sec­ tion 529A. For more information about Oregon ABLE accounts and examples of qualified withdrawals, see “ABLE account contributions” in “Refundable credits.“ Accumulation distribution from certain domestic trusts (ORS 316.737) [Addition code 132] If you used federal Form 4970 to figure the partial tax on a distribution of accumulated income from a domestic trust created before March 1, 1984, contact us or email the Fiduciary Unit at estate.help.dor@dor. oregon.gov for information about this addition. Capital loss carryover difference [Addition code 162] This addition affects few taxpayers. You'll have an addition on your Oregon return only if you're carry­ ing over a capital loss from last year’s return and last year’s federal AGI was within the limits in Table 8. If so, use the Capital loss carryover difference work- sheet in the Appendix to calculate your addition. Table 8. Capital loss carryover difference If line 11 on your 2022 Form 1040 was less than line 12, and— you filed: and: was more than: Form OR-40 Line 7 Line 14 plus line 18 minus the larger of line 8 or Form 1040, line 7*. Form OR-40-P Line 29S Line 33S plus (line 42 times line 35) minus the larger of lines 13S* or 30S. Form OR-40-N Line 29S Line 33S plus line 44 minus the larger of lines 13S* or 30S. you may have an addition on your 2023 Oregon return. * As a positive amount. Claim of right income repayments [ORS 316.680(2)(i)] [Addition code 103] [Modification code 649] Are you taking a deduction on your federal return under IRC Section 1341(a) for a repayment of more than $3,000 of income that was included in a prior year’s taxable income under a claim of right? If so, and you’re claiming the Oregon credit for the same Additions

150-101-431 (Rev. 06-17-24) 60 repayment, you can’t deduct the repayment on your Oregon return. If you claimed the repayment deduction on Sched­ ule OR-A, you must add back the itemized deduc­ tion amount. Use addition code 103 or report a nega­ tive modification using code 649. If you claimed the repayment deduction on a federal form or schedule other than Schedule A, you must add back the deduc­ tion as an addition on Schedule OR-ASC, section A or Schedule OR-ASC-NP, section B. See the instructions for Worksheet OR-CRC, Claim of Right Income Repayments, for more information. You can download the worksheet and instructions from our website or contact us to order it. Note: If you’re claiming a deduction on your federal return for repaid income that wasn’t taxed by Ore­ gon, see “Federal law disconnect” in “Other items.” Fiduciary addition. If the repayment is allowed as a deduction on Form 1041 and the Oregon credit is claimed on Form OR-41, report the deducted amount as an addition on Schedule OR-ASC-FID. College Opportunity Grant Fund contributions (ORS 315.643) [Addition code 165] [Modification code 652] If you claimed an itemized deduction on Sched­ ule OR-A for the amount you paid for your College Opportunity Grant tax credit, and you are claiming the credit on your return, you will have an Oregon addition for the amount of your deduction. Example: John bid on $4,000 worth of College Oppor­ tunity Grant credits during this year’s auction. He won all the credits that he bid on and paid $3,950 for them. On his Oregon return, John claims the $4,000 credit, and includes the same amount as an itemized deduction on Schedule OR-A. He must add back that amount to his income. He reports both the addition and the credit on Schedule OR-ASC. For more information on the College Opportunity Grant credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Depletion in excess of property basis [ORS 316.680(2)(d)] [Addition code 151] Depletion is using up natural resources by mining, quarrying, drilling, or felling. The depletion deduc­ tion allows an owner or operator to account for the reduction of a product’s reserves. If you claim percentage depletion on your federal return, you must add to your Oregon income any deple­ tion that is more than your adjusted basis in the prop­ erty. The addition includes any depletion in excess of basis taken by an S corporation or partnership of which you are a shareholder or partner. Usually you need to add to Oregon income any depletion that is a preference item subject to the federal alternative minimum tax. Disposition of inherited Oregon farmland or forestland (ORS 316.844) [Addition code 106] You may have an addition on your return if: • You dispose of farmland you inherited from some­ one who died on or after October 5, 1973, and before January 1, 1987; or • You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987. You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax pur­ poses. Generally, the federal valuation is the fair mar­ ket value of the property at the date of the previous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheritance tax purposes the property may have been valued as farm-use or forestland. Farm-use value. If the previous owner died on or after October 5, 1973, but before September 13, 1975, use the farm-use value for the year preceding death. If death occurred on or after September 13, 1975, use the farm- use value for the year of death. You won’t have this addition if the carryover basis was elected for a death after December 31, 1976, but before November 7, 1978. Forest-use value. Use the forest-use value for the year of death. How to figure the addition. This addition is equal to the difference between: Additions

150-101-431 (Rev. 06-17-24) 61 • The taxable gain or loss, using the Oregon valua­ tion as your basis, and • The taxable gain or loss, using the federal valuation as your basis. This addition will increase the gain or reduce the loss you reported on your federal return. Transfers of property. An addition is required when the beneficiary sells the inherited property. It’s also required when: • You recognize gain or loss on property that acquired the inherited property’s basis due to a nontaxable exchange or involuntary conversion. • You recognize gain or loss on property you received as a gift from a donor who inherited it. Example: Anne inherited farmland from a relative who died on March 1, 1986. She sold the land in 2023 for $1,100,000. The fair market value at the date of the relative’s death was $180,000. The farm-use value of the land on the 1986–87 property tax statement was $50,000. Anne must show a $130,000 addition on Schedule OR-ASC. Here is how she figures her addition: Oregon valuation: Selling price $ 1,100,000 Less: Farm-use value – 50,000 Gain

$ 1,050,000 Federal valuation: Selling price $ 1,100,000 Less: Fair market value

on March 1, 1986 – 180,000 Gain

– 920,000 Difference in total gain

Addition amount

$ 130,000 Disqualified charitable donations (ORS 128.760, 128.763) [Addition code 160] [Modification code 650] The Oregon Department of Justice (DOJ) issues dis­ qualification orders to charitable organizations that fail to spend at least 30 percent of their annual functional expenses for program services. Names of disqualified organizations can be found by contacting DOJ. For more information, visit the DOJ website, www.doj.state. or.us. The organization is required to notify you that your donation may not be deducted on your Oregon return. If you made such a donation, you must report an addition on Schedule OR-ASC for the amount of the donation that you deducted on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Federal business income deduction (ORS 316.859) [Schedule OR-ASC-FID only: Addition code 185] Oregon is disconnected from the federal deduction for qualified business income in IRC Section 199A. Personal income tax returns. This deduction doesn’t flow through to the Oregon return. No addition is required. Fiduciary returns. Report the amount from federal Form 1041, line 20, as an addition on Schedule OR- ASC-FID using code 185. See “Qualified business income reduced tax rate” in “Oregon tax” for information about Oregon’s reduced tax rate for sole proprietorships and pass-through entities. Federal election on interest and dividends of a minor child (ORS 316.372) [Addition code 107] Did you use federal Form 8814, Parents’ Election to Report Child’s Interest and Dividends, to report the interest or dividends of your minor child on your federal return? If so, you must add the amount sub­ ject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or local government that you didn’t include as income on your federal return. Full-year residents. Oregon taxes the smaller of line 13 or 14 from Form 8814. Oregon also taxes any inter­ est or dividends your child received from state and local governments outside Oregon. Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident. Nonresidents. Oregon generally doesn’t tax interest or dividends received while you were a nonresident. Federal estate tax [ORS 316.680(2)(c)] [Addition code 157] [Modification code 605] Federal estate tax on income in respect of a decedent (IRD) is allowed as a deduction on your federal return. If any of this tax is on income not taxed by Oregon, you must show an addition on your Oregon return. Use this formula to figure the Oregon addition: Additions

150-101-431 (Rev. 06-17-24) 62 IRD not taxable by Oregon × Federal estate tax deducted on the federal return = Oregon addition IRD included in federal taxable income Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Fiduciary returns. Federal estate tax on IRD is allowed as a deduction on federal Form 1041 when the tax on that income will be paid by the recipient. An addition is required if the deducted tax is on income not taxed by Oregon. See the instructions for Form OR-41, Schedule 2, line 16. Federal income tax refunds (ORS 316.685) [Addition code 109] [Modification code 601] Did you get a federal tax refund because of a federal audit or amended return? If so, you may need to add part or all of that refund to your Oregon income. An explanation of the federal income tax liability sub­ traction can be found in “Subtractions.” Tax benefit doctrine. You need to add back only refunds of federal tax for which you received a ben­ efit in a prior year. Example 1: Rosa subtracted her entire federal tax liability of $2,800 on her 2021 Oregon return. In 2023, she amended her 2021 federal return. Rosa reduced her federal tax to $2,300 and received a federal refund of $500. She received a $500 tax benefit because she subtracted $500 more on her 2021 Oregon return than her corrected federal tax liability. Rosa will have an addition of $500 on her 2023 return. When to report the refund. As a general rule, report the refund in the year you get it. The rules for fig­ uring the addition are explained here, but first, note these exceptions: Exception 1 If there is an error on your federal return, we may correct your federal tax liability when your Oregon return is pro­ cessed. This may decrease your federal tax subtraction. When the IRS later refunds the difference between your correct federal liability and the liability on your original return, don’t report the refund as an addition. Because the tax subtraction on your original Oregon return was corrected, you didn’t receive a tax benefit from the total federal tax subtracted on your original return. Example 2: The Jacksons showed a $3,700 federal tax lia­ bility on their federal return. They claimed a federal tax subtraction for that same amount on their Oregon return. When their Oregon return was processed, we discov­ ered a math error on their federal return. We figured the Jacksons’ correct federal tax as $2,400 and reduced their Oregon federal tax subtraction to that amount. The Jack­ sons received the IRS refund of $1,300. They won’t report the refund as an addition on their current year Oregon return because they didn’t receive a tax benefit for it. Exception 2 If you file an amended return before the filing due date for that tax year, your amended return is treated as your original return for that year. In this case, the federal tax subtraction is corrected to reflect the fed­ eral income tax liability on your amended return. Example 3: Heather filed this year's federal and Oregon returns in February. Her federal tax liability was $4,800, which she subtracted in full on her Oregon return. In March, she amended her federal return to claim addi­ tional deductions. She refigured her federal tax as $3,000. She also amended her Oregon return to claim the same additional deductions and reduce her federal tax subtrac­ tion by $1,800 (from $4,800 to $3,000). The $1,800 federal refund she receives won’t be reported as income on her Oregon return. Because Heather filed the amended Ore­ gon return before the original due date, her amended return is treated as her original return this year. Figuring the addition You must report as an addition the amount of the fed­ eral refund from which you received a tax benefit. The tax benefit is the amount of federal tax you deducted in a prior year and received as a refund in a later year, if the amount you received reduced your Oregon tax­ able income in the prior year. Use the limit that applied to your federal tax liability subtraction for the prior year. The maximum allow­ able subtraction amount for the past few years can be found on the last page of this publication. See “Fed- eral income tax liability” and Table 9 in “Subtrac- tions” for more information about annual limits. Use this worksheet to figure your tax benefit. 1. Original federal tax liability from the prior year, up to annual limit. 1._________ 2. Corrected federal tax liability from the prior year, up to annual limit. 2. ________ 3. Line 1 minus line 2. This is the tax benefit you received from your refund. 3. ________ Example 4: Jill’s 2021 federal tax liability was $9,000. Her subtraction was limited to $7,050, which she subtracted on her Oregon return. Jill amended her 2021 federal return and received a refund of $4,000 in 2023. The addi­ tion on Jill’s 2023 return will be $2,050, figured as follows: 1. Federal tax subtracted on Jill’s 2021 Oregon return (limit $7,050). $ 7,050 2. Less: Corrected federal tax ($9,000 – $4,000) (limit $7,050). -5,000 Additions

150-101-431 (Rev. 06-17-24) 63 3. Tax benefit received and Jill’s Oregon addition. $ 2,050 Example 5: Ella’s 2020 original federal tax liability was $8,200. She amended her 2020 federal return and part- year Oregon return in January 2023. She received a $1,000 federal refund in 2023. Ella doesn’t change the federal tax amount on her amended Oregon return. Her 2020 corrected federal tax is $7,200. Because Ella’s cor­ rected federal tax is still more than the $6,950 maximum subtraction she claimed on her Oregon return, she didn’t receive a tax benefit from the federal refund. Ella doesn’t have an addition to report on her 2023 Oregon return. Nonresidents. A nonresident’s tax benefit from federal tax refunds is the difference between the tax actually subtracted on the prior year’s return and the tax that would have been subtracted had the federal return been correct. If the amounts on your federal return changed because you amended your federal return or because it was audited, your Oregon percentage may also change. Use the corrected percentage to figure the tax benefit. Example 6: Brokston was a nonresident with Oregon- source income in 2021. His original federal tax was $8,600. His Oregon percentage was 40 percent. In March 2023, he amended his 2021 federal and Oregon returns. Brokston doesn’t change the federal tax amount on his amended Oregon return. He received a $4,500 federal refund in 2023. His revised Oregon percentage for 2021 was 50 percent. He received a tax benefit of $770 from the refund. He figures his tax benefit as follows: 1. Original federal tax liability (limit $7,050) $ 7,050 × original Oregon percentage. × 0.40

$ 2,820 2. Less: Corrected federal tax ($8,600 - $4,500) (limit $7,050) $ 4,100 × revised Oregon percentage. × 0.50

– 2,050 3. Tax benefit received and Brokston’s Oregon addition. $ 770 Full-year residents. Enter the tax benefit as an addition on Schedule OR-ASC, section A, using addition code 109. Part-year residents and nonresidents. Use a minus sign to enter the tax benefit as a negative modifica­ tion on Schedule OR-ASC-NP, section D, using modi­ fication code 601. Federal subsidies for employer prescription drug plans (ORS 316.837) [Addition code 123] Employers who provide a prescription drug plan for their retired employees may receive a federal subsidy if they meet the requirements in 42 U.S.C. Section 1395w- 132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return. Full-year residents. Enter the full amount of the sub­ sidy on Schedule OR-ASC. Part-year residents and nonresidents. Enter the full amount of the subsidy on the federal line on Schedule OR-ASC-NP. On the Oregon line, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. First-time home buyer savings account nonqualified withdrawal (ORS 316.801, OAR 150-316-0607) [Addition code 166] Funds that are withdrawn from a first-time home buyer savings account (FTHBSA) but aren’t used to pay eligible costs must be added back to Oregon income if: • The withdrawn funds were previously subtracted on an Oregon return, and • The funds weren’t redeposited within 60 days into another FTHBSA held by the taxpayer. For more information about the FTHBSA subtraction, eligible costs, and other requirements, see this topic in “Subtractions.” Penalty. Nonqualified withdrawals that require an add back are also subject to a 5 percent penalty. See this topic in “Interest and penalties” and in the return instructions. Gambling losses claimed as an itemized deduction (ORS 461.560) [Addition code 134] [Modification code 604] If you claimed gambling losses as an itemized deduc­ tion on Schedule OR-A, you may have an addition on your Oregon return. Your gambling losses are limited to the amount of your gambling winnings taxed by Oregon. Oregon doesn’t tax Oregon Lottery winnings of $600 or less from a single ticket or play. See “Oregon lottery winnings“ under “Subtractions” for more information. Example 1: Angela reported total gambling income of $580 on her federal return ($500 from the Oregon Lottery plus $80 from horse races). On Schedule OR-A, Angela deducted $300 of gambling losses. Angela will subtract Additions

150-101-431 (Rev. 06-17-24) 64 $500 in Oregon Lottery winnings from her Oregon income. Her net gambling winnings, taxable by Oregon, are reduced to $80. Because Angela may not claim more in gambling losses than her gambling winnings taxable by Oregon, she can’t claim more than $80 in gambling losses on her Oregon return. She is required to reduce her deduction for gambling losses from $300 to $80. The difference of $220 is an Oregon addition. Gambling winnings reported in federal AGI $ 580 Less subtraction for Oregon Lottery winnings (500 ) Net gambling winnings taxable by Oregon $ 80 Gambling losses claimed on Schedule OR-A $ 300 Net gambling winnings included in Oregon income -80 Reduction in gambling losses— Oregon addition $ 220 Example 2: Satish won $100 from playing video poker and $400 from Oregon lottery tickets. He included all $500 in gambling winnings on his federal return, and he’s deducting $300 in gambling losses on Schedule OR-A. Satish is subtracting the $400 in lottery win­ nings on his Oregon return because they’re exempt from Oregon tax. Because only $100 of his gambling winnings are taxed by Oregon, Satish must add back $200 ($300 - $100) of the gambling losses he’s deduct­ ing on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Income taxes paid to another state by a pass-through entity (ORS 316.082) [Addition code 148] If you’re an owner of a PTE with income that is taxed by more than one state, report an addition if: • The PTE paid tax to another state on your behalf on income that is also taxed by Oregon; • You’re claiming a credit for tax the PTE paid to the other state on your behalf; and • The PTE deducted the tax paid on your behalf on its own return. The amount of your addition is the lesser of the tax that was paid or deducted by the PTE on its return. Note: See the instructions for fiduciary returns at the end of this section if a credit is claimed on Form OR-41. Example 1: Chad owns 5 percent of West Group, LLP, a limited partnership doing business in Utah. The LLP paid or withheld $10,000 of Utah income tax on Chad’s behalf in 2023 and deducted that amount on the LLP’s 2023 federal return. Chad filed his own Utah nonresident return for 2023. His Utah tax liabil­ ity was $9,000. He’ll receive a $1,000 refund in 2024. On his 2023 Oregon return, Chad calculates his 2023 credit based on his $9,000 Utah tax liability. The income from the LLP that flowed through to Chad’s return was reduced by the amount of tax that the LLP paid and deducted. For this reason, Chad must add the lesser of the tax paid ($10,000) or deducted ($9,000) to his income. Chad adds $9,000 to his income on Schedule OR-ASC. Example 2: Susan owns 50 percent of Painter, Inc., an Oregon S corporation. Painter, Inc. pays California income tax. It deducts the tax on its corporate return. It paid California $30,000 of 2023 tax for her in 2023, and $10,000 of 2023 tax in January 2024. The corporation paid $2,000 of tax for her with its 2023 tax return filed in 2024. Susan elects to be included in the group nonresident return that Painter, Inc. files with California. She calcu­ lates her credit for 2023 using $42,000: $30,000 in pay­ ments made in 2023, and the $12,000 in 2023 tax paid in 2024. She claims the full credit on her 2023 return. Because Painter, Inc. is deducting the tax on its own return, Susan must add the lesser of the total tax paid or deducted to her income. This is true whether Susan’s share of the tax was paid when the composite return was filed or was paid or withheld by Painter, Inc. during the tax year. For 2023, she adds $30,000 to her Oregon income on Schedule OR-ASC. She'll add the remaining $12,000 to her Oregon taxable income on her 2024 return. Credit claimed on fiduciary return. If a credit is claimed on Form OR-41 for income taxes paid to another state, and the taxes on which the credit is based are deducted on federal Form 1041, line 11, the taxes must be restored to income on the Oregon return. Report the smaller of the other state’s 2023 tax liability or the tax claimed as a deduction on Form 1041 as an addition on Schedule OR- ASC-FID, section 1. For more information and exam­ ples, see the instructions for Schedule OR-ASC-FID. Individual development account (IDA) (ORS 315.271, 316.848) [Addition code 137, 138, or 159] [Modification code 648] For more information about IDAs, see this topic under "Subtractions." Donation credit. If you’re claiming an itemized deduc­ tion for donations you made to the Oregon IDA Initia­ tive Fund and you’re claiming a credit based on those donations, you must report the amount you’re deducting as an addition on Schedule OR-ASC using addition code 138 or as a negative modification on Schedule OR-ASC- NP using modification code 648. Additions

150-101-431 (Rev. 06-17-24) 65 Nonqualified withdrawal. Did you make a nonquali­ fied withdrawal from your IDA during the year? If so, you must report the amount as an addition on Sched­ ule OR-ASC or OR-ASC-NP. Use addition code 137. Rollover to retirement account. Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP. Use addition code 159. Interest and dividends on government bonds of other states [ORS 316.680 (2)(a)] [Addition code 158] Full-year residents. Oregon taxes interest and divi­ dends on bonds and notes of another state or political subdivision of another state that you didn’t include on your federal return. This income is an addition using Schedule OR-ASC. Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC. See “Federal election on interest and dividends of a minor child.” Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the inter­ est and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident. Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation. Fiduciary returns. Report the addition on Form OR-41, Schedule 2, line 14. No addition code is needed. Related expenses You may reduce your addition by the amount of investment expenses that: • Aren’t deducted elsewhere on your return, and • Could be deducted if the income were included on your federal return. Other federally-exempt obligations You will have an Oregon addition for interest or dividends on obligations of any authority, commis­ sion, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax [ORS 316.680(2)(b)]. Oregon doesn’t tax interest or dividends on obliga­ tions that states can’t tax under federal law. Examples of such obligations are bonds issued by: • Territory of Guam. • Commonwealth of Puerto Rico. • Territory of Puerto Rico. • Territory of Samoa. • Territory of Virgin Islands. Lump-sum distribution from a qualified retirement plan (ORS 316.737) [Addition code 139] Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution wasn't included in your federal AGI. The excluded portion of your distribution must be included as an addition to your Oregon income. Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options, you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R. Example 1: Gary got a $20,000 lump-sum distribution from his employer. Of this, $12,000 was capital gain income, and $8,000 was ordinary income. Using federal Form 4972, he chose to use the 10-year averaging method only on the $8,000 of ordinary income. He chose the 20 percent capital gain election on the $12,000 capital gain income. Gary will add all of his $20,000 lump-sum dis­ tribution to his Oregon income on Schedule OR-ASC. Election to treat the entire distribution as ordinary income and average it. Did you average all of your lump-sum distribution (ordinary income and capital gain portions) on federal Form 4972? If so, you will have an addition for the entire lump-sum distribu­ tion to report on Schedule OR-ASC or OR-ASC-NP. Example 2: John received a $40,000 lump-sum distribu­ tion from his employer; $30,000 was capital gain income and $10,000 was ordinary income. He chose to average the entire distribution of $40,000 as ordinary income on his federal Form 4972. John will add all of his $40,000 lump-sum distribution to his Oregon income. Election not to average any of your lump-sum distri­ bution. Did you choose not to average any of your lump-sum distribution? If you included it in federal AGI, there is no addition on your Oregon return. Additions

150-101-431 (Rev. 06-17-24) 66 Nonresident capital losses and loss carryovers (OAR 150-316-0006) [Addition code 161] Capital losses and losses carried over from prior years may be claimed on an Oregon return only if: • The capital loss was incurred while you were an Oregon resident; or • If you were a nonresident when the capital loss was incurred, the loss was attributable to Oregon sources. If you have a capital loss or are carrying over a loss from a prior year on this year’s return (or are using the loss to offset capital gain), and the loss doesn’t meet these requirements, you will have an addition on your Oregon return. Full-year residents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to offset capital gain on your return, report the loss amount as an addition on Schedule OR-ASC. Part-year residents and nonresidents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to reduce Oregon capital gain on your return, report the loss amount to the extent that it reduces the Oregon gain as an addition on Sched­ ule OR-ASC-NP. Example 1: Louise moved to Oregon and became a resident on June 1. Before she became a resident, Louise incurred a $50,000 capital loss from non-Oregon sources. After she became a resident, Louise recognized a capi­ tal gain of $70,000. On her federal return, she’s offsetting the $70,000 gain with the $50,000 loss, for a net gain of $20,000. Because she wasn’t a resident when she incurred the loss, and the loss wasn’t from Oregon sources, Louise must report a $50,000 addition on Schedule OR-ASC-NP. Example 2: Eric is a Missouri resident who recognizes a $25,000 capital gain from Oregon sources. On his fed­ eral return, Eric offsets the capital gain with $10,000 in capital losses from Missouri sources, for a net gain of $15,000. He reports the $15,000 capital gain in the Ore­ gon column on his nonresident return. Eric must report the $10,000 loss as an addition on Schedule OR-ASC-NP. Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal [ORS 316.680(2)(j)] [Addition code 117] Did you withdraw funds from an Oregon College or MFS 529 Savings Plan account for nonqualified pur­ poses, where the funds were subtracted on a prior year’s Oregon return? Nonqualified purposes include using funds in the account to pay tuition at a K-12 school. If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Sec­ tion 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reasonable method to determine the amount of the addition. Keep a copy of this determina­ tion with your tax records. For more information about these plans see this topic under “Refundable credits.” Oregon Production Investment Fund contributions (ORS 315.514) [Addition code 144] [Modification code 644] If you claimed an itemized deduction on Sched­ ule OR-A or a business expense deduction for the amount you or your business paid for your Oregon Production Investment Fund tax credit, you will have an addition for the amount of your deduction. Example: Beth bid on $2,000 worth of Oregon Produc­ tion Investment Fund credits during this year’s auc­ tion. She won all the credits she bid on and paid $1,900 for them. On her Oregon return Beth will claim an Oregon Production Investment Fund credit of $2,000. If she claims the $1,900 she paid for the credits as an itemized deduction on Schedule OR-A, she must add back that amount to her income. She reports both the credit and the addition on Schedule OR-ASC. For more information on the Oregon Production Investment Fund, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica­ tion on Schedule OR-ASC-NP. Passive foreign investment company income (ORS 316.737) [Addition code 140] You must add income from a passive foreign invest­ ment company (PFIC) that consists of excess distri­ butions that you received during the year but didn’t include in your gross income under IRC Section 1291. Your addition amount is the income from all PFICs that you used in the calculation of the increased tax entered on federal Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, line 16c. Additions

150-101-431 (Rev. 06-17-24) 67 PTE-E tax deducted on entity-level federal return (Or Laws 2022, ch 82, § 3) [Addition code 167] Certain PTEs may elect to pay Oregon income tax at the entity level (PTE-E tax). If you’re a member of an entity that elected to pay the PTE-E tax, you must report an addition for your share of the tax deducted by the electing entity on an entity-level federal return. The electing entity must send you Schedule OR- 21-K-1, Distributive Share of Proceeds, Addition, and Credit, to report your share of the PTE-E tax deducted on the entity’s federal return. Your addition amount can be found on Schedule OR-21-K-1, line 2. Are you a member of more than one electing entity? If so, your addition amount is the sum of all your shares of PTE-E tax deducted on those entities’ federal returns. Report the addition on your return for the same year that you report your income from each electing entity. Treatment for qualified business income reduced tax rate. If you’re using the qualified business income reduced tax rate to figure your tax, you may include the addition amount in your qualified busi­ ness income to the extent that the ordinary business income passed through from the electing entity qual­ ifies for the reduced tax rate. See “Qualified business income reduced tax rate” in “Oregon tax” for more information. Refundable tax credit. You may claim a refundable tax credit for the taxes paid by an electing entity. See “Pass-through entity elective taxes paid” in “Refund- able credits.” For more information about the PTE-E tax, see “Pass- through entity elective tax” in “Oregon tax.” Refund of Oregon-only itemized deductions from a prior year [Addition code 136] You may have an addition if you: • Claimed itemized deductions for Oregon but not for federal on a previous year’s return; • Received a refund this year of an item you deducted on the previous year’s Schedule OR-A; and • Don’t have to include the refund as income on this year’s federal return because you didn’t itemize deductions on the previous year’s federal return. You must add back the refunded item only to the extent that you received a tax benefit from the amount refunded. For an explanation of tax benefit with examples, see “Tax benefit doctrine” under “Federal income tax refunds.” Part-year residents and nonresidents. Enter the addi­ tion amount on both the federal and Oregon lines on Schedule OR-ASC-NP, Section C. University Venture Development Fund contributions (ORS 315.640) [Addition code 146] [Modification code 646] If you claimed a deduction on Schedule OR-A for the amount of your University Venture Development Fund contribution, you will have an Oregon addition for the amount of your deduction. Example: Amelia made a contribution to a Univer­ sity Venture Development Fund in the amount of $100,000. She may claim a total credit of 60% of her contribution, or $60,000, limited to her tax liabil­ ity for the year. This year, Amelia’s tax liability is $23,000. On her Oregon return she will claim a credit of $23,000 for her contribution. The rest of her credit is carried forward to a later year. If Amelia claims the $100,000 contribution as an itemized deduction on Schedule OR-A, she must add back the $100,000 to her income on Schedule OR-ASC in the tax year the itemized deduction was claimed. For more information on the University Venture Development Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Unused business credits [ORS 316.680(2)(f)] [Addition code 122] Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon doesn’t allow this deduction. Full-year residents. You must report your federal UBC deduction as an Oregon addition. Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident. Nonresidents. You will have an addition for your fed­ eral UBC deduction related to Oregon credits earned from Oregon sources. Additions

150-101-431 (Rev. 06-17-24) 68 WFHDC medical expenses [Addition code 163] [Modification code 651] Some expenses for the care of qualifying persons who aren’t able to care for themselves may qualify as expenses for purposes of claiming the WFHDC credit and also as medical expenses for purposes of claiming itemized deductions. You can use these expenses for either the WFHDC credit or as a medical expense deduc­ tion, but they can’t be used for both. If you choose to use them for both, you’ll have an addition on your Oregon return. Use the WFHDC medical expense worksheet in the Appendix to figure the Oregon addition. Full-year residents. Report any required add back amount on Schedule OR-ASC. Part-year residents and nonresidents. Use a minus sign to report any required add back amount as a negative modification on Schedule OR-ASC-NP. For more information about the WFHDC credit, see this topic under “Refundable credits” or Schedule OR-WFHDC Instructions, Oregon Working Family Household and Dependent Care Credit. Additions

150-101-431 (Rev. 06-17-24) 69 Subtractions Generally, subtractions are items the federal govern­ ment taxes but Oregon doesn’t. Subtractions reduce your income taxed by Oregon. Numeric codes are provided with the explanation for most subtractions. For part-year residents and nonresidents, some subtractions will be reported as modifications. This is required when an amount you are subtracting must be adjusted for Oregon tax pur­ poses. When this is the case, a modification code is provided with the explanation for that subtraction. Enter the numeric code and the dollar amount of each subtraction or modification on Schedule OR-ASC or Schedule OR-ASC-NP. The total dollar amount of subtractions and modifications is then reported on your return. If a numeric code isn’t provided for a subtraction or modification, the amount is reported directly on your return. ABLE account deposit carryforward (ORS 316.699) [Subtraction code 360] Contributions you made to an Oregon or contract­ ing state’s ABLE account after December 31, 2019 no longer qualify for a subtraction, but they may qual­ ify for a credit. See “ABLE account contributions” in “Refundable credits.” Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2023 return is $5,580 if you file a joint return ($2,790 for all others). This maximum applies to the com­ bined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Addition. You may need to add back funds with­ drawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. See this topic under “Additions” for more information. American Indian (ORS 316.777) [Subtraction code 300] Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true: • You are an enrolled member of a federally recog­ nized American Indian tribe, and • Your income is derived from sources within feder­ ally recognized Indian country in Oregon, and • You lived in federally recognized Indian country in Oregon at the time the income is earned. “Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the U.S. government for a tribe. For enrolled members of federally recognized Ameri­ can Indian tribes who live in Indian country in Ore­ gon, income exempt from Oregon income tax includes: • Wages earned for work performed in Indian coun­ try in Oregon. • Income from business or real estate located in Indian country in Oregon. • Retirement income if the contributions to the plan came from or were connected with services per­ formed in Indian country. • Unemployment insurance benefits if the benefits were received as a result of work performed in Indian country. • Interest, dividends, and capital gains from the sale of stocks and other intangibles, regardless of where the accounts are located. • Gambling winnings from Indian gaming centers (casinos). • Indian tribal disbursements from casino earnings. You must live on and have income derived from sources within Indian country in Oregon and be an enrolled member of a federally recognized tribe to subtract the income listed above. You don’t have to live in and have income from the same Indian coun­ try. The areas where you live and derive income must both be Indian country to qualify for the subtraction. To claim the subtraction, you must report your total income on both your federal and Oregon tax returns. Keep a completed copy of Schedule OR-EIS, Exempt Income Schedule for Enrolled Members of a Federally Rec­ ognized Indian Tribe, with your tax records. We may ask for it later. Go to our website to download the schedule or call us. You must include the following information on the schedule: • The street address of the place you worked, • The street address of the place you lived, and • The tribe you are enrolled with and your member­ ship number. Subtractions

150-101-431 (Rev. 06-17-24) 70 You must use the street address of your residence on the schedule so we can verify that you lived in Indian coun­ try when you earned your income. However, you may use your post office box address on your tax return. If you meet all of the requirements for exemption from Oregon withholding, use Form OR-W-4 to declare that your income is exempt using the appro­ priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income earned in Oregon but outside of Indian coun­ try will be taxed by Oregon. Also, any Oregon income earned by a member not living in Indian country will be taxed by Oregon. Each member of a household with income must meet these qualifications in order to claim the subtraction of their income. If you are an enrolled member of a federally recog­ nized tribe and a member of the U.S. Armed Forces stationed in Oregon, you may be entitled to an addi­ tional subtraction. For more information, see “Mili- tary personnel filing information.” AmeriCorps educational award (ORS 316.847) [Subtraction code 362] Were you an AmeriCorps volunteer? If you received a national service, summer of service, or silver scholar educational award from the federal Corporation for National and Community Service this year, you may subtract the award amount to the extent that it is included in your federal taxable income. The amount you are awarded under 42 U.S.C. Section 12602 must be received after your required term of service is com­ pleted. You can’t subtract any amount that you are deducting elsewhere on your return. Artist’s charitable contribution (ORS 316.838) [Subtraction code 301] [Modification code 600] Oregon allows a subtraction to artists who contribute art objects they’ve created to a recognized charitable organization or governmental unit. What qualifies as an “art object?” The art object must be a painting, sculpture, photo­ graph, graphic or craft art, industrial design, costume or fashion design, tape or sound recording, or film that qualifies for a charitable contribution deduction under IRC Section 170. The charitable organization isn’t required to use the art object for the same purpose or function that qualifies it for its federal tax exemption. You may deduct your charitable contribution even if the chari­ table organization sells the art object. You must have an appraisal report showing the fair market value of the art object at the time of the con­ tribution. Keep the appraisal report with your tax records; we may ask for it later. How to calculate the subtraction The subtraction is equal to the difference between: 1. The amount that would have been allowed as an itemized deduction if you could deduct the fair market value of the art (subject to the federal con­ tribution limit)*, and 2. The actual allowable amount as an itemized deduc­ tion under federal tax law. *Federal law limits charitable contributions. Contributions to some organizations are limited to 50 percent of your federal AGI. Contributions to others are limited to 30 per- cent of your AGI. Use these limits when you figure your deduction. Example: Ronda’s AGI is $10,000. She donated one of her paintings to an organization for display in a building. The painting has a basis (cost) of $300 and a FMV of $6,000. Here is how she computes her subtraction: 1. Amount allowed as a

charitable contribution

if computed using FMV. $ 6,000 2. Amount allowed as a charitable contribution limited to 50% of AGI. $ 5,000 3. Lesser of line 1 or line 2. $ 5,000 4. Amount allowed as a charitable contribution on Schedule OR-A (basis). ($300) 5. Ronda’s subtraction (line 3 minus 4). $ 4,700 Part-year residents and nonresidents. Follow the same rules as a full-year resident. You don’t have to prorate this subtraction. Part-year residents: Enter your subtraction in section D of Schedule OR-ASC- NP using modification code 600. Nonresidents: Enter your subtraction amount on the “Charitable art donation“ line on Form OR-40-N. Capital Construction Fund (CCF) contributions (ORS 316.048) [Subtraction code 339] If you subtracted your contributions to your qualify­ ing CCF account on your federal return, you may also Subtractions

150-101-431 (Rev. 06-17-24) 71 subtract that amount on your Oregon return. See IRS Publication 595, Capital Construction Fund for Commer­ cial Fishermen, for more information. The subtraction for Oregon is the same as the amount you identified as “CCF” and subtracted on your fed­ eral return. Part-year residents and nonresidents. Enter the full subtraction amount on the federal line on Schedule OR-ASC-NP, section C. The amount allowed on the Oregon line is the Oregon percentage of your fishing trade or business that qualifies you for a CCF account. Example: Greg moved out of Oregon in May and con­ tinued his fishing business in California. His Oregon net fishing income is $10,000 and his California net fishing income is $30,000. He put $15,000 into his CCF account during the past year. On Schedule OR-ASC- NP, Greg will enter $40,000 for his fishing income on the federal line and $10,000 on the Oregon line. Greg’s CCF subtraction on the federal line is the full $15,000. Since 25 percent of his eligible income was Oregon source, he is allowed a CCF subtraction of $3,750 ($15,000 x 25%) on the Oregon line. Casualty loss from state-declared emergency (Or Laws 2023, ch 324, § 2) [Subtraction code 388] [Modification code 654] Did you experience a loss in Oregon that resulted from an event that was the subject of a state of emer­ gency declared by the governor or that occurred in an area subject to an Emergency Conflagration Act order? If so, you may subtract on your Oregon return the amount of loss that you can’t deduct on your fed­ eral return due to IRC Section 165(h)(5). IRC Section 165(h)(5) disallows personal casualty losses from being deducted during tax years 2018- 2025 unless the loss is due to a federally declared disaster. Oregon law, however, allows those losses if they meet specific criteria. In addition to being due to a state-declared emer­ gency in Oregon, the loss must: • Occur during tax years beginning on or after Janu­ ary 1, 2020, and before January 1, 2026; • Not be a loss due to theft; and • Not be taken into account as a deduction on your federal return. See the instructions for federal Schedule A and Form 4684 to determine the amount of your Oregon sub­ traction, subject to the restrictions above. Construction worker and logger commuting expenses (ORS 316.812, 316.824, 316.832) [Subtraction code 303] If you are a qualified construction worker or logger, you may deduct certain commuting expenses from your Oregon taxable income. To claim these expenses, you must have worked at one or more construction projects or logging operation sites more than 50 miles from your home. A construction project is construction, alteration, repair, improvement, moving, or demolition of a structure. A logging operation is the commercial harvesting of forest products. People in other occupa­ tions aren’t eligible for this subtraction. Management personnel aren’t eligible for this subtraction either. Qualifying workers. Loggers must be fallers or buck­ ers who maintain their own equipment and are paid on a per-unit-cut basis. Construction workers must be members of a recognized trade, craft, or union. Qualifying expenses. You may claim only the actual cost of gas, oil, repairs, and maintenance for your vehicle for getting to and from work sites that are more than 50 miles from your home. You can’t use a standard mileage rate to figure expenses. If you use your vehicle both for business and personal purposes, you must determine your portion of busi­ ness use. Keep a mileage log book during the year to track your business use and record all business trip miles. You should also record your starting and ending odometer reading for your vehicle each year. You may claim only the business portion of your repairs and maintenance as commuting expenses. You can’t claim depreciation. To claim the actual business expenses for your qualified commute miles, you will need to keep your vehicle records during the year. Keep receipts for all your fuel (such as gas, diesel), oil change, repair, and maintenance costs in your permanent tax records. Example: Ewan is a construction worker. He uses his truck for both personal and business purposes. He worked on three construction jobs during the year. Two of the jobs were located more than 50 miles away from his home. Ewan kept a log book in his truck and recorded each trip to and from the construction sites. He also kept a record of all his truck expenses—his receipts for diesel fuel, oil changes, repairs, and main­ tenance for the year. These receipts totaled $4,215. Ewan’s odometer readings were: Year end: December 31 38,306 Year beginning: January 1 26,327 Total miles driven 11,979 Subtractions

150-101-431 (Rev. 06-17-24) 72 Ewan’s mileage log book showed that his mileage to and from qualified construction job sites totaled 4,716 miles. He will use this formula to determine the business use of his truck and the amount of truck expenses which will qualify for this subtraction: Qualified construction miles × actual expenses = Subtraction Total miles driven 4,716 × $4,215 = $1,659 11,979 Ewan will claim a subtraction of $1,659 on Schedule OR-ASC. Duration of project. If you are a construction worker, claim only your expenses for the first year of continu­ ous employment at any one construction site. If your employment continues beyond one year, the job site is considered permanent. You may not subtract any addi­ tional commuting costs for going to and from that site after the first year at that worksite. If your employment at that job site is temporarily interrupted, don’t count the interruption when you figure the one-year limit. If you are a logger, there is no limit on how long you can work at the same job site and still claim expenses. How to claim the subtraction. Claim your commut­ ing expenses on Schedule OR-ASC or OR-ASC-NP. Part-year residents and nonresidents. You can claim only expenses related to income that you included in the Oregon column of your Oregon return. Domestic international sales corporation (DISC) dividend payments (ORS 316.749) [Subtraction code 352] Oregon allows a subtraction for the dividend pay­ ments you received from a DISC. You can claim the subtraction if all of the following are true: • The DISC dividend payments are included in your federal AGI, and • The DISC was formed by January 1, 2014, and • The DISC is subject to the 2.5% tax. Federal gain previously taxed by Oregon [ORS 314.290 (repealed), 316.716] [Subtraction code 306] Oregon law used to require an addition for gain on the sale or exchange of certain property deferred on the fed­ eral return. This statute was repealed in 2001. If you were required to make this addition before 2001, you have already been taxed by Oregon for the gain on the sale or exchange of your property. If this gain is now included in your federal income, you may claim a subtraction for the amount of the gain previously taxed by Oregon. Federal income tax liability (ORS 316.680, 316.685, 316.695) Part A: Federal income tax liability subtraction [Form OR-40, line 10] [Form OR-40-N or OR-40-P, line 40] Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] Current year’s federal income tax liability. Oregon allows a subtraction for your current year’s federal income tax liability after credits. The subtraction for 2023 is limited to $7,800 ($3,900 if your filing status is married filing separately). It may be limited further based on your AGI; see Table 9. The subtraction is based on the accrual method of accounting. This means you subtract the total amount of your federal tax liability after credits for the cur­ rent tax year (not less than zero) as shown on your original return, regardless of when you pay it. The subtraction is limited to income tax. This includes alternative minimum tax, tax on an IRA, and recap­ ture taxes. You can’t include self-employment tax or Social Security (FICA) tax. You also can’t include penalties, interest, or any shared responsibility pay­ ment required by the federal Affordable Care Act. Federal income tax credits, except for the EITC, reduce your federal tax subtraction. The credits for federal tax on special fuels, special oils, and a regu­ lated investment company won’t reduce your federal tax subtraction. Don’t enter less than $0 or more than your limit. Use the federal tax worksheet to figure your subtraction. RDPs: Use amounts from your actual federal return(s), not your “as if” return. Additional federal income tax paid or determined. If you paid additional federal tax because your federal return was amended or audited, you may be able to claim an additional subtraction or modification for it in the year the tax was paid or determined, which­ ever is later. Your additional prior year’s federal tax plus your current year’s federal tax can't be more than your current year federal tax subtraction limit. Subtractions

150-101-431 (Rev. 06-17-24) 73 This subtraction applies only to additional federal income tax paid because your return was amended or audited. It doesn’t include withholding tax, advance tax payments, interest, penalties, or paying the tax due on your original federal return. Use Part B of the federal tax worksheet to figure your federal tax from a prior year. If you're a resident, report the amount using subtrac­ tion code 309; if you're a part-year resident or nonresi­ dent, report the amount using modification code 602. Amended returns. If your federal tax liability for a prior year is changed, see “Amended returns” to determine whether you should change the amount of the subtraction on your amended Oregon return. Federal tax worksheet Note: All references to federal Form 1040 in this worksheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. Instructions for Part A: Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonre­ fundable credits but before other taxes. This is found on Form 1040, line 22. Line 2: Do you have to repay some of the advance pre­ mium tax credit that you received during the year? If so, enter your excess advance premium tax credit repayment. This is found on Form 1040, Schedule 2, line 2. Otherwise, enter $0. Line 3: Line 1 minus line 2. If the result is less than zero, enter $0. Line 4: Enter the total of any other taxes, plus any additions to tax that include only income tax, such as recapture taxes, from Form 1040, Schedule 2, lines 8, 16, and 17. Also include the amount reported on Schedule 2, line 10, only if you’re repaying a 2008 first-time homebuyer credit and filing federal Form 5405, Repayment of the First-Time Homebuyer Credit. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any addi­ tions to tax from Schedule 2, line 17 that are penal­ ties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter $0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allow­ able premium credit regardless of any excess advance payments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund­ able credits that must be subtracted from your federal income tax liability. Line 9: Line 5 minus line 8. If less than zero, enter $0. This is your federal income tax liability after refund­ able credits (other than the EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 9. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Part A: Federal tax liability subtraction 1. Federal tax liability (Form 1040, line 22). 1. _________ 2. Excess advance premium tax credit (Form 1040, Schedule 2, line 2). 2. _________ 3. Line 1 minus line 2. (If less than $0, enter $0.) 3. _________ 4. Other taxes (see instructions). 4. _________ 5. Line 3 plus line 4. 5. _________ 6. American Opportunity credit (Form 1040 or 1040-SR, line 29). 6. _________ 7. Premium tax credit (Form 8962, line 24). 7. _________ 8. Line 6 plus line 7. 8. _________ 9. Line 5 minus line 8. (If less than $0, enter $0). 9. _________ 10. Maximum subtraction amount from Table 9. 10. _________ 11. Smaller of line 9 or line 10. This is your federal tax liability subtraction. 11. _________ Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] 1. Enter maximum amount from Table 9 (Part A, line 10). 1. _________ 2. Enter federal tax liability subtraction (Part A, line 11). 2. _________ 3. Line 1 minus line 2. If the result is 0, Stop—you can’t deduct your federal tax from a prior year. If greater than $0, continue to line 4. 3. _________ Subtractions

150-101-431 (Rev. 06-17-24) 74 4. Enter the amount of federal tax you paid in 2023 for a prior year. 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC, section B (subtraction code 309) or Schedule OR-ASC-NP, section D (modification code 602). 5. _________ Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] If your total federal tax subtraction (Part A, line 11 plus Part B, line 5) is $7,800 ($3,900 if your filing status is married filing separately), Stop—you can’t subtract your foreign tax (ORS 316.690). Otherwise, continue to Step 1. 1. Enter $7,800 ($3,900 if your filing status is married filing separately). 1. _________ 2. Enter your total federal tax liability subtraction (Part A, line 11 plus Part B, line 5). 2. _________ 3. Line 1 minus line 2. 3. _________ 4. Enter the amount paid in foreign tax, but not more than $3,000 ($1,500 if your filing status is married filing separately). 4. _________ 5. Enter the smaller of line 3 or line 4 here and on Schedule OR-ASC section B (subtraction code 311) or Schedule OR-ASC-NP section D (modification code 603). 5. _________ Table 9. Federal tax liability subtraction AGI phase-out If your filing status is: and your federal AGI is: then your maximum allowable tax liability subtraction is: at least— but less than— Single 0 $125,000 $7,800 $125,000 $130,000 $6,250 $130,000 $135,000 $4,700 $135,000 $140,000 $3,100 $140,000 $145,000 $1,550 $145,000 or more $0 Married filing separately 0 $125,000 $3,900 $125,000 $130,000 $3,125 $130,000 $135,000 $2,350 $135,000 $140,000 $1,550 $140,000 $145,000 $775 $145,000 or more $0 Married filing jointly Head of household Qualifying surviving spouse 0 $250,000 $7,800 $250,000 $260,000 $6,250 $260,000 $270,000 $4,700 $270,000 $280,000 $3,100 $280,000 $290,000 $1,550 $290,000 or more $0 Federal mortgage interest credit (ORS 316.716) [Subtraction code 320] [Modification code 607] If all of the following are true for you, you may have a subtraction for mortgage interest on your Oregon return: • You’re claiming a mortgage interest credit on your federal return, • You’re claiming your mortgage interest as an item­ ized deduction on federal Schedule A, • You reduced your mortgage interest deduction by the federal mortgage interest credit, and • You’re claiming the same reduced amount of mort­ gage interest on Schedule OR-A. Claim a subtraction for the amount of mortgage interest credit allowed on your federal return. Take the subtraction in the year of the payment even if the federal credit is carried forward. Example 1: Shawn and Phillip pay $5,000 in mortgage interest this year. They are entitled to a 50 percent credit, limited to $2,000, on their federal return. They claim the credit and reduce their itemized deduc­ tion for mortgage interest to $3,000. They include the same $3,000 deduction on Schedule OR-A, and claim a $2,000 subtraction on Schedule OR-ASC. Example 2: Use the same facts as Example 1, except that Shawn and Phillip’s federal tax liability is $1,500. They claim $1,500 as a credit on their federal return, claim a deduction of $3,000 in mortgage interest on Schedule A, and have a $500 credit to carry over to next year. They include the $3,000 deduction on Schedule OR-A and subtract $2,000 on Schedule OR-ASC. They don’t have a carryforward amount for Oregon. Federal pension income [ORS 316.680(1)(e)] [Subtraction code 307] You may be able to subtract some or all of your tax­ able federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It doesn’t include disability payments if you haven’t Subtractions

150-101-431 (Rev. 06-17-24) 75 attained the minimum retirement age. The subtrac­ tion amount is based on the number of months of federal service or points earned for retirement before and after October 1, 1991: • If all of your months of federal service occurred or points were earned before October 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return. • If you have no months of service or points earned before October 1, 1991, you can’t subtract any fed­ eral pension. • If your service occurred or points were earned both before and after October 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service or points earned before October 1, 1991, by your total months of service or points earned. Round your percentage to three places (example: 0.4576 = 45.8%). Once you determine the percentage, it will remain the same from year to year. Federal Thrift Savings Plan (TSP). Once a taxpayer is a retiree, withdrawals from federal TSP accounts are eligible for the subtraction based on dates of ser­ vice. Withdrawals prior to retirement aren’t eligible because the taxpayer must be a retiree at the time of withdrawal to be eligible for the subtraction. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no lon­ ger a federal pension. In this case, future withdraw­ als wouldn't be eligible for the subtraction. Full-year residents. If you're eligible for the federal pension income subtraction, enter the amount on Schedule OR-ASC. Part-year residents. If you received the federal pen­ sion income during the part of the year when you were a resident and you're eligible for the subtrac­ tion, enter the amount on both the federal and Ore­ gon lines of Schedule OR-ASC-NP. Include your fed­ eral pension income received during the part of the year when you were a nonresident only if you were domiciled in Oregon during that time. If you were not domiciled in Oregon during the part of the year that you were a nonresident, exclude the income you received during that time from your Oregon income on your part-year return, and don't claim a subtrac­ tion for any portion of that income. Nonresidents. Claim a subtraction for federal pen­ sion income only if you reported it on your Oregon return. Oregon doesn’t tax your retirement income unless you have kept Oregon as your domicile. For more information, see “Income.” Use this worksheet to determine your federal pension income subtraction amount: 1. Federal pension income included in federal AGI. 1. $ ___________ 2. a. Months of service or points earned from _______

(federal service start date) to October 1, 1991. a. ____ months*/points

b. Months of service or points earned from _______

(federal service start date) to _______ (federal

service retirement date). b. ____ months**/points

Divide the number of months or points on line a by the total number of months or points on line b. This is your federal pension subtraction percentage. Round the decimal three places and enter it here. 2. ___________ 3. Multiply line 1 by the decimal on line 2. This is your federal pension subtraction. 3. $ ___________ * Federal service start date: If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service.

If your federal service start date was the 16th through the end of a month, don’t include the first partial month of service. Start counting the months of federal service with the first full month.

** Federal service retirement date: If your federal service retirement date was the 1st through the 15th of a month, don’t count this final partial month when counting the total months of federal service.

If your retirement date was the 16th through the end of the month, include the entire month when counting the total months of federal service.

Keep a copy of this worksheet with your permanent tax records. Use the same percentage from line 2 to determine your federal pension subtraction in future years. Example 1: Jared worked for the U.S. Department of Agriculture from May 1, 1977, until July 31, 2012. He worked a total of 423 months—173 months before October 1, 1991. This year, he received federal pension income Subtractions

150-101-431 (Rev. 06-17-24) 76 of $65,000. He can subtract 40.9 percent (173 ÷ 423) or $26,585 (0.409 × $65,000) of his federal pension. Jared will continue to subtract 40.9 percent of his federal pension from Oregon income in future years. Example 2: Robin served in the U.S. Army Reserves from June 20, 1987 through May 18, 2012. As a retired mem­ ber of the reserves, Robin’s service is easier measured by the retirement points she earned. Her Chronological Statement of Retirement Points shows that she earned 1,917 retirement points before October 1, 1991, out of a total 3,510. Robin received $25,000 in pension benefits this year. This worksheet shows how she will determine her federal pension subtraction. 1. Federal pension income included in federal AGI. 1. $ 25,000 2. a. Points earned before October 1, 1991. a. 1,917 points

b. Total points earned. b. 3,510 points

Divide the number of points on line a by the total number of points on line b. Round the decimal three places. This is Robin’s federal pension subtraction percentage. 2. 0.546 3. Multiply line 1 by the decimal on line 2. This is Robin’s federal pension subtraction. 3. $ 13,650 Federal tax credits (ORS 316.716) [Subtraction code 340] [Modification code 609] These credits are not related to individual health insurance premium credits allowed by the federal Affordable Care Act. To claim certain federal tax credits, such as the mort­ gage interest credit or the employer credit for paid family leave allowed by IRC Section 45S, you must reduce your business expenses or itemized deduc­ tions on your federal return by the amount of the credit you figured for the year. Oregon allows a subtraction for the amount reduced on your federal return. Subtract the entire reduction amount in the year you first claimed the federal credit, even if the federal credit is carried over. Part-year residents and nonresidents: Report the reduction amount as a subtraction if the item you reduced was reported on a federal form or sched­ ule other than Schedule A. If you were required to reduce an itemized deduction, report the reduction amount as a modification, not as a subtraction. Mortgage interest credit. Were you required to reduce your mortgage interest deduction because you claimed the federal mortgage interest credit? See “Federal mortgage interest credit” for detailed infor­ mation about this subtraction. Health Coverage Tax Credit (HCTC). If you claimed this credit on your federal return, you might be allowed a subtraction on your Oregon return. This credit isn’t related to the premium credit allowed by the federal Affordable Care Act. Oregon allows a subtraction or modification for the self-employed health insurance deduction or itemized deductions you couldn’t claim on your federal return because you claimed the HCTC. Part-year residents and nonresidents doing business in Oregon. If your federal credit is related to a busi­ ness operated entirely in Oregon, don’t prorate your subtraction. If the credit is related to a business not operated solely in Oregon, you must prorate your sub­ traction. Use this formula to determine the amount to subtract on the Oregon line on Schedule OR-ASC-NP: Sales in Oregon × Expenses not allowed on your federal return Sales everywhere Enter the expenses not allowed on your federal return on the federal line on the schedule. Partnerships and S corporations. If your federal credit is from a partnership or S corporation, you may subtract a percentage of the expenses not deductible on your federal partnership or S corporation return. This amount will usually be the same as the percent­ age of total partnership or S corporation income you report on your return. Nonresidents or part-year resi­ dents must use the percentage explained in the previ­ ous paragraph to further prorate the expenses. Film production labor rebate (ORS 316.698) [Subtraction code 336] Companies producing commercials, television shows, or movies in Oregon may be eligible for a cash rebate against payroll taxes if they qualify for the Greenlight Oregon Labor Rebate (GOLR) program. This program is administered by the Oregon Film and Video Office. Visit their website, www.oregonfilm.org, for more information. You may subtract the amount of your GOLR rebate to the extent that it is included in your federal income. Subtractions

150-101-431 (Rev. 06-17-24) 77 First-time home buyer savings account (FTHBSA) contributions and earnings (ORS 316.798, 316.800) [Subtraction code 361] Oregon allows a subtraction for amounts you depos­ ited during the tax year into a designated FTHBSA, along with any earnings on your deposits. Who may claim the subtraction? Any Oregon resident who hasn’t purchased or owned a single-family home, either individually or jointly, in the three years prior to the date they purchase a new home in Oregon and makes deposits into their desig­ nated FTHBSA may qualify for this subtraction. What are the requirements? A FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of open­ ing the account. What costs will qualify? You must use your FTHBSA funds to pay costs asso­ ciated with buying a home, such as: • Down payment. • Title insurance and other closing costs. • Realtor commissions. • Appraisal and inspection fees. • Loan origination fees. What’s the tax benefit of my FTHBSA? Up to $5,000 in deposits and earnings for the year may be subtracted by an individual filer each year— up to $10,000 each year if you’re filing a joint return— for up to ten years or an aggregate total of $50,000. The maximum subtraction amount is limited by your federal AGI as shown in Table 10. Note: Deposits or earnings that exceed the subtraction limit for the year can’t be carried forward to a later year. Only those amounts that were deposited or earned during the tax year may be subtracted from that year’s Oregon taxable income. Table 10. FTHBSA subtraction limits If your filing status is: and your federal AGI is: then your maximum allowable FTHBSA subtraction is: at least— but less than— Married filing jointly 0 $149,000 $10,000 $149,000 $158,000 $8,000 $158,000 $167,000 $6,000 $167,000 $176,000 $4,000 $176,000 $187,000 $2,000 $187,000 or more 0 All others 0 $104,000 $5,000 $104,000 $111,000 $4,000 $111,000 $117,000 $3,000 $117,000 $123,000 $2,000 $123,000 $131,000 $1,000 $131,000 or more 0 Penalty and add back for nonqualified withdrawal. If the funds in your FTHBSA are withdrawn within 10 years of opening the account, but aren’t used to pur­ chase a home, a 5 percent penalty may be imposed on the amount withdrawn. See this topic in “Interest and penalties.” You will also be required to add back any withdrawn amounts you previously subtracted. See this topic in “Additions.” Note: You may trans­ fer funds from your FTHBSA and deposit them into another FTHBSA that you hold at the same or a dif­ ferent financial institution; to avoid the penalty and the add back requirement, the transfer (or the home purchase) must be completed within 60 calendar days of the withdrawal. For more information about the FTHBSA program, contact a participating Oregon financial institution. For help locating a participating institution, visit the Oregon Association of Realtors’ website at www. oregonrealtors.org. Foreign income tax (ORS 316.690) [Subtraction code 311] [Modification code 603] You can subtract taxes paid to a foreign country if on your federal return: • You claimed a credit for taxes you paid to a foreign country; or • You didn’t claim a credit for tax you paid to a for­ eign country and you didn’t claim foreign taxes as an itemized deduction. Subtractions

150-101-431 (Rev. 06-17-24) 78 Your foreign tax subtraction plus the subtraction for your current federal tax liability plus any additional federal tax paid for a prior year can’t be more than $7,800 ($3,900 if your filing status is married filing separately). The foreign tax portion of your federal tax subtrac­ tion can’t be more than $3,000 ($1,500 if your filing status is married filing separately). Itemized deduction. If you claimed foreign income taxes as an itemized deduction on your federal return, you may claim them in full on Schedule OR-A. The amount you may deduct on your Schedule OR-A isn’t subject to the same limit as the subtraction. See the instructions for Schedule OR-A for more information. If you claim the foreign taxes as an itemized deduc­ tion, you may not also claim them as a subtraction. Use Part C of the Federal tax worksheet to figure your foreign tax subtraction. IDA contributions (ORS 316.848) [Subtraction code 314] An IDA is a matched savings account that builds the financial management skills of qualifying Orego­ nians while they save toward a defined goal. An IDA allows an individual in a lower-income household to accumulate assets tax-free. As the account holder, you make deposits to your own account. Your depos­ its are matched with private donations. Withdrawals made for a qualified purpose are tax free. Qualified purposes include: • Paying higher education expenses or medical expenses; or • Purchasing a primary residence; or • Saving for retirement; or • Starting your own business. Oregon allows a subtraction on your tax return for deposits you make to your IDA through the Neigh­ borhood Partnership Fund. Your subtraction includes the interest earned on your IDA funds if the interest is included in your federal taxable income. Subtract the amount of the deposits made during the year, plus taxable interest earned, on Schedule OR-ASC or OR-ASC-NP. For more information about establishing an IDA, contact The Neighborhood Partnership Fund at 503- 226-3001 or www.neighborhoodpartnerships.org. Income on a composite return (OAR 150-314-0515) [Form OR-40-N/OR-40-P only: Subtraction code 341] If you’re a nonresident PTE owner who elects to join in a composite filing, the PTE will file Form OR-OC, Oregon Composite Return, to report your income and pay tax on your behalf. If you have other Oregon- source income, you must also file your own nonresi­ dent personal income tax return to report and pay tax on this income. Follow the instructions for filing Form OR-40-N if you have income that wasn’t included in a compos­ ite filing. All of your PTE income must be reported on the return, including the income reported on the composite return. However, because the income on the composite return has already been taxed, subtract that income on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Note: Don’t claim the tax paid on your behalf by the PTE as a payment on your Form OR-40-N. That pay­ ment was already used to pay the tax on the income reported on the composite return. Interest and dividends on U.S. bonds and notes [ORS 316.680(1)(a)] [Subtraction code 315] Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest. You may also subtract U.S. government interest (called state exempt-interest dividends) from regu­ lated investment companies and asset pools man­ aged by a fiduciary. These include, but aren’t limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or asset pool must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The sub­ traction is limited to your share of the amount of interest actually earned from qualifying U.S. govern­ ment securities. You can’t subtract amounts when the U.S. govern­ ment only guarantees the security. If you receive dis­ tributions from a retirement plan, you may not sub­ tract pension income received from funds invested in U.S. government securities. Subtractions

150-101-431 (Rev. 06-17-24) 79 Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon. Following is a detailed list of bonds and notes that may or may not qualify for this subtraction. For a list of obligations that are exempt from both state and federal taxation, see “Interest and dividends on gov- ernment bonds of other states“ in “Additions.“ Qualifies Bond/note Yes Banks for Cooperatives District of Columbia. Yes Commodity Credit Corporation. No* Export-Import Bank. No Farmers Home Administration. Yes Federal Deposit Insurance Corporation. Yes Federal Farm Credit Bank. Yes Federal Financing Bank. No Federal Home Loan Mortgage Corpora- tion (Freddie Mac). Yes Federal Home Loan Bank. Yes Federal Intermediate Credit Bank. Yes Federal Land Bank and Federal Land Bank Association. No Federal National Mortgage Association (Fannie Mae). Yes Federal Savings and Loan Insurance Corporation. No Federal tax refunds. Yes Financing Corporation (FICO). Yes General Insurance Fund. No* Government National Mortgage Asso- ciation (Ginnie Mae). Yes Government Services Administration (GSA Public Building Trust Participation Certificate). No International Bank for Reconstruction and Development. Yes Production Credit Association (PCA). Yes Resolution Funding Corporation (REFCO). No Repurchase agreements (Repos). Yes Series EE, HH, and I Bonds. No* Small Business Administration. Yes Student Loan Marketing Association (Sallie Mae). Yes Tennessee Valley Authority. Yes Treasury bills and notes—interest. No Treasury bills and notes—gain on sale. No U.S. Merchant Marine bonds. Yes U.S. Postal Service bonds. No* Washington (D.C.) Metropolitan Transit Authority. Yes Zero coupon obligations of the U.S. (for example, “CATs,” “STRIPS,” “TIGRs,” etc.). *If the creditor has defaulted and the U.S. government/ Export-Import Bank is paying the interest, it’s nontaxable. Related expenses You must reduce your subtraction for expenses con­ nected with U.S. bonds and notes if the expenses are included in your Oregon itemized deductions on Schedule OR-A. These expenses include interest paid on money borrowed to buy the bonds and notes and costs incurred in the production of income from the bonds and notes. Legislative Assembly expenses (ORS 171.072) [Subtraction code 335] Members of the Oregon Legislative Assembly receive allowances for expenses they incur while perform­ ing their official duties. Each legislator must choose whether to include their allowance in taxable income. When an allowance is included in taxable income, the legislator may deduct the expenses they incurred while performing their official legislative duties. If the legislator does not include their expense allow­ ance in their taxable income, they can’t claim any deductions for their expenses. Oregon doesn’t tax the allowances received by legisla­ tors. If you served as an Oregon legislator during 2023 and you chose to include your allowance in your tax­ able income, you may subtract any allowance amount that you haven’t deducted elsewhere on your return. Example: Peter served as an Oregon senator during the tax year. He chose to have his allowance included in his taxable income. On his Schedule OR-A, he deducts all but $1,000 of the expenses he incurred while performing his official legislative duties. He may claim a subtraction for the remaining $1,000 on his Oregon return. Manufactured dwelling park capital gain exclusion (Notes following ORS 316.792) [Subtraction code 338] Amounts received from the sale of a manufactured dwelling park to certain organizations are exempt from Oregon income tax. Subtractions

150-101-431 (Rev. 06-17-24) 80 If you included this gain in income on your federal return, you may claim a subtraction for the gain amount on your Oregon return. Enter the amount on Schedule OR-ASC or OR-ASC-NP. To qualify, the park must have been: • Sold to a tenants’ association nonprofit organiza­ tion, community development corporation, or a housing authority; or • Destroyed by a natural disaster and sold to a non­ profit corporation or housing authority that will redevelop the site as a manufactured dwelling park. For purposes of this exclusion, a “natural disaster” includes any disaster resulting in the declaration of a state of emergency by the governor of Oregon, or by the governing body of an Oregon city or county, for wildfires, floods, tsunamis, earthquakes or simi­ lar events, including disasters begun by negligent or intentional acts. Manufactured dwelling park closure payments (ORS 316.795) [Subtraction code 344] Payments received from your former landlord because your manufactured dwelling park was closed are exempt from state taxation. These payments must be included in your federal income in order to be sub­ tracted on your Oregon return. If you didn't include them in federal income, don't subtract them. Marijuana business expenses [ORS 316.680(1)(i)] [Subtraction code 359] Did you operate a business as a medical marijuana dispensary or as a producer, processor, wholesaler, or retailer of medical or recreational marijuana with a license issued by the Oregon Health Authority (OHA) or the Oregon Liquor Control Commission (OLCC) under ORS Chapter 475B? If so, you may subtract cer­ tain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cul­ tivation, manufacture, distribution, or sale of certain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and necessary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Con­ trolled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Erin has a business licensed by the OLCC to sell marijuana in Oregon. Her store sold medi­ cal and recreational marijuana products. Her gross sales for the year totaled $750,000. After deducting $350,000 in cost of goods sold, her gross profit was $400,000, which she reported as business income on her federal Schedule C. Along with paying the cost of the goods she sold, Erin had ordinary and necessary retail business expenses. She completed a second Schedule C for Oregon only and determined that her expenses, other than cost of goods sold, totaled $150,000. She claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Matt grows marijuana in his garage and sells it to his coworkers and friends. This year, he made $50,000 from these sales. He spent $15,000 on costs of goods sold during the year, and another $10,000 in other ordinary and necessary business expenses. Matt doesn’t have a license to produce or sell marijuana in Oregon, but he must file federal and Oregon tax returns to report his income. On his fed­ eral return, he must report $50,000 in gross income and can deduct $15,000 for the cost of the goods he sold. He can’t deduct his other business expenses on his federal return. Matt also can’t take an Oregon sub­ traction for those other business expenses because he doesn’t have a license issued by the OHA or OLCC. Oregon College and MFS 529 Savings Plan deposits carryforward (ORS 316.699) [Subtraction code 324] Contributions you made to an Oregon College or MFS 529 Savings Plan account after December 31, 2019 no longer qualify for a subtraction, but they may qualify for a credit. See “Oregon 529 College Savings Net- work account contributions” in “Refundable credits.” Subtractions

150-101-431 (Rev. 06-17-24) 81 Carryforward. If you made a contribution in a tax year that started before January 1, 2020 that was more than the maximum allowable subtraction for that year, you may carry forward the amount not subtracted over the next four years. The maximum amount you can carry forward and subtract on your 2023 return is $5,580 if you file a joint return ($2,790 for all oth­ ers). This maximum applies to the combined total of ABLE account and Oregon College or 529 Savings Plan contributions carried forward. Tax year 2023 is the last year that a carryforward may be subtracted. Example: Korey and Keri contributed $25,000 in 2019 to an Oregon College Savings Plan account for their son. They subtracted the maximum of $4,865 on their 2019 return. They carried the $20,135 balance of their con­ tribution forward and claimed the maximum of $4,960 on their 2020 return, the maximum of $5,030 on their 2021 return, and the maximum of $5,185 on their 2022 return. For 2023, they will claim the remaining $4,960. Nonqualified expenses. You may need to add back funds withdrawn for a nonqualified purpose if the funds were subtracted on a prior year’s return. A nonqualified purpose includes using the funds and earnings to pay K-12 tuition. See “Oregon Col- lege and MFS 529 Savings Plans nonqualified with- drawal“ under “Additions.” Oregon income tax refund (ORS 316.695) [Form OR-40-P/Form OR-40-N only: Subtraction code 325] Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon doesn’t allow a subtraction for an income tax refund from any other state. Full-year filers: This subtrac­ tion is claimed on Form OR-40. Part-year and non­ resident filers: Claim this subtraction on Schedule OR-ASC-NP, section C. Oregon Investment Advantage

(ORS 316.778) [Subtraction code 342] Oregon has an income tax exemption program for business development in Oregon. The program is available to both new and expanding businesses. Who is eligible for the exemption? The exemption is a 10-year waiver of all income and excise taxes relating to qualifying business opera­ tions. Business Oregon (the Oregon Business Devel­ opment Department, or OBDD) administers this program. To qualify, a company must create at least five new full-time, year-round jobs that meet minimum pay requirements. Facility operations must be the first of their kind in Oregon for the company and must not compete with existing area businesses. Areas that qualify for development can change from year to year. Local unemployment rates and per capita income as of the date of application for preliminary certification determine eligibility. For a list of qualifying counties, go to www.oregon.gov/biz. How is a facility certified? There are two application forms necessary for this program. A preliminary certification is completed before hiring or any construction work is done. An annual certification is then completed for each of the 10 years that the income tax exemption is claimed. To find out more about this program or download an application form, contact Business Oregon at www.oregon.gov/biz. How is the subtraction computed? The exempt income is determined by multiplying the taxpayer’s federal taxable income by the ratio of their federal AGI derived from the business over their total federal AGI. The resulting amount is then multiplied by the ratio of the business’ income derived from the business’ sales at the certified facility over its sales from all business activities. Nonresident and part-year resident taxpayers deter­ mine exempt income by multiplying only Oregon- sourced federal taxable income in the first step of the computation above. See our administrative rule for additional informa­ tion on determining income derived from qualifying activities (OAR 150-316-0600). Oregon Lottery winnings (ORS 461.560) [Subtraction code 322] Oregon won’t tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and aren’t eligible for the subtraction. “Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery doesn’t include gambling winnings from other sources, such as tribal gaming centers. If you’re Subtractions

150-101-431 (Rev. 06-17-24) 82 a Native American, see the “American Indian” sub­ traction for more information. Winnings of more than $600 from a single ticket or play are fully taxable and may be reported by the Oregon State Lottery on Form W-2G. Lottery win­ nings that are more than $1,500 must have 8 percent withheld for Oregon taxes. If state income tax wasn’t withheld from your gambling winnings consider making estimated tax payments or increasing your withholding from your wages. To increase your Ore­ gon wage withholding, complete Form OR-W-4. Give the form to your employer. Example: Margaret purchased two Oregon Lot­ tery tickets and won $1,000 on one ticket and $500 on the other. She also won $300 from a lottery ticket she bought in Idaho, and $150 on a slot machine at an Oregon casino. Margaret included all $1,950 in winnings on her federal return. Margaret can sub­ tract $500 of her Oregon Lottery ticket winnings on Schedule OR-ASC. Nonresidents: Oregon Lottery winnings are taxable to nonresidents. Oregon Lottery winnings included in federal taxable income are eligible for the subtrac­ tion when winnings per ticket or play are $600 or less. Exception for pre-1998 tickets: You may subtract all Oregon Lottery winnings included in your federal income from tickets purchased prior to January 1, 1998. Did you assign your lottery winnings to a pri­ vate company and receive a lump-sum settlement? If so, your settlement isn’t taxable by Oregon if your winning ticket was purchased before January 1, 1998. Winnings from tickets purchased on or after January 1, 1998 are fully taxable. Gambling loss deduction. If you’re deducting gam­ bling losses related to your tax-exempt lottery win­ nings on Schedule OR-A, you must add back the amount that exceeds the winnings that are taxed by Oregon. See this topic under “Additions” for more information. Paid Leave Oregon benefits deducted on federal Schedule A [ORS 316.695(1)(d)] [Subtraction code 386] If you took paid medical, family, or safe leave on or after September 3, 2023, you may have received ben­ efits through the state’s Paid Leave Oregon program. If so, part of your benefits may have included con­ tributions you made as an employee through payroll deductions or by contributions you made if you’re self-employed and chose to be covered by the state program. Contributions you make to the Paid Leave Oregon program are considered to be a payment of Oregon income tax. For that reason, they can’t be included in your Oregon itemized deductions as a payment of state income tax. Benefits you receive from the Paid Leave Oregon program may be included in your federal taxable income. However, in some cases, you may be allowed to reduce your benefit income by the amount of the contributions you made for the type of benefits you received. Because you couldn’t deduct your contributions for these benefits on your Oregon return, Oregon has already taxed the portion of your benefits that is from those contributions. If you’re reducing your benefit income on your federal return for contributions you made for the type of benefits you received, you don’t need to do anything on your Oregon return. The income reduction will flow through automatically. If you’re not reducing your benefit income on your federal return, you may claim a subtraction on your Oregon return for your contributions. Limit your subtraction to the amount of contributions you made for the type of benefits you received that Oregon has already taxed. Example 1: Oliver made contributions to the Paid Leave Oregon program through payroll deductions by his employer. In October, Oliver’s son broke his arm, and Oliver took several weeks of family leave to care for him. Oliver received $3,000 in family leave benefits from the program. Of this amount, $600 was attributable to Oliver’s family leave contributions. Oliver doesn’t itemize deductions on the federal return, so he reduces the benefit income by the con­ tribution amount and includes $2,400 ($3,000 - $600) in income. Because the benefit income is reduced on the federal return, Oliver doesn’t report a subtraction on the Oregon return. Example 2: Same facts as in Example 1, but Oliver itemizes deductions on the federal return. Oliver includes the entire $3,000 benefit amount in income and the $600 contribution portion as an itemized deduction on his federal return. Because he is claim­ ing an itemized deduction for his contributions instead of reducing his benefit income, Oliver may claim a $600 subtraction on Schedule OR-ASC. For more information about the Paid Leave Oregon program, visit www.paidleave.oregon.gov. Subtractions

150-101-431 (Rev. 06-17-24) 83 Previously taxed employee retirement plan contributions (ORS 316.159) [Subtraction code 327] If you are an Oregon resident who made contribu­ tions to a traditional IRA, Keogh, SEP, or certain other retirement plans while you were a nonresident, you may claim a subtraction for your distributions up to the amount of your contributions that were taxed by the state where you were a resident, if all of the fol­ lowing are true. You: • Deducted your contributions on your federal return for the year the contributions were made. • Filed an income tax return with the state where you were a resident for the year when you deducted the contributions on your federal return. • Couldn’t claim the same (or any) deduction on your state income tax return for the contributions you deducted on your federal return. • Weren’t required to file a nonresident Oregon return for the year when the contributions were deducted on your federal return. • Weren’t allowed a credit for taxes paid to another state on an Oregon return which included the con­ tributions in the credit calculation. • Were not allowed to claim a subtraction, deduction, exemption, or other tax benefit in another state for your distributions from the plan before you became an Oregon resident. • Are now receiving distributions from the plan to which you made contributions as a nonresident. • Included the distributions in your federal AGI this year. All distributions you receive after becoming an Ore­ gon resident are initially considered to be a recovery of your contributions. You may claim a subtraction for your distributions each year that you are a resi­ dent, up to the total amount of contributions that were previously taxed, even if you have received dis­ tributions before becoming an Oregon resident. No subtraction is allowed for interest or other invest­ ment income from your contributions, or for contri­ butions that weren’t previously taxed. A statement showing the contributions you made when you were a nonresident and the amounts that were deducted on your federal returns but taxed on your state income tax returns will help you figure your subtraction. Keep this statement with your tax records. Example 1: Peggy was a California resident when she made contributions to her employer-based retirement plan. She deducted the contributions on both her federal and California returns. After Peggy became an Oregon resident, she started taking retirement distributions. Because Peggy’s contributions weren’t taxed on her California returns, she can’t take the subtraction. Example 2: Ronald was a Kansas resident when he made contributions to the state’s public employee retirement fund. He deducted the contributions on his federal returns, but his contributions were included in income on his Kansas income tax returns. Ronald became an Oregon resident and this year he started taking distributions from his retirement plan. Because his contributions were previously taxed by Kansas, Ronald can take the subtraction. He can take the subtraction each year until the total amount of his previously taxed contributions has been recovered. Example 3: Harley was a Washington state resident when she made contributions to a traditional IRA. Her contributions were deducted on her federal return. Because Washington doesn’t have a state income tax, she didn’t pay state income tax on the contributions. Last year she became an Oregon resi­ dent, and this year she started taking distributions from her IRA account. Harley can’t take the subtrac­ tion because her contributions weren’t previously taxed by another state. Example 4: Bill was a California resident when he made contributions to a Roth IRA. The contribu­ tions were not deducted on his federal or California returns. Bill is 65 years old and became an Oregon resident last year. He began taking distributions this year from the Roth IRA account, which he held for more than five years. Because he meets the age and holding requirements for his Roth IRA, his dis­ tributions aren’t included in his federal income. He can’t take the subtraction because the income isn’t included in his federal AGI, it wasn’t previously taxed by the other state, and it wasn’t deducted on his federal return. For additional examples, see OAR 150-316-0230. Previously taxed IRA conversions [ORS 316.680(1)(f)] [Subtraction code 348] Oregon allows a subtraction for converting a tra­ ditional IRA to a Roth IRA, if the IRA is taxed by another state. You must include the payments in fed­ eral taxable income to claim the subtraction. Example: Susan lived in New York in March of last year, when she converted her $100,000 traditional IRA to a Roth IRA. In September, she moved to Oregon. New York state will tax her IRA when she becomes a nonresident. Susan can subtract the amount included Subtractions

150-101-431 (Rev. 06-17-24) 84 in federal income when she files her Oregon tax return. Psilocybin business expenses [ORS 316.680(1)(j)] [Subtraction code 385] Did you operate a business as a manufacturer or seller of psilocybin products, an operator of a psilo­ cybin service center, or a facilitator of psilocybin ser­ vices licensed by the Oregon Health Authority (OHA) under ORS Chapter 475A? If so, you may subtract cer­ tain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi­ ness expenses on your federal return, other than the cost of goods sold, if your business involves the cul­ tivation, manufacture, distribution, or sale of certain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and necessary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Con­ trolled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter­ mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, Section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Doug has a business licensed by the OHA to manufacture and sell psilocybin products to licensed psilocybin service centers. His gross sales for the year totaled $100,000. After deducting $20,000 in cost of goods sold, his gross profit was $80,000, which he reported as business income on his federal Schedule C. Along with paying the cost of the goods he sold, Doug had other ordinary and necessary business expenses. He completed a second Schedule C for Oregon only and determined that his expenses, other than cost of goods sold, totaled $15,000. He claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Eleanor grows mushrooms containing psilocybin in her basement and sells them to her friends. This year, she made $40,000 from these sales. She spent $3,000 on cost of goods sold during the year, and another $15,000 in other ordinary and necessary business expenses. Eleanor doesn’t have a license to manufacture or sell psilocybin products in Oregon, but she must file federal and Oregon tax returns to report her income. On her federal return, she must report $40,000 in gross income and can deduct $3,000 for the cost of the goods she sold. She can’t deduct her other business expenses on her federal return. Elea­ nor also can’t take an Oregon subtraction for those other business expenses because she doesn’t have a license issued by the OHA. PTE-E tax refund included on entity- level federal return (ORS 305.100) [Subtraction code 387] If you’re a member of a PTE that made the election to pay Oregon’s PTE-E tax for a prior year, you may be able to claim this subtraction if: • The PTE deducted the PTE-E tax on its federal return; • You reported an addition for your distributive share of the deducted amount on your own return; • The PTE later received a refund of some or all of the deducted PTE-E tax; and • You included some or all of your distributive share of the refunded tax in your federal taxable income. Your subtraction is limited to the amount of the refund that you included on your federal return. Public Safety Memorial Fund award [ORS 316.680(1)(g)] [Subtraction code 329] Amounts awarded to you by the Public Safety Memo­ rial Fund Board may be subtracted from Oregon income. The award must be included in federal tax­ able income to claim the subtraction. Public Safety Memorial Fund Awards are for public safety officers with certain job-related permanent total disabilities. These awards are also available to family members of a public safety officer who is killed in the line of duty or while interceding in a crime. Railroad Retirement Board benefits (ORS 316.054) [Subtraction code 330] The Railroad Retirement Act of 1974 prohibits states from taxing certain railroad benefits. This act pertains Subtractions

150-101-431 (Rev. 06-17-24) 85 to all benefits issued by the Railroad Retirement Board (RRB). Oregon allows a subtraction for Tier 1 RRB benefits (the same as for Social Security benefits). The subtraction has been extended by administrative rule to the other supplemental RRB benefits including Tier 2, windfall, vested dual, supplemental annuities, unemployment, and sickness (OAR 150-316-0065). Tier 1 benefits. Tier 1 benefits are reported like Social Security on your federal return. Subtract these ben­ efits with Social Security on the Oregon return. Tier 2, windfall, vested dual, supplemental annuities, unemployment and sickness paid by the RRB. These benefits are reported as wages or on the private pen­ sion line of your federal return. Subtract these ben­ efits on Schedule OR-ASC, section B or Schedule OR- ASC-NP, section C. Other benefits. A retired railroad employee may receive other retirement benefits from their employer. Benefits paid by private railroad employers are pri­ vate pensions taxed the same on both the federal and Oregon returns. There is no Oregon subtraction for retirement benefits paid by private railroad employers. Only benefits paid by the RRB qualify for the subtrac­ tion. RRB benefits are reported on Form 1099, except for sickness benefits, which are reported on Form W-2. All 1099s issued by the RRB, other than 1099-G for RRB unemployment benefits, are labeled Form RRB-1099-R. More information on RRB benefits is available on the board’s website at www.rrb.gov. Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claim­ ing the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed. Social Security benefits (ORS 316.054) Oregon doesn’t tax Social Security benefits. Any Social Security benefits included in your federal AGI are subtracted on your Oregon return. Special Oregon medical (ORS 316.693) [Subtraction code 351] You may qualify for the special Oregon medical sub­ traction if: • You or your spouse turned 66 by the end of the tax year; • Your federal AGI doesn’t exceed $200,000 ($100,000 if your filing status is single or married filing sepa­ rately); and • You or your spouse have qualifying medical or dental expenses. Medical or dental expenses qualify if they can be included in itemized deductions. See IRS Publica­ tion 502, Medical and Dental Expenses, to see which expenses qualify. You can’t subtract expenses: • For anyone under age 66; • For dependents, regardless of their age; or • That are deducted elsewhere on your return. Table 11. Special Oregon medical subtraction— maximum amount If your filing status is: And your federal adjusted gross income from Form OR-40, line 7 or Form OR-40-N or OR-40-P, line 29F is: Then your maximum allowable medical subtraction per qualifying taxpayer is: at least— but less than— Married filing jointly, Head of household, Qualifying surviving spouse 0 $50,000 $1,800 $50,000 $100,000 $1,400 $100,000 $200,001 $1,000 $200,001 or more 0 Single or Married filing separately 0 $25,000 $1,800 $25,000 $50,000 $1,400 $50,000 $100,001 $1,000 $100,001 or more 0 The maximum amount you can subtract for each qualifying person is shown in Table 11. Use the table and the Special Oregon medical subtraction work­ sheet to determine the amount of your subtraction. Subtractions

150-101-431 (Rev. 06-17-24) 86 Shared expenses. Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy doesn’t affect the price of the pol­ icy, it’s reasonable to count all children on the policy as one individual. For example, the cost of insurance premiums for a policy covering two adults and four children can be divided by three. Example 1: Chloe and Sam were ages 67 and 62 at the end of the tax year. They filed a joint return with one depen­ dent (Sam’s mother), federal AGI of $55,000, and itemized deductions for Oregon. During the tax year they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in premi­ ums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Oregon medical subtraction because Sam doesn’t meet the age requirement and Sam’s mother is a dependent. Example 2: Peter turned 66 during the tax year. He’s self-employed and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on Schedule OR-A. He also deducted 100 percent of his self-employed health insurance premiums, totaling $2,500, on his fed­ eral return. Only the $3,200 in medical expenses Peter claimed on Schedule OR-A will be used to calculate his special Oregon medical subtraction because they haven’t been fully deducted. The worksheet will help him calculate the amount of his subtraction. Special Oregon medical subtraction worksheet instructions Line 1: Enter each person’s qualifying medical and den­ tal expenses that you’re claiming as itemized deduc­ tions on Schedule OR-A. Enter your expenses in col­ umn (A) and your spouse’s expenses in column (B). If you’re not including medical expenses in your Oregon itemized deductions or you’re claiming the standard deduction on your Oregon return, skip lines 2–4, enter the amount from line 1 on line 5, and go to line 6. Line 2: Enter the total medical and dental expenses you’re claiming as an itemized deduction (Schedule OR-A, line 1), even if they are for a spouse or depen­ dent whose expenses don’t qualify. Line 3: Line 1 divided by line 2. Round to three deci­ mal places. For example, 0.7308 is rounded to 0.731. Line 4: Enter the lesser of the amount you entered on line 2, above, or the amount on line 3 of your Schedule OR-A. Line 5: Multiply line 3 times line 4 and round to whole dollars. (For example: $101.49 is rounded to $101.) Line 6: Enter the maximum allowable medical sub­ traction for your filing status and federal AGI from Table 11. Don’t enter more than $1,800 in each column. Line 7: Enter the smaller of line 5 or line 6. Line 8: Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. Full-year residents. Enter the amount from line 8 on Schedule OR-ASC, section B. Part-year residents and nonresidents. Enter the full amount from line 8 on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Special Oregon medical subtraction worksheet:

Column Column

(A) (B)

You Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ $ 6. Maximum allowable medical subtraction from Table 11. 6. $ $ 7. Enter the smaller of line 5 or line 6. 7. $ $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ Subtractions

150-101-431 (Rev. 06-17-24) 87 Example 3: Leah and Tyler are ages 67 and 61 at the end of the tax year. They file a joint return with fed­ eral AGI of $45,000 and itemize their deductions for Oregon. During the year, they paid $4,700 in medi­ cal and dental expenses claimed on Schedule OR-A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medi­ cal insurance policy covering both of them. Only Leah’s expenses qualify for the special Oregon medi­ cal subtraction because only she met the age require­ ment. Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows:

Column Column

(A) (B)

Leah Tyler 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 2,150 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 4,700 $ 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.457

4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 3,375 $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,542 $ 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,800 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,542 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,542

Leah and Tyler will claim $1,542 on Schedule OR-ASC. Example 4: Kenneth and Sophia were both age 66 at the end of the tax year. They file a joint return with fed­ eral AGI of $78,000. Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses dur­ ing the year. They are self-employed and claimed $3,400 for self-employed health insurance premiums on their federal return. They claimed the remaining $8,900 on line 1 of Schedule OR-A. Of this amount, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia calculate their special Oregon medical subtraction as follows:

Column Column

(A) (B)

Kenneth Sophia 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 7,700 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ 8,900 $ 8,900 3. Line 1 divided by line 2. Round to three decimal places. 3. 0.135 0.865 4. Enter the smaller of line 2, above, or Schedule OR-A, line 3. 4. $ 5,850 $ 5,850 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 790 $ 5,060 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,400 $ 1,400 7. Enter the smaller of line 5 or line 6. 7. $ 790 $ 1,400 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 2,190 Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they don’t include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that haven’t been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that haven’t been previously deducted, and $1,400, the maximum amount allowed Sophia). Example 5: Margaret is age 67 at the end of the tax year. She’s single and has a federal AGI of $27,000. During the year, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret doesn’t itemize her deductions because her standard deduction is greater than her itemized deductions for Subtractions

150-101-431 (Rev. 06-17-24) 88 Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows:

Column Column

(A) (B)

Margaret Spouse 1. Medical and dental expenses for each qualifying taxpayer. 1. $ 1,200 $ 2. Total medical and dental expenses claimed (Schedule OR-A, line 1). 2. $ $ 3. Line 1 divided by line 2. Round to three decimal places. 3.

4. Enter the smaller of line 2 above, or Schedule OR-A, line 3. 4. $ $ 5. Line 3 times line 4. Round to the nearest dollar. 5. $ 1,200 $ 6. Maximum allowable medical subtraction from Table 11. 6. $ 1,400 $ 7. Enter the smaller of line 5 or line 6. 7. $ 1,200 $ 8. Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,200 The medical expenses paid by Margaret for her 9-year-old granddaughter don’t qualify for the sub­ traction because she is a dependent. Example 6: Same as Example 5, except that Margaret isn’t an Oregon resident. She enters $1,200 on both the federal and Oregon lines of Schedule OR-ASC-NP, section C. State and local government bond interest (ORS 286A.140) [Subtraction code 317] You can subtract interest or dividends on obligations of counties, cities, districts, ports, or other public or municipal corporations or political subdivisions of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by the State of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by an interstate bridge commission formed along the border of Oregon and Washington to the extent included for federal income tax purposes. Related expenses You must reduce your subtraction if you’re including interest you paid on debt incurred to carry the obliga­ tions or securities or other expenses incurred in the production of income from these obligations in your Oregon itemized deductions on Schedule OR-A. Taxable benefits for former RDPs (ORS 314.023, OAR 150-316-0009) [Subtraction code 347] If you and your RDP were legally married or dis­ solved your partnership during the year, you may be allowed an Oregon subtraction for: • The imputed value of certain fringe benefits pro­ vided by your employer for your RDP for the part of the year you were still registered domestic partners. • The transfer of funds from your former domestic partner upon a dissolution decree. The fringe benefits typically include, but aren’t lim­ ited to, health insurance and tuition payments. You must have included the imputed value of the benefits in your federal income to claim the Oregon subtrac­ tion. The imputed value will be included in the total compensation (Box 1) shown on your Form W-2. The transfer of funds typically include, but aren’t limited to, retirement funds. You must have included these amounts in your federal income to claim the Oregon subtraction. Example: Ruth and Jan entered into an RDP eight years ago. They were legally married on June 16 of this tax year. Ruth and Jan must file this year’s tax return as married filing jointly for both federal and Oregon purposes. They won’t file an “as-if” federal return. Instead, they will attach their actual federal return to their Oregon return. Ruth’s employer provides health insurance benefits for Jan, and the imputed value of those benefits were included in Box 1 of Ruth’s W-2 for the portion of the year that Ruth and Jan weren't married (January 1 through June 15). Ruth may claim a subtraction for the value of the imputed benefits included in federal income, as reported on her W-2. U.S. government interest in IRA or Keogh distributions (ORS 316.681) [Subtraction code 331] Interest and dividends on U.S. bonds and notes are exempt from state tax. See “Interest and dividends Subtractions

150-101-431 (Rev. 06-17-24) 89 on U.S. bonds and notes.” Answer these questions to see if you have a subtraction on your Oregon return for exempt income related to your retirement distributions: 1. Did you have any distributions from a self- employed retirement plan or an IRA? 2. Was any part of your self-employed retirement plan or your IRA invested in U.S. bonds and notes? 3. Did you include your self-employed retirement plan or IRA distribution in your 2023 federal AGI? If you answered “yes” to all the questions above, you may take a subtraction on Schedule OR-ASC or OR-ASC-NP for the retirement plan exempt earnings included in your distribution. Use a worksheet like the one shown in the example here or in OAR 150-316-0525 to calculate your sub­ traction. Keep the worksheet with your records; we may ask for it later. Example: Donna retired last year and began tak­ ing distributions of $10,000 each year from her IRA. The IRA is invested in U.S. government securities so Donna uses the following information to calculate her subtraction for years 1 and 2:

Year 1 Year 2 Current year earnings $4,000 $5,000 Current year distribution $10,000 $10,000 Account balance at 12/31 $100,000 $95,000 Total exempt earnings on account at 12/31 $ 40,000 $45,000 Worksheet Year 1 Year 2 1. Total account balance at year end. $100,000 $95,000 2. Current year distribution. + 10,000 + 10,000 3. Line 1 plus line 2. $110,000 $105,000 4. Total exempt earnings on account at year end. $ 40,000 $45,000 5. Total exempt part of distributions from all prior years. – 0 – $3,636 6. Line 4 minus line 5, but not less than zero. $40,000 $41,364 7. Line 6 divided by line 3. Oregon exempt ratio. 0.3636 0.3939 8. Line 2 multiplied by line 7. Oregon exempt portion of current year’s distribution. $3,636 $3,939 Subtractions

150-101-431 (Rev. 06-17-24) 90 Other items Net operating losses (NOLs) (ORS 316.028) [Addition code 116] [Subtraction code 321] An Oregon NOL is figured the same as in IRC Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Ore­ gon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts. Oregon doesn’t allow an NOL from a non-Oregon source that occurred while you were a nonresident. Prohibited amounts Amounts Oregon is prohibited from directly or indi­ rectly taxing include interest earned from Treasury bonds, Treasury notes, and other obligations of the United States. Federal depreciation disconnect If you had an NOL in 2009 or 2010 and also claimed depreciation or expensing not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. See “Deprecia- tion difference for Oregon.” Computation of the NOL Full-year residents. Generally, the computation of the Oregon NOL for a resident is the same as the federal NOL, except for the prohibited amount modification. (See Prohibited amounts above.) The computation of the Oregon NOL begins with fed­ eral AGI. Reduce AGI by federal exemptions, federal deductions, and the prohibited amount modifica­ tion to arrive at the modified Oregon taxable income (OTI). Then adjust the modified OTI as required by IRC Section 172(d). Required adjustments are: 1. Oregon NOL deduction (NOLD) from prior years included in Oregon income after adjustments. 2. Net Oregon capital loss deduction. 3. Federal personal exemption amount (this will be $0 through tax year 2025). 4. Excess of nonbusiness deductions over nonbusi­ ness income included in modified Oregon taxable income. Example 1: Maria and Jaime filed joint federal and Oregon tax returns for 2023. On their federal return, they reported wages of $56,000, a business loss of $80,000, a gain on the sale of stock of $500, and inter­ est income of $900 from a bank. They reported total itemized deductions of $34,000, which were all non­ business and included $4,000 in Oregon withholding. On their Oregon return, Maria and Jaime reported an addition of $500 of municipal bond interest from California that was exempt from federal income tax. Their Oregon NOL is computed as follows: Federal tax return Wages $ 56,000 Interest income

900 Schedule C loss (80,000) Schedule D stock gain

500 Federal AGI ($ 22,600) Personal exemptions

0 Schedule A deductions (34,000) Federal taxable income ($ 56,600) Computation of Oregon NOL Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions (34,000) Modified Oregon taxable income ($ 56,600 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 34,000 Nonbusiness income (1,400 ) Nonbusiness deductions in excess of nonbusiness income 32,600 Oregon NOL ($ 24,000 ) Note: The $500 in California municipal bond interest and the $4,000 in Oregon withholding aren't used in this calculation. Compute the Oregon NOL based on federal NOL methods and definitions. Use Oregon sources with­ out Oregon adjustments (modifications, additions, and subtractions), except for prohibited amounts. Example 2: Use the same facts as in Example 1, except the $900 interest is from U.S. government securities (a prohibited amount). The Oregon NOL for Maria and Jaime is computed as follows: Federal tax return Wages $ 56,000 Interest from U.S. government securities

900 Other items

150-101-431 (Rev. 06-17-24) 91 Schedule C loss

( 80,000 ) Schedule D stock gain

500 Federal AGI ($ 22,600 ) Personal exemptions

0 Schedule A deductions

(34,000) Federal taxable income ($ 56,600 ) Computation of Oregon NOL Federal AGI ($ 22,600 ) U.S. government interest

(900 ) Personal exemptions

0 Schedule A deductions

(34,000) Modified Oregon taxable income ($ 57,500 ) Adjustments: Personal exemptions

0 Nonbusiness deductions 34,000 Nonbusiness income (1,400 ) Excess nonbusiness deductions

32,600 Oregon NOL ($ 24,900 ) Note: U.S. government interest, a prohibited amount, isn’t used to compute an Oregon NOL. Oregon NOL carryover or carryback. With the excep­ tion of farming NOLs (see below), Oregon follows the IRS carryover and carryback laws in IRC Section 172, although prohibited amounts aren’t taken into con­ sideration. If you make an election to carry an NOL back for federal purposes, but you weren’t required to file an Oregon return for the carryback year, carry the Oregon NOL to the year the loss may first be applied. You aren’t allowed an NOL carryback or carryover on an Oregon return if the loss was incurred while you were a nonresident and wasn’t attributable to Oregon sources. If your Oregon NOL is less than your federal NOL, report the difference as an addition on Sched­ ule OR-ASC, Section A, or Schedule OR-ASC, Section B. For more information, see IRS Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Exception for farming NOLs. Starting with losses aris­ ing in 2023, you can elect to carry an Oregon farming NOL back to any of the prior three years, instead of the two years allowed by IRC Section 172. However, if you make this election, you must add back any fed­ eral NOLD on your Oregon return that you carried to the same year before you deduct the farming NOLD. Part-year residents and nonresidents. You’re allowed an Oregon NOL if it’s generated from Oregon sources. Use the federal method without modifications except for prohibited amounts. Computing an Oregon NOL begins with “income after adjustments” from the Oregon column. Reduce this amount by federal exemptions and deductions (attributable to Oregon sources) to arrive at the modified OTI. Then adjust the modified OTI as required by IRC Section 172(d). The required adjustments are the same as those listed for full-year residents. Example 3: In 2022, while they were residents of California, Robin and Valerie incurred losses from an Oregon partnership creating an $85,000 Oregon-only NOL. The next year, Robin and Valerie move to Oregon and file a part-year Oregon return. They report federal income after adjustments of $385,000, Oregon income after adjust­ ments of $235,000, and federal itemized deductions of $72,000 that aren’t subject to AGI limits. Using the federal NOL rules, they determine that their NOL carryover is less than 80 percent of their taxable income before the loss is applied. Robin and Valerie calculate their Oregon taxable income as follows:

Federal Oregon Income after adjustments $ 385,000 $ 235,000 NOLD

(85,000 ) (85,000 ) Modified income after adjustments $ 300,000 $ 150,000 Additions per Oregon return

7,000 7,000 Subtractions per Oregon return

(2,000 ) (2,000 ) Modified income after subtractions $ 305,000 $ 155,000 Oregon percentage: 155,000 ÷ 305,000 = 50.8% Less: Standard or itemized deductions recomputed for revised federal AGI

(72,000 )

Federal tax subtraction

-0 -* Oregon taxable income as revised $ 233,000 *The federal tax subtraction is $0 when federal AGI is $290,000 or more for joint filers. Example 4: Leslie and Jill live in Vancouver, Washington. Leslie operates a business in Oregon. Leslie and Jill filed a nonresident Oregon return for 2022 reporting an Oregon-only NOL of $6,000. Leslie and Jill carried the NOL over to 2023. In 2023, Leslie and Jill report Oregon income after adjustments of $1,600, federal income after adjustments of $32,000, and their Oregon percentage is 5 percent ($1,600 ÷ $32,000). Their income after Other items

150-101-431 (Rev. 06-17-24) 92 adjustments for both federal and Oregon includes a $2,000 capital loss on the sale of some Oregon property. They are claiming the federal standard deduction, and have Oregon itemized deductions of $13,200. Leslie and Jill calculate their NOLD and the carryover to the next year as follows: NOL carried forward from 2022

($6,000) Oregon income after adjustments $1,600 Add: Oregon capital loss deduction 2,000 Modified Oregon income as revised

$3,600 Less: Prohibited amounts

(0 )

Oregon percentage of standard or itemized

deductions recomputed for revised federal AGI (0.05 x $13,200)

(660 ) Modified Oregon taxable income

$2,940 Multiply by 80 percent (federal limitation)

x 0.80 Limit for NOLD

2,352 Carryover of NOL available for next year

($3,648 ) NOL as a subtraction. Generally, your NOL carryback and carryover amounts will be reflected in your federal AGI. However, if you have an NOL carryback or carryover for Oregon only, the loss won’t be reflected in your federal AGI; in that case, claim your carryback or carryover as a subtraction on Schedule OR-ASC, Section B, or Schedule OR-ASC-NP, Section C. Example 5: Same facts as Example 4. For federal purposes, Leslie and Jill's NOL will be entirely absorbed in 2023. The $3,648 that is available to be carried forward to their 2024 return won't be reflected in their 2024 federal AGI. They'll compute the NOLD amount for 2024 as they did for 2023, and claim the allowable amount as a subtraction on Schedule OR-ASC-NP. Depreciation difference for Oregon (ORS 316.707, 316.716, 316.739) [Addition code 152] [Subtraction code 354] Your Oregon depreciation or amortization deduction is generally the same as for federal purposes. It won’t be the same in the following cases: • You transferred property into Oregon’s taxing jurisdiction. • The asset was placed in service in tax years begin­ ning on or after January 1, 1985, and you took a cor­ responding tax credit on your federal return that isn’t available on the Oregon return. • Assets were placed in service between 1981 and 1985 (Accelerated Cost Recovery System [ACRS] assets), and you didn’t make the adjustment align­ ing Oregon basis with federal basis for them. If you made the adjustment on your 1996 tax return, there won’t be a depreciation difference. • The asset was placed in service during tax years 2009 or 2010 and you claimed bonus depreciation or additional expensing under IRC Sections 168(k) or 179. For tax years 2009 and 2010, Oregon gen­ erally allowed the same expensing of qualifying assets under IRC Sections 168(k) and 179 as allowed under 2008 federal law. Because of this disconnect an addition is required, leaving a higher adjusted basis for Oregon to be depreciated over the life of the asset. Most taxpayers with an addition for this disconnect in 2009 or 2010 will have future year subtractions over the remaining life of the asset. NOL and federal depreciation disconnect. Your Ore­ gon NOL is the same as your federal NOL. Therefore if you had an NOL in 2009 or 2010 and also claimed depreciation or expenses not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. Oregon Depreciation Schedule. Use Schedule OR- DEPR to determine if your Oregon depreciation is the same as, or different from, your federal depreciation. Oregon depreciation on all property – Federal depreciation on the same property = Oregon difference in depreciation Oregon subtraction. If your Oregon depreciation is more than your federal depreciation on the same property, you’ll have a subtraction (subtraction code 354) for the difference. Oregon addition. If your Oregon depreciation is less than your federal depreciation on the same property, you’ll have an addition (addition code 152) for the difference. Go to our website to download Schedule OR-DEPR, or contact us to order it. Federal depreciation disconnect [Addition code 153] This addition is used for reporting a difference in fed­ eral and Oregon depreciation deductions due to a new Other items

150-101-431 (Rev. 06-17-24) 93 change in federal law from which Oregon has discon­ nected. As of the date this publication was last revised, Oregon had not disconnected from any new federal depreciation expense provisions for this tax year. If your depreciation expense deduction for Oregon differs from federal for reasons other than a new federal disconnect, see “Depreciation difference for Oregon” and Schedule OR-DEPR Instructions. Partnership and S corporation modifications for Oregon (ORS 314.712-314.752) [Addition code 119] [Subtraction code 323] If you received Schedule OR-K-1 from a PTE (partner­ ship, S corporation, or LLC filing as either), then you may have Oregon modifications or credits that flow through to your Oregon return. Your modification or credit is based on the total for the business multiplied by your ownership percentage, which should have been calculated by the business. If the PTE provided you with a specific code for an Oregon addition or subtraction, use that code. Oth­ erwise, use the above codes to identify the addition or subtraction. If the PTE operates both in and out of Oregon, it has an apportionment percentage for the year. This per­ centage shows how much of the PTE’s income was from Oregon sources. If you were a nonresident for all or part of the year, this percentage should appear on your Schedule OR-K-1, since it shows you how much of the income from your business is Oregon source. The PTE should have already multiplied your share of Oregon additions and subtractions by the PTE’s apportionment percentage. Business tax credits. Oregon credits that flow through may be required to be multiplied by your Oregon per­ centage on your part-year or nonresident return. See “Credits” for requirements. CPAR adjustments (ORS 314.733) [Addition code 187] [Subtraction code 384] If you’re an owner of a partnership that was subject to a partnership-level audit by the IRS (or you’re an owner of a tiered partner of such a partnership), and the partnership doesn’t elect to pay the CPAR tax, you must file an original or amended return for the adjusted year. Report an increase in income using addition code 187 or report a decrease in income using subtraction code 384, whichever is applicable. Use these codes even if another code is assigned for the specific type of increased or decreased income. See “CPAR tax” in “Oregon tax” or visit our website for more information. Basis of business assets transferred into Oregon (ORS 316.707) [Addition code 150] [Subtraction code 358] There are several ways that nonresidents can bring assets into Oregon’s taxing jurisdiction. For example: • You become an Oregon resident and transfer busi­ ness assets into Oregon. • You become an Oregon resident and leave the assets in the other state. • You open a business in Oregon and transfer busi­ ness assets into Oregon. Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller. The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Sec­ tion 179. The fair market value and useful life are fig­ ured when you bring the asset into Oregon. Reduce the federal unadjusted basis or the fair mar­ ket value of the asset by any Oregon depreciation previously allowed. Example: Bob was a California resident. He has owned a business in Yreka, California since 2000. Bob bought an office building in Yreka for $800,000. He placed it in service March 1, 2000. For federal purposes, the build­ ing is 31½-year real property and is being depreciated using the applicable percentages. On January 1, 2020, Bob bought a truck for $45,000. For federal purposes, the truck is five-year property and is being depreci­ ated using the applicable percentages. On January 1, 2023, Bob moved to Ashland, but he con­ tinues to operate his business in Yreka. At that time, the building had a fair market value of $1,473,000, and the truck’s fair market value was $27,000. Because Bob is an Oregon resident, he must determine his Oregon basis to depreciate his assets for Oregon. The Oregon adjusted basis is computed as follows: Building Smaller of: Cost of building (federal unadjusted basis) $ 800,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Net basis $ 800,000 Other items

150-101-431 (Rev. 06-17-24) 94

or Fair market value as of January 1, 2023 $ 1,473,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 Oregon fair market value $ 1,473,000 Bob will depreciate the building for Oregon using the $800,000 federal unadjusted basis and Modified Accelerated Cost Recovery System (MACRS) depre­ ciation for its original federal applicable recovery period. Truck Smaller of: Cost of truck (federal unadjusted basis) $ 45,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Net basis $ 45,000

or Fair market value as of January 1, 2023 $ 27,000 Less: Depreciation previously allowed

for Oregon tax purposes – 0 Oregon fair market value $ 27,000 Bob will depreciate the truck for Oregon using the $27,000 Oregon fair market value and MACRS depre­ ciation for its original applicable federal recovery period. Gain or loss on sale of depreciable property with different basis for Oregon (ORS 316.716) [Addition code 154] [Subtraction code 355] Gain or loss on property you began depreciating after 1980 and before 1985. During the tax year, did you sell property you began depreciating after December 31, 1980, and before January 1, 1985? If you did and didn’t make the one-time adjustment on your 1996 Oregon return, your gain or loss for Oregon may differ from your gain or loss for federal purposes. If you sold this property during the year, you must make an adjustment on your return to reconcile your Oregon basis to your federal basis. To figure your gain or loss for Oregon, use the depre­ ciation you claimed on your Oregon return in prior years. Subtract the total amount of gain or loss for Oregon property you began depreciating after 1980 and before 1985 from your gain or loss for federal purposes for the same property. The difference is an Oregon addition or subtraction. Keep a worksheet with your tax records to show how you figured the difference. Addition or subtraction If Oregon depreciation is less than your federal depreciation, you will have an Oregon subtraction. If Oregon depreciation is more than your federal depre­ ciation, you will have an Oregon addition. Partnerships and S corporations Partnerships report differences between federal and Oregon depreciation on the Oregon partner­ ship return. S corporations report the differences on Schedule SM of the Oregon S corporation return. The differences must also be shown on the partner’s or shareholder’s Schedule OR-K-1 or equivalent. The differences will be added to or subtracted from income on the individual partner’s or shareholder’s Oregon income tax return. Gain on the sale of an Oregon residence (ORS 316.048) [Addition code 152] [Subtraction code 354] Generally, Oregon will tax the gain from the sale of your residence only when the federal government taxes it. Oregon won’t tax any gain excluded on your federal return. This is true even if you reinvest in a home outside Oregon. The Oregon basis of your home is generally the same as your federal basis. If your gain is taxed by the fed­ eral government, Oregon will tax the same amount of gain. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may not be the same as the federal basis due to depreciation differences. Note: If you are also taxed by another state or coun­ try on some or all of the gain, see “Mutually-taxed gain on the sale of residential property“ under “Stan- dard credits.“ Fiduciary adjustment from Oregon estates and trusts (ORS 316.697) [Addition code 133] [Subtraction code 310] The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Sched­ ule OR-ASC or OR-ASC-NP as an addition using code 133 or as a subtraction using code 310. Other items

150-101-431 (Rev. 06-17-24) 95 Example: Frank reported $5,000 of trust income from R&C Farewell Trust on federal Schedule E. Of this, $2,500 was from interest on U.S. obligations, which isn’t taxable by Oregon. He also received interest income of $1,000 from the trust that wasn't included in his federal income. This interest was from Cali­ fornia bonds and is taxable by Oregon. Frank should claim a $1,500 subtraction, the net of both fiduciary adjustment items, using subtraction code 310. Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year. Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income. Passive activity losses (PALs) (ORS 314.300) [Addition code 155] [Subtraction code 356] Generally, a passive activity is any: • Rental activity including equipment and real estate, regardless of your level of participation; or • Business in which you don’t materially participate on a regular, continuous, and substantial basis. Oregon generally adopted the federal passive loss rules in the federal Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. There are some differences in passive losses for Oregon. How to compute and report passive losses for Oregon 1. Modify the federal passive loss by the applicable additions and subtractions listed under “Oregon modifications to federal passive activity losses.“ 2. Apply the federal passive loss limitations to the Oregon passive loss you computed in step 1 above. This will determine how much is deductible for Oregon. To apply the income limitations, use fed­ eral AGI before modifying for Oregon additions or subtractions. 3. Figure the difference between the passive loss reported on your federal return and the deduct­ ible Oregon loss you figured above. You will claim an addition or subtraction on your Oregon return. 4. Keep a schedule with your tax records showing your computations for steps 1, 2, and 3 above. 5. Also keep a schedule (when applicable) showing the allocation of Oregon modifications between the Oregon passive loss activities and other busi­ ness activities. Example: Depreciation modification. Elijah has deter­ mined that his depreciation for Oregon is more than his federal depreciation by $1,000. Ordinarily, he would report a $1,000 subtraction on his Oregon return for the difference in depreciation. Of the $1,000 difference in depreciation, $600 is allo­ cable to passive activities and $400 is allocable to other business activities. His Oregon passive activity loss is his federal passive activity loss increased by the $600 difference in depreciation. He reports the remaining $400 difference in depreciation allocable to other business activities as a subtraction on his Oregon return. Passive activity credits. You can offset in full the tax credits related to a passive activity against your Ore­ gon tax liability for the taxable year. Active participants in rental real estate activities. The $25,000 offset for rental real estate activities provided in IRC Section 469(i) applies to deductions allowed under federal and Oregon law. Don’t reduce the off­ set by deduction equivalents defined in IRC Section 469(j)(5). The phaseout amounts ($100,000/$150,000) are based on federal AGI regardless of whether you are a full-year resident, part-year resident, or nonresi­ dent of Oregon. Part-year residents. Compute your passive activity losses from activities carried on while an Oregon resident. Add those connected with Oregon sources while a nonresident. Modify the result by applicable additions and subtractions listed here. Nonresidents. Compute your passive activity losses from activities connected with Oregon sources. Modify the loss by the applicable additions and subtractions listed here. The loss must be connected with Oregon sources even if you later become an Oregon resident. Oregon modifications to federal passive activity losses Listed here are some of the modifications you must make for Oregon: 1. Additions: • Interest or dividends on obligations of another state. • Depletion in excess of the adjusted basis of property. • Gain on voluntary or involuntary conversions or exchanges of Oregon property reinvested outside Oregon when no election is made to defer it. 2. Subtractions: • Gain or loss on the sale of public utility stock where dividends were reinvested. • Interest or dividends on obligations of the U.S. government. • Wages you didn’t deduct from federal taxable income because you claimed the federal work opportunity credit. Other items

150-101-431 (Rev. 06-17-24) 96 • Interest or dividends on obligations of Oregon political subdivisions. 3. Additions or subtractions: • Differences in depreciation. • Differences in gain or loss from basis differences in the sale of an asset. Note: Items used to modify the federal passive activ­ ity loss must occur in the ordinary course of a trade or business. See OAR 150-314-0110 for more information. Suspended losses (ORS 316.048) [Addition code 156] [Subtraction code 357] Suspended losses are passive activity losses that must be carried over from the loss year to a later tax year. These losses may be used to offset gain when you dispose of your entire interest in the passive activity in a fully taxable transaction under IRC Section 469. You may have an addition if the transaction is taxable by Oregon and a suspended loss was incurred while you were a nonresident. You may have a subtraction if the transac­ tion is not taxable by Oregon but you were a resident dur­ ing the year when the suspended loss was incurred. See “Passive activity losses” for more information. Oregon percentage (ORS 316.117) Part-year residents and nonresidents must compute an Oregon percentage. This determines allowable deduc­ tions, modifications, Oregon tax , and some tax credits. In most cases, you’ll divide your income after sub­ tractions from the Oregon column by your income after subtractions from the federal column. Carry the decimal to three places and enter the figure on the Oregon percentage line. Don’t fill in more than 100 percent or less than 0. Negative income. If the federal column is negative and the Oregon column is positive, your Oregon percentage is 100 percent. If the federal column is positive or nega­ tive and the Oregon column is negative, your Oregon percentage is 0 percent. If both columns are negative, treat both columns as if they were positive and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon num­ ber, divide the federal number by the Oregon number. See Table 12 for examples. Example: Lisa reported $30,000 of income after sub­ tractions in the federal column. She reported $10,000 of income after subtractions in the Oregon column. Here’s how she figured her Oregon percentage: $10,000 ÷ $30,000 = 0.333 or 33.3% Table 12. Oregon percentage examples

Federal column Oregon column Oregon percentage ($20,000) $42,000 100.0% $50,000 ($22,000) 0.0% ($25,000) ($15,000) 100.0% ($12,000) ($15,000) 80.0% Deductions and modifications

(ORS 316.695) You may claim either Oregon itemized deduc­ tions or Oregon’s standard deduction, whichever is larger, but not both. You can claim Oregon item­ ized deductions even if you’re claiming the stan­ dard deduction on your federal return. Oregon itemized deductions Oregon Schedule OR-A. Oregon has its own form for reporting itemized deductions. If you're itemizing your deductions for Oregon, include Schedule OR-A with your Oregon return whether or not you're item­ izing deductions on your federal return. You still use federal definitions and AGI to figure any itemized deduction limitations. For more information, see the instructions for Schedule OR-A. Itemized deduction add backs Certain items that you may be including on Sched­ ule OR-A must be modified for Oregon purposes. If you’re claiming a deduction that must be modified for Oregon, you may need to add back some (or all) of the amount you deducted. All deductions that must be added back can be found under “Additions.” Follow these instructions for reporting an itemized deduction add back: • Full-year residents: Enter the amount you’re add­ ing back with the indicated addition code on Sched­ ule OR-ASC, section A. • Part-year residents and nonresidents: Use the indicated modification code and enter the dollar amount with a minus sign to report the add back as a “negative modification” on Schedule OR-ASC- NP, section D. Other Oregon modifications Part-year residents and nonresidents. Most income items that are modified for Oregon are reported as additions or subtractions. However, a few items must be reported by part-year residents and nonresidents as modifications on Schedule OR-ASC-NP. These are: Other items

150-101-431 (Rev. 06-17-24) 97 • Artist’s charitable contribution subtraction (part- year filers only). • Federal income tax refund addition (negative modification). • Subtraction for federal tax from a prior year. • Foreign tax subtraction. See these items under “Additions” or “Subtractions” and the instructions for Schedules OR-ASC and OR- ASC-NP for more information. Oregon standard deduction Use the standard deduction only if it’s larger than your Oregon itemized deductions. If your filing status is married filing separately and your spouse itemizes, your standard deduction is $0. Generally, your standard deduction is based on your filing status: Single …………………………………………… $2,605 Married filing jointly ……………………………… $5,210 Married filing separately If spouse claims standard deduction ………$2,605 If spouse claims itemized deductions …………… $0 Head of household …………………………… $4,195 Qualifying surviving spouse ………………… $5,210 Standard deduction—Non-U.S. citizens without per­ manent resident status. Your standard deduction is $0, but you may claim itemized deductions. Standard deduction—Short-period return. Individu­ als filing a short-period return may not claim a stan­ dard deduction. Standard deduction—Age 65 or older, blind. If you or your spouse turned 65 on or before January 1, 2024, or if you or your spouse are blind, you’re entitled to an additional deduction amount. If you checked one or more of the boxes on line 17 of your Oregon Form OR-40 or line 38 of your Oregon Form OR-40-N or OR-40-P, multiply the number of boxes checked by: • $1,000 if married or qualifying surviving spouse. • $1,200 if single or head of household. Add this amount to the standard deduction amount for your filing status from above. Example 1: Matt and Sandy are married and file a joint return. Matt is 67 years old, and Sandy, age 62, is blind. They check boxes 17a and 17d on their Form OR-40. Their total standard deduction is $7,210. They figure their standard deduction as follows:

$5,210 Standard deduction for their filing

status MFJ

$2,000 2 x $1,000

$7,210 Total standard deduction Standard deduction—Single or married filing jointly dependents. If you (or you and your spouse, if fil­ ing jointly) can be claimed as a dependent on another person’s return, use the following worksheets to fig­ ure your standard deduction. Use these worksheets even if the other person doesn’t claim you (or your spouse, if filing jointly). Earned income includes salaries, wages, tips, profes­ sional fees, or other amounts received as pay for work you actually perform, and any part of a scholarship or fellowship grant that you must include in your gross income. Use your earned income from all sources even if you are a part-year resident or nonresident. Standard deduction worksheet for single dependents 1. Enter your earned income. 1. 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,250 5. Enter the larger of line 3 or 4. 5. 6. Basic standard deduction for single. 6. $ 2,605 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2024, enter $1,200; if not, enter $0. 8. 9. If blind, enter $1,200; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 2: Homer is single, age 17, not blind, and claimed as a dependent by his father. He had $1,135 of earned income. Homer’s standard deduction is $1,535, figured as follows: 1. Enter your earned income. 1. $ 1,135 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. $ 1,535 4. Minimum standard deduction, set amount. 4. $ 1,250 5. Enter the larger of line 3 or 4. 5. $ 1,535 6. Basic standard deduction for single. 6. $ 2,605 7. Enter the smaller of line 5 or 6. 7. $ 1,535 8. If age 65 by 1/1/2024, enter $1,200; if not, enter $0. 8. $ 0 9. If blind, enter $1,200; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 1,535 Other items

150-101-431 (Rev. 06-17-24) 98 Standard deduction worksheet for married filing jointly (MFJ) dependents 1. Enter your earned income. 1. 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. 4. Minimum standard deduction. 4. $ 1,250 5. Enter the larger of line 3 or 4. 5. 6. Standard deduction for MFJ. 6. $ 5,210 7. Enter the smaller of line 5 or 6. 7. 8. If age 65 by 1/1/2024, enter $1,000; if not, enter $0. 8. 9. If blind, enter $1,000; if not, enter $0. 9. 10. Add lines 7, 8, and 9. This is your standard deduction. 10. Example 3: Jack and Kris are married and are both full-time college students. Jack is 20 and Kris is 21. Neither is blind. They live in Jack’s parents’ home and are both claimed as dependents by Jack’s par­ ents. Jack and Kris work part-time at the university. Together they had $7,620 of wage income. Jack and Kris will file a joint tax return. They calculate their standard deduction as follows: 1. Enter your earned income. 1. $ 7,620 2. Additional $400. 2. $ 400 3. Add lines 1 and 2. 3. $ 8,020 4. Minimum standard deduction. 4. $ 1,250 5. Enter the larger of line 3 or 4. 5. $ 8,020 6. Basic standard deduction for MFJ. 6. $ 5,210 7. Enter the smaller of line 5 or 6. 7. $ 5,210 8. If age 65 by 1/1/2024, enter $1,000; if not, enter $0. 8. $ 0 9. If blind, enter $1,000; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. $ 5,210 Oregon deferral of reinvested capital gain (Or Laws 1995, ch 809) [Addition code 118] From 1996 to 1999, taxpayers were allowed to defer their Oregon personal income tax on certain capital gains if the gains were timely reinvested in assets used in types of business activities. An addition is required for the tax year when the deferred gain must be recognized. Reasons for recognition include ceasing to use the asset in an approved manner, dis­ posing of the asset, and ending approved business activities. Federal law disconnect [Addition code 131] Use this addition code to report items that were excluded or deducted from your federal taxable income and should be added back for Oregon pur­ poses, where those items don’t already have an assigned addition code. Contact us if you have ques­ tions about a situation involving a disconnect from federal taxable income that isn’t described elsewhere in this publication. Other items

150-101-431 (Rev. 06-17-24) 99 Credits Types of credits There are three types of Oregon tax credits: standard, carryforward, and refundable. In addition, some of these credits require certification from another state agency. Certain credits must be prorated on part-year and nonresident returns. Refer to the instructions for the credit you are claiming for specific details. Standard credits. These credits aren’t refundable. They can’t exceed your tax liability for the current tax year. Unused credit in excess of your tax liability can’t be carried forward to a later tax year. Carryforward credits. These credits aren’t refund­ able. They can’t exceed your tax liability for the cur­ rent tax year, but you may carry forward the unused amount to a later tax year. Refundable credits. Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability will be refunded to you. Certified credits. For certain credits, you must qual­ ify, apply, and be certified before you can claim them on your return. Other agencies, not the Department of Revenue, are responsible for certifying these cred­ its. Contact information can be found in the instruc­ tions for each certified credit in this section. Full-year residents. All credits you qualify for are allowed on Form OR-40. Part-year residents and nonresidents. You must pro­ rate certain Oregon credits by multiplying your total credit by your Oregon percentage from Form OR- 40-N or OR-40-P to figure the amount you can claim on your Oregon return. You must prorate the follow­ ing credits: • ABLE account contributions. • Agricultural employer overtime tax credit. • Agriculture workforce housing. • Crop donation. • Earned income. • Employer scholarship. • Fish screening devices. • Oregon 529 College Savings Network contributions. • Oregon Cultural Trust. • Oregon Kids’ Credit. • Oregon Veterans’ Home physicians. • Personal exemption. • Reservation enterprise zone. • Rural emergency medical technicians. • Rural medical practitioners. • Short line railroad rehabilitation. • University Venture Development Fund contributions. • Working family household and dependent care. S corporation shareholders. Certain carryforward credits earned by S corporations pass through to shareholders, who then claim these credits on their personal income tax returns. Each of these credits may only be claimed on an Oregon personal income tax return by shareholders of an S corporation that qualifies for the credit or, if the credit is transferable, is a qualified transferee of the credit from another corporation that earned the credit. Except as noted, each credit is limited to the shareholder’s income tax liability for the year, although the carryforward pro­ visions may vary. For more information about credits available to S corporations, visit our website. Tax recaptures. Forfeited credits are reported as tax recaptures on Schedule OR-ASC, section C, or Schedule OR-ASC-NP, section E, and on your Oregon return as an addition to tax. See “Additions to tax” in “Oregon tax” for more information. Claiming credits. The exemption credit, political contribution credit (full-year filers), earned income credit, and Oregon Kids Credit are claimed on spe­ cific lines on the return. All other credits are reported on Schedule OR-ASC or Schedule OR-ASC-NP. The schedule contains sections that are specific for each of the three types of credits. Enter the credit code and the amount you are claiming in the applicable sec­ tion. The total dollar amount of the credits entered in each section is reported on your return. See the explanation for the specific credit on the following pages to find its code number and more detailed instructions. A list of all credits and their code numbers is included in the Appendix. If you claim any credits on Schedule OR-ASC or OR-ASC- NP, include the schedule when you file your return. Credits

150-101-431 (Rev. 06-17-24) 100 Standard credits Exemption credit (ORS 316.085) This year’s maximum credit is $236 for each quali­ fying personal exemption. The exemption amount is indexed for inflation. A personal exemption credit isn’t allowed if your fed­ eral AGI on line 7 of Form OR-40, or line 29F of Form OR-40-N or Form OR-40-P exceeds: • $200,000 for married filing jointly, head of house­ hold, or qualifying surviving spouse; or • $100,000 if your filing status is single or married filing separately. Part-year residents and nonresidents. Multiply your personal exemption credit by your Oregon percentage. Personal exemption The term “personal exemption” refers to an individ­ ual who qualifies for a personal exemption deduction on the federal return under IRC Section 151. Through tax year 2025, the amount of the federal deduction is $0; however, the qualifications for the deduction under IRC Sections 151 and 152 haven’t changed, and neither have the qualifications for claiming the Ore­ gon personal exemption credit. An individual who qualifies for a personal exemption deduction under IRC Sections 151 and 152 includes: • The taxpayer (including both the primary and sec­ ondary taxpayers who file a joint return); • The taxpayer’s spouse, if the taxpayer is filing a separate return and the spouse has no gross income and doesn’t qualify for an exemption deduction on another taxpayer’s return; and • The taxpayer’s qualifying child or qualifying relative. Qualifying child. A qualifying child is an individual who is the taxpayer’s: • Child or the child’s descendant, or • Sibling or stepsibling, or their descendant. The term “child” includes stepchildren, legally- adopted children, and foster children who have been placed with the taxpayer by an authorized placement agency or by court order. At the end of the calendar year, the child must be: • Under the age of 19; or • A student under the age of 24; or • Permanently and totally disabled, regardless of age. A “student” is an individual who attended an edu­ cational organization on a full-time basis during each of five calendar months during the tax year. The educational organization must have a regular faculty and curriculum, with a regularly-enrolled student body who attend where the organization’s educa­ tional activities normally take place. An individual who is a “permanently and totally dis­ abled” child is one who is unable to engage in any “sub­ stantial gainful activity,” as that term is defined under federal law, due to a physical or mental impairment that is medically determinable and can be expected to result in death, or which has lasted, or can be expected to last, for at least 12 continuous months. Qualifying relative. A qualifying relative is an indi­ vidual for whom the taxpayer pays over one-half of the individual’s support for the year, and who is the taxpayer’s: • Child, sibling, stepsibling, or half sibling, or their descendant, who isn’t also a qualifying child of the taxpayer; • Parent, or their ancestor; • Stepparent or parent-in-law; • Sibling-in-law; • Parent’s sibling; or • An individual who isn’t listed above but is a mem­ ber of the taxpayer’s household and has the same principal place of abode as the taxpayer. The qualifying relative can’t have gross income for 2023 that exceeds $4,700, and can’t be claimed on another tax­ payer’s return. They must also be a U.S. citizen or national, or a resident of the United States, Mexico, or Canada. Special rule for custodial parents. If a qualifying child receives over one-half of their support from parents who are divorced, legally separated, or living apart for the last six months of the year, and the child is in the custody of one or both parents for more than half of the year, the personal exemption credit for the child may be claimed by the noncustodial parent if the custodial parent (the parent who has custody for the greater part of the year) makes a written statement releasing the exemption to the noncustodial parent for the tax year. The custodial parent’s written statement should be kept with the taxpayer’s records; we may ask for it later. For additional information about requirements for the personal exemption deduction, including details about certain exceptions and support limitations, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information. You and your spouse You are allowed one personal exemption credit for yourself if no one else can claim you as a dependent. Credits–Standard

150-101-431 (Rev. 06-17-24) 101 You are allowed one personal exemption credit for your spouse if no one else can claim your spouse as a dependent and: • You’re filing a joint return, or • Your filing status is married filing separately and your spouse has no income. If someone else can claim you as a dependent, you can’t claim an exemption for yourself. If someone else can claim your spouse as a dependent, you can’t claim their exemption. This is true even if the other person doesn’t claim you (or your spouse) as a dependent. Severely disabled (ORS 316.752 , 316.758) Did you have a severe disability at the end of the tax year? If so, you can claim an additional personal exemption credit if your federal AGI doesn’t exceed $100,000, regardless of your filing status. You may qualify for the severely disabled exemption even if someone else can claim you as a dependent. You’re considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet or legs; or • You permanently lost the use of both hands; or • You’re permanently blind; or • You have a permanent condition or an impairment of indefinite duration that limits your ability to:

— Earn a living, or

— Maintain a household, or

— Transport yourself. Deafness or hearing impairment alone don’t qualify as a severe disability for purposes of this additional exemption credit. This is true regardless of any special equipment you may use in your home or workplace. You don’t qualify for this exemption if: • You have a temporary disability from an injury or illness and are expected to recover; or • Your condition keeps you from doing your former work but not from doing other kinds of work with­ out special equipment; or • Your federal AGI is more than $100,000, regardless of your filing status. If you have a permanent severe disability, your physi­ cian must write a letter describing it. Keep the letter with your permanent health records. If you qualify, check the “Severely disabled” exemp­ tion box on your return. If your spouse qualifies, they may also claim this additional exemption credit. All dependents You are allowed one personal exemption credit for: • Each qualifying child you're able to claim as a dependent, and • Each of your other qualifying relatives. On your Oregon return, you must include the fol­ lowing information for all dependents: first and last name, relationship to you, Social Security number, and date of birth. Child with a disability (ORS 316.099) You may be entitled to an additional exemption credit for your dependent child who has a qualifying dis­ ability. To qualify, all of the following must be true. Your federal AGI must not be more than $100,000, regardless of your filing status, and your child: • Qualified as your dependent for the year, and • Was eligible for early intervention or special edu­ cation services, as defined by the Department of Education, and • Was considered to have a disability as of Decem­ ber 31, 2023, under the federal Individuals with Disabilities Education Act, and • Was age 21 or younger at the end of the tax year. Eligible disabilities and their Oregon Department of Education code numbers include:

— Autism spectrum disorder (82).

— Communication disorder (50).

— Deafblindness (43).

— Developmental delay (98).

— Emotional disturbance (60).

— Hearing impairment (20).

— Intellectual disability (10).

— Orthopedic impairment (70).

— Other health impairment (80).

— Specific learning disability (90).

— Traumatic brain injury (74).

— Visual impairment (40). Each year, you must be able to provide an eligibility statement that confirms one of the disabilities listed above from the child’s Individualized Education Pro­ gram (IEP) or Individualized Family Service Plan (IFSP). Keep the eligibility statement with your per­ manent health records. If your dependent qualifies, mark the “Child with qualifying disability” box by your dependent’s name on your return. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 06-17-24) 102 Income taxes paid to another state on mutually-taxed income (ORS 316.082, 316.131) [Credit code 802] You may be able to claim a credit on your Oregon return if you have income that was taxed by Oregon and another state. If you pay tax to both Oregon and the other state, you have “mutually-taxed income.” Jurisdiction to tax. Certain types of income can be taxed by only one state. This credit is allowed only if Oregon taxed the income and the other state also had a right to tax the same income. For instance, if you live in Oregon, other states can’t tax your pen­ sion income. Only the state you live in can tax your pension income. Therefore, if you pay tax to Oregon and another state on your pension income, you can’t take a credit for that tax. You can’t take a credit for paying tax you don’t owe. State income tax only. This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, excise tax, alterna­ tive minimum tax (AMT), property tax, or other state taxes that aren’t based on income. For example, the Idaho Permanent Building Fund Tax and the Wash­ ington Business and Occupation (B & O) Tax and Capital Gains Tax don’t qualify because they aren’t based on income. Nonresident reciprocity. Oregon is one of five states that allow a credit to be claimed by a nonresident for tax paid to the nonresident’s home state on income that is taxed by Oregon and the home state. The other four states are Arizona, California, Indiana, and Vir­ ginia. If you are a resident of one of those four states, you may claim a credit on your Oregon nonresident return for tax you paid to your home state on the mutually-taxed income. Sale of residence. If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either this credit or the credit for mutually-taxed gain on the sale of residential property. You can’t claim both credits. See “Mutu- ally-taxed gain on the sale of residential property“ for more information about that credit. When can this credit be claimed? You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit. Tax paid in different years. If you paid tax to Oregon and another state on the same income, but in different tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information. Who may claim this credit? Full-year residents. Claim the credit on your Oregon return only if the income is taxed by both Oregon and a state other than Arizona, California, Indiana, or Virginia. If you are a full-year Oregon resident with income that is taxed by Arizona, California, Indiana, or Virginia, you must claim the credit on the nonresident return that you file with that state; don’t claim the credit on your Oregon return. See “Note for full-year residents” and “Exception for Oregon resident partners and S corporation shareholders.” Example 1: Roy is a full-year Oregon resident. He has wages from a job in Idaho and income from rental property he owns in California. His Idaho wages and California rental income are taxed by Oregon as well as those states. Roy may claim a credit on his Oregon return for taxes paid to Idaho. He must claim a credit on his California nonresident return for taxes paid to Oregon. Note for full-year residents. If one of the listed states doesn’t allow the credit on your nonresident return, you may amend your Oregon return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to Arizona, California, Indiana, or Virginia on income that was also taxed by Oregon; 2. You paid that state’s tax at or before the time you filed your Oregon return; 3. You properly claimed the credit for taxes paid to Oregon on the nonresident return you filed with that state; and 4. That state didn’t allow your credit. Part-year residents. Your credit is a combination of an amount based on your mutually-taxed income during the part of the year that you were a nonresi­ dent and an amount based on your mutually-taxed income during the part of the year that you were a resident. • Claim the credit on your Oregon return for the part of the year you were a nonresident of Oregon only if you pay taxes on income that is mutually taxed by Oregon and Arizona, California, Indiana, or Virginia. If the income was taxed by Oregon and a state other than those listed, you must claim a credit for taxes paid to Oregon on the return you file with the other state. See “Note for nonresidents.” • Claim the credit on your Oregon return for the part of the year you were a resident of Oregon if you pay Oregon tax on income that was mutually taxed by a state other than Arizona, California, Indiana, Credits–Standard

150-101-431 (Rev. 06-17-24) 103 or Virginia (or you meet the “Exception for Oregon resident partners and S corporation shareholders”). See “Note for full-year residents“ above. Example 2: Charlotte operates a business in Oregon. She moved from Oregon to Virginia in May, but con­ tinued to have income from her Oregon business after she moved. She also had income during the year from rental properties she owns in Oregon, Virginia, and Georgia. She files a part-year Oregon return, a part-year Virginia return, and a nonresident Geor­ gia return. She will claim a credit for taxes paid to another state on each kind of income as follows: • Oregon business income. Charlotte will pay tax to Oregon for the part of the year she was a resident, and to both Oregon and Virginia for the part of the year she was a nonresident. She may claim a credit on her Oregon return for taxes paid to Virginia for the part of the year that she was a nonresident of Oregon. • Georgia rental income. Charlotte will pay tax to both Oregon and Georgia on this income only dur­ ing the part of the year that she was a resident of Oregon. Once she moved to Virginia and was no longer an Oregon resident, Oregon stopped having the right to tax this income. She may claim a credit on her Oregon return for tax paid to Georgia only for the part of the year that she was an Oregon resi­ dent. She will claim a credit on her Virginia return for tax paid to Georgia for the part of the year that she was a Virginia resident. • Virginia rental income. Charlotte will pay tax to both Oregon and Virginia for the part of the year that she was a resident of Oregon, and only to Vir­ ginia after she moves. She can’t claim a credit on her Oregon return for taxes paid to Virginia on this income when she was an Oregon resident. Instead, she must claim a credit for taxes paid to Oregon on her Virginia return for the part of the year that she was a nonresident of Virginia. Example 3: Kim and Jimmy lived and worked in New Mexico. At the end of August, they quit their jobs and moved to Oregon. In September they both got new jobs in Oregon. Their wages were their only source of income for the year. Kim and Jimmy paid tax to New Mexico only on the wages they earned when they lived in New Mexico, and they paid Oregon tax only on the wages they earned after they moved to Oregon. They can’t claim a credit for tax paid to either state because they didn’t have income that was mutually taxed by both states. Nonresidents. You may claim a credit on your Ore­ gon return for tax paid to your state of residence on mutually-taxed income if your state offers a recipro­ cal credit for Oregon residents. As noted above, the states with a reciprocal credit are Arizona, Califor­ nia, Indiana, or Virginia. If you pay Oregon tax on income that is also taxed by a state other than those listed, you must claim the credit for taxes you paid to Oregon on the return you file with the other state. See “Note for nonresidents.“ Example 4: Elisa, a calendar-year taxpayer, was a resident of Indiana who receives income from an upscale boutique she owns in Oregon. Last year, Elisa claimed a credit for taxes paid to Indiana on the mutually-taxed income from the boutique on her Oregon nonresident return. On January 1 of this year, Elisa moved away from Indiana and became a resident of Hawaii. She still receives income from the boutique in Oregon. Because Hawaii isn’t one of the nonresident reciprocity states, Elisa must claim a credit for taxes paid to Oregon on the return she files with Hawaii. Note for nonresidents. If a state (other than those listed above) doesn’t allow your credit, you may amend your Oregon nonresident return to claim the credit for taxes paid to that state. You must provide proof of the following: 1. You paid tax to a state (other than Arizona, Cali- fornia, Indiana, or Virginia) on income that was also taxed by Oregon; and 2. You paid the other state’s tax at or before the time you filed your Oregon return; and 3. You properly claimed the credit for taxes paid to Oregon on the other state’s return; and 4. The other state didn’t allow your credit. How do I calculate the credit amount? The procedure for calculating the credit depends on whether you are a full-year resident, a part-year resident, or a nonresident of Oregon. If you paid tax to multiple states on income that is also taxed by Oregon, calculate the credit for each state separately, without regard to any credit for tax paid to any other state. Use these formulas and definitions to calculate the credit amount according to your residency status. Formula I Modified AGI taxed by both states Modified AGI x Your Oregon tax after all other credits Formula II Modified AGI taxed by both states Total income on the other state’s return x Other state’s tax after all other credits Modified AGI • Full-year residents. Your modified AGI is your fed­ eral AGI modified by certain Oregon additions and subtractions. Credits–Standard

150-101-431 (Rev. 06-17-24) 104 • Part-year residents and nonresidents. Your modi­ fied AGI is the part of your federal AGI that is tax­ able to Oregon, modified by certain Oregon addi­ tions and subtractions. Oregon additions. These are generally items of income that are taxed by Oregon but not by the federal government. See “Additions” for more information. Oregon subtractions. These are generally items of income that are taxed by the federal government but not by Oregon. For example, U.S. bond interest is an Oregon subtraction because it’s income reported on your federal return that isn’t taxed by Oregon. Note: Don’t subtract the federal tax you paid on the sub­ tracted income, because it isn’t an income item. See “Subtractions” for more information. Oregon tax after all other credits Your Oregon tax after all other credits is your tax after all credits except the credit for taxes paid to another state on mutually-taxed income, the surplus (“kicker”) credit, and the credit for PTE-E taxes paid. Full-year residents Claim the credit on your Oregon return only if your income is taxed by Oregon and a state other than Ari­ zona, California, Indiana, or Virginia. The credit for a full-year resident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to the other state; or • The amount calculated with Formula I. Note: Full-year residents don't use Formula II. Example 5: Manar's AGI is $44,000. This includes $10,000 of rental income taxed by both Oregon and Idaho and $5,000 of U.S. bond interest. She received $1,000 in interest from municipal bonds from another state. She has a federal tax liability of $3,000. Her Idaho income tax is $300. Her net Oregon tax is $2,000 (before her credit for income taxes paid to another state). Here’s how she calculates her modified AGI and Formula I: Federal AGI $ 44,000 Modifications

Add municipal bond interest + 1,000

$ 45,000

Less U.S. bond interest – (5,000 )

Modified AGI $ 40,000 Note: The federal tax subtraction isn’t used in this computation because it isn’t an income item. Formula I: ($10,000 ÷ $40,000) × $2,000 = $500. Manar’s credit is $300, the smallest of: • Her Oregon tax after all other credits ($2,000); or • The tax actually paid to Idaho ($300); or • The amount from Formula I ($500). Part-year residents Your credit for the part of the year that you were a nonresident is the smallest of: • Your Oregon tax on mutually-taxed income from the nonresident period after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia on that same income; or • The amount figured using Formula I; or • The amount figured using Formula II. For the part of the year that you were a resident, your credit is the smallest of: • Your Oregon tax on mutually-taxed income while you were a resident after all other credits; or • The tax on that same income you actually paid to a state other than Arizona, California, Indiana, or Virginia; or • The amount calculated with Formula I. Important—Don't use Formula II to calculate the credit for the part of the year that you were a resident. Example 6: Ezra moved from Idaho to Oregon on September 1. He sold Oregon property on June 10, and sold Idaho property on October 18. He worked in Idaho all year. His Idaho income tax after credits is $2,000; of this amount, $700 is on income he received when he was an Oregon resident. His Oregon income tax liability after other credits is $400; of this amount, $150 is on income received during the part of the year when he wasn't an Oregon resident. His income on his Oregon and Idaho returns is: Oregon income Sale of Oregon property June 10 $ 13,500 Wages September 1 to December 31

9,000 Interest September 1 to December 31

500 Sale of Idaho property October 18: Idaho capital gain reported + 6,000* Total AGI taxable to Oregon $ 29,000 Idaho income Sale of Oregon property June 10 $ 13,500 Wages January 1 to December 31

27,000 Interest January 1 to August 31

1,000 Sale of Idaho property October 18: Idaho capital gain reported. 6,000 Less Idaho capital gain exclusion* ($3,600) Net capital gain taxed by Idaho 2,400 Total AGI taxable to Idaho $ 43,900 Credits–Standard

150-101-431 (Rev. 06-17-24) 105 *If the other state has any income exclusion that applies to the mutually-taxed income, you must adjust the mutually- taxed income by the exclusion amount. In this example, Ezra’s federal capital gain is $19,500. Idaho allows Ezra to exclude 60 percent, or $3,600, of his $6,000 capital gain from the sale of the Idaho property. Ezra’s mutually-taxed income is $24,900 [($6,000 – $3,600) + 13,500 + 9,000]. Nonresident period. Ezra had $13,500 in mutually- taxed income while he was a nonresident. However, because Idaho isn’t one of the four listed states, Ezra must claim his credit for the tax paid to Oregon while he was an Idaho resident on his Idaho part-year return. Residency period. Ezra had $11,400 in mutually- taxed income when he was an Oregon resident: the $9,000 in wages earned from working in Idaho, and the $2,400 portion of the capital gain taxed by Idaho. His total income while he was a resident was $16,000: the $9,000 in wages, $1,000 in interest, and $6,000 cap­ ital gain from the Idaho property. Ezra compares the tax paid to Oregon and Idaho on income received while he was an Oregon resident to the result he gets from Formula I: Formula I: ($11,400 ÷ $16,000) × $250 = $178 His credit for the resident part of the year is $178, the smallest of: • His Oregon tax after all other credits ($250); • The tax actually paid to Idaho ($700); or • The amount from Formula I ($178). Nonresidents The credit for a nonresident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia; or • The amount figured using Formula I; or • The amount figured using Formula II. Example 7: Mary is a full-year resident of California. She lived in Oregon for 10 years prior to retiring to California. While living in Oregon, she acquired and maintained rental property there. She now receives installment payments from the sale of the property and pays tax to California on the gain and inter­ est. Her California income tax after credits is $100. Because she is an Oregon nonresident, only the gain is taxed on her Oregon nonresident return. Her Ore­ gon tax after credits is $350. Her income is as follows: Oregon income Capital gain on installment sale of real property $ 10,000 Total AGI taxable to Oregon $ 10,000 California income Capital gain on installment sale of real property $ 10,000 Interest on installment sale 5,000 Other interest 8,000 Business loss (20,000) Total AGI taxable to California $3,000 Her income taxed by both states is $10,000. To figure her credit, Mary compares the tax she paid to Oregon and California to the results of both Formula I and Formula II. • Formula I: ($10,000 ÷ $10,000) × $350 ($350). • Formula II: ($10,000 ÷ $3,000) × $100 ($333). Her Oregon credit is $100, the smallest of: • Her Oregon tax after all other credits ($350); or • The tax actually paid to California ($100); or • The amount from Formula I ($350); or • The amount from Formula II ($333). Where do I claim the credit? A credit for taxes paid on income taxed by more than one state is reported on Schedule OR-ASC, section C or Schedule OR-ASC-NP, section E. Use credit code 802. Enter the dollar amount of the credit and the two-letter postal abbreviation for the other state. If you are claiming a credit for taxes paid to more than one state, list each state separately. Include Schedule OR-ASC or OR-ASC-NP when you file your Oregon return, and keep the following with your tax records: 1. A complete copy of the other state’s income tax return; and 2. Proof of payment of the tax, such as:

— A copy of the check written to pay the tax at the time the other state’s return is filed;

— Copies of W-2 statements verifying withhold­ ing paid to the other state;

— A copy of a cashier’s check or other negotiable instrument;

— A copy of a canceled check showing payment of tax or estimated tax payments; or

— A receipt of tax payment. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Itemized deduction You can’t take a credit and a deduction for the same item on your return. If you're claiming a credit for taxes paid to another state on your Oregon return, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Credits–Standard

150-101-431 (Rev. 06-17-24) 106 Fiduciary returns. See the note under “Income taxes paid to another state by a pass-through entity” in “Additions” if the tax on which the credit is based is deducted on federal Form 1041. Exception for Oregon resident partners and S corporation shareholders Pass-through income taxes paid to another state [Credit code 815] Owners of companies taxed in Oregon as partner­ ships or S corporations may be able to claim a credit on their resident Oregon return for their proportion­ ate share of income taxes paid to another state by the entity. The tax must be an income tax, not a mini­ mum tax. For example, Washington state's B & O tax doesn't qualify for this credit. Claim the credit on your resident return, if: • You elected to be included in the entity’s group/ composite filing for the other state and the entity paid your tax liability; or • The entity was taxed directly by the other state. You’re considered to have paid a pro rata share of the income tax imposed on the entity by the other state. For an Oregon resident partner or S corporation shareholder, the allowable credit is the smallest of the following: • Oregon tax on the individual’s return; or • The individual’s pro rata share of the other state’s tax; or • The individual’s pro rata share of the mutually- taxed income from an S corporation or partnership return:

— Divided by the individual’s modified Oregon income, and

— Multiplied by the Oregon tax liability from the individual return. Example 1: Oliver is a full-year Oregon resident with modified Oregon income of $30,400 and Oregon tax (after all other credits) of $1,538. Oliver is a 10 percent shareholder of My Corp., an electing S corporation in California. California has a corporate tax of 1.5 per­ cent of income, with a minimum corporate franchise tax of $800. For this tax year, My Corp. earned $10,000 in ordinary business income, so Oliver’s share is $1,000. The corporation must pay California $800 of tax, and only $150 is attributable to income ($10,000 × 1.5%). Oliver’s share of this tax is $15. The $650 balance paid by My Corp is a minimum franchise tax and doesn’t qualify for this credit. Oliver’s Oregon credit for income taxes paid to another state is $15, the smallest of: • Oregon tax after all other credit: $1,538, • Pro rata share of California’s tax: $15, • ($1,000 ÷ $30,400) × $1,538 = $51. Oliver claims the credit on Schedule OR-ASC using credit code 815. Example 2: Monte, an Oregon resident, receives part­ nership income from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia doesn’t allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Monte can claim a credit on his Oregon resident return. Example 3: Kate, an Oregon resident, receives income from a partnership doing business in Hawaii. She reports AGI of $21,000, including gain on the sale of partnership property in Hawaii of $5,000. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Kate’s modified AGI is $20,000 ($21,000 of AGI minus the $1,000 basis adjustment). The mutually-taxed income is $4,000 ($5,000 gain minus the $1,000 basis adjustment). Her Oregon tax after all other credits is $1,100. Her pro rata share of Hawaii tax is $360. Kate’s Oregon credit for income taxes paid to Hawaii is $220, the smallest of: • Oregon tax after all other credits: $1,100. • Pro rata share of Hawaii’s tax: $360. • Formula I: ($4,000 ÷ $20,000) x $1,100 = $220. Note: Because Kate is an Oregon resident, she doesn’t use Formula II. Addition. If the PTE paid income tax to another state for itself or on your behalf and is deducting the tax on its own return, you’ll need to add the tax payment on your return. See “Income taxes paid to another state by a pass-through entity” in “Additions.” Mutually-taxed gain on the sale of residential property (ORS 316.109) [Credit code 806] If you sell your personal residence, your Oregon taxable gain will be the same as your federal tax­ able gain. Generally, any gain you excluded on your federal return will also be excluded on your Oregon return. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may be different from the federal basis due to depreciation differences. Credits–Standard

150-101-431 (Rev. 06-17-24) 107 You may qualify for this credit only if the gain on the sale of your residential property is taxed by both Oregon and another state or country. You may claim either this credit or the credit for income taxes paid to another state, but not both. You aren’t eligible to claim this credit if you qualify for a credit for income taxes paid to another state on the other state’s tax return. How much is the credit? The credit is the smaller of: • Mutually-taxed gain × Other state’s/coun­ try’s tax after all other credits Total income on the return of the other state/country or • Eight percent of the gain taxed by the other state/ country. Mutually-taxed gain. Your mutually-taxed gain is the total gain from the sale of your personal residence, reduced by any deductions or exclusions allowed by either the other state/country or Oregon. Oregon tax after all other credits. Your Oregon tax after all other credits is your tax after standard, carry­ forward, and refundable credits but before any credit for taxes paid to another state. Your tax includes tax recaptures but doesn’t include interest on installment sales. See “Additions to tax” for more information. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Itemized deduction If you claim this credit, you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Oregon Cultural Trust contributions (ORS 315.675) [Credit code 807] Did you make a donation to an Oregon nonprofit cul­ tural organization during the tax year? If so, you can make a matching donation to the Trust for Cultural Development Account and get an Oregon tax credit. How much is the credit? You may get a credit of up to 100 percent of the amount of the matching contribution, to a maximum credit of $500 per taxpayer ($1,000 on jointly filed returns). For spouses who file separate returns, each may claim a share that would have been allowed on a joint return in proportion to the contribution each spouse made. Be sure to keep receipts from both organizations with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Itemized deduction You can’t claim an itemized deduction for a contribu­ tion to a charitable organization to the extent that you received something of value, such as a tax credit, for your contribution. If you’re itemizing deductions for Oregon, don’t include your contribution to the Ore­ gon Cultural Trust on Schedule OR-A. For more information, contact the Oregon Cul­ tural Trust at 503-986-0088 or visit their website at www.culturaltrust.org. Oregon Veterans’ Home physicians (ORS 315.624) [Credit code 808] Physicians who provide medical care to residents of an Oregon Veterans’ Home (OVH) may be eligible for a credit of up to $5,000 per year. Who can claim the credit? Any resident or nonresident individual physician may qualify for the credit. The physician must be licensed to practice in Oregon (ORS chapter 677). They must pro­ vide care to a minimum of at least eight residents at an OVH. S corporation shareholders and partnership mem­ bers may only claim a credit based on the care they pro­ vided. The full amount of the credit shall be allowed to each taxpayer who qualifies in an individual capacity. How much is the credit? The credit is equal to the lesser of: • $1,000 for every eight residents for whom the physi­ cian provides care at an OVH; or • $5,000. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required You must obtain a letter from the OVH where you provided care. The letter must state that you missed no more than 5 percent of your scheduled visits dur­ ing the tax year. Keep the letter with your tax records; we may request it at a later date. Credits–Standard

150-101-431 (Rev. 06-17-24) 108 No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Political contributions (ORS 316.102) [Credit code 809—Schedule OR-ASC-NP only] Oregon law allows a tax credit for political contribu­ tions. You may not claim this credit if your federal AGI exceeds $150,000 on a jointly filed return, or $75,000 on all other returns. To qualify, you must have contributed money in the tax year you claim the credit. You must reduce the amount of your contribution by the fair market value (FMV) of any items or services you receive in exchange for your contribution. Contributions of goods or services don’t qualify. Keep receipts from the candidate or organization with your tax records. You can use copies of canceled checks as your receipt. How much is the credit? Your credit is equal to your contribution, limited to $100 on a joint return or $50 on a single or separate return. The $3 check-off on the Oregon tax return doesn’t qualify for this credit. Partners or S corporation shareholders can claim a credit for their share of political contributions made by the partnership or S corporation. The contribu­ tion must meet all statutory requirements. The $50 and $100 limits apply individually to each partner’s or shareholder’s return. Which contributions qualify? Candidates and their principal campaign commit­ tees. You can claim a credit for a contribution to a candidate for federal, state, or local elective office, or to the candidate’s principal campaign committee. To qualify, at least one of the following must occur in Oregon in the same calendar year in which you made your contribution: • The candidate’s name must be listed on a primary, general, or special election ballot, • A prospective petition of nomination must be filed by or for the candidate, • A declaration of candidacy must be filed by or for the candidate, • A certificate of nomination must be filed by or for the candidate, or • A designation of a principal campaign committee must be filed with the Oregon Secretary of State’s Office. Note: The designation must be made in each year that a contribution is made in order to qualify under this provision. Political action committees. You can claim a credit for contributions to political action committees (PACs). The PAC must have certified the name of its politi­ cal treasurer with the appropriate filing officer, usu­ ally the Secretary of State for statewide or regional elections, your county clerk for county elections, or your city recorder for city elections. PACs registered with the Federal Elections Commission may not be required to register in Oregon. Political parties. Political parties can be national, state, or local committees of major political parties. Oregon also allows a tax credit for contributions made to minor political parties that qualify under state law. Contact the Oregon Secretary of State’s Office in Salem at 503-986-1518 to see if a particular party qualifies. Newsletter fund–credit not allowed. Oregon doesn’t allow a credit for contributions made to a newsletter fund. Example 1: Holly contributes $275 for a fund-raising dinner for a presidential candidate. The FMV of the dinner was $35. Holly’s political contribution is $240, because she must reduce her $275 contribution by the $35 FMV of the dinner she received. Being single, Holly’s political contribution credit is limited to $50. Example 2: Burt donated a desk, chair, and a four- drawer file cabinet to his favorite PAC headquarters. The FMV of the furniture is $410. Burt has a written receipt from the PAC. He can’t claim a political contri­ bution credit because he didn’t contribute money to the PAC. His contribution of office furniture doesn’t qualify for the credit. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Reservation enterprise zone (ORS 315.506) [Credit code 810] Businesses in an Oregon reservation enterprise zone that pay tax to tribal governments can claim a credit against their Oregon income tax. The credit is equal to either: • The tribal property tax on a business facility that is paid or incurred during the tax year; or • Any tribal tax paid or incurred during the tax year the business first begins to operate in the reserva­ tion enterprise zone. The credit is allowed only if the tax is imposed uni­ formly in the territory. Credits–Standard

150-101-431 (Rev. 06-17-24) 109 Contact the Oregon Business Development Depart­ ment for the location of reservation enterprise zones at: www.oregon.gov/biz. Who can claim the credit? The credit is available to individuals, partnerships, and corporations. Any business activity qualifies, except property leasing. The business must have begun in 2002 or later. To compute your credit, fill out Schedule OR-REZT, Reservation Enterprise Zone Tax Credit. Download the schedule from our website or call us to order it. Keep the completed schedule with your tax records. Part-year residents and nonresidents. Multiply the credit allowable to a full-year resident by your Ore­ gon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Retirement income (ORS 316.157) [Credit code 811] Who can claim the credit? If you were age 62 or older at the end of the year, and receive taxable retirement income, you may qualify for this credit. Retirement income includes payments in Oregon taxable income from: • State or local government public pensions. • Employee pensions. • Individual retirement plans. • Employee annuity plans. • Deferred compensation plans including defined benefits, profit sharing, and 401(k)s. • Federal pensions (includes military) not subtracted from Oregon taxable income. How do you qualify for the credit? • Your household income is less than $22,500 ($45,000 if married filing jointly); and • Your Social Security and/or Tier 1 Railroad Retire­ ment Board (RRB) benefits are less than $7,500 ($15,000 if married filing jointly), and • Your household income plus your Social Security and Tier 1 RRB benefits is less than $22,500 ($45,000 if married filing jointly). What’s included in household income? Household income generally includes all income (both taxable and nontaxable) each spouse received during the year. Household income includes gross income reduced by adjustments as reported in your federal AGI. You also need to include items not in your federal AGI. These items include but aren’t limited to: • Veteran’s and military benefits. • Gifts and grants (total amount minus $500). • Disability pay. • Nontaxable dividends (other than “return of capital”). • Inheritance. • Insurance proceeds. • Nontaxable interest. • Lottery winnings. • RRB benefits (Tier 2 only). • Scholarships. • IRA conversions included in AGI. See the Household income checklist in the Appen- dix for more help. Don’t include: • Social Security and Tier 1 RRB benefits. • Your state tax refund. • Pension income excluded from federal AGI that is a return of your contributions. • Pensions that are rolled over into an IRA that aren’t included in AGI. To determine household income, you must separate income (or loss) from businesses, farms, rentals or roy­ alties, and dispositions of tangible or intangible prop­ erty. Combine all income from similar sources for net income or loss. Any net loss from the source is lim­ ited to $1,000. NOL carrybacks or carryforwards aren’t allowed. Capital loss carryforwards aren’t allowed. If the combined total of your depreciation, depletion, and amortization deductions is more than $5,000, you must add the excess back into household income.You must also increase your household income by the Oregon income tax modification for depletion in excess of basis. How much is the credit? Use this worksheet to calculate your credit: 1. Enter the retirement income of the eligible individual(s) included on Form OR-40, line 7; or Form OR-40-N or OR-40-P Oregon column, lines 15S and 16S. (Don’t include Social Security/RRB benefits). 1. 2. Enter any federal pension income subtracted from Oregon income. See “Federal pension income.“ 2. 3. Net Oregon taxable pension. Line 1 minus line 2. 3. 4. Enter $7,500 ($15,000 if married filing jointly). 4. 5. Enter both spouses’ total Social Security and Tier 1 RRB benefits. 5. 6. Line 4 minus line 5, but not less than $0. 6. 7. Enter your household income. See the next section to determine household income. 7. Credits–Standard

150-101-431 (Rev. 06-17-24) 110 8. Household income base. Enter $15,000 ($30,000 if married filing a joint return). 8. 9. Line 7 minus line 8, but not less than $0. 9. 10. Line 6 minus line 9, but not less than $0. 10. 11. Enter the smaller of line 3 or line 10. 11. 12. Multiply line 11 by 9% (0.09). This is your credit. 12. Example 1: Jack owns a farm and has a $4,000 loss. He is also in a partnership whose main activity is farming. Jack has income from the partnership of $1,500. His net farm loss is $2,500. He may claim only $1,000 of this loss to compute his household income. Any net loss Jack has from other sources is also limited to $1,000 each. If Jack is claiming more than a $1,000 loss on any line, he must include a worksheet showing his computations. Example 2: Callie has a business with gross income of $32,000 for the year. She has an $11,000 depreciation deduction. Other business expenses are $24,500. She reports a business loss for federal purposes of $3,500. She recomputed her business income for household income purposes. The allowable depreciation deduc­ tion is limited to $5,000. She reports $2,500 business income, computed as follows: $32,000 – ($5,000 + $24,500) = $2,500. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Rural emergency medical service providers (ORS 315.622) [Credit code 812] A tax credit is available for emergency medical ser­ vice providers in qualifying rural areas of Oregon. The credit is based solely on determination of eligi­ bility by the Office of Rural Health. Who can claim the credit? Emergency medical service providers who provide volunteer services in a qualifying rural area may be eligible to claim this tax credit. However, the volun­ teer services must comprise at least 20 percent of the total services provided by the individual in the tax year. A qualifying rural area is an area in Oregon that is located at least 25 miles from any city with a population of 30,000 or more. How much is the credit? The credit is the lesser of $250 or your tax liability for the year. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Forms are available on their website at www.ohsu.edu/oregonruralhealth. Contact Rural Health in Portland at 503-494-4450 if you have questions or need assistance. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Rural health practitioners (ORS 315.613) [Credit code 813] A tax credit is available for health practitioners in certain rural areas of Oregon. The credit is based on eligibility requirements determined by the Office of Rural Health. Who can claim the credit? Physicians, dentists, podiatrists, optometrists, physi­ cian assistants, certified registered nurse anesthetists, and nurse practitioners can qualify for the credit. You qualify for the credit if during the tax year you: • Engage in a rural practice for at least 20 hours per week, averaged over the month. • Remain willing to serve patients with Medicare coverage and medical assistance. • Have AGI of $300,000 or less (unless you meet an exception). The AGI limitation doesn’t apply to a physician who does one of the following:

— Practices as a general surgeon.

— Specializes in obstetrics.

— Specializes in family or general practice and provides obstetrical services.

— Practices emergency medicine in a frontier rural practice county. The percentage of your patients who have Medicare coverage or receive medical assistance must bear the same or greater proportion to the ratio of such persons in need of care in the county served by your practice. This ratio is determined by the Office of Rural Health and may not exceed 20 percent Medicare patients or 15 percent medical assistance patients. S corporations and partnerships don’t qualify for the credit. However, shareholders and partners can Credits–Standard

150-101-431 (Rev. 06-17-24) 111 take the credit on their individual Oregon income tax returns if they meet the eligibility requirements. The credit may be claimed each year for up to a max­ imum of ten years. Certification required You must apply to the Office of Rural Health each year for confirmation of eligibility. Visit their website at www. ohsu.edu/oregonruralhealth for more information. Con­ tact Rural Health in Portland at 503-494-4450 to request an application. Keep a copy of the confirmation letter with your tax records for each year you claim the credit. How much is the credit? The credit is based on the distance from your prac­ tice or hospital where you have a membership and a major population center in a metropolitan statistical area. The credit is the lesser of the amount shown in Table 13 and certified by the Office of Rural Health, or your tax liability for the year. You can claim the credit as long as you have a qualifying practice. Part-year residents and nonresidents. If you meet the eligibility requirements, you may receive a credit. Multiply the credit amount certified by the Office of Rural Health by your Oregon percentage. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Any credit not used this year is lost. Table 13. Rural health practitioner credit Distance between practice/hospital and major population center, in miles Credit amount At least 10, but less than 20 $3,000 At least 20, but less than 50 $4,000 50 or more $5,000 Credits–Standard

150-101-431 (Rev. 06-17-24) 112 Carryforward credits These credits aren’t refundable. They can’t exceed your tax liability for the current tax year, but you may carry forward the unused amount to a later tax year. For each credit you claim, you’ll report on Schedule OR-ASC or OR-ASC-NP: • Any unused amount of the credit that was avail­ able to use (“awarded”) from a prior year and car­ ried forward to this year; • Any amount awarded for the first time this year; and • The total amount you’re using this year. Report any amounts carried forward from a prior year or awarded for the first time in 2023 even if you’re not using the credit this year. Use credits that expire soonest first. Note: You can’t claim an amount carried forward from a prior year unless you filed a return and claimed the credit for that year, even if none of the credit was used. Refer to the instructions for the credit you are claiming for specific details. Transferable credits. Certain carryforward credits may be transferred to another taxpayer. If you will be transferring a credit, you and the transferee must complete and submit Form OR-TFR, Transfer Notice for Certain Credits, on or before the earliest of: • Thirty days after the transfer takes place; • The date that the transferee files their return on which they claim the credit; or • The due date of the transferee’s return, including extensions. For more details about credit transfer requirements, see Form OR-TFR Instructions. Download the form and instructions from our website or contact us to order a copy. Agriculture workforce housing (ORS 315.164) [Credit code 835] Who can claim the credit? You may be eligible for a credit if you construct or rehabilitate agriculture workforce housing for sea­ sonal or year-round agricultural workers and their immediate families in Oregon. The housing must be occupied at some time during the year by an agricul­ tural worker to qualify for the credit. Housing can’t be used for any purpose except housing for agri­ cultural workers. Your family members aren’t con­ sidered agricultural workers under this credit. The credit is available for projects that physically began on or after January 1, 1990. The project must be com­ pleted before you can claim the credit. S corporations and partnerships. Individual share­ holders must claim the tax credit based on their percentage of S corporation ownership interest. Indi­ vidual partners must claim the tax credit based on their distributive share of partnership income. Your percentage should be listed on your Oregon K-1. Part-year residents and nonresidents. The credit is available to nonresidents and part-year residents who build or restore agriculture workforce housing located in Oregon. Multiply the credit amount allow­ able to a full-year resident by your Oregon percentage. How much is the credit? The total credit is 50 percent of the eligible costs actu­ ally paid or incurred to complete the agriculture workforce housing project. The credit may be taken in any of the 10 consecutive tax years beginning with the tax year the agriculture workforce housing proj­ ect is completed. The amount of the credit allowed in any one tax year is 20 percent of the total credit. The amount of credit you can use in any one tax year, however, can’t exceed the lesser of: • Twenty percent of the total credit; or • Your tax liability for the year. Construction and rehabilitation costs include those for financing, construction, excavation, installation, and permits. Construction costs also include acquisi­ tion of new or used prefabricated or manufactured housing. However, rehabilitation costs don’t include the costs of acquiring a building or an interest in a building. In either type of project, construction or rehabilitation, acquisition costs of land and existing improvements on that land used for the project aren’t eligible costs. Depreciation and basis. Depreciation and amortiza­ tion expenses associated with the agriculture work­ force housing project aren’t decreased by the amount of the tax credit. Your adjusted basis in the housing project isn’t decreased by the tax credit. Certification required Oregon Housing and Community Services (OHCS) must inspect the agriculture workforce housing proj­ ect prior to occupancy. For an application, call OHCS in Salem at 503-986-2000 or visit their website at www.oregon.gov/ohcs. If your project qualifies, you’ll get a tax credit approval letter. Keep the letter with your tax records. Credits–Carryforward

150-101-431 (Rev. 06-17-24) 113 Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to nine years after the year it was first allowed (awarded). If you don’t use the carryforward within nine years, it’s lost. Example 1: Ann completes an agricultural workforce housing project in tax year 1 with eligible costs of $1,500,000. She receives a tax credit approval letter certifying a credit of $750,000 ($1,500,000 x 0.50). Ann may choose to claim her credit in any of the 10 con­ secutive tax years beginning with tax year 1. Chart A shows Ann’s tax liabilities for the next 12 years. Because Ann’s tax liability is relatively small for tax years 1 and 2, she chooses to claim her credit in tax year 3. Ann is allowed $150,000 (0.20 x 750,000) of her credit in any given tax year. She reports the allowed amount on the “Amount awarded this year” line on Schedule OR-ASC. Chart A shows the allowed amounts she will report as “awarded” each year on Schedule OR-ASC, and the credit remaining after each year. Chart A: Ann’s allowed and remaining credits per year Year Tax liability Amount awarded this year Remaining credit 1 $500 $0 $750,000 2 $1,000 $0 $750,000 3 $90,000 $150,000 $600,000 4 $127,000 $150,000 $450,000 5 $170,000 $150,000 $300,000 6 $50,000 $0 $300,000 7 $95,000 $150,000 $150,000 8 $40,000 $0 $150,000 9 $32,000 $0 $150,000 10 $60,000 $150,000 $0 11 $0 $0 $0 12 $250,000 $0 $0 Chart B shows Ann’s tax liability and amount allowed each year from Chart A. It also shows the amount she uses each year and any unused amount carried for­ ward as they’d be entered on Schedule OR-ASC. The amount she can use each year is limited to her tax liability for the year or $150,000, whichever is less. For example, in Year 3, Ann uses $90,000 of the $150,000 awarded for the year; for Year 4, she reports $60,000 ($150,000 – $90,000) as the amount carried forward from a prior year. Chart B: Ann’s prior year, awarded, and used credit amounts Year Tax liability Amount from prior year Amount awarded this year Amount used this year 1 $500 N/A $0 $0 2 $1,000 N/A $0 $0 3 $90,000 N/A $150,000 $90,000 4 $127,000 $60,000 $150,000 $127,000 5 $170,000 $83,000 $150,000 $150,000 6 $50,000 $83,000 $0 $50,000 7 $95,000 $33,000 $150,000 $95,000 8 $40,000 $88,000 $0 $40,000 9 $32,000 $48,000 $0 $32,000 10 $60,000 $16,000 $150,000 $60,000 11 $0 $106,000 $0 $0 12 $250,000 $106,000 $0 $106,000 Example 2: Use the same facts as Example 1, except that Ann decides to transfer her credit in tax year 6, when Chart A shows she has $300,000 available to transfer. Chart B shows that if she transfers the remaining credit in tax years 6 and 7, Ann would still have $33,000 carried forward from the credit allowed in tax year 5. She may use this amount until it’s gone or until the carryforward expires in tax year 14 (the ninth year after tax year 5), whichever happens first. Alternative qualified research activities carryforward (ORS 317.154) [Credit code 837] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit was allowed to corporations that incurred qualified research expenses. It was last awarded for tax years beginning before January 1, 2018. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Credits–Carryforward

150-101-431 (Rev. 06-17-24) 114 Bovine manure production/ collection carryforward (ORS 315.176) [Credit code 869] This credit was for producers or collectors of bovine (cattle) manure that was used in Oregon as biofuel or to produce biofuel. The credit was last awarded for tax years beginning before January 1, 2022. Any unused credit could be carried forward for up to four years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. Business energy carryforward (ORS 315.354, 315.357) [Credit code 839] These credits were available for businesses that invested in certain types of energy conservation projects. The credit was last awarded for projects receiving final certification before January 1, 2013. Some credits were required to be claimed over a period of five years. Any unused amount could be carried forward for up to eight years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Child Care Fund contributions carryforward (ORS 315.213) [Credit code 841] This credit was for contributions made to the Child Care Fund to help address child care affordability, provider compensation, and quality assurance issues in Oregon. The credit was last awarded for tax years beginning before January 1, 2022. Any unused credit could be carried forward for up to four years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within four years after it was first awarded, it’s lost. College Opportunity Grant Fund contributions (auction) (ORS 315.643) [Credit code 871] You may be able to claim a tax credit if you partici­ pated in the College Opportunity Grant tax credit auction conducted by the Department of Revenue, in cooperation with the Higher Education Coordinating Commission (HECC). The final auction was held in February 2023. Credits awarded at the final auction may be claimed for the first time on a 2022 or 2023 return. Certification required If you received a tax credit through the auction, your credit amount is shown on the certificate issued by the HECC. Keep this certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first claimed. If you don’t use the carryforward within three years, it’s lost. This credit can’t be trans­ ferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contributions, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Crop donation (ORS 315.156) [Credit code 843] Oregon allows a tax credit for crops donated to a glean­ ing cooperative, food bank, or other charitable organi­ zation that distributes food without charge. The orga­ nization receiving the donation must have a principal or ongoing purpose of distribution of food to children, homeless, unemployed, elderly, or low-income indi­ viduals. The organization must be located in Oregon and exempt from federal income taxes under the IRC. To qualify for this credit, you must: • Be in the business of growing a crop to be sold for cash; and • Donate the crop to a tax-exempt organization located in Oregon; and Credits–Carryforward

150-101-431 (Rev. 06-17-24) 115 • Complete Form OR-CROP, Crop Donation Tax Credit, which must be signed by the organization receiv­ ing the donation. The crop must be fit for human consumption. The food must meet all quality and labeling standards imposed by federal, state, or local laws, even though the food may not be readily marketable due to appear­ ance, age, freshness, grade, size, surplus, or other condition. Eligible crops include, but aren’t limited to, bedding plants that produce food, orchard stock that produces food, and livestock that may be processed into food for human consumption. How much is the credit? The credit is 15 percent of the value of the quantity of the crop donated, computed at the wholesale market price at the time of donation. The wholesale market price is determined by either: • The amount paid to the grower by the last cash buyer of the particular crop, or • In the event there is no previous cash buyer, a price based on the market price of the nearest regional wholesale buyer or a regional u-pick market price. Example: 5,000 pounds of potatoes at $ 0.10/lb.

5,000 x 0.10 = $500 (market value)

15% (0.15) x $500 = $75 (credit allowed) Certification required Keep the completed Form OR-CROP with your tax records to verify your donation. The organization where you donate the crop may have this form avail­ able, or you may download it from our website. Also, if there was a previous cash buyer, you must keep a copy of an invoice or other statement identifying the price received for crops of comparable grade or quality. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Electronic commerce zone investment carryforward (ORS 315.507) [Credit code 845] This credit was available to individuals and busi­ nesses that engage in electronic commerce in an Oregon enterprise zone or city designated for elec­ tronic commerce. The credit was last awarded for tax years beginning before January 1, 2018. Any unused amount could be carried forward for up to five years after the year it was first awarded. Enter your car­ ryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Employer scholarship (ORS 315.237) [Credit code 847] A tax credit is allowed to Oregon employers who have scholarship programs for their employees and their employees’ dependents. How much is the credit? The credit is the smaller of: • Fifty percent of the amount of qualified scholar­ ship funds actually paid to or on behalf of qualified scholarship recipients during the tax year; or • $50,000. Certification required The credit must be certified by the Office of Student Access and Completion. Keep the certificate with your tax records. For an application and more information, contact the office at 541-687-7400 or toll-free from an Oregon prefix at 800-452-8807, or go to their website at www. oregonstudentaid.gov. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Energy conservation project carryforward (ORS 315.331) [Credit code 849] This credit was for energy conservation projects certi­ fied by the Oregon Department of Energy. The credit was last awarded for tax years beginning before January 1, 2018. Any unused credit may be carried forward for up to five years after the year it was first awarded. Credits–Carryforward

150-101-431 (Rev. 06-17-24) 116 Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Fish screening devices (ORS 315.138) [Credit code 850] A tax credit is available to taxpayers who pay to install fish screening devices required by the Oregon Department of Fish and Wildlife (ODFW). Who can claim the credit? The credit is available to individuals, partners, sole proprietorships, and S corporation shareholders. Shareholders and partners can claim the credit based on their pro rata share of the certified costs. How much is the credit? Full-year residents. The credit is equal to the smaller of: • Fifty percent of the net costs of installing the device, or • $5,000. You can still claim any depreciation or amortization otherwise allowed. Don’t reduce your basis in the property by the credit amount. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required ODFW will send you a preliminary certificate within 90 days of the receipt of plans, specifications, and other information it requests from you. After you complete the project, ODFW will send you a final cer­ tificate that includes the verified costs of the installa­ tion. Contact ODFW in Salem at 503-947-6000 or toll- free from an Oregon prefix at 800-720-6339, or go to www.dfw.state.or.us. Keep the final ODFW certificate with your tax records. Also keep a statement showing the computation of the allowed credit, if this isn’t on the certificate. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Forest conservation (Or Laws 2022, ch 34) [Credit code 873] A credit is allowed to small forestland owners that choose to use standard practice harvest restrictions instead of the small forest owner minimum option. To obtain the credit, a forest conservation area must be created and the standard practice harvest restric­ tions must be followed for 50 years. The owner must record an irrevocable deed restriction prohibiting a harvest in the forest conservation area during that time. If a timber harvest is conducted in the forest con­ servation area before the restriction has expired, the owner at the time of harvest will be responsible for repaying the full amount of the credit. How much is the credit? The amount of the credit is the sum of: • The certified stumpage value of standing timber in the portion of the forest conservation area that is not harvested as a result of using the standard practice harvest restrictions; • The cost to the owner of establishing the stumpage value, including the cost of an appraisal and the fees related to the deed restriction; and • One-half of the certified stumpage value of retained timber in any dry channel area adjacent to the for­ est conservation area. The stumpage values are calculated as of the date that the owner files a notification of operation with the State Forester. The value can be calculated using the conversion return method, the actual compari­ son method, or the cash flow modeling method. Visit the Oregon Department of Forestry’s (ODF) website, www.oregon.gov/odf, for more information about calculating stumpage values. Costs, including the appraisal and deed costs, can only be included in the credit amount if the owner does not claim those costs as a deduction on their return. Certification required You must have obtained certification from ODF indi­ cating the amount of your tax credit. Keep your cer­ tificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward to any future tax year. If the Credits–Carryforward

150-101-431 (Rev. 06-17-24) 117 owner dies before all of the credit is used, the credit may be used by the estate to pay taxes. Any credit remaining will pass to the owner’s heirs. Lender’s credit: affordable housing (ORS 317.097) [Credit code 854] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Schedule OR-K-1. This transferable certified credit is available to lending institutions making qualifying loans to finance cer­ tified housing projects for low-income households. Annual certification by Oregon Housing and Com­ munity Services is required. Part-year residents and nonresidents. You may claim the full amount of the credit, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. Lender’s credit: energy conservation carryforward (ORS 317.112) [Credit code 848] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit was awarded to commercial lending institutions that made loans to owners of oil- or wood-heated residential property, to finance energy conservation measures. The credit was last awarded for tax years beginning before January 1, 2012. Any unused credit could be carried forward for up to 15 years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within 15 years after it was first awarded, it’s lost. Long-term enterprise zone facilities (ORS 317.124) [Credit code 853] This credit is only available to shareholders of an S corporation that qualifies for the credit, which should be listed on the shareholder’s Schedule OR-K-1. This certified credit was available to corpo­ rations that constructed and operated facilities in a qualified rural enterprise zone, where the facility was eligible for long-term exemption from property tax. The credit was last awarded for facilities certi­ fied on or before June 30, 2018, and was required to be claimed over a five- to 15-year period. Any unused credit could be carried forward for up to five years after the year it was first awarded. If you have a credit that is being claimed over mul­ tiple years, enter only the amount for tax year 2023 on the “Amount awarded this year” line on Sched­ ule OR-ASC or OR-ASC-NP; otherwise, enter $0 on that line and enter any carryforward amount on the “Amount from prior year” line. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Oregon IDA Initiative Fund donation (ORS 315.271) [Credit code 852] IDAs are matched savings accounts that build the financial management skills of qualifying Orego­ nians with lower incomes while they save toward a defined goal. Oregon allows a tax credit for dona­ tions made to the Oregon IDA Initiative Fund during the tax year. The total amount of credits allowed to all taxpayers in any tax year may not exceed $7.5 million. How much is the credit? The credit amount is the percentage determined by the fiduciary agency, but may be no more than 90 percent of the donation made. The maximum credit amount allowed for any taxpayer in any tax year, including amounts carried forward from an earlier tax year, is $500,000. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. You may carry forward any unused credit for three years after the year when you made the donation. If you don’t use the carryfor­ ward within three years, it’s lost. For information on how to make a donation to the Oregon IDA Initiative Fund, contact The Neighbor­ hood Partnership Fund at 503-226-3001 or visit their website at www.neighborhoodpartnerships.org. Credits–Carryforward

150-101-431 (Rev. 06-17-24) 118 Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your donation, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Oregon Low-Income Community Jobs Initiative/New Markets (ORS 315.533) [Credit code 855] The New Markets tax credit was available for a quali­ fied equity investment made before July 1, 2016 in a qualified community development entity. For more information on qualifying investments and entities, visit www.oregon.gov/biz, or contact the Oregon Business Development Department at 503-986-0123. How much is the credit? The credit is equal to 39 percent of the purchase price of the qualified equity investment. It must be claimed over a period of seven years, beginning with the year of investment. The allowable tax credit for each of the seven years is: • Zero percent in the first and second years. • Seven percent of the purchase price in the third year. • Eight percent of the purchase price in each of the fourth through seventh years. Certification required You must have obtained certification from the Ore­ gon Business Development Department indicating the amount of your tax credit. Keep your certificate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit allowable to a full-year resident, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If you don’t use the carryforward within five years, it’s lost. This credit can’t be trans­ ferred or sold. Oregon Production Investment Fund contributions (auction) (ORS 315.514) [Credit code 856] You may be able to claim a tax credit if you partici­ pated in the Oregon Production Investment Fund tax credit auction we conducted in cooperation with the Oregon Film and Video Office. Proceeds from the auction go to the Oregon Production Investment Fund. Total credits certified by the Oregon Film and Video Office are limited to $20 million for each fiscal year starting on or after July 1, 2021. You may claim the credit for the tax year in which you participated in the auction or for the prior tax year, but only if the auction is held by April 15 and you haven’t yet filed the prior year’s return. Visit the Oregon Film and Video Office website, www.oregonfilm.org, for information about the Oregon Production Investment Fund, and our website for information about upcom­ ing auctions, and auction rules and procedures. Certification required If you received a tax credit through the auction, your credit amount is shown on your certificate issued by the Oregon Film and Video Office. Keep the certifi­ cate with your tax records. Part-year residents and nonresidents. You can claim the full amount of the credit you received in the auc­ tion, limited by your tax liability for the year. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the auc­ tion year. If you don’t use the carryforward within three years, it’s lost. This credit can’t be transferred or sold. Oregon itemized deduction If you’re claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.” Qualified research activities carryforward (ORS 317.152) [Credit code 858] This credit is only available to shareholders of an S corporation that qualified for the credit. This credit was allowed to corporations that increased their qualified research expenses and basic research pay­ ments (IRC Section 41). The credit was last allowed for amounts paid or incurred in tax years beginning before January 1, 2018. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. Credits–Carryforward

150-101-431 (Rev. 06-17-24) 119 Credits–Carryforward The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Renewable energy resource equipment manufacturing facility carryforward (ORS 315.341) [Credit code 860] This tax credit was certified by the Business Devel­ opment Department or Department of Energy. The deadline for filing an application for final certifica­ tion of a facility was December 31, 2013. The credit was required to be claimed over a period of years. Any unused credit could be carried forward for up to eight years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within eight years after it was first awarded, it’s lost. Residential energy carryforward (ORS 316.116) [Credit code 861] This certified credit was for taxpayers who pur­ chased various energy-efficient devices for residen­ tial use. The credit was last awarded for tax years beginning before January 1, 2018. Some credits had to be claimed over a four-year period. Any unused credit could be carried forward for up to five years after the year it was first awarded. Enter your car­ ryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years after it was first awarded, it’s lost. Rural technology workforce development carryforward (ORS 315.523) [Credit code 868] This tax credit was allowed to Oregon employers located in certain areas of the state who established and implemented an employee training program in collaboration with a local community college. Any unused credit may be carried forward for up to three years after the year it was first allowed. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR-ASC or OR-ASC-NP. The amount used can’t be more than your tax liabil­ ity for the year. If the carryforward isn’t used within three years, it’s lost. Short line railroad rehabilitation (ORS 315.593) [Credit code 872] A transferable tax credit is allowed for short line rail­ roads that pay or incur costs for rehabilitation proj­ ects in Oregon. The project costs must be directly related to the work necessary to maintain, recon­ struct, or replace tracks, switches, sidings, roadbeds, railroad bridges, or industrial leads owned or leased in Oregon. “Short line railroad” refers to a class II or class III railroad as defined in title 49 of the Code of Federal Regulations, part 1201. Costs that are funded by or used to qualify for state or federal grants or to claim a federal tax credit don’t qualify for the credit. The credit doesn’t take the place of any depreciation or amortization deduction allowed for the rehabilita­ tion project or decrease the taxpayer’s adjusted basis for determining gain or loss. How much is the credit? The credit amount depends on whether the short line railroad is in Tier I or Tier II: • Tier I. The total length of short line railroad track owned or leased in Oregon is at least 200 miles. • Tier II: Any short line railroad that isn’t a Tier I short line railroad, or is one that is owned or leased by the state, a city, a county, a port, or any other public or municipal corporation. The credit amount is the smaller of: • $1,000 (Tier I) or $3,500 (Tier II) times the number of miles of track owned or leased in Oregon on the day the project is completed; or • Fifty percent of the rehabilitation project costs paid or incurred by the taxpayer during the tax year in which the credit is claimed. Certification required This credit is certified by the Oregon Department of Transportation (ODOT). Final certification of the reha­ bilitation project is required before the credit may be claimed. Visit ODOT’s website, www.oregon.gov/odot, for more information.

150-101-431 (Rev. 06-17-24) 120 Credits–Carryforward Transfer. If the credit will be transferred, download Form OR-TFR and Form OR-TFR Instructions from our website or contact us to order them. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. If the carryforward isn’t used within five years, it’s lost. The carryforward may not be transferred. Transportation projects carryforward (ORS 315.336) [Credit code 863] All transportation project credits certified by the Department of Energy have expired. Any unused credit could be carried forward for up to five years after the year it was first awarded. For more information about these credits, see earlier editions of this publication. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to five years after the year it was first awarded. Enter your carryforward amount on the “Amount from prior year” line and $0 on the “Amount awarded this year” line on Schedule OR- ASC or OR-ASC-NP. The amount used can’t be more than your tax liability for the year. If you don’t use the carryforward within five years, it’s lost. University Venture Development Fund contributions (ORS 315.640) [Credit code 864] A tax credit is available for contributions to Oregon University Venture Development Funds. Who can claim the credit? Any taxpayer who makes a qualifying charitable contribution to an Oregon University Venture Devel­ opment Fund is eligible for the credit. S corpora­ tions and partnerships may claim a credit for their contributions. How much is the credit? The credit is 60 percent of the amount contributed, as stated on the tax credit certificate, but can’t be more than $600,000. The amount of the credit allowed to be taken on your Oregon tax return may not be more than your tax liability for the year. Certification required The university that established the fund will issue a tax credit certificate to you. Keep this certificate with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Carryforward. The amount used can’t be more than your tax liability for the year. Any unused credit may be carried forward for up to three years after the year it was first awarded. If you don’t use the carryfor­ ward within three years, it’s lost. Oregon itemized deduction If you're claiming this credit, you must add back the amount of your contribution, if any, that you’re including in your Oregon itemized deductions. See this topic in “Additions.”

150-101-431 (Rev. 06-17-24) 121 Credits–Refundable Refundable credits Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability is treated like an overpayment of tax and may be refunded to you. ABLE account contributions (ORS 315.650) [Credit code 897] A tax credit of up to $170 ($340 if married filing jointly) is available for taxpayers who make contribu­ tions to an Oregon Achieving a Better Life Experi­ ence (ABLE) account. The credit is allowed only for contributions made on or after January 1, 2020. Con­ tributions may be made up until the date the return is filed or the due date (not including extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see this topic in “Subtractions.” What is an ABLE account? An ABLE account is a state-sponsored savings account, established through the Oregon Savings Network, that allows a person with disabilities to save money for disability-related expenses without affect­ ing their eligibility for government or other benefits. ABLE accounts qualify for special tax status under IRC Section 529A. Once you open an account and select an investment option, the Oregon Savings Net­ work board and a private investment company man­ age your investment. The earnings on these accounts aren’t taxed. ABLE account funds don’t affect a ben­ eficiary’s eligibility for government or other benefits. Funds withdrawn to pay qualified expenses related to the beneficiary’s disability won’t be taxed. These include expenses for education, housing, transporta­ tion, assistive technology, personal support services, employment training and support, and fees for legal and financial services, among others. For more information about ABLE accounts, go to www.oregonablesavings.com. Rollovers. Rollovers to an ABLE account don’t qual­ ify for a credit if an Oregon subtraction or credit has already been based on the funds rolled over. Tax recapture for nonqualified withdrawals. If you claim a credit based on your contributions and later use the funds for a nonqualified purpose, you must forfeit your credit if you received a tax benefit from the withdrawn contributions. Report a tax recapture on your return for the year when the funds are withdrawn. See “Additions to tax” in “Oregon tax” for more information about the tax recapture. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an earlier year, see “Additions.” How much is the credit? Your AGI determines the percentage of the contribu­ tions you made during the year that you may claim, up to the maximum of $170 ($340 if married filing jointly). Use Table 14 to find your percentage. Table 14. Credit percentage If your AGI is at least: But not more than: your percentage is: $0 $30,000 100 $30,001 $70,000 50 $70,001 $100,000 25 $100,001 $250,000 10 $250,001 5 Example: Jesse and Stacey make a $4,000 contribution to an ABLE account they opened for their daughter, who has a disability. Their AGI is $150,000. Their per­ centage from Table 14 is 10 percent. They may claim the lesser of 10 percent of their contribution ($4,000 x 0.10 = $400) or $340. Their credit is $340. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Agricultural employer overtime tax credit (AEOTC) (Or Laws 2022, ch 115, § 8) [Credit code 901] The AEOTC is available for certain employers who pay overtime wages to their agricultural employees. The employers must pay overtime wages to quali­ fying employees who perform agricultural work in crop production or animal production and aquacul­ ture businesses (North American Industry Classifi­ cation System (NAICS) codes 111 or 112).

150-101-431 (Rev. 06-17-24) 122 How much is the credit? Agricultural workers in Oregon must be paid over­ time wages (regular wages plus another 50 percent) if they work more than a certain number of hours per week. The credit amount is a percentage of the addi­ tional 50 percent of the employees’ regular wages paid as overtime. The allowable percentage depends on the employer’s agricultural industry, number of employees, and hours of overtime worked. Notice of Acknowledgment required The total amount of AEOTC available to all qualify­ ing employers is $55 million per year. For this rea­ son, the Department of Revenue must determine the allowable credit amount for every employer before any credit may be claimed. Application required. To claim the AEOTC, an agri­ cultural employer must apply for and receive a Notice of Acknowledgment from us. Employers must apply for the credit using Revenue Online during January of the year following the year when qualifying over­ time wages were paid. The Notice of Acknowledgment will show the credit amount an employer may claim on their return. Automatic extension of time to file. By applying for the credit, an employer is automatically given a six- month extension to file their return. This extension gives us the time to determine the allowable credit amount for all qualifying applicants. Qualifying applicants should receive their Notice of Acknowledg­ ment in June. Requirements for the credit are explained in detail in the instructions for the online application. See the application instructions on our website for more information. Part-year residents and nonresidents. Multiply the credit amount shown in your Notice of Acknowledg­ ment by your Oregon percentage. Claim of right income repayment (ORS 315.068) [Credit code 890] Did you repay more than $3,000 of income taxed by Oregon in a prior year and claim a federal claim of right income repayment deduction or credit under IRC Section 1341(a)? If so, you may claim an Oregon credit based on the Oregon tax you paid in that ear­ lier year on the income that you later repaid. Repay­ ments of $3,000 or less don’t qualify for an Oregon credit. See the instructions for Worksheet OR-CRC to cal­ culate your Oregon credit. Worksheet OR-CRC is available from our website or contact us to order it. Claim the credit on Schedule OR-ASC or OR-ASC-NP. Note: If you’re claiming the federal deduction instead of the federal credit, see this topic in “Additions.” Earned income credit (EIC) (ORS 315.266) You’re allowed an Oregon EIC only if you qualify for the earned income tax credit (EITC) on your federal return. Your Oregon EIC is 12 percent of your federal EITC if you have a qualifying dependent who was younger than 3 years old at the end of the tax year; otherwise, your credit is 9 percent of your federal EITC. This credit is claimed on your return. Part-year residents and nonresidents. Multiply your Oregon EIC by your Oregon percentage. Filers using ITINs. If you can’t claim the federal EITC because you, your spouse, or your qualifying child(ren) don’t have an SSN that is valid for work, see “Oregon EIC for ITIN filers.” Manufactured dwelling park closure ORS 316.090 [Credit code 891] Did you move out of a manufactured dwelling park because the park was closing? If so, you may be eli­ gible for a credit. To qualify, you must meet all of the following requirements: • Owned your manufactured dwelling; and • Rented space in a manufactured dwelling park that closed during the tax year; and • Occupied your manufactured dwelling as your principal residence; and • Received notice from the landlord that the park was closing; and • Moved out of the manufactured dwelling park (along with all members of your household) because of the park closure notice. If you qualify, you can claim a $5,000 refundable credit on your tax return for the year that your house­ hold moved out of the park. To claim this credit, fol­ low the instructions for Schedule OR-MPC, Oregon Mobile Home Credit, and enter the credit amount on Schedule OR-ASC or OR-ASC-NP. You can download Schedule OR-MPC from our website or contact us to order it. Include Schedule OR-MPC with your tax return. Note: If you qualify for this credit, you may have received a payment from your landlord of $5,000, Credits–Refundable

150-101-431 (Rev. 06-17-24) 123 $7,000, or $9,000 depending on the size of your manu­ factured dwelling. These payments can be subtracted on your Oregon return if they are included in taxable income on your federal return. See this topic under “Subtractions” for more information. Oregon 529 College Savings Network account contributions (ORS 315.650) [Credit code 896] A tax credit of up to $170 ($340 if married filing jointly) is available for taxpayers who make contri­ butions to an Oregon 529 College Savings Network account. To qualify for the credit, you must make contributions during tax years beginning on or after January 1, 2020. Contributions may be made up until the date the return is filed or the due date (not includ­ ing extensions), whichever is earlier. For information about the previous subtraction and amounts carried forward from tax years before 2020, see “Subtractions.” What is an Oregon 529 College Savings Network account? These state-sponsored plans qualify for special tax status as qualified tuition programs under IRC Sec­ tion 529. Account holders can save money for college for any designated beneficiary. Once you open an account and select an investment option, the Oregon Savings Network board and a private investment company manage your investment. Qualified withdrawals. Funds that are withdrawn from the account must be used to pay for the des­ ignated beneficiary’s qualified higher education expenses. These include expenses for tuition, fees, books, supplies, equipment, and room and board at an eligible educational institutional anywhere in the United States and certain foreign countries. A list of eligible institutions can be found on the U.S. Depart­ ment of Education’s website at www.studentaid.gov. Qualified withdrawals also include: • Rollovers to an ABLE account for the same desig­ nated beneficiary or a member of their family. • Expenses related to apprenticeship programs regis­ tered and certified under the National Apprentice­ ship Act (29 U.S.C. 50). • Principal and interest payments on up to $10,000 of the designated beneficiary’s (or their sibling’s) qualified education loans, as allowed by IRC Sec­ tion 529. Rollovers. Rollovers from a 529 college savings plan in another state qualify as a new contribution for purposes of the credit. However, you can’t claim a credit based on any amount rolled over from an IDA or from any rollover funds that have been allowed as an Oregon subtraction or an Oregon credit. Nonqualified withdrawals Tax recapture. If you claim a credit based on your con­ tributions and later use the funds for a nonqualified purpose, you must forfeit the credit if you received a tax benefit from the withdrawn contributions. Report a tax recapture on your return for the year when the funds are withdrawn. See “Additions to tax” in “Ore- gon tax” for more information. Note: Nonqualified withdrawals include funds with­ drawn from an Oregon 529 savings plan account that are used to pay K-12 tuition if those funds were sub­ tracted or claimed as a credit on an Oregon return. Addition. For funds withdrawn for a nonqualified purpose for which a subtraction was taken in an ear­ lier year, see “Additions.” How much is the credit? Your AGI determines the percentage of your contri­ butions made during the year you may claim, up to the maximum of $170 ($340 if married filing jointly). Use Table 14 under “ABLE account contributions” to find your percentage. Example: Carol is single and contributes $800 to an Oregon 529 College Savings Plan account she opened for her grandson. Her AGI is $72,000. Her percentage from Table 14 is 25 percent. Carol may claim the lesser of 25 percent of her contribution ($1,000 x 0.25 = $250) or $170. Her credit is $170. Married taxpayers filing separate returns. Spouses filing separate returns may each claim a portion of the credit that would be allowed if they were filing a joint return. Use the percentage applicable to your combined AGI. Each spouse may claim the credit amount proportional to the spouse’s share of AGI. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. For more information about Oregon higher education savings plans, call the Oregon College Savings Plan at 1-866-772-8464 or go to www.oregoncollegesavings.com Oregon EIC for ITIN filers [ORS 315.266(2)] [Credit code 898] You may be able to claim Oregon’s EIC for ITIN filers if you would have qualified for the federal EITC this year but couldn’t claim some or all of the credit only Credits–Refundable

150-101-431 (Rev. 06-17-24) 124 because you, your spouse, or qualifying child(ren) don’t have an SSN that is valid for work. If you don’t qualify for the federal EITC for any other reason, you can’t claim Oregon’s EIC for ITIN filers. You must use Schedule OR-EIC-ITIN, Oregon Earned Income Credit for Filers Using Individual Taxpayer Iden­ tification Numbers, to calculate your credit amount. Include the schedule when you file your Oregon return. The schedule and instructions are available in English and Spanish. Download them from our website or contact us to order them. Part-year residents and nonresidents. Your credit must be multiplied by your Oregon percentage. See Schedule OR-EIC-ITIN Instructions for more information. Oregon Kids Credit (Or Laws 2023, ch 538, § 2) This refundable credit is available to low-income tax­ payers who claim at least one qualifying child under the age of 6 on their Oregon return. For 2023, the maxi­ mum amount of the credit is $1,000 per qualifying child. The credit may not be claimed by taxpayers with a filing status of married filing separately or taxpayers with a qualifying income of more than $30,000, after Oregon additions and subtractions. For more informa­ tion, see the instructions for your 2023 Oregon return. Oregon surplus credit (ORS 291.349) The Oregon surplus credit, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. Every two years, the Oregon Department of Admin­ istrative Services (DAS) determines whether there is a surplus and the amount to be returned to taxpay­ ers as a kicker. If there’s a surplus, the kicker may be claimed on the return as a refundable tax credit or donated to the State School Fund. The kicker credit is available only on the return for an odd-numbered year. If there’s no surplus, or if the tax year is even- numbered, no kicker is available. DAS has determined that there is a surplus for the most recent two-year period. For tax year 2023, the kicker is 44.28 percent of your 2022 personal income tax liability. For more information, see the instructions for your 2023 Oregon return. Pass-through entity elective taxes paid (Or Laws 2021, ch 589, § 8) [Credit code 900] Certain PTEs may elect to pay Oregon income tax at the entity level (PTE-E tax). If you’re a member of an entity that elected to pay the PTE-E tax, you may claim a refundable credit for your share of the tax paid by the electing entity. The electing entity must send you Schedule OR-21-K-1 to report your share of the PTE-E tax paid by the entity. Your credit amount can be found on Schedule OR- 21-K-1, line 3. Are you a member of more than one elect­ ing entity? If so, your credit amount is the sum of all your shares of PTE-E tax paid by those entities. Claim the credit on your return for the same year that you report your income from each electing entity. Addition required. You must report an addition for any PTE-E tax that was deducted by an electing entity. See “PTE-E tax deducted on entity-level federal return” in “Additions.” For more information about the PTE-E tax, see “Pass- through entity elective tax” in “Oregon tax.” Working family household and dependent care (WFHDC) (ORS 315.264) [Credit code 895] This refundable credit is available to low- to mod­ erate-income working families who paid for depen­ dent care during the year for one or more qualify­ ing individuals. Students who paid for care while they attended school during the year may be eligible for the credit. For more information, see Schedule OR-WFHDC Instructions. What are the income limitations for this credit? Your federal AGI or your Oregon AGI, whichever is greater, must be at or below the allowable limit for your household size to be eligible for this credit. Students. The allowable income limits for students may be different. See Schedule OR-WFHDC-ST Instructions for your income limit. Credits–Refundable

150-101-431 (Rev. 06-17-24) 125 Table 15. WFHDC AGI limits Household size AGI limit 2 $59,160 3 $74,580 4 $90,000 5 $105,420 6 $120,840 7 $136,260 8 or more $151,680 How much is the credit? The credit amount is based on your income, care expenses paid, household size, and the age of your youngest qualifying individual. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Oregon itemized deduction for medical expenses Certain medical expenses that can be included in your Oregon itemized deductions are also quali­ fied expenses for this credit. If you claim medical expenses on Schedule OR-WFHDC, you may have to add back some or all of those expenses if you’re including them in your Oregon itemized deductions. See this topic in “Additions.” How do I claim the credit? Download Schedule OR-WFHDC from our website or contact us to order a copy. You’ll also need a copy of your federal Form 2441, Child and Dependent Care Expenses. Figure your federal and Oregon AGI and complete Form 2441 before you calculate your credit. Students. You must also complete Schedule OR- WFHDC-ST if you (or your spouse, if you’re married and filing a joint return) were a student and you paid for care in order to attend school. Include the sched­ ule with your return. Review the instructions for Schedule OR-WFHDC carefully to see if you qualify for the credit. Make sure all the information you provide on Schedule OR- WFHDC is complete and correct. We may ask you to verify the information you provide. If your informa­ tion is incorrect or incomplete, your credit might be delayed or denied. Claim the credit on Schedule OR-ASC or OR-ASC- NP. Be sure to include this schedule, Schedule OR- WFHDC, and Schedule OR-WFHDC-ST (if applica­ ble) when you file your Oregon return. Penalty: You may be charged a penalty if you know­ ingly claim or knowingly assist someone in claiming this credit falsely. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjust­ ment or denial of the credit. Credits–Refundable

150-101-431 (Rev. 06-17-24) 126 Interest on underpayment of estimated tax Do I owe underpayment interest? If you were required to make estimated payments but paid less than the required amounts due by each pay­ ment date, you have an underpayment of estimated tax. Oregon charges interest on underpayment of the estimated tax due. If your 2023 tax after all credits, tax recaptures, and withholding is $1,000 or more, you must complete Oregon Form OR-10, Underpayment of Oregon Estimated Tax, and submit it with your return. The form and instructions for calculating underpay­ ment interest can be found on our website or contact us to order them. Figure your required annual payment Required annual payment To calculate your underpayment interest, you must determine your required annual tax payment. Your required annual payment is the total amount of all tax payments, including estimated tax and withhold­ ing, you must make in order to avoid paying under­ payment interest. Your required annual payment is the lesser of: • Ninety percent of the net tax shown on your 2023 tax return; or • One hundred percent of the tax shown on your 2022 Oregon return (commonly called Safe Harbor). Annual estimated tax payment Your annual estimated tax payment is your required annual payment minus your withholding. Required installment payment Your annual estimated tax payment may be paid all at once or you may pay it in up to four installments. If you make the payment in installments, determine the required installment amount using one of these two methods: • Regular installment: Divide your annual estimated payment by the number of installment periods. • Annualized installment: Your installment is based on your actual income for the installment period. This method may benefit part-year residents and taxpayers whose income isn’t received evenly throughout the year. See Form OR-10 Instructions to calculate your required installment amount. 2023 required installment due dates If you made one annual estimated payment, the due date was April 18, 2023. If you paid in installments and you’re a calendar-year filer, your 2023 install­ ment payments were due on: April 18, 2023 June 15, 2023 September 15, 2023 January 16, 2024 Underpayment interest calculation Underpayment interest is calculated on estimated tax that is due but isn’t paid by the installment due date. The interest rate is 6 percent per year for 2023. The interest rate is 8 percent per year for 2024. Interest is calculated daily, based on a 365-day year. Use the worksheets in Form OR-10 Instructions to cal­ culate your underpayment interest. Report the total amount on Form OR-10 and your return. Include Form OR-10 when you file your return. Exceptions to paying interest on an underpayment of estimated tax If you qualify for one of the following exceptions, you don’t have to pay interest on an underpayment of estimated tax. See Form OR-10 Instructions for more information about claiming an exception on both Form OR-10 and your return. Exception 1—Farmers and commercial fishermen. If at least two-thirds (66.7 percent)* of your 2022 or 2023 gross income is from farming, oyster farming, or fish­ ing, you won’t have to pay underpayment interest. *Only reported income from specific federal forms and schedules are considered in this calculation. Keep a copy of your federal schedules or forms with your tax records. Exception 2—Prior year. You don’t need to pay inter­ est on an underpayment of estimated tax if all of the following were true for you: • You had no Oregon tax liability* for 2022, or you weren't required to file an Oregon return; and • Your 2022 tax year was a full 12-month period; and • You were a full-year Oregon resident for 2022. *Your Oregon tax liability is your liability after tax credits, but before withholding and estimated tax payments. Interest on underpayment of estimated tax

150-101-431 (Rev. 06-17-24) 127 Exception 3—You retired at age 62 or older or became disabled in 2022 or 2023, and you had a reason­ able cause for the underpayment. Keep a statement explaining the cause for the underpayment with your tax records. Exception 4—Underpayment was due to casualty, disaster, or other unusual circumstances, and it would be unfair to impose underpayment interest. Gather and keep relevant supporting documentation of the unusual circumstances with your tax records. An unusual circumstance isn’t the same as reason­ able cause. Exception 5—First-year S corporation shareholders who are nonresidents or were part-year residents. No interest is due on underpayment of S corporation income as a shareholder if: • The income is for the first year that S corporation status is elected; and • You’re a nonresident for 2023; or • You were a part-year resident for 2022. Keep proof of the S corporation election with your tax records. Interest on underpayment of estimated tax

150-101-431 (Rev. 06-17-24) 128 Estimated tax Should I pay estimated tax? Oregon law requires some taxpayers to pay esti­ mated tax. Oregon’s estimated tax system is similar to the federal system, but when you figure estimated tax for Oregon: • Use Oregon income tax laws and tax rates. • Don’t include Social Security tax (FICA), self-employ­ ment tax, or household employment tax. In most cases, you must make estimated tax payments if your 2024 tax after all credits and withholding will be $1,000 or more when you file your return. Pay estimated tax for tax year 2024 if: You expect your 2024 tax after all credits, tax recap­ tures, and withholding will be $1,000 or more when you file your return and you estimate that your total withheld tax will be less than: • One hundred percent of the tax shown on your 2023 income tax return that covered all 12 months of the year; or • Ninety percent of the tax to be shown on your 2024 income tax return; or • Ninety percent of the tax on your 2024 annualized income. You can make estimated tax payments even if you expect that your 2024 tax after all credits, tax recap­ tures, and withholding will be less than $1,000. For instructions and examples, download Publication OR-ESTIMATE from our website or contact us to order it. Note: Estimated tax payments aren’t a substitute for withholding Oregon income tax from wage income. If you need to increase the amount of Oregon tax withheld from your wages or other income, give an updated Form OR-W-4 to your employer or other payer. You can download Form OR-W-4 from our website or contact us to order it. Exceptions Farmers and commercial fishermen Farmers and fishermen aren’t required to pay esti­ mated tax if at least two-thirds of their 2023 gross income or two-thirds of their 2024 estimated gross income from all sources is from farming or fishing. This includes oyster farming. See “Interest on under- payment of estimated tax.” Fiduciaries You don’t need to pay estimated tax on behalf of an estate or trust. Special situations Nonresidents and part-year residents Nonresidents figure Oregon estimated tax only on income that is: • Subject to Oregon tax; or • From conducting a trade or business within Oregon; or • Single ticket Oregon lottery winnings greater than $600. S corporation, LLC, or partnership income If you’re a shareholder in an S corporation, a mem­ ber of an LLC, or in a partnership with income from Oregon sources, you may need to make estimated tax payments. Undistributed income should be com­ puted on a per share, per day basis and reported as earned evenly through the year. Part-year residents. For the part of the year you were a nonresident, you are subject to Oregon tax on your share of the Oregon income reported by the S corpo­ ration, LLC, or partnership. Partners must also report guaranteed payments. For the part of the year you were a resident, you’re subject to Oregon tax on your share of all the S corporation, LLC, or partnership income. Nonresidents. You’re subject to Oregon tax on your share of the Oregon income reported by the S corporation, LLC, or partnership. You’re also subject to Oregon tax on any guaranteed payments from the partnership. The payments are apportioned using the partnership’s percentage. Retirees If you’re retired or will soon retire, you may need to make estimated tax payments if you’re unable to have Oregon income tax withheld from your retire­ ment income. Contact the payer of the income to see if withholding is possible. If so, complete Form OR-W-4 and give it to the payer. Retirees who are Oregon residents but not living in Oregon may be subject to tax on their Oregon-source pensions. This law applies to retirees who still have Oregon as their domicile but file as nonresidents. See “Retirement income” under “Income.” Non-U.S. citizens without permanent resident status Estimated tax filing requirements are the same regard­ less of your citizenship status. Non-U.S. citizens can be either Oregon residents or nonresidents. If you’re mar­ ried and you (or your spouse) are a non-U.S. citizen without permanent resident status, don’t make joint esti­ mated tax payments; you must make separate payments. Estimated tax

150-101-431 (Rev. 06-17-24) 129 Appendix Contents 2023 Household Income Checklist WFHDC Medical Expense Worksheet Capital Loss Carryover Difference Worksheet 2023 Numeric Codes Appendix

150-101-431 (Rev. 06-17-24) 130 Household income checklist Use this list to decide if an item must be included in total household income. Alimony and separate maintenance Yes Annuities and pensions (reduced by cost recovery) Yes Business income (reduced by expenses) (losses limited to $1,000) Yes Cafeteria plan benefits

No Capital loss carryover

No Capital losses (in year determined) (losses limited to $1,000) Yes Child support Yes Child support included in public assistance Yes Clergy’s rental or housing allowance, in excess of expenses claimed to determine federal AGI Yes Compensation for services performed Back pay Yes Bonuses Yes Clergy fees Yes Commissions Yes Director fees Yes Fees in general (trustee, executor, jury duty) Yes Lodging for convenience of employer

No Meals for convenience of employer

No Salaries Yes Severance pay Yes Tips and gratuities Yes Wages Yes Deferred compensation Contributions made

No Payments received Yes Depletion in excess of basis Yes Depreciation, depletion, and amortization in excess of $5,000 Yes Disability income (entire amount) Yes Dividends, taxable and nontaxable Credit union savings account “dividends” (interest) Yes Insurance policy “dividends” (return of premium)

No Return of capital dividends

No Stock dividends Yes Tax-exempt dividends Yes Earned income credit, advanced

No Estate and trust income (also see “Inheritance”) (losses limited to $1,000) Yes Farm income (reduced by expenses) (losses limited to $1,000) Yes Agricultural program payments Yes Patronage dividends Yes Proceeds from sale of crops and livestock Yes Rents Yes Sale of services Yes Fellowships Yes Foreign income excluded from federal AGI Yes Foster child care (reduced by expenses)

No Funeral expenses received

No Gains on sales (receipts less cost) Yes Excluded gain for Oregon on sale of residence

No Gambling winnings (without reduction for losses) Yes Gifts and grants (totaling more than $500 in value) Cash Yes Gifts from nonspouse in the same household Yes Gifts from spouse in the same household

No Gifts other than cash (report at fair market value) Yes Payment of indebtedness by another person Yes Grants and payments by foreign governments not included in federal AGI Yes Grants by federal government for rehabilitation of home

No Gratuities and tips Yes Hobby income Yes Honoraria Yes IRA Conventional IRA Payments received Yes Payments contributed

No Rollovers or conversions not included

in AGI

No

Rollovers or conversion

included in AGI Yes Roth IRA Payments received

No Payments contributed Yes Rollovers or conversions not included

in AGI

No Rollovers or conversion

included in AGI Yes Inheritance Yes From spouse who resided in the same household

No Insurance proceeds Accident and health Yes Disability payments Yes Employee death benefits Yes Life insurance Yes Household income checklist

150-101-431 (Rev. 06-17-24) 131 Personal injury damages (less attorney fees) Yes Property damage if included in federal income Yes Reimbursement of medical expense

No Sick pay (employer sickness and injury pay) Yes Strike benefits Yes Unemployment insurance benefits Yes Workers’ compensation Yes Interest, taxable and nontaxable Contracts Yes Municipal bonds and other securities Yes Savings accounts Yes Tax-exempt interest Yes U.S. Savings Bonds Yes Losses on sales (to extent used in determining AGI) (losses limited to $1,000) Yes From sales of real or personal property (nonbusiness)

No Lottery winnings Yes Lump-sum distribution (less cost recovery) Yes Military and veteran’s benefits (taxable and nontaxable) Combat pay Yes Disability pensions Yes Educational benefits (GI Bill) Yes Family allowances Yes Pensions Yes NOL carryback and carryover

No Partnership income (reduced by expenses) (losses limited to $1,000) Yes Parsonage (rental value) or housing allowance in excess of expenses used in determining federal AGI Yes Pensions and annuities (taxable and nontaxable) (reduced by cost recovered in the current year) Yes Prizes and awards Yes Public assistance benefits Aid to blind and disabled Yes Child care payments Yes Child support included in public assistance Yes Direct payments to nursing home

No Fuel assistance

No In-home services approved by the Department of Human Services

No Medical mileage reimbursements Yes Medical payments to doctors

No Oregon Supplemental Income Program (OSIP) Yes Payments for medical care, drugs, medical supplies, and services for which no direct payment is received

No Reimbursements of expenses paid or incurred by participants in work or training programs

No Special Shelter Allowance

No Supplemental Nutrition Assistance Program (SNAP) benefits

No Surplus food

No Temporary assistance for needy families (TANF) Yes Women, Infants, and Children program (WIC)

No Railroad Retirement Board benefits Yes Refunds Earned income credit

No Federal tax

No Property tax

No Oregon income tax

No Other states’ income tax (if included in federal AGI) Yes Prior-year rental assistance payment

No Reimbursements in excess of expenses Yes Rental allowances paid to ministers not included in federal AGI Yes Rental and royalty income (reduced by expenses) (losses limited to $1,000) Yes Residence sales (see “Gains on sales”) Yes Retirement benefits (see “Pensions” and “Social Security”) Scholarships (excess more than $500) Yes Sick pay Yes Social Security (taxable and nontaxable) Children’s benefits paid to parent Yes Children’s benefits paid to your child

No Disability pension Yes Medicare payments of medical expenses

No Medicare premiums deducted from Social Security Yes Old-age benefits Yes Social Security Disability Insurance (SSDI) Yes Supplemental Security Income (SSI) Yes Survivor benefits Yes Stipends (excess more than $500) Yes Strike benefits Yes Support from parents who don’t live in your household Yes Trust income Yes Unemployment insurance benefits Yes Wages Yes Household income checklist

150-101-431 (Rev. 06-17-24) 132 WFHDC medical expense worksheet 1. Enter your expense limit (Schedule OR-WFHDC, line 27). 1. $ __________________ 2. Enter the total expenses you paid for care (Schedule OR-WFHDC, line 10). 2. $ __________________ 3. Enter the expenses from step 2 that are also included in your medical expenses

on Schedule OR-A, line 1. 3. $ __________________ 4. Step 2 minus step 3. These are your non-medical WFHDC care expenses. 4. $ __________________ Compare step 4 to step 1. If step 4 is more than step 1, your non-medical expenses are more than your expense limit and you don’t have an add back. If step 4 is less than step 1, continue to step 5. 5. Step 1 minus step 4. 5. $ __________________ 6. Enter your medical and dental expenses from Schedule OR-A, line 1. 6. $ __________________ 7. Enter your medical expense deduction from Schedule OR-A, line 4. 7. $ __________________ 8. Step 7 divided by step 6. Round to three decimal places. 8. ___________________ 9. Step 8 times step 3. This is the portion of your WFHDC medical care expenses

that you included in itemized deductions. 9. $ __________________ 10. Enter the smaller of step 5 or step 9. This is the portion of the medical care

expenses you deducted and on which you based your credit. 10. $ __________________ 11. Enter your Oregon itemized deductions from Schedule OR-A, line 23. 11. $ __________________ 12. Enter the Oregon standard deduction for your filing status plus any

additional standard deduction you could claim if you didn’t itemize

deductions (see “Other items” ). 12. $ __________________ 13. Step 11 minus step 12. This is the difference between your itemized

deductions and standard deduction. 13. $ __________________ 14. Enter the smaller of step 10 or step 13. This is the amount you must add back.

Use addition code 163 on Schedule OR-ASC, section A, or enter this amount

with a minus sign and use modification code 651 on Schedule OR-ASC-NP,

section D. 14. $ __________________ WFHDC medical expense worksheet

150-101-431 (Rev. 06-17-24) 133 Capital loss carryover difference worksheet Capital loss carryover difference worksheet This worksheet is used to calculate an addition if the tax benefit of a capital loss carryover on your federal return is different from the tax benefit on your Oregon return. Use this worksheet only if all of the following are true: • You filed federal and Oregon returns for 2022; • You deducted a capital loss on your 2022 federal return; • Your AGI was less than your federal standard deduction or itemized deductions; • You carried over some or all of your 2022 capital loss deduction to 2023; • If you filed a part-year or nonresident return for tax year 2022, at least some of your 2022 capital losses were from Oregon sources; and • Your 2022 federal AGI was within the applicable range in Table 7 (see “Additions”). If all of the above are true, you’ll need to have these items in order to complete the worksheet: • Your federal return with Schedule D for 2022 and 2023, and • Your 2022 Oregon return. Part-year or nonresident return filed for tax year 2022. Capital losses may be claimed on an Oregon return only if they are from Oregon sources—that is, from Oregon sources while a nonresident, or from all sources while an Oregon resident. If you filed a part-year or nonresident return for 2022 and your capital losses included Oregon-source losses, complete the following before you start the Oregon worksheet: (a) Enter your net short-term capital loss or gain from your 2022 Schedule D, line 7. (a) $ ____________

(b) Enter the portion of the amount in (a) that is from Oregon sources. (b) $ ____________ (c) Line (b) divided by line (a). Round to three decimal places. (c) ____________ (d) Enter your net long-term capital loss or gain from your 2022 Schedule D, line 15. (d) $ ____________ (e) Enter the portion of the amount in (d) that is from Oregon sources. (e) $ ____________ (f) Line (e) divided by line (d). Round to three decimal places. (f) ____________ Part A. Figure your Oregon loss carryforward amount. 1. Enter your 2022 Oregon taxable income (Form OR-40, line 19; Form OR-40-N, line 45; or Form OR-40-P, line 43 times line 35). If less than $0, enclose in parentheses. 1. $ ____________ 2. Full-year residents: Enter the capital loss deduction from your 2022 Form 1040, line 7, as a positive amount. Part-year residents and nonresidents: Enter the Oregon amount from your 2022 Form OR-40-N or Form OR-40-P, line 13S, as a positive amount. 2. $ ____________ 3. Line 1 plus line 2. If zero or less, enter $0.

3. $ _____________ 4. Enter the smaller of line 2 or line 3. 4. $ ____________ If line 7 of your 2022 Schedule D shows a loss, go to line 5; otherwise, enter $0 on line 5 and go to line 9. 5. Enter the net short-term loss from your 2022 Schedule D, line 7, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above, as a positive amount.

5. $ _____________ 6. Enter the net long-term gain, if any, from your 2022 Schedule D, line 15. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above. If a loss, enter $0. 6. $ ____________

150-101-431 (Rev. 06-17-24) 134 Capital loss carryover difference worksheet 7. Line 4 plus line 6.

7. $ _____________ 8. Oregon short-term capital loss carryover for 2023. Line 5 minus line 7. If zero or less, enter $0.

8. $ _____________ If line 15 of your 2022 Schedule D is a loss, go to line 9; otherwise, skip to Part B. 9. Enter the net long-term loss from your 2022 Schedule D, line 15, as a positive amount. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (e), above, as a positive amount.

9. $ _____________ 10. Enter the net short-term gain, if any, from your 2022 Schedule D, line 7. Part-year residents and nonresidents: Enter only the portion from Oregon sources from (b), above. If a loss, enter $0. 10. $___________ 11. Line 4 minus line 5. If zero or less, enter $0. 11. $___________ 12. Line 10 plus line 11.

12. $ _____________ 13. Oregon long-term capital loss carryover for 2023. Line 9 minus line 12. If zero or less, enter $0.

13. $ _____________ Part B. Figure your Oregon addition. 14. Enter your federal short-term capital loss carryover from your 2023 Schedule D, line 6, as a positive amount. 2022 part-year residents and nonresidents: Multiply this amount times the decimal in (c), above; round to the nearest dollar. 14. $___________ 15. Oregon tax benefit from 2022 short-term loss. Line 14 minus line 8.

15. $ _____________ 16. Enter your federal long-term loss carryover from your 2023 Schedule D, line 14, as a positive amount. 2022 part-year residents and nonresidents: Multiply this amount times the decimal in (f), above; round to the nearest dollar. 16. $___________ 17. Oregon tax benefit from 2022 long-term loss. Line 16 minus line 13.

17. $ _____________ 18. Line 15 plus line 17. This is your Oregon addition.

18. $ _____________ Full-year filer for 2023. Enter the amount from line 18 on Schedule OR-ASC, section A, using code 162. Part-year or nonresident filer for 2023. Enter the amount from line 18 on both the federal and Oregon lines on Schedule OR-ASC-NP, section B.

150-101-431 (Rev. 06-17-24) 135 Numeric codes Numeric codes Numeric codes are required when you are claiming or reporting an adjustment, addition, subtraction, modifi­ cation, or credit on Schedule OR-ASC or OR-ASC-NP. If you have multiple items that use the same code, other than a credit for income taxes paid to another state, add them together and enter the total as a single item. Modifications marked with + must be entered as a negative number. Credits marked with * must be prorated by part-year residents and nonresidents. Include Schedule OR-ASC or OR-ASC-NP when you file your return. (Note: For page numbers, see the item’s listing in the Index.) Adjustments—Nonresident and part-year resident filers only, Schedule OR-ASC-NP, Section A Code Certain business expenses of reservists, performing artists, and fee-basis government officials —Form 1040, Schedule 1, Line 12 ..............................................................................................................................002 Health savings account deduction—Form 1040, Schedule 1, Line 13 ..................................................................003 Penalty on early withdrawal of savings—Form 1040, Schedule 1, Line 18.........................................................004 Other adjustments on Form 1040, Schedule 1, Lines 23 and 25 ............................................................................005 Additions—Schedule OR-ASC, Section A or OR-ASC-NP, Section B Code Claim of right income repayments ...........................................................................................................................103 Disposition of inherited Oregon farmland or forestland......................................................................................106 Federal election on interest and dividends of a minor child ................................................................................107 Federal income tax refunds .......................................................................................................................................109 Net operating loss—non-Oregon source .................................................................................................................116 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal ..........................................117 Oregon deferral of reinvested capital gain ..............................................................................................................118 Partnership and S corporation modifications for Oregon ....................................................................................119 Unused business credits ............................................................................................................................................122 Federal subsidies for employer prescription drug plans ......................................................................................123 Federal law disconnect ...............................................................................................................................................131 Accumulation distribution from certain domestic trusts .....................................................................................132 Fiduciary adjustment from Oregon estates and trusts .........................................................................................133 Gambling losses claimed as an itemized deduction..............................................................................................134 Refund of Oregon-only itemized deductions from a prior year ..........................................................................136 IDA nonqualified withdrawal ...................................................................................................................................137 Oregon IDA Initiative Fund donation credit add back .........................................................................................138 Lump-sum distribution from a qualified retirement plan ...................................................................................139 Passive foreign investment company income .........................................................................................................140 Oregon Production Investment Fund contributions .............................................................................................144 University Venture Development Fund contributions ..........................................................................................146 Income taxes paid to another state by a pass-through entity ...............................................................................148 Basis of business assets transferred into Oregon ...................................................................................................150 Depletion in excess of property basis ......................................................................................................................151 Depreciation difference for Oregon .........................................................................................................................152 Federal depreciation disconnect ...............................................................................................................................153 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................154 Passive activity losses .................................................................................................................................................155 Suspended losses ........................................................................................................................................................156 Federal estate tax .........................................................................................................................................................157 Interest and dividends on government bonds of other states ..............................................................................158 Federal subtraction for retirement savings rollover from IDA ............................................................................159 Disqualified charitable donations ............................................................................................................................160 Nonresident capital losses and loss carryovers ......................................................................................................161 Capital loss carryover difference ..............................................................................................................................162 WFHDC medical expenses ........................................................................................................................................163 ABLE account subtraction nonqualified withdrawal ............................................................................................164 College Opportunity Grant Fund contributions ....................................................................................................165 First-time homebuyer savings account nonqualified withdrawal .......................................................................166

150-101-431 (Rev. 06-17-24) 136 Numeric codes PTE-E tax deducted on entity-level federal return ................................................................................................167 CPAR addition .............................................................................................................................................................187 Subtractions—Schedule OR-ASC, Section B or OR-ASC-NP, Section C Code American Indian .........................................................................................................................................................300 Artist’s charitable contribution .................................................................................................................................301 Construction worker and logger commuting expenses ........................................................................................303 Federal gain previously taxed by Oregon ...............................................................................................................306 Federal pension income .............................................................................................................................................307 Federal income tax paid for a prior year .................................................................................................................309 Fiduciary adjustment from Oregon estates and trusts ..........................................................................................310 Foreign income tax ......................................................................................................................................................311 IDA contributions ........................................................................................................................................................314 Interest and dividends on U. S. bonds and notes ..................................................................................................315 State and local government bond interest ...............................................................................................................317 Military pay .................................................................................................................................................................319 Federal mortgage interest credit ...............................................................................................................................320 Net operating loss for Oregon ...................................................................................................................................321 Oregon Lottery winnings ..........................................................................................................................................322 Partnership and S corporation modifications for Oregon ....................................................................................323 Oregon College and MFS 529 Savings Plan deposits carryforward ....................................................................324 Oregon income tax refund .........................................................................................................................................325 Previously taxed employee retirement plan contributions ...................................................................................327 Public Safety Memorial Fund award .......................................................................................................................329 Railroad Retirement Board benefits .........................................................................................................................330 U.S. government interest in IRA or Keogh distributions ......................................................................................331 Scholarship awards used for housing expenses.....................................................................................................333 Legislative Assembly expenses .................................................................................................................................335 Film production labor rebate—Greenlight Oregon Labor Rebate Fund ............................................................336 Manufactured dwelling park capital gain exclusion .............................................................................................338 Capital Construction Fund contributions ...............................................................................................................339 Federal tax credits .......................................................................................................................................................340 Income on a composite return...................................................................................................................................341 Oregon Investment Advantage .................................................................................................................................342 Manufactured dwelling park closure payments ....................................................................................................344 Taxable benefits for former RDPs .............................................................................................................................347 Previously-taxed IRA conversions ...........................................................................................................................348 Special Oregon medical .............................................................................................................................................351 DISC dividend payments ...........................................................................................................................................352 Depreciation difference for Oregon .........................................................................................................................354 Gain or loss on sale of depreciable property with different basis for Oregon ...................................................355 Passive activity losses .................................................................................................................................................356 Suspended losses ........................................................................................................................................................357 Basis of business assets transferred into Oregon ...................................................................................................358 Marijuana business expenses ....................................................................................................................................359 ABLE account deposit carryforward ........................................................................................................................360 First-time home buyer savings account contributions and earnings ..................................................................361 AmeriCorps educational award ................................................................................................................................362 CPAR subtraction ........................................................................................................................................................384 Psilocybin business expenses ....................................................................................................................................385 Paid Leave Oregon benefits deducted on federal Schedule A .............................................................................386 PTE-E tax refund included on entity-level federal return ....................................................................................387 Casualty loss from state-declared emergency ........................................................................................................388 Modifications—Part-year and nonresident filers only, Schedule OR-ASC-NP, Section D Code Artist’s charitable contribution (Part-year filers only) ...........................................................................................600 Federal income tax refunds + ....................................................................................................................................601 Federal income tax paid for a prior year .................................................................................................................602

150-101-431 (Rev. 06-17-24) 137 Foreign income tax ......................................................................................................................................................603 Gambling losses claimed as an itemized deduction + ..........................................................................................604 Federal estate tax + .....................................................................................................................................................605 Federal mortgage interest credit ...............................................................................................................................607 Federal tax credits .......................................................................................................................................................609 Oregon Production Investment Fund contributions + ..........................................................................................644 University Venture Development Fund contributions + ......................................................................................646 Oregon IDA Initiative Fund donation credit add back + ......................................................................................648 Claim of right income repayment + .........................................................................................................................649 Disqualified charitable donations + .........................................................................................................................650 WFHDC medical expenses + ....................................................................................................................................651 College Opportunity Grant Fund contributions + .................................................................................................652 Casualty loss from state-declared emergency ........................................................................................................654 + Must be entered as a negative number Tax recaptures—Schedule OR-ASC, Section C or OR-ASC-NP, Section E Code Tax recapture—ABLE account nonqualified withdrawal .....................................................................................950 Tax recapture—Oregon 529 College Savings Network account nonqualified withdrawal .............................951 Standard credits—Schedule OR-ASC, Section D or OR-ASC-NP, Section F Code Income taxes paid to another state on mutually-taxed income............................................................................802 Mutually-taxed gain on the sale of residential property ......................................................................................806 Oregon Cultural Trust contributions * .....................................................................................................................807 Oregon Veterans’ Home physicians *.......................................................................................................................808 Political contributions (Part-year and nonresident filers only) ............................................................................809 Reservation enterprise zone * ....................................................................................................................................810 Retirement income ......................................................................................................................................................811 Rural emergency medical service providers * ........................................................................................................812 Rural health practitioners * ........................................................................................................................................813 Pass-through income taxes paid to another state ...................................................................................................815 Carryforward credits—Schedule OR-ASC, Section E or OR-ASC-NP, Section G Code Agriculture workforce housing * ..............................................................................................................................835 Business energy carryforward ..................................................................................................................................839 Child Care Fund contributions carryforward ........................................................................................................841 Crop donation * ...........................................................................................................................................................843 Electronic commerce zone investment carryforward ...........................................................................................845 Employer scholarship * ..............................................................................................................................................847 Energy conservation project carryforward .............................................................................................................849 Fish screening devices * .............................................................................................................................................850 Oregon IDA Initiative Fund donation ......................................................................................................................852 Oregon Low Income Community Jobs Initiative/New Markets .........................................................................855 Oregon Production Investment Fund contributions (auction) .............................................................................856 Renewable energy resource equipment manufacturing facility carryforward .................................................860 Residential energy carryforward ..............................................................................................................................861 Transportation projects carryforward .....................................................................................................................863 University Venture Development Fund contributions ..........................................................................................864 Rural technology workforce development carryforward * ...................................................................................868 Bovine manure production/collection carryforward ............................................................................................869 College Opportunity Grant Fund contributions (auction) ....................................................................................871 Short line railroad rehabilitation * ............................................................................................................................872 Forest conservation .....................................................................................................................................................873 Carryforward credits—Available only to S Corporation shareholders Code Alternative qualified research activities carryforward (S corporation) ..............................................................837 Lender’s credit: energy conservation carryforward (S corporation) ...................................................................848 Long-term enterprise zone facilities carryforward (S corporation) .....................................................................853 Lender’s credit: affordable housing (S corporation) ...............................................................................................854 Qualified research activities carryforward (S corporation) ..................................................................................858 Numeric codes

150-101-431 (Rev. 06-17-24) 138 Refundable credits—Schedule OR-ASC, Section F or OR-ASC-NP, Section H Code Claim of right income repayment .............................................................................................................................890 Manufactured dwelling park closure ......................................................................................................................891 Working family household and dependent care (WFHDC) * ..............................................................................895 Oregon 529 College Savings Network account contributions * ............................................................................896 ABLE account contributions * ...................................................................................................................................897 Oregon EIC for ITIN filers *.......................................................................................................................................898 Pass-through entity elective taxes paid ...................................................................................................................900 Agricultural employer overtime tax credit * ...........................................................................................................901 * Credit must be prorated by part-year residents and nonresidents. Numeric codes

150-101-431 (Rev. 06-17-24) 139 Index Symbols 2-D barcode filing for Oregon .............................................. 11 529 plans—see Oregon 529 College Savings Network A ABLE Account Contributions—credit .......................................................121 Deposit—subtraction ..........................................................69 Nonqualified withdrawal—addition ...............................59 Nonqualified withdrawal—tax recapture .......................30 Abusive Tax Avoidance Transactions—penalty ................40 Accumulation distribution from a trust—addition ...........59 Additions ABLE account subtraction nonqualified withdrawal ....59 Accumulation distribution from a trust ..........................59 Basis of business assets transferred into Oregon ............93 Capital loss carryover difference ......................................59 Claim of right income repayments ...................................59 College Opportunity Grant Fund contributions ............60 CPAR adjustments ..............................................................93 Depletion in excess of property basis ...............................60 Depreciation difference for Oregon ..................................92 Disposition of inherited Oregon farmland or forestland ...60 Disqualified charitable donations .....................................61 Federal business income deduction .................................61 Federal depreciation disconnect .................................90, 92 Federal election on interest and dividends of a minor child ...61 Federal estate tax .................................................................61 Federal income tax refunds ...............................................62 Federal law disconnect .......................................................98 Federal subsidies for employer prescription drug plans .....63 Fiduciary adjustment from Oregon estates and trusts .... 94 First-time home buyer savings account nonqualified withdrawal .................................................................63 Gain on the sale of an Oregon residence .........................94 Gain or loss on sale of depreciable property with different basis for Oregon .........................................94 Gambling losses claimed as an itemized deduction ......63 Income taxes paid to another state by a pass-through entity ...................................................64 Individual development account Donation credit ..................................................................64 Nonqualified withdrawal ................................................65 Rollover to retirement account........................................65 In general ..............................................................................59 Interest and dividends on government bonds of other states ..................................................................65 Lump-sum distributions ....................................................65 Nonresident capital losses and loss carryovers ..............66 Oregon College and MFS 529 Savings Plan subtraction nonqualified withdrawal .....................66 Oregon deferral of reinvested capital gain ......................98 Oregon Production Investment Fund contributions .....66 Partnership and S corporation modifications for Oregon ...93 Passive activity losses .........................................................95 PTE-E tax deducted on entity-level federal return ........67 Refund of Oregon-only itemized deductions from a prior year .................................................................67 Suspended losses ................................................................96 University Venture Development Fund contributions .... 67 Unused business credits .....................................................67 WFHDC medical expenses ................................................68 Additions to tax ......................................................................25 Addresses ..............................................................................145 Adjustments—Centralized partnership audit regime ......93 Adjustments to income Alimony paid .......................................................................54 Educator expenses ..............................................................55 Fee-basis government officials, business expenses of ...54 Health Savings Account deduction ..................................55 In general ..............................................................................54 IRA or self-employed SEP and SIMPLE contributions .... 55 Moving expenses .................................................................56 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ............................................................57 Penalty on early withdrawal of savings ..........................56 Performing artists, business expenses of .........................54 Reservists, business expenses of .......................................54 Self-employed health insurance ........................................56 Self-employment tax ...........................................................57 Student loan interest ...........................................................57 Agricultural employer overtime tax credit ......................121 Agriculture workforce housing—credit ........................... 112 Air carrier employees ............................................................47 Alimony Paid, deduction—adjustment ............................................54 Received, income ................................................................47 Alternative qualified research activities–credit ............... 113 Amended returns ...................................................................36 American Indian—subtraction .............................................69 AmeriCorps educational award—subtraction ...................70 Amtrak Act ..............................................................................49 Annual estimated tax payment ..........................................126 Appeals Appealing a deficiency based on federal audit reports or audit reports of other states ...................43 Conference ...........................................................................43 Doubtful liability .................................................................44 Interest ............................................................................43, 44 Notice of Assessment..........................................................42 Notice of Deficiency ............................................................42 Oregon Tax Court ................................................................44 Paying your taxes during the appeal ...............................44 Penalty or interest ...............................................................43 Revenue Online .......................................................42, 43, 44 Written objection .................................................................43 Appendix ...............................................................................129 Application of refund ............................................................33 Artist’s charitable contribution—subtraction ....................70 “As if” federal returns ...........................................................17 Audit ........................................................................................41 B Basis of business assets transferred into Oregon ...............93 Bona fide residence test .........................................................14 Bond interest ...............................................................65, 78, 88 Bovine manure production/collection ............................. 114 Business energy carryforward—credit ............................. 114 Business income or loss .........................................................48 Business income reduced tax rate ........................................26 C Capital Construction Fund—subtraction ...........................70 Capital gain .................................................................28, 48, 65 Capital loss carryover difference—addition ......................59 Capital loss carryover difference worksheet ....................133 Index

150-101-431 (Rev. 06-17-24) 140 Casualty loss from state-declared

emergency—subtraction ..........................................71 Centralized Partnership Audit Regime Addition ...............................................................................93 Adjustment report ...............................................................41 Amount in lieu of tax paid by partners ...........................30 Subtraction ...........................................................................93 Certain business expenses of reservists, performing artists, and fee-basis government officials .............54 Child Care Fund contribution—credit .............................. 114 Child with a disability .........................................................101 Claim of right income repayments Addition ...............................................................................59 Credit ..................................................................................122 College Opportunity Grant Fund contributions Addition ...............................................................................60 Credit .................................................................................. 114 Combat zone/Contingency area ..........................................23 Commercial fishermen Estimated tax .....................................................................128 Underpayment interest ....................................................126 Community property income .........................................18, 47 Commuting expenses, construction worker/logger— subtraction ..................................................................71 Composite return, filing ........................................................16 Income on, subtraction .......................................................78 CPAR adjustments .................................................................93 CPAR amount in lieu of tax paid by partners ....................30 Credit card payments ............................................................32 Credit forfeiture ......................................................................30 Credits and payments............................................................25 Credits, carryforward Agriculture workforce housing ...................................... 112 Alternative qualified research activities ........................ 113 Bovine manure production/collection carryforward .... 114 Child Care Fund contribution ......................................... 114 College Opportunity Grant Fund contributions .......... 114 Crop donation .................................................................... 114 Electronic commerce zone investment ........................... 115 Employer scholarship ....................................................... 115 Energy conservation project ............................................ 115 Fish screening devices ...................................................... 116 Forest conservation ........................................................... 116 Lender’s credit: affordable housing ............................... 117 Lender’s credit: energy conservation ............................. 117 Long-term enterprise zone facilities ............................... 117 New Markets ..................................................................... 118 Oregon IDA Initiative Fund donation ........................... 117 Oregon Low-Income Community Jobs Initiative ......... 118 Oregon Production Investment Fund contributions ... 118 Qualified research activities ............................................ 118 Renewable energy resource equipment manufacturing facility ............................................. 119 Residential energy ............................................................. 119 Rural technology workforce development .................... 119 Short line railroad rehabilitation ..................................... 119 Transportation projects .....................................................120 University venture development fund contributions .... 120 Credits, refundable ABLE account contributions ............................................121 Agricultural employer overtime tax credit ...................121 Claim of right income repayment ...................................122 Earned income ...................................................................122 Manufactured dwelling park closure .............................122 Oregon 529 College Savings Network account contributions ............................................................123 Oregon EIC for ITIN filers ...............................................123 Oregon Kids Credit ...........................................................124 Oregon surplus credit (kicker) ........................................124 Pass-through entity elective taxes paid .........................124 Working Family Household and Dependent Care (WFHDC) ..................................................................124 Credits, standard Exemption ..........................................................................100 Income taxes paid to another state on mutually-taxed income .......................................................................102 Mutually-taxed gain on the sale of residential property .....106 Oregon Cultural Trust contributions ..............................107 Oregon Veterans’ Home physicians ...............................107 Pass-through income taxes paid to another state .........106 Political contributions ......................................................108 Reservation enterprise zone ............................................108 Retirement income ............................................................109 Rural emergency medical service providers ................. 110 Rural health practitioners ................................................ 110 Credit transfers ..................................................................... 112 Credit types .............................................................................99 Crop donation—credit ......................................................... 114 D Dam workers; hydroelectric .................................................48 Deceased person’s return ........................................................8 Deductions and modifications .............................................96 Itemized deductions ...........................................................96 Standard deduction ............................................................97 Age 65 or older, blind .......................................................97 Single or married filing jointly dependents ..................97 Dependent ...........................................................................9, 97 Depletion in excess of property basis—addition ...............60 Depreciation difference for Oregon .....................................92 Direct deposit of refund ........................................................33 Disaster area ............................................................................15 Disaster relief workers .............................................................9 DISC dividend payments—subtraction ..............................72 Disposition of inherited Oregon farmland or forestland—addition .................................................60 Disqualified charitable donations—addition .....................61 Dividend income ..............................................................49, 78 Domicile ...................................................................................13 E Earned income—credit ........................................................122 Educator expenses—adjustment ..........................................55 Electronic commerce zone investment—credit ................ 115 Electronic filing for Oregon .................................................. 11 Employee retirement plans, previously taxed —subtraction ..............................................................83 Employer scholarship—credit ............................................ 115 Energy conservation project—credit ................................. 115 Estimated tax ........................................................................128 Exempt income Air carrier employees, nonresident ..................................47 Amtrak Act ...........................................................................49 Hydroelectric dam workers ...............................................48 Interstate transportation wages Amtrak Act ...................49 Railroad Retirement Board benefits .................................52 Social Security benefits .......................................................52 Index

150-101-431 (Rev. 06-17-24) 141 Waterway workers, nonresident .......................................53 Extensions of time to file .......................................................15 F Failure to file ...........................................................................45 Appeal procedure ...............................................................45 Assessment of tax ................................................................45 Penalty, 25 percent ..............................................................39 Penalty, 100 percent ............................................................40 Farmers Estimated tax .....................................................................128 Underpayment interest ....................................................126 Farm income averaging .........................................................29 Farm liquidation long-term capital gain tax rate ..............28 Federal audits .........................................................................41 Federal business income deduction—addition .................61 Federal depreciation disconnect ..........................................92 Federal election on interest and dividends of a minor child—addition ..........................................................61 Federal estate tax—addition .................................................61 Federal income tax liability—subtraction Additional tax paid .............................................................72 Amended returns—how to report ....................................37 Worksheet .............................................................................72 Federal income tax refunds—addition ...............................62 Federal law connection............................................................7 Federal law disconnect—addition .......................................98 Federal mortgage interest credit—subtraction ..................74 Federal or other state corrections to tax returns ................35 Federal pension income—subtraction ................................74 Federal return Audit of ................................................................................42 Extensions of time to file ....................................................15 Filing status ..........................................................................16 Need for ................................................................................ 11 RDPs ......................................................................................19 Federal Schedule E and F income ........................................48 Federal subsidies for employer prescription drug plans—addition .........................................................63 Federal tax credits—subtraction ..........................................76 Federal tax law .........................................................................7 Federal tax worksheet ...........................................................73 Fee-basis government officials, business expenses of—adjustment ...........................................................54 Fiduciaries Exception to paying estimated tax .................................128 Federal business income deduction—addition ..............61 Federal estate tax—addition ..............................................61 Fiduciary returns ...................................................................8 Fiduciary tax ........................................................................31 Income taxes paid to another state by a pass-through entity—addition .........................................................64 Interest and dividends on government bonds of other states—addition ...............................................65 Fiduciary adjustment from Oregon estates and trusts .....94 Filing an Oregon return .........................................................13 Filing requirements ..................................................................9 Nonresidents ........................................................................10 Part-year residents ..............................................................10 Filing status .............................................................................16 Filing your Oregon return before receiving your ITIN ....... 19 Film production labor rebate—subtraction ........................76 First-time home buyer savings account (FTHBSA) contributions and earnings ......................................77 Addition for nonqualified withdrawal ............................63 Nonqualified withdrawal penalty ....................................40 Subtraction ...........................................................................77 Fish screening devices—credit ........................................... 116 Foreign income tax—subtraction .........................................77 Forest conservation—credit ................................................ 116 G Gain, loss, and distributions .................................................48 Gain on the sale of an Oregon residence ............................94 Gain or loss on sale of depreciable property with different basis for Oregon .........................................94 Gambling losses claimed as an itemized deduction .........63 General information ................................................................9 Global intangible low-taxed income (GILTI) .....................48 H Health savings account deduction—adjustment...............55 Household income checklist ...............................................130 Housing expenses, scholarships used for—subtraction ...85 Hydroelectric dam workers ..................................................48 I Important mailing addresses ..............................................145 Important reminders ...............................................................7 Income .....................................................................................47 Air carrier employees .........................................................47 Alimony received ................................................................47 Amtrak Act ...........................................................................49 Business income or loss ......................................................48 Federal Schedule E and F income .....................................48 Gain, loss, and distributions ..............................................48 Global intangible low-taxed income ................................48 Hydroelectric dam workers ...............................................48 Individual Retirement Account distributions .................49 Interest and dividend income ...........................................49 Interstate transportation wages ........................................49 Like-kind exchange or involuntary conversion..............51 Railroad Retirement Board benefits .................................52 Retirement income ..............................................................52 Salaries ..................................................................................53 Social Security benefits .......................................................52 State and local income tax refunds ...................................52 Taxable to Oregon ...............................................................47 Unemployment insurance benefits ..................................53 Wages ....................................................................................53 Waterway workers ..............................................................53 Income averaging, Farm .......................................................29 Income on a composite return—subtraction ......................78 Income taxes paid to another state on mutually-taxed income By a pass-through entity—addition .................................64 Credit, full-year residents ................................................104 Credit, generally ................................................................102 Credit, nonresidents .........................................................105 Credit, part-year residents ...............................................104 Sale of residential property ..............................................106 Income tax refund, federal—addition .................................62 Income tax refund, Oregon—subtraction ...........................81 Individual Development Account Addition Donation credit ..................................................................64 Nonqualified withdrawal ................................................65 Rollover to retirement account........................................65 Initiative Fund donation credit ....................................... 117 Subtraction ...........................................................................78 Index

150-101-431 (Rev. 06-17-24) 142 Index Individual Taxpayer Identification Number ......................19 Inherited farmland/forestland—addition..........................60 Interest Appeals .................................................................................43 Income ..................................................................................49 Installment sales, addition to tax ......................................30 Refunds .................................................................................38 Underpayment of estimated tax .....................................126 Unpaid tax ............................................................................38 Interest/dividends on government bonds of other states—addition .........................................................65 Interest/dividends on U.S. bonds/notes—subtraction....78 Interest income ...........................................................49, 65, 78 Interest on certain installment sales ....................................30 Interstate transportation wages ...........................................49 IRA conversions, previously taxed—subtraction ..............83 IRA or self-employed SEP and SIMPLE contributions—adjustment .......................................55 Itemized deductions and add backs ....................................96 K Kicker (Oregon surplus credit)...........................................124 L Legislative Assembly expenses—subtraction ....................79 Lender’s credit: affordable housing .................................. 117 Lender’s credit: energy conservation ................................ 117 Like-kind exchange or conversions of property ................51 Long-term enterprise zone facilities—credit .................... 117 Lottery winnings—subtraction ............................................81 Lump-sum distributions—addition Capital gains income ..........................................................65 Ordinary income .................................................................65 M Mailing addresses ................................................................145 Manufactured dwelling park Capital gain exclusion—subtraction ................................79 Closure credit .....................................................................122 Closure payments—subtraction .......................................80 Marijuana business expenses—subtraction .......................80 Market-based sourcing ..........................................................52 Medical subtraction, special Oregon ...................................85 Military pay subtractions ......................................................21 Military personnel filing information .................................20 Minor child, federal election on interest and dividends—addition .................................................61 Minor child’s return .................................................................8 Miscellaneous Oregon income tax information for tax years 2020–2023 .................................................146 Mortgage interest credit—subtraction ................................76 Moving expense deduction, military personnel ................20 Moving expenses—adjustment ............................................56 Moving expenses of military spouses .................................24 Mutually-taxed gain on the sale of residential property—credit ......................................................106 N Net operating losses (NOLs) ................................................90 New information ......................................................................7 New Markets—credit .......................................................... 118 Nonresident capital losses and loss carryovers .................66 Nonresident—Form OR-40-N ..............................................15 Nonresidents Adjustments .........................................................................54 Composite return filed by pass-through entity ..............16 Earned income credit ........................................................122 Estimated tax .....................................................................128 Exemption credit ...............................................................100 Filing requirements .............................................................10 Form OR-40-N .....................................................................15 Income taxes paid to another state .................................102 Married taxpayers with different residency status ........16 Nonresident aliens ............................................................128 Oregon percentage ..............................................................96 Rental property in Oregon .................................................10 Residency .............................................................................14 Nonresident spouse of military member stationed in Oregon .........................................................................24 Nonresidents stationed in Oregon, military ......................22 Numeric codes ......................................................................135 O Open estimated tax account .................................................34 Oregon 529 College Savings Network account contributions Addition, nonqualified withdrawal .................................66 Credit ..................................................................................123 Subtraction ...........................................................................80 Tax recapture, nonqualified withdrawal .........................30 Oregon Cultural Trust contributions—credit ...................107 Oregon deferral of reinvested capital gain ..................................................................98 Oregon EIC for ITIN filers ..................................................123 Oregon IDA Initiative Fund donation—credit ................ 117 Oregon income tax refund—subtraction ............................81 Oregon Kids Credit ............................................................................124 Oregon Low-Income Community Jobs Initiative—credit .......118 Oregon percentage .................................................................96 Oregon Production Investment Fund (auction) Addition ...............................................................................66 Credit .................................................................................. 118 Oregon residents living in a foreign country .....................13 Oregon surplus credit ..........................................................124 Oregon tax ...............................................................................25 Oregon Veterans’ Home physicians—credit ....................107 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25—adjustments ..................................57 Other federally-exempt obligations ....................................65 Other gain or loss ...................................................................48 Other individual taxes ...........................................................31 Other items ..............................................................................90 Other Oregon modifications .................................................96 Oyster farmers Estimated tax .....................................................................128 Underpayment interest ....................................................126 P Paid Leave Oregon benefits—subtraction ..........................82 Partnership and S corporation modifications for Oregon .......93 Part-year resident—Form OR-40-P ......................................15 Part-year residents Adjustments .........................................................................54 Earned income credit ........................................................122 Estimated tax .....................................................................128 Exemption credit ...............................................................100 Filing requirements .............................................................10 Form OR-40-P ......................................................................15 Income taxes paid to another state .................................102 Married taxpayers with different residency status ........16 Net operating losses ...........................................................91

150-101-431 (Rev. 06-17-24) 143 Index Oregon percentage ..............................................................96 Residency .............................................................................14 Passive activity losses ............................................................95 Passive foreign investment company income ....................66 Pass-through entities Composite tax return ..........................................................16 Elective tax ...........................................................................29 Income on a composite return—subtraction ...................78 Income taxes paid to another state—addition ................64 Income taxes paid to another state—credit ...................106 Nonresident withholding ..................................................16 Reduced tax rate ..................................................................26 Pass-through entity elective tax ...........................................29 Pass-through entity elective taxes paid—credit ..............124 Pass-through income taxes paid to another state—credit ......106 Payment options .....................................................................32 Payments and refunds ...........................................................32 Penalties ...................................................................................39 Abusive Tax Avoidance Transactions ...............................40 Failure to file, 25 percent, additional ................................39 Failure to file, 100 percent ..................................................40 False claim, Working Family Household and Dependent Care credit ............................................125 Filing or paying late ............................................................39 First-time home buyer savings account nonqualified withdrawal ..........................................40 Frivolous return...................................................................40 Intent to evade tax...............................................................40 Substantial understatement of net tax .............................40 Penalty on early withdrawal of savings—adjustment .....56 Performing artists, business expenses of—adjustment ...... 54 Personal exemption—credit ...............................................100 Personal income tax rates .....................................................25 Political contributions—credit ...........................................108 Prescription drug plans, employer subsidies—addition .......63 Previously taxed employee retirement plans—subtraction ....83 Previously taxed IRA conversions—subtraction ...............83 Prohibited amounts for Oregon NOLs ...............................90 Protective claim for refund ...................................................37 Psilocybin business expenses—subtraction .......................84 PTE-E tax deducted on entity-level federal return— addition .......................................................................67 PTEs with nonresident owners ............................................16 Public Safety Memorial Fund Awards—subtraction ........84 Q Qualified business income reduced tax rate ......................26 Qualified research activities—credit ................................. 118 R Railroad Retirement Board benefits—subtraction ............84 Reasons to file an amended return ......................................36 Record-keeping requirements .............................................. 11 Refund of Oregon-only itemized deductions from a prior year—addition ..............................................67 Refunds ....................................................................................32 Amended returns ................................................................36 Application to open estimated tax account ...............33, 34 Deceased taxpayer ..............................................................32 Delays ...................................................................................34 Direct deposit .......................................................................33 Injured spouse refund claims ............................................35 Interest ..................................................................................38 Minimum................................................................................8 Oregon statute of limitations .............................................35 Processing.............................................................................34 Protective claim ...................................................................37 Unclaimed property ...........................................................32 Registered domestic partners ...............................................19 Renewable energy resource equipment manufacturing facility carryforward—credit ................................. 119 Requesting a waiver of penalty or interest .........................46 Required annual payment ..................................................126 Required installment payment ...........................................126 Reservation enterprise zone—credit .................................108 Reservists, business expenses of—adjustment ..................54 Residency ................................................................................13 Bona fide residence test ......................................................14 Domicile ...............................................................................13 Foreign country ...................................................................13 Military personnel...............................................................20 Military spouses ..................................................................23 Nonresidents ........................................................................14 Part-year residents ..............................................................14 Physical presence test .........................................................13 Special-case Oregon residents ...........................................13 Tax treaties ...........................................................................14 Resident—Form OR-40 .........................................................15 Residential energy—credit .................................................. 119 Retirement income .................................................................52 Credit ..................................................................................109 Revenue Online ........................................................................7 Rural technology workforce development—credit ......... 119 S Salary income ..........................................................................53 Sales of Oregon real property by nonresidents .................15 Scholarships used for housing expenses—subtraction ...... 85 Self-employed health insurance—adjustment ...................56 Self-employment tax—adjustment ......................................57 Severely disabled, exemption credit ..................................101 Short line railroad rehabilitation—credit .......................... 119 Social Security and Railroad Retirement Board benefits ..........52 Social Security benefits—subtraction ..................................85 Special Oregon medical—subtraction .................................85 Special Oregon medical subtraction worksheet instructions .................................................................86 Standard credits ....................................................................100 Standard deduction ...............................................................97 State and local government bond interest ..........................88 State and local income tax refunds ......................................52 Statewide transit tax ..............................................................31 Statute of limitations Generally ..............................................................................12 Net operating loss carryback .............................................37 Notice of deficiency for listed transaction .......................40 Refunds .................................................................................35 Student loan interest—adjustment ......................................57 Substantial understatement of net tax penalty ..................40 Subtractions ABLE account deposit ........................................................69 American Indian .................................................................69 AmeriCorps educational award .......................................70 Artist’s charitable contribution .........................................70 Basis of business assets transferred into Oregon ............93 Capital Construction Fund contributions .......................70 Casualty loss from state-declared emergency ................71 Commuting expenses, construction worker/logger .....71 CPAR adjustment ................................................................93 Depreciation difference for Oregon ..................................92

150-101-431 (Rev. 06-17-24) 144 DISC dividend payments ..................................................72 Federal gain previously taxed by Oregon .......................72 Federal income tax liability ...............................................72 Federal mortgage interest credit .......................................74 Federal pension income .....................................................74 Federal tax credits ...............................................................76 Fiduciary adjustment from Oregon estates and trusts ...94 Film production labor rebate .............................................76 First-time home buyer savings account contributions and earnings ...............................................................77 Foreign income tax ..............................................................77 Gain on the sale of an Oregon residence .........................94 Gain or loss on sale of depreciable property with different basis for Oregon .........................................94 IDA contributions ...............................................................78 Income on a composite return ...........................................78 Individual Development Account ....................................78 In general ..............................................................................69 Interest and dividends on U.S. bonds and notes ............78 Legislative Assembly expenses .........................................79 Lottery winnings .................................................................81 Manufactured dwelling park capital gain exclusion .....79 Manufactured dwelling park closure payments ............80 Marijuana business expenses ............................................80 Net operating losses for Oregon .......................................90 Oregon College and MFS 529 Savings Plan deposits ....80 Oregon income tax refund .................................................81 Oregon Investment Advantage .........................................81 Oregon Lottery Winnings ..................................................81 Paid Leave Oregon benefits .......................................................82 Partnership and S corporation modifications for Oregon ...93 Passive activity losses .........................................................95 Previously taxed employee retirement plans..................83 Previously taxed IRA conversions ....................................83 Psilocybin business expenses ............................................84 Public Safety Memorial Fund awards ..............................84 Railroad Retirement Board benefits .................................84 Scholarships used for housing expenses .........................85 Social Security benefits .......................................................85 Special Oregon medical ......................................................85 State and local government bond interest .......................88 Suspended losses ................................................................96 Taxable benefits for former RDPs .....................................88 U.S. government interest in IRA or Keogh distribution 88 Suspended losses....................................................................96 T Tables Table 1: Filing thresholds for full-year residents ..............9 Table 2: Filing thresholds for part-year residents and nonresidents........................................................10 Table 3: Spouses with different residency status ............17 Table 4: Tax on qualified business income.......................26 Table 5: Partnership and S corporation employee requirements ...............................................................27 Table 6: Refund applied as estimated tax payment .......34 Table 7: Interest percentage rates ......................................38 Table 8: Capital loss carryover difference ........................59 Table 9: Federal tax liability subtraction AGI phase-out ....74 Table 10: FTHBSA subtraction limits ................................77 Table 11: Special Oregon medical subtraction —maximum amount .................................................85 Table 12: Oregon percentage examples ............................96 Table 13: Rural health practitioner credit .......................111 Table 14: Credit percentage ..............................................121 Table 15: WFHDC AGI limits ..........................................125 Taxable benefits for former RDPs—subtraction ................88 Tax benefit doctrine................................................................62 Tax recaptures .........................................................................30 Tax treaties ...............................................................................14 Transit self-employment tax .................................................31 Transportation projects—credit ..........................................120 Two-tiered interest on deficiencies and delinquencies ....... 38 Two-tiered interest on refunds .............................................39 U Underpayment of estimated tax, interest on ............126, 127 Appeals .................................................................................42 Exceptions ..........................................................................126 Unemployment compensation Income ..................................................................................53 Railroad Retirement Board benefits—subtraction .........84 University venture development fund contributions Addition ...............................................................................67 Credit ..................................................................................120 Unused business credits—addition .....................................67 U.S. bonds and notes, interest on—subtraction .................78 U.S. government interest in IRA or Keogh distribution—subtraction .........................................88 W Wage income ...........................................................................53 Waterway workers .................................................................53 Working Family Household and Dependent Care (WFHDC)—credit ....................................................124 Medical expenses claimed as itemized deduction .........68 Penalty for false claim ......................................................125 Written objection ....................................................................43 Index

150-101-431 (Rev. 06-17-24) 145 Important mailing addresses If you are responding to a specific notice or letter, use the address and contact information listed on that correspondence. Send all returns and forms to the address listed on it or its instructions. See our website for additional mailing addresses. Physical address: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Forms and publications requests: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Federal ITIN information: Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Tax Information Authorization and Power of Attorney for Representation form: Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Fax: 503-945-8735 Return after tax has been assessed: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Donations to State School Fund: Oregon Department of Education Attention: OFA Cashier 255 Capitol Street NE Salem OR 97310-1206 Injured spouse refund requests: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Written objections, conference requests, and requests for interest or penalty adjustments: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Appeals to the Oregon tax court: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 Appeals of interest on underpayment of tax: UND Team Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018

Miscellaneous Oregon income tax information for tax years 2020–2023 (Refer to prior year return instructions before filing delinquent or amended returns) Tax year 2020 2021 2022 2023 Return due date (Calendar year filer) 5/17/21 4/18/22 4/18/23 4/15/24 Standard deduction Single (can be claimed on another’s return) $1,100* $1,100* $1,150* $1,250* Single $2,315 $2,350 $2,420 $2,605 Married filing jointly or qualifying surviving spouse $4,630 $4,700 $4,840 $5,210 Married filing separately $2,315† $2,350† $2,420† $2,605† Head of household $3,725 $3,780 $3,895 $4,195 Federal tax subtraction maximum $6,950–$0‡ $7,050–$0‡ $7,250–$0‡ $7,800–$0‡ Exemption credit $210 or $0x% $213 or $0x% $219 or $0x% $236 or $0x% Oregon College and MFS 529 Savings Plans and ABLE account contribution maximum Joint return $4,960# $5,030# $5,185# $5,580# All others $2,480# $2,515# $2,590# $2,790# Marginal tax rates Single Married filing separately 4.75% First $3,600 First $3,650 First $3,750 First $4,050 6.75% $3,601–$9,050 $3,651–$9,200 $3,751–$9,450 $4,051–$10,200 8.75% $9,051–$125,000 $9,201–$125,000 $9,451–$125,000 $10,201–$125,000 9.9% Over $125,000 Over $125,000 Over $125,000 Over $125,000 Married filing jointly Head of household Qualifying surviving spouse 4.75% First $7,200 First $7,300 First $7,500 First $8,100 6.75% $7,201–$18,100 $7,301–$18,400 $7,501–$18,900 $8,101–$20,400 8.75% $18,101–$250,000 $18,401–$250,000 $18,901–$250,000 $20,401–$250,000 9.9% Over $250,000 Over $250,000 Over $250,000 Over $250,000 * Greater of amount shown or earned income plus $400, but not more than the standard deduction for a single filer. † If your spouse itemizes deductions, your standard deduction is $0. ‡ If federal AGI is $125,000 or greater, the federal tax subtraction is limited. Use the federal tax subtraction worksheet. x If federal AGI is more than $100,000 ($200,000 for a joint return), the exemption credit amount is $0. % The additional exemption credit for a disabled child or severely disabled taxpayer or spouse is $0 if AGI is over $100,000, regardless of filing status. # Carryforward of pre-2020 contributions only.

150-101-431 (Rev. 11-27-24) 2024 OREGON Publication OR-17 Individual Income Tax Guide

Important updates

This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax (For Individuals). This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 questions.dor@dor.oregon.gov Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include .txt files in your email, but we are unable to open any other type of attachment. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. • Personal and partnership income tax: prac.revenue@dor.oregon.gov. • Pass-through entity elective tax: businessalternative.incometax@dor.oregon.gov. • Corporate income or excise tax: corp.help.dor@dor.oregon.gov. • Corporate minimum tax: corp.help.dor@dor.oregon.gov. • Corporate nexus and voluntary disclosure: nexus.help.dor@dor.oregon.gov. • Corporate activity tax: cattax.questions@dor.oregon.gov. • Payroll and business tax: payroll.help.dor@dor.oregon.gov. • Fiduciary/estate/inheritance tax: estate.help.dor@dor.oregon.gov. • Transit self-employment taxes: tse.help.dor@dor.oregon.gov. • Agricultural overtime: ag.overtime@dor.oregon.gov. Revenews. To receive emailed information from us, subscribe to Revenews using the link on our Tax professionals webpage.

150-101-431 (Rev. 11-27-24) 4 Contents Federal tax law ....................................................................

7 New information.................................................................

7 Important reminders..........................................................

7 General information..................................................

9 Do I have to file an Oregon income tax return?.............

9 Electronic filing for Oregon ............................................

11 2-D barcode filing for Oregon.........................................

11 Why Oregon needs a federal return ..............................

11 Record-keeping requirements.........................................

11 Filing an Oregon return.........................................

13 Residency ...........................................................................

13 Extensions of time to file .................................................

15 Which form do I file?........................................................

15 Filing status........................................................................16 Registered domestic partners (RDPs) ............................

19 Individual Taxpayer Identification Number.................

19 Military personnel filing information...........................

20 Oregon tax ....................................................................

25 Personal income tax rates ................................................

25 Qualified business income reduced tax rate ................

26 Farm liquidation long-term capital gain tax rate .........

28 Farm income averaging ...................................................

29 Pass-through entity elective tax......................................

29 CPAR tax ............................................................................

30 Interest on certain installment sales ..............................

30 ABLE account or Oregon higher education savings plan account tax recapture .........................................

30 Other individual taxes .....................................................

31 Payments and refunds ...........................................

32 Payment options................................................................

32 Refunds...............................................................................

32 Direct deposit of refund...................................................

33 Application of refund.......................................................

33 Refund processing ............................................................

34 Injured spouse refund claims.........................................

35 Oregon statute of limitations on refunds .....................

35 Amended returns .....................................................

36 How do I amend my Oregon return? ............................

36 Interest and penalties.............................................38 Interest................................................................................

38 Penalties..............................................................................

39 Audits and appeals...................................................

41 What to do if your return is audited..............................

41 Appeals...............................................................................

42 Failure to file an Oregon income tax return... 45 Filing a return after tax is assessed................................

45 Income ............................................................................

47 What income is taxable to Oregon?................................

47 Air carrier employees.......................................................

47 Alimony received..............................................................

47 Business income or loss....................................................

48 Federal Schedule E and F income...................................

48 Federally excluded income..............................................

48 Gain, loss, and distributions ...........................................

48 Global intangible low-taxed income (GILTI) ................

48 Hydroelectric dam workers.............................................

49 Individual Retirement Account (IRA) distributions ... 49 Interest and dividend income.........................................

49 Interstate transportation wages (Amtrak Act)..............

49 Like-kind exchange or involuntary conversion ...........

51 Market-based sourcing ....................................................

52 Retirement income............................................................

52 Social Security and Railroad Retirement Board benefits ... 52 State and local income tax refunds ................................

53 Unemployment insurance (UI) benefits and other taxable income..............................................................

53 Wages, salaries, and other pay for work........................

53 Waterway workers ............................................................

53 Adjustments.................................................................

54 Alimony paid.....................................................................

54 Certain business expenses of reservists, performing artists, and fee-basis government officials...............

54 Educator expenses ............................................................

55 Health savings account (HSA) deduction .....................

55 IRA or self-employed SEP and SIMPLE contributions ... 55 Moving expenses ..............................................................

56 Penalty on early withdrawal of savings ........................

56 Self-employed health insurance ....................................

56 Self-employment tax ........................................................

57 Student loan interest ........................................................

57 Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 ........................................

57 Additions........................................................................

58 ABLE account subtraction nonqualified withdrawal....

58 Accumulation distribution from certain domestic trusts... 58 Capital loss carryover difference....................................

58 Claim of right income repayments.................................

58 Depletion in excess of property basis ............................

59 Disposition of inherited Oregon farmland or forestland ... 59 Disqualified charitable donations..................................

60 Federal business income deduction...............................

60 Federal election on interest and dividends of a minor child... 60 Federal estate tax...............................................................

60 Federal income tax refunds.............................................

60 Federal subsidies for employer prescription drug plans ....

62 First-time home buyer savings account nonqualified withdrawal............................................

62 Gambling losses claimed as an itemized deduction ... 62 Income taxes paid to another state by a pass-through entity .....................................................

63 Individual development account (IDA).........................

63 Interest and dividends on government bonds of other states................................................................

63 Lump-sum distribution from a qualified retirement plan.................................................................................

64 Nonresident capital losses and loss carryovers............

64 Oregon higher education savings plan subtraction nonqualified withdrawal............................................

65 Oregon Production Investment Fund contributions... 65 Passive foreign investment company income...............

65 PTE-E tax deducted on entity-level federal return......

65 Refund of Oregon-only itemized deductions from a prior year....................................................................

65

150-101-431 (Rev. 11-27-24) 5 Research and development for semiconductor companies .....................................................................

66 University Venture Development Fund contributions ... 66 Unused business credits ..................................................

66 WFHDC medical expenses..............................................66 Subtractions.................................................................

67 ABLE account deposit fiscal-year carryforward..........

67 American Indian...............................................................

67 AmeriCorps educational award .....................................

68 Artist’s charitable contribution.......................................

68 Capital Construction Fund (CCF) contributions..........

68 Casualty loss from state-declared emergency..............

69 Construction worker and logger commuting expenses ........................................................................

69 Domestic international sales corporation (DISC) dividend payments......................................................

70 Federal gain previously taxed by Oregon.....................

70 Federal income tax liability.............................................

70 Federal tax worksheet ......................................................

71 Federal mortgage interest credit ....................................

72 Federal pension income ...................................................

72 Federal tax credits ................................................................

74 Film production labor rebate...........................................

74 First-time home buyer savings account (FTHBSA) contributions and earnings ........................................

75 Foreign income tax ...........................................................

75 IDA contributions .............................................................

76 Income on a composite return ........................................

76 Interest and dividends on U.S. bonds and notes..........

76 Legislative Assembly expenses ......................................

77 Manufactured dwelling park capital gain exclusion... 77 Manufactured dwelling park closure payments..........

78 Marijuana business expenses .........................................

78 Oregon higher education savings plan deposits fiscal-year carryforward .............................................

78 Oregon income tax refund ..............................................

79 Oregon Investment Advantage.......................................

79 Oregon Lottery winnings................................................

79 Paid Leave Oregon benefits deducted on federal Schedule A ....................................................................

80 Previously taxed employee retirement plan contributions.................................................................

80 Previously taxed IRA conversions .................................

81 Psilocybin business expenses .........................................

81 PTE-E tax refund included on entity-level federal return.............................................................................

82 Public Safety Memorial Fund award .............................

82 Railroad Retirement Board benefits...............................

82 Scholarship awards used for housing expenses ..........

83 Social Security benefits....................................................

83 Special Oregon medical ...................................................

83 State and local government bond interest.....................

86 Taxable benefits for former RDPs...................................

86 U.S. government interest in IRAor Keogh distributions .................................................................

87 Wildfire civil action legal fees.........................................

87 Wildfire civil action settlement or judgment................

87 Other items...................................................................

88 Net operating losses (NOLs) ..........................................

88 Depreciation difference for Oregon ...............................

90 Federal depreciation disconnect.....................................

90 Partnership and S corporation modifications for Oregon...........................................................................

91 CPAR adjustments ............................................................

91 Basis of business assets transferred into Oregon.........

91 Gain or loss on sale of depreciable property with different basis for Oregon...........................................

92 Gain on the sale of an Oregon residence.......................

92 Fiduciary adjustment from Oregon estates and trusts ......................................................................

92 Passive activity losses (PALs)..........................................

93 Suspended losses ..............................................................

94 Oregon percentage............................................................

94 Deductions and modifications........................................

94 Oregon surplus refund ....................................................

96 Oregon deferral of reinvested capital gain ...................

96 Federal law disconnect.....................................................

96 Credits ............................................................................

97 Types of credits..................................................................

97 Standard credits ........................................................

98 Exemption credit...............................................................

98 Income taxes paid to another state on mutually-taxed income..........................................................................100 Exception for Oregon resident partners and S corporation shareholders..........................................

104 Oregon Cultural Trust contributions...........................

104 Oregon Veterans’ Home physicians.............................

105 Political contributions ....................................................

105 Reservation enterprise zone..........................................

106 Retirement income..........................................................

106 Rural emergency medical service providers ..............

107 Rural health practitioners..............................................

108 Taxes imposed by other jurisdiction on mutually-taxed gain from sale of residence...........

109 Carryforward credits.............................................

110 Agriculture workforce housing ....................................

110 Bovine manure production/collection carryforward...............................................................111 Business energy carryforward......................................

112 Child Care Fund contributions carryforward............

112 College Opportunity Grant Fund contributions (auction) carryforward..............................................

112 Crop donation..................................................................

112 Employer scholarship.....................................................

113 Energy conservation project carryforward.................

113 Fish screening devices....................................................

113 Forest conservation.........................................................

114 Lender’s credit: affordable housing..............................

114 Lender’s credit: energy conservation carryforward... 114 Long-term enterprise zone facilities ............................

115 Oregon IDA Initiative Fund donation .........................

115 Oregon Low-Income Community Jobs Initiative/New Markets ............................................

115 Oregon Production Investment Fund contributions (auction) ..............................................

116 Publicly supported housing sale ..................................

116 Renewable energy resource equipment manufacturing facility carryforward .....................

116 Research and development for semiconductor companies—nonrefundable.....................................

117 Residential energy carryforward .................................

117 Rural technology workforce development carryforward...............................................................117 Short line railroad rehabilitation..................................

117 Transportation projects carryforward.........................

118

University Venture Development Fund contributions...............................................................

118 Refundable credits .................................................

119 ABLE account contributions..........................................

119 Agricultural employer overtime tax credit (AEOTC) ...

119 Claim of right income repayment ................................

120 Earned income credit (EIC) ...........................................

120 Manufactured dwelling park closure..........................

120 Oregon higher education savings plan account contributions...............................................................

121 Oregon EIC for ITIN filers.............................................

121 Oregon Kids Credit.........................................................

122 Pass-through entity elective taxes paid.......................

122 Research and development for semiconductor companies—refundable............................................

122 Working family household and dependent care (WFHDC) ....................................................................

123 Interest on underpayment of estimated tax... 124 Do I owe underpayment interest? ................................

124 Figure your required annual payment........................

124 Exceptions to paying interest on an underpayment of estimated tax...............................

124 Estimated tax.............................................................

125 Should I pay estimated tax?...........................................125 Exceptions ........................................................................

125 Special situations ............................................................

125 Appendix......................................................................

126 Contents............................................................................

126

150-101-431 (Rev. 11-27-24) 7 Federal tax law No extension to pay. Oregon doesn’t allow an extension of time to pay your tax, even if the IRS is allowing an extension. Your 2024 Oregon tax is due April 15, 2025. Federal law connection. Oregon has a rolling tie to changes made to the definition of federal taxable income, with the exceptions noted below. For all other purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2023. Oregon exceptions to federal tax law: • Internal Revenue Code (IRC) Section 139A tax exemp- tion for federal subsidies for employer prescription drug plans. If you have this type of business income, you’ll have an addition on your Oregon return. • IRC Section 529 tax exemption for earnings on col- lege savings plan funds used for K-12 tuition. Ore- gon College & MFS 529 Savings Plans may be used for higher education expenses only. • IRC Section 199A deduction for noncorporate quali- fied business income (QBID). Oregon is discon- nected from the QBID. This deduction doesn’t flow through to the Oregon personal income tax return, so there is no addition to report; however, the deduc- tion must be added back on fiduciary returns. References to federal return forms. In this publica- tion, references to the federal return or to Form 1040 also include a reference to Forms 1040-SR, 1040-NR, and 1040-X, unless otherwise indicated. New information Direct File Oregon. Oregon now has a free, interview- based method that many full-year residents can use to file an original or amended return. Direct File guides you through the return, handling the math and providing assistance with common deductions and credits. See “Electronic filing for Oregon” for more information. Voluntary self-identification. Oregon will now be asking you to voluntarily identify your race or eth- nicity when you file your income tax return. You can select up to three race or ethnicity categories using Form OR-VSI. The information gathered from Form OR-VSI will be used only for research purposes to help make Oregon’s tax laws more equitable. For more information, visit our Voluntary self-identifica- tion webpage. Wildfire settlement or judgment subtractions. You may be able to subtract income from a settle- ment or judgment related to a wildfire that hasn’t been deducted elsewhere on your federal or Oregon return. Legal expenses related to the settlement or judgment may also be subtracted. Returns for tax years 2018 through 2021 may be amended to claim the subtractions if they are filed by May 14, 2025. See “Subtractions” for more information. First-time home buyer savings account (FTHBSA) subtraction. The limits for this subtraction are now adjusted for inflation. The 2024 limits for the FTH- BSA subtraction are $11,865 for joint account holders who file a joint return and $5,930 for all other account holders. For phaseout limits and other information, see “Subtractions.” Form 1099-G is no longer being mailed. We will send you an informational postcard about Form 1099-G if you received an Oregon income tax refund in 2024 and you claimed itemized deductions on your 2023 federal return. The postcard will tell you how to get your Form 1099-G through Revenue Online. The form will be available by January 31. If you don’t have internet access, contact us by phone for assistance. Federal tax liability subtraction. The federal tax subtraction limit is $8,250 ($4,125 if married filing separately) for 2024. It may be limited further based on your adjusted gross income (AGI). See “Federal income tax liability” in “Subtractions.” Important reminders Revenue Online. Revenue Online provides conve- nient, secure access to tools for managing your Ore- gon tax account. With Revenue Online, you can: • Check the status of this year’s refund. • View and print most letters from us. • Make or schedule payments. • Securely communicate with us. • Check balances and view your tax account history. • Submit your requests (such as penalty waivers or appeals) or information we’ve requested from you. • View your Form 1099-G, if applicable. Tax professionals with third party access have addi- tional benefits, such as viewing clients’ accounts. For more information and instructions on setting up your personal Revenue Online account, go to www. oregon.gov/dor and click on Revenue Online. Data security breaches. Tax professionals suffering a data security breach associated with tax return preparation must report the breach to us promptly. See our Tax professionals webpage for details. Military pay. Oregon doesn’t tax your military pay if you aren’t an Oregon resident. For more information about residency and the Oregon military pay subtrac- tions, see “Military personnel filing information.” Federal centralized partnership audit regime (CPAR). Oregon recognizes CPAR, the federal regime for auditing partnerships. See “Oregon tax” and “Audits and appeals.” Federal tax law

150-101-431 (Rev. 11-27-24) 8 Special Oregon medical subtraction. You or your spouse must be age 66 or older at the end of the tax year to qualify for the subtraction. See “Special Ore- gon medical subtraction.” Fiduciary returns. This publication includes infor- mation for Oregon fiduciary return filers, where the treatment of an item may differ from the treatment on personal income tax returns. Also, see the instruc- tions for Form OR-41, Oregon Fiduciary Income Tax Return. Statewide transit tax (STT). This income tax funds public transportation services and improvements within Oregon. See “Oregon tax” for filing require- ments and other details. Market-based sourcing. Nonresident taxpayers must apportion their business income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See ORS 314.665, ORS 314.666, and OAR 150-314-0435. Payment options. We accept tax payments by check, money order, debit card, and credit card. See “Pay- ments and refunds.” Direct deposit. Instead of receiving your refund check in the mail, you may have your refund depos- ited directly into your account that accepts electronic deposits. See “Direct deposit of refund” in “Payments and refunds.” You can also have your refund depos- ited directly into an Oregon higher education savings plan account. You may choose up to four accounts. See our full-year and part-year/nonresident booklets for more information. Minimum refund. Under Oregon law, the minimum refund that can be issued is $1. Minor child’s return and signature. If your child must file a tax return, you may sign the child’s name as their legal agent. Sign the child’s name and then write “By (your signature), parent (or legal guardian) for minor child.” Deceased person’s return. A final return for a person who died during the calendar year must be filed if a return would normally be required. If a return must be filed, check the “Deceased” box after the person’s name on the return. If you filed a final return with a refund and are unable to cash the refund check, you will need to return the check to us along with Form OR-243, Claim to Refund Due a Deceased Person. Go to our website to download the form or contact us to order it. If you are a court appointed personal representative or have filed a small estate affidavit and you need more information about trusts or estates, contact our Estate Unit at estate.help.dor@dor.oregon.gov. AGI limit for additional exemption credits. The addi- tional exemption credits for a taxpayer or spouse with a severe disability and for a child with a quali- fying disability aren’t available for taxpayers whose AGI is more than $100,000, regardless of filing sta- tus. For more information, see “Exemption credit” in “Standard credits.“ Registered domestic partners (RDPs). For Oregon tax purposes, RDPs are treated the same as married cou- ples. References to “spouse” within this publication include RDPs. Nonresident disaster relief workers. You don’t need to file a return if you worked in Oregon solely to pro- vide relief during a declared disaster or emergency. See “General information” for more details. Mailing address. Always include your current mail- ing address when filing a return so that we can reach you if needed. If you’re filing a return for a previous tax year, don’t use the address that you had during that tax year unless it is still your current mailing address. Important reminders

150-101-431 (Rev. 11-27-24) 9 General information Do I have to file an Oregon income tax return? Use the following charts and examples to determine whether you are required to file an Oregon personal income tax return. See the explanations in this publi- cation if you are unsure about: • Residency status—see “Residency.“ • Filing status—see “Filing status.“ • Taxable income—see “What income is taxable to Oregon?” • Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Oregon income tax withheld, even if you aren’t oth- erwise required to file a return. Note: You don’t have to file an Oregon return if you are an out-of-state employee or the operator of an out-of-state business and you were in Oregon solely for purposes of performing disaster or emergency- related work (ORS 401.690). Full-year residents You need to file if your gross income is more than the amount shown for your filing status in Table 1. Note: The amounts in Table 1 apply to gross income from all taxable sources. Table 1. Filing thresholds for full-year residents Your filing status is: Number of boxes checked below line 17 of Form OR 40: - And your gross income is more than: Single, can be claimed on another’s return Any See “Dependents” Single 0 $7,710 1 $8,910 2 $10,110 Married filing jointly 0 $15,425 1 $16,425 2 $17,425 3 $18,425 4 $19,425 Married filing separately 0 $7,710 1 $8,710 2 $9,710 Head of household 0 $9,665 1 $10,865 2 $12,065 Qualifying surviving spouse 0 $10,740 1 $11,740 2 $12,740 In addition, file a return if: • You’re required to file a federal return. • You had $1 or more of Oregon income tax withheld from your wages. Dependents. If you can be claimed as a dependent on another person’s return, you must file your own return if your income is more than the lesser of: • The standard deduction allowed on your federal return, or • The Oregon standard deduction for a single filer. You can use this worksheet, which has the federal amounts, to help you figure out if you need to file your own return. 1. Enter gross income from all 1. $

________

taxable sources.

2. Earned income $_____ plus $450. 2. $

________

Enter total. 3. Set federal amount. 3. $ 1,300

4. Enter the larger of line 2 or 3. 4. $

________

5. Enter the Oregon standard 5. $

________

deduction for a single person: • Basic standard deduction: $2,745. • Age 65 or older, or blind: $3,945. • Age 65 or older and blind: $5,145. 6. Enter the smaller of line 4 or 5. 6. $

________

If line 1 is more than line 6, you must file an Ore- gon return. If line 6 is more than line 1, you aren’t required to file an Oregon return. Example 1: Emily is single, age 20, and a full-time college student. Her parents claim her as a depen- dent. Emily has earned income of $800 from her job. She also has $29 of interest income from her savings account. 1. Enter gross income from all 1. $ 829

taxable sources. 2. Earned income $800 plus $450. 2. $ 1,250

Enter total. General information

150-101-431 (Rev. 11-27-24) 10 3. Set federal amount. 3. $ 1,300

4. Enter the larger of line 2 or 3. 4. $ 1,300

5. Enter the Oregon standard 5. $ 2,745

deduction for a single person: • Basic standard deduction: $2,745. • Age 65 or older, or blind: $3,945. • Age 65 or older and blind: $5,145. 6. Enter the smaller of line 4 or 5. 6. $ 1,300

Because line 6 ($1,300) is more than line 1 ($829), Emily isn’t required to file an Oregon return. Note: If Emily had any Oregon income tax withheld from her income, she must file an Oregon return to claim a refund. Example 2: Norman, age 77, is claimed as a depen- dent by his son. Norman has income of $3,015 from a pension and interest. He doesn’t have any other tax- able income. 1. Enter gross income from all 1. $ 3,015

taxable sources. 2. Earned income $0 plus $450. 2. $ 450

Enter total. 3. Set federal amount. 3. $ 1,300

4. Enter the larger of line 2 or 3. 4. $ 1,300

5. Enter the Oregon standard 5. $ 3,945

deduction for a single person: • Basic standard deduction: $2,745. • Age 65 or older, or blind: $3,945. • Age 65 or older and blind: $5,145. 6. Enter the smaller of line 4 or 5. 6. $ 1,300

Because line 1 ($3,015) is more than line 6 ($1,300), Norman is required to file an Oregon return. Example 3: Katrina is single, age 19, a full-time stu- dent, and claimed as a dependent by her mother. Katrina didn’t work but had $1,500 of unearned inter- est income. 1. Enter gross income from all 1. $ 1,500

taxable sources. 2. Earned income $0 plus $450. 2. $ 450

Enter total. 3. Set federal amount. 3. $ 1,300

4. Enter the larger of line 2 or 3. 4. $ 1,300

5. Enter the Oregon standard 5. $ 2,745

deduction for a single person: • Basic standard deduction: $2,745. • Age 65 or older, or blind: $3,945. • Age 65 or older and blind: $5,145. 6. Enter the smaller of line 4 or 5. 6. $ 1,300

Because line 1 ($1,500) is more than line 6 ($1,300), Katrina is required to file an Oregon return. Part-year residents and nonresidents You need to file an Oregon return if your gross income is more than the amount shown for your fil- ing status in Table 2. Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident and gross income from all taxable sources while an Oregon resident. Table 2. Filing thresholds for part-year residents and nonresidents Your filing status is: And your Oregon gross income is more than: Single, can be claimed on another’s return $1,300* Single $2,745 Married filing jointly $5,495 Married filing separately If spouse claims standard deduction $2,745 If spouse itemizes deductions 0 Head of household $4,420 Qualifying surviving spouse $5,495 * The larger of $1,300 or your earned income plus $450, up to your standard deduction amount. If your Oregon income is less than the amount in Table 2, you aren’t required to file a return unless you had $1 or more of Oregon tax withheld from your wages. Nonresidents with rental property in Oregon You don’t have to file an Oregon return if: • Your only Oregon-source income is from rental property, and • You have a loss from the rental activity for the year. However, you must file Oregon returns for all applicable loss years if:

— You later sell the rental property in a fully-tax- able transaction;

— The sale results in gain that would otherwise be taxed by Oregon;

— You have suspended passive activity losses from the rental activity; and

— You are deducting your suspended losses from that gain on your federal return. General information

150-101-431 (Rev. 11-27-24) 11 Electronic filing for Oregon Electronic filing is a fast, efficient, and accurate way to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Direct File Oregon. Use Direct File to file your return for free. Direct File is an interview-based software that many full-year residents may use to file an origi- nal or amended return through Revenue Online. You can use Direct File without a Revenue Online account; however, some features may be limited. Your federal return must be filed separately with the IRS, and you will need to have the information from your federal return and schedules available when you use Direct File. At this time, Direct File can’t be used to file a nonresi- dent or part-year resident return. E-file. Practitioners are automatically approved for Oregon e-filing after the IRS accepts your online application to become an authorized e-file provider. There is no separate registration required for Oregon. Paid preparers who meet the requirements of the fed- eral e-file mandate must also e-file Oregon personal income tax returns. For information on waivers of this requirement, see the information for tax profes- sionals on our website. The copy of a tax return provided to a client must be an exact copy of the tax return submitted to us. When filing electronically, don’t send us a paper copy of your tax return. 2-D barcode filing for Oregon 2-D barcode filing is an alternative way to file a paper Oregon return. Oregon-approved tax software pack- ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on the tax return is a “picture” of the information on the return, which is printed on the top right-hand cor- ner of the return’s front page. A machine reads the barcode information so it doesn’t have to be entered manually into our computer system. If changes are made to the return after it has been printed, the entire return must be re-printed so that the barcode will reflect the correct information. The copy of a 2-D barcode return provided to a tax- payer must be an exact copy of the tax return you submit to us. Why Oregon needs a federal return Most information to support the amounts on your Oregon return comes from your federal return. Even when Oregon law differs from federal law (such as additions, subtractions, and credits), we still need information from your federal return (ORS 314.380). If you file an electronic return, we will receive your federal return with your Oregon return. If you are filing a paper return, you must include a copy of the front and back of your federal return with Schedules 1 through 3 (if applicable). Also include any “as if” federal returns. If you’re not required to file a federal return, prepare a federal return as if you were actually filing it and include it with your Oregon return. Don’t include extension requests or federal schedules other than those listed above, but keep a copy of those with your tax records. We may ask for copies later. Record-keeping requirements Why is record-keeping important? • Keeping records of your income and deductions will help you prepare an accurate tax return and pay the correct tax. • You must be able to prove all items on your return with adequate records and sufficient evidence. Keep records that verify the income, deductions, credits, and other items reported on your tax return. Esti- mates or approximations don’t qualify as proof. • Accurate records will help you if we select your tax return for audit. Usually, an audit will occur one to three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from various sources. You may also have to pay more tax if you can’t prove the figures you used. How should I keep my records? You must keep accurate records, but no particular system is required for keeping them. Your records should contain all the information you used to fig- ure your income, deductions, credits, and other items shown on your income tax return. What records should I keep? If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list of records you should keep: • Receipts and sales documents for deductible busi- ness expenses, self-employment, farm, rentals, sale of assets, etc. General information

150-101-431 (Rev. 11-27-24) 12 • Dated and signed receipts for any cash payments that might be deductible. • Income statements, including Form W 2 for your - wages and Form 1099 for interest, dividends, rents, and nonemployee compensation. • All payroll records, including copies of W 2 and - 1099 forms you’ve issued. • Pay statements if you have deductible expenses withheld from your paycheck. • Receipts and certificates to verify Oregon tax credits claimed. • Copies of your tax returns, including complete fed- eral returns with all required schedules, or an “as if” return if you don't have a federal filing requirement. • Copies of your “as if” returns if you were required to prepare them to claim a special filing status. • Worksheets, summary statements, calendars, log books, journals, etc. • Canceled checks, substitute checks or carbon cop- ies of checks, bank deposit slips, and receipts. • Checking and savings account statements for both personal and business accounts. • If you deduct alimony payments, keep copies of can- celed checks and the divorce, separate maintenance, or support decree or a written separation agreement. • For property you own, keep proof of the pur- chase price, any purchase expenses, the cost of any improvements, and any other basis adjustments, such as depreciation and deductible casualty losses. If you received property as a gift, you must have records that show the donor’s adjusted basis just before the property was given to you, its fair market value on the date of the gift, and any gift tax paid on it. • The sale of a capital asset (and certain other assets). This type of sale is reported as a capital gain or loss. Your records must show when and how the asset was acquired, how it was used, and when and how you dis- posed of it. Records must also show your cost or other basis, the gross selling price, and the expenses of the sale. • Year-end statements showing total interest paid on loans, mortgages, or notes. • Statements and canceled checks, mortgage state- ments, and other documents for your real estate and personal property taxes paid. • Proof of payment to your care provider if you are claiming the Oregon WFHDC credit. How do I document deductible expenses? A receipt is the best evidence to prove the amount of an expense. A canceled check, together with a bill or invoice from the payee, ordinarily establishes the cost. A canceled check might not prove a business expense without other evidence to show that it was for a business purpose. All records should show: • The date, • The amount, and • The purpose of the expense. To be deductible, a business expense must be both ordinary and necessary. How do I document car or truck expenses? You must have written records to verify your vehicle expenses. To deduct car or truck expenses, you must be able to prove: • The amount of each separate expense for a vehicle, such as the cost of purchase, capital improvements, lease payments, maintenance, and repairs. • The mileage for each business or investment use of the vehicle and the total miles for the tax year. • The date of the expense or use. Keep a trip log at the time of use, showing the date and mileage for each business use, including odometer readings. • The business or investment reason for the expense or use of the vehicle. Keep the proof you need for these items in an account book, diary, log, statement of expense, trip sheet, etc. Include all documents needed to verify the item. How long should I save my records? Keep records that support an item of income or a deduc- tion on your return at least until the statute of limita- tions expires for that return. A statute of limitations is the period of time after which no legal action can be brought. Usually this is three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. Returns filed before the due date are treated as if they were filed on the due date. Exceptions: There are times you should keep records longer, including the following: • Keep records that support your basis in property for at least four years after you sell or dispose of the property (including all capital improvements). • If you’re depreciating property, keep records related to each item’s depreciation expenses for its entire recovery period plus three years. • If your return was audited by the federal govern- ment, Oregon has two years from the date we receive the federal audit report to review your Ore- gon return for adjustments. • If you have employees, we recommend you keep all of your employment tax records for at least five years after the date the tax becomes due or is paid, whichever is later. This includes copies of Form W 2 for each employee, and all payroll records. - • If you didn’t report some income and it’s more than 25 percent of the income shown on your return, the return may be audited within five years after it was filed. If a return is false or fraudulent or if no return is filed, there is no time limit. What if I don’t have all of my records? If records have been destroyed and your return is selected for audit, the auditor will advise you about reconstructing your records. General information

150-101-431 (Rev. 11-27-24) 13 Filing an Oregon return In order to correctly file an Oregon personal income tax return, you must know: • Your residency status. • Which form to file. • Your filing status. Residency (ORS 316.027) General rule. Oregon taxes residents on all sources of income. Oregon taxes nonresidents on income from Oregon sources. Residents An Oregon resident is someone who is domiciled in this state. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan to return after an absence. Domicile isn’t the same as home, abode, or residence. Intent is the deciding factor when you determine your domicile. The law assumes you have a domicile somewhere. It also assumes you have only one domicile. Home. If you have one home, your domicile is gen- erally where that home is located. If you have two homes, your domicile follows your center of activity. To determine your center of activity and your domi- cile, consider: • Physical characteristics of the place. • Time you spend there. • Things you do there. • People and property there. • Your attitude toward the place. • Your intent to return to the place when you are away. Family relations. Generally, spouses living together have the same domicile. The domicile of minor chil- dren is determined by the domicile of the person who has legal custody of them. When living apart, spouses each may establish their own domicile if they meet the requirements for a change of domicile. Change of domicile. Intent is the most important factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your domicile. Once domicile is established, it’s never lost until all of the following happen: • You intend to abandon the old domicile, and • You intend to acquire a specific new domicile, and • You are physically present in the new domicile. The important points are physical presence at a new dwelling and the intent to make the new dwelling a home. Non-domiciled residents. An Oregon resident may also be someone who isn’t domiciled in Oregon, but: • Maintains a residence in Oregon, and • Spends a total of more than 200 days in Oregon during the taxable year. A fraction of a day is considered to be a whole day when figuring the 200 days. We won’t consider you to be a resident if you are in Oregon for a temporary purpose. The burden of proof is on you to show your stay here is only temporary. Consider both your domicile and the place where you live to determine how you are taxed. Special-case Oregon residents (Oregon residents liv- ing in another US state). Even if you are domiciled in Oregon, you will be taxed as a nonresident if you meet all of the following requirements: • You don’t maintain a permanent residence in Ore- gon for yourself or your family during any part of the year, and • You maintain a permanent residence outside Ore- gon during the entire year, and • You spend less than 31 days of the year in Oregon. Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be taxed as foreign nonresidents. In general, you’re considered to be a foreign non- resident if you meet the residency requirements for foreign earned income or housing exclusion under federal law. To qualify as a foreign nonresident, you must meet one of these two federal tests: • The “physical presence” test; or • The “bona fide residence” test. Note: You may be treated as an Oregon nonresident for tax purposes if you are in the civil service or mili- tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel filing information” for more details. Physical presence test. To meet the requirements of the physical presence test: • Your tax home must be in a foreign country, and • You must be present in a foreign country or coun- tries for 330 full days out of any consecutive 12-month period. “Tax home” is generally your regular place of busi- ness or the location where you work, regardless of Filing an Oregon return

150-101-431 (Rev. 11-27-24) 14 where you live. For more information on tax home, refer to IRS Publication 17, Your Federal Income Tax for Individuals. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may begin on any date in the calendar year. The period ends the day before that same date, one year later. For example, a 12-month period beginning October 10 would end October 9 of the following year. The 330 full days must fall within that 12-month period. Example 1: Juan arrives in England on April 24, 2023, at noon. He establishes his tax home in England and remains there until 2 p.m. on March 21, 2025, when he leaves England to return to the United States. Juan is physically present in a foreign country for 330 full days during at least one 12-month period: • One 12-month period starts on his first full day in England, April 25, 2023, and ends April 24, 2024. • Another 12-month period starts on March 21, 2024, and ends March 20, 2025, his last full day in England. Juan may use any 12-month period that begins after his arrival in England and ends before he returned to the United States to meet the physical presence test. Juan qualifies for nonresident treatment for the months he was out of the country during 2023, 2024, and 2025. He should file Oregon part-year returns for 2023 and 2025, and a nonresident return for 2024. Example 2: Use the facts in Example 1, but change Juan’s arrival date to June 23, 2024. In this case, Juan won’t qualify for nonresident treatment because he wasn't physically present in a foreign country for 330 days. He must file a full-year resident return for 2024 and 2025 as well as 2023. Bona fide residence test. To meet the requirements of the bona fide residence test, you must: • Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country, and • Maintain a bona fide residence for an uninter- rupted period that includes a full tax year. Example 3: Sandra is a calendar-year taxpayer. She establishes a bona fide residence in Russia on August 12, 2023. On June 10, 2024, she moves out of her residence and spends six weeks at a hotel in Alaska. On July 22, 2024, she establishes a bona fide residence in South Korea. She is transferred back to the United States on May 8, 2025. She doesn’t meet the requirements of the bona fide residence test because she doesn’t maintain a bona fide residence for an uninterrupted period that includes a full tax year. She also doesn’t qualify for the physical presence test because she isn’t physically present in a foreign coun- try for 330 full days out of a consecutive 12-month period. Example 4: Use example 3, but instead of going to South Korea, Sandra continues to work in Russia until February 2025. She would now qualify under the bona fide residence test. Her residence was estab- lished for a full tax year. Sandra should file a nonresi- dent return for 2024. Sandra also qualifies for non- resident treatment for the months in 2023 and 2025 that she maintained the bona fide foreign residence. She should file Oregon part-year returns for 2023 and 2025. For more information about physical presence or bona fide residence, see IRS Publication 54, A Tax Guide for U.S. Citizens and Resident Aliens Abroad. Tax treaties. If a U.S. tax treaty changes the meaning of terms used in determining federal taxable income, Oregon accepts the changed meaning as it applies to affected taxpayers. We may ask you to provide records showing how a particular treaty affects your taxable income. Nonresidents If you were domiciled outside Oregon and lived out- side Oregon for the entire year, you were a nonresi- dent of Oregon. If you are a nonresident, Oregon taxes only income you earned in Oregon and received from Oregon sources. In some cases, however, a taxpayer domiciled in Oregon can be treated as a nonresident. See “Special-case Oregon residents.“ Example 1: Misha was a permanent California resi- dent in 2024. She temporarily worked in Medford as a computer consultant for two months in 2024. Misha is a nonresident of Oregon. She will pay Oregon tax on the income she earned in Oregon. California will also tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax her income, Misha may claim a credit for taxes paid to another state. For information about this credit, see “Income taxes paid to another state.” Example 2: Nash is a permanent Nevada resident. He has rental property in Oregon. Nash is a nonresident of Oregon. He will pay Oregon tax on the income from his Oregon rental property. Part-year residents If you were domiciled in Oregon for part of the year and in another state for part of the year, you were a part-year Oregon resident. Oregon taxes all of your income for the part of the year you were an Oregon resident. Oregon also taxes any income earned in Filing an Oregon return

150-101-431 (Rev. 11-27-24) 15 Oregon or received from Oregon sources for the part of the year you were a nonresident. Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and established a new domicile here. Gustav is considered to be a part-year Oregon resident for the tax year. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because she doesn’t abandon her Oregon domicile when she works in Alaska. Extensions of time to file If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For 2024 returns, this means you have until October 15, 2025 to file. An extension of time to file your return doesn’t mean you have more time to pay your taxes. You must pay any tax you expect to owe by April 15, 2025. If you don’t, you will owe interest on the unpaid balance from April 15, 2025 until the date it’s paid, and will be subject to a minimum penalty of 5 percent of the unpaid tax. To avoid penalty and interest charges, include enough payment with your extension to cover your tax liability. Once you file your return, if you have overpaid, we'll refund the overpayment. See “Interest and penalties” for more information. Were you stationed in a designated combat zone? If you were in the military and stationed in a desig- nated combat zone, you may qualify for an automatic extension of time to file your return. See “Military personnel filing information.” Was your home or business located in a presidentially-declared disaster area? Did you receive additional time to file your federal tax return and pay your federal tax? If so, you may qualify for additional time to file your Oregon return and pay your Oregon tax. Check the “Federal disas- ter relief” box on your return. Extension for filing returns Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to file your Oregon return and you owe tax, see Publica- tion OR-40-EXT, Instructions for Automatic Extension of Time to File Oregon Individual Income Tax Return. Your extension payment must be received by April 15, 2025, to avoid penalties and interest. Download Publication OR-40-EXT from our website or contact us to order it. Whether you owe tax or are expecting a refund, mark the “Extension filed” box on your Oregon return and file your return by October 15, 2025. Which form do I file? Oregon has three types of personal income tax forms. The form you use depends on your residency status. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Part-year resident—Form OR-40-P Use Form OR-40-P if any one of the following is true: • You are a part-year resident; or • You are filing jointly and one spouse is a full-year Oregon resident and one is a part-year resident; or • You qualified as an Oregon resident living abroad for part of the year. Nonresident—Form OR-40-N Use Form OR-40-N if any one of the following is true: • You are a nonresident; or • You are a special-case Oregon resident (see “Resi- dency”); or • You and your spouse are filing jointly and one (or both) of you is a nonresident; or • You meet the military personnel nonresident requirements (see “Military personnel filing infor- mation”); or • You qualified as an Oregon resident living in a for- eign country for the entire year (see “Residency”). You may need to file supplemental schedules or forms, depending on your circumstances. Nonresident trusts. If you file a federal Form 1040- NR and you’re filing an Oregon return for a nonresi- dent trust, you must file using Form OR-41. Don’t file using Oregon Form OR-40-N. Sales of Oregon real property by nonresidents Withholding on real property sales. Authorized escrow agents may be required to withhold taxes due when a nonresident sells real property located in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: • Four percent of the consideration; • The net proceeds from the sale; or • Eight percent of the gain includible in Oregon tax- able income. Filing an Oregon return

150-101-431 (Rev. 11-27-24) 16 For more information about this requirement and its exceptions, see the instructions for Form OR-18-WC, Report of Tax Payment or Written Affirmation for Oregon Real Property Conveyance, available on our website. If required, the nonresident transferor uses Form OR- 18-WC to calculate their gain or claim an exemption from withholding, then gives the form to the escrow agent. The escrow agent completes the rest of the form and submits it and any required payment to the department. Keep a copy of this form for your own records. Pass-through entities (PTEs) Partnerships. Except for publicly-traded partner- ships taxed as corporations, every partnership with one or more Oregon resident partners, and every partnership having income or loss derived from or connected with Oregon sources, must file Form OR-65, Oregon Partnership Income Return. Partnership income is generally taxable to the partners rather than the partnership. See the Form OR-65 instruc- tions for further details. Note: Oregon follows fed- eral filing guidelines including the due date for fil- ing a partnership return. If you aren’t required to file a federal partnership return, you don't need to file one for Oregon. S corporations. S corporations doing business in Oregon or receiving income from Oregon sources are required to file Form OR-20-S, Oregon S Corporation Tax Return. S corporation income is generally tax- able to the shareholders rather than the corporation. However, S corporations do pay Oregon tax on cer- tain kinds of income. For more information, see the instructions for Form OR-20-S on our website. LLCs. Oregon LLCs and foreign LLCs doing business in Oregon are taxed and classified the same as for federal income tax purposes. • An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax Return, or Form OR-20-INC, Oregon Corporation Income Tax Return. • A multiple-member LLC that chooses to be taxed as a partnership files Form OR-65. • A single-member LLC that chooses to be taxed as a sole proprietorship and files Schedule C, Sched- ule E, or Schedule F with their federal individual income tax return files the same way for Oregon. PTEs with nonresident owners (ORS 314.778, 314.784) Composite tax return. A PTE must file Form OR-OC, Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For forms and instructions, see our website. Nonresident withholding. A PTE must withhold tax on a nonresident owner’s share of Oregon-source income if the nonresident owner elects not to be included on Form OR-OC, unless the nonresident owner’s share of Oregon-source income is less than $1,000 or other exceptions listed in ORS 314.784 apply. For more information, see the instructions for Form OR-19, Annual Report of Pass-through Entity Owner Tax Payments. Filing status General rule The filing status on your Oregon return must be the same as your filing status on your federal return, unless you’re married and have a different residency status than your spouse or you’re an RDP who isn’t married. Example 1: Minerva filed her federal return using the filing status of single. She must use the single filing status on her Oregon return. Example 2: Peter and Della are married and both are full-year Oregon residents. They filed a joint federal return. Peter and Della must use the married filing jointly filing status on their Oregon return. Example 3: Tia and Colin are married and choose the married filing separately filing status on their federal returns. They must use the married filing separately filing status on each of their separate Oregon returns. Exception: Filing status for married taxpayers with different residency status If you and your spouse file a joint federal return but only one of you was an Oregon resident (either full- year or part-year), you have a choice of two different filing statuses to use for Oregon: • You and your spouse may file one Oregon return using the married filing jointly status; or • You and your spouse may each file a separate Oregon return using the married filing separately status. You may not file as head of household (ORS 316.122). Note: This exception doesn’t apply to unmarried RDPs or married non-U.S. citizens without perma- nent resident status because these taxpayers may not file joint federal returns. For information on RDP fil- ing, see “Registered domestic partners.” Which forms do we file? Use Table 3 to determine which return form to use if you file a joint return or separate returns for Oregon. Filing an Oregon return

150-101-431 (Rev. 11-27-24) 17 Table 3. Spouses with different residency status Spouses’ residency status: If you file a joint return, use: If you file separate returns, use: Part-year and nonresident OR-40-N Each spouse uses the form that matches their individual residency status Nonresident and full-year resident OR-40-N Part-year and full-year resident OR-40-P Note: If you file separate federal returns, you must file separate Oregon returns. If you are a married nonresident without Oregon income, and you and your spouse are filing separate returns, you aren’t required to file an Oregon return. What information goes on each return? On each spouse’s separate Oregon return, enter the filer’s name and Social Security number first, then the spouse’s name and Social Security number. Mark the “Married filing separately” box. “As if” federal returns. You must include an “as if” federal return showing how the return would have appeared if you had filed a separate federal return, along with a copy of the joint federal return that you actually filed. Label the “as if” federal returns and mark the “Calculated using ‘as if’ federal return” box on each Oregon return. If you are filing paper returns, mail both Oregon returns, the “as if” federal returns, and the actual federal return in the same envelope, but don’t staple them together. Income and deductions. You and your spouse each report your own share of income and deductions. Also, report your share of any Oregon additions, sub- tractions, modifications, or adjustments, including the federal tax subtraction. Use the following guidelines when preparing your return: Your percentage. Use this formula to compute your share of certain deductions: Your share of federal AGI = Your percentage (not to exceed 100%) Joint federal AGI If your share is less than $0, your percentage is 0. Federal tax subtraction. Each spouse may subtract their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (after all credits except the EIC) by your percentage to determine your federal tax subtraction, with the applicable AGI limitation. Itemized deductions. Multiply each itemized deduc- tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Itemized Deductions, if you can't clearly determine each spouse’s deductions. For more information about itemized deductions, see the instructions for Schedule OR-A. • Standard deduction. The Oregon standard deduc- tion is $2,745 for each spouse. • Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or before January 1, 2025, or if they’re blind. The addi- tional deduction is $1,000 for married taxpayers filing separately. A taxpayer who is both age 65 or older and blind may claim two additional deduc- tions plus the basic standard deduction. • Exception: If one spouse claims itemized deduc- tions, the other spouse can’t claim the standard deduction. The other spouse may only claim item- ized deductions. Exemption credits. You can’t prorate exemptions. You may claim exemptions for yourself and any dependents allowed on your federal return. You can’t claim an exemption for the same dependent claimed on your spouse’s return. Example: Jim worked and lived in Oregon all year. Mary moved from Idaho to Oregon in July and mar- ried Jim. They filed a joint federal return and are fil- ing separate returns for Oregon. Mary earned $30,000 in Oregon and $22,000 in Idaho. Jim earned $41,000 in Oregon. Their total federal AGI was $93,000. Jim and Mary claimed the standard deduction on their joint federal return. They had $12,200 in Oregon itemized deductions, including $4,000 in property tax and $6,400 in mortgage interest on their Oregon home, and $1,800 in charitable contributions. Their joint fed- eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his income of $41,000. On the return, he enters his own name and Social Security number (SSN) first, then enters Mary’s information, and marks the “Married filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal return” box on the Oregon return, and claims the fol- lowing federal tax liability and deductions: His share: $41,000 ÷ $93,000 = 0.44 (44%)

Federal tax: 0.44 × $14,400 = $6,336

(His subtraction is limited to $4,125; see “Federal income tax liability” in “Subtractions.”) Filing an Oregon return

150-101-431 (Rev. 11-27-24) 18 Oregon itemized deductions:

Property tax: 0.44 × $4,000 = $1,760

Mortgage interest: 0.44 × $6,400 = $2,816

Charitable contributions: 0.44 × $1,800 = $792

Total Oregon itemized deductions: $5,368

Jim will have Oregon itemized deductions of $5,368. He follows the line instructions for Oregon Form OR-40 and Schedule OR-A to complete his return. Mary, a part-year resident, files Form OR-40-P and reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and SSN first, then enters Jim’s information, and marks the “Married filing separately” box. She creates an “as if” federal return, marks the ”Calculated using 'as if' federal return” box on the Oregon return, and claims the following federal tax liability and deductions: Her share: $52,000 ÷ $93,000 =

0.56 (56%) Federal tax:

0.56 × $14,400 =

$8,064 (Her subtraction is also limited to $4,125.) Oregon itemized deductions:

Property tax: 0.56 × $4,000 = $2,240

Mortgage interest: 0.56 × $6,400 = $3,584

Charitable contributions: 0.56 × $1,800 = $1,008

Total Oregon itemized deductions: $6,832

Mary will have Oregon itemized deductions of $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. Married filing separately with community property income An Oregon resident whose spouse lives in a commu- nity property state may have community property income that is taxable by Oregon. There are nine com- munity property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Some residents of community property states aren’t subject to community property laws for various rea- sons. You will need to check with your community property state for details. IRS Publication 555, Com- munity Property, also contains information that may be helpful to you. Here are examples of how to file for Oregon: Example 1: Paul and Marie are married, but they are legally separated. Paul is an Oregon resident. Marie is a resident of California, a community property state. They maintain separate households, don’t combine funds, and have no plans to get back together. They file a joint return with the IRS. When Paul files his separate return for Oregon on Form OR-40, he doesn’t have to include any community property income because California’s community property laws don’t apply to him and Marie. Example 2: Renton is an Idaho resident. His wife, Julie, lives in Oregon. Julie plans to move to Idaho next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap- ital gain, and $100 in interest. Because Renton is domiciled in Idaho, he and Julie are subject to Idaho’s community property laws. His income for the year is $60,000 in wages and $500 in interest. They plan to file a joint return with the IRS, but aren’t sure whether they want to file jointly for Oregon. If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain all of Julie’s income, because Oregon taxes all of her income from all sources. In addition to Julie’s sepa- rate income, she has $30,250 of community property income for the year—half of Renton’s wages and bank interest. Line 34F (federal column) of their joint Form OR-40-N is $103,600, which is equal to their federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community property income ($40,000 + $3,000 + $100 + $30,250). They are also eligible for a credit for taxes paid to Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state on mutually- taxed income“ for more information on this credit.) If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal return as if she had filed separately. She will include $73,350 in separate income and community property income. This amount flows through to Line 7 of her Oregon Form OR-40. She is eligible for a credit for taxes paid to Idaho, because she must also file a non- resident Idaho return to report her community prop- erty income of $30,250. Example 3: Kevin lives and works in California and is subject to California’s community property laws. Lori, his wife, moved to Oregon with their kids two years ago. Kevin supports them and will be ready to transfer to Oregon within the next two years. Kevin has $110,000 in wages. Kevin and Lori have joint income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. They decide to file separate federal returns. Lori’s federal AGI is $63,000: half of Kevin’s wages, half of their joint income, and all of her business income. Filing an Oregon return

150-101-431 (Rev. 11-27-24) 19 Kevin’s federal AGI is $58,000; half of his wages and half of their joint income. Lori must file using the married filing separately filing status for Oregon on Form OR-40 because she did so on her federal return. She is eligible for a credit for taxes paid to another state, but must claim it on her California nonresident return. Kevin isn’t required to file for Oregon. Important: You must check the laws of the commu- nity property state to see if you, or your spouse, are subject to those laws even if your situation is similar to one of the examples. Registered domestic partners (RDPs) (ORS 314.023) Filing your Oregon income tax return The following section applies only to Oregon RDPs who haven’t been legally married. If you were legally married at the end of the tax year, you are considered married for fed- eral and Oregon purposes. You don’t need to complete an “as-if” federal return. Instead, attach your actual federal return to your Oregon return and follow the instructions for married individuals. In Oregon, a domestic partnership is a civil contract entered into between two individuals, where at least one of the individuals is an Oregon resident. RDPs are subject to the same tax statutes and regulations that apply to married filers. As an RDP, you are no longer eligible to use the single filing status on your Oregon return; generally, you must use the married filing jointly or married filing separately status. See IRS Publication 17 for information about other filing status requirements. To correctly figure your Oregon tax liability, you need to complete an “as if” federal income tax return as if you are filing as married fil- ing jointly or married filing separately for federal purposes. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return. You won't submit your “as if” fed- eral return to the IRS, but you must include a copy with your Oregon tax return. Mark the “Calculated using ‘as if’ federal return” box on the Oregon return. General filing instructions for RDPs If you were an Oregon RDP on December 31, or if you were an RDP during the year and your partner died and you didn’t enter into a new registered domestic partnership or marry before the end of the year, fol- low these directions for filing your income tax return: 1. Complete your federal return forms for each part

- ner using the appropriate federal filing status, such as single or head of household. File these returns with the IRS. 2. Use another federal form to complete an “as if”

federal return. Use all the same IRS rules and procedures that apply to married couples, except for the federal tax liability. Important: Don’t file this “as if” federal return with the IRS. Note: If your wage statement includes the imputed value of health or education benefits you received from your employer for your partner or qualifying dependents, subtract the amount included in your wages as “other income” on Schedule 1 of your “as if” federal return. 3. Complete your Oregon return using the same fil

- ing status you used on the “as if” federal return. Information used to fill out the Oregon return must be taken from the “as if” federal return and not the individual federal return that you actually filed with the IRS, except for the federal income tax liability subtraction. Use the amount each partner actually paid in federal tax to compute the correct federal tax subtraction. 4. Submit both of your actual federal returns, your

“as if” federal return, and your Oregon return to us. If you and your partner file separate Oregon returns, send the returns in the same envelope, but don’t staple your separate returns together. It’s very important to keep copies of all “as if” fed- eral returns with your tax records for future refer- ence. For more information on filing your tax return as an Oregon RDP, visit our website and search for

RDP information. Individual Taxpayer Identification Number The IRS issues individual taxpayer identification numbers (ITINs) to taxpayers and their dependents who don’t have SSNs. If you have your own SSN, don't apply for an ITIN; use your SSN. If you already have an ITIN, enter your ITIN wherever an SSN is requested. Requesting an ITIN from the IRS If you don’t have an ITIN, you must file your fed- eral return and attach Form W-7, Application for IRS Individual Taxpayer Identification Number. The IRS will issue an ITIN, associate the ITIN with your return, and process your return. For Form W-7, go to the IRS website at www.irs.gov or call 800-829-3676. Filing your Oregon return before receiving your ITIN You may file your Oregon return without an SSN or ITIN. Follow these instructions if you, your spouse, or your dependents don’t have an ITIN when you file your Oregon return: Filing an Oregon return

150-101-431 (Rev. 11-27-24) 20 1. Complete and file each ITIN application (federal

Form W-7) according to IRS instructions. 2. On your Oregon tax return, mark the “Applied for

ITIN” box wherever the SSN is required for you or your family members who have applied for an ITIN. You don’t need the ITIN(s) to file your Ore- gon tax return. Don’t attach your ITIN application to your Oregon tax return. 3. File your 2024 Oregon tax return by April 15, 2025.

4. The IRS will send you a letter with your ITIN

information. We need this information to issue your refund and correctly apply your future tax payments to your account. Refunds won’t be issued without a valid SSN or ITIN. Send us your: • Name (and the name of your spouse and

dependents if they applied for an ITIN). • Current address.

• Previous SSNs or ITINs used when filing an

Oregon return (if any); and • A copy of each of the letters you receive from

the IRS with the ITINs for you, your spouse, or your dependents. Send this information to: Oregon Department of Revenue

PO Box 14999

Salem OR 97309-0990

Military personnel filing information Federal laws determine how a state may tax the income of military personnel and their spouses. These federal laws include the Servicemember’s Civil Relief Act (SCRA) and the Military Spouse Residency Relief Act (MSRRA). Your residency status deter- mines how Oregon treats your military pay or other income for tax purposes. Moving expense deduction Your unreimbursed moving expenses may be deducted on your Oregon return only if: • You are on active duty in the U.S. Army, Navy, Air Force, Marines, or Coast Guard, • Your expenses are deductible on your federal return because they are related to a permanent change of station (known as a PCS move), • Your new duty station is in Oregon, and • You have taxable income from employment (mili- tary pay or other employment, including self- employment) performed in Oregon. Note: Are you the spouse of a military member? See “Military spouses.“ Residency of military personnel Domicile. Generally, you are considered to be an Ore- gon resident if your domicile is in Oregon. Your domi- cile is the place that you consider to be your home. It’s the place where you are from, and where you plan to return when you are away. Your domicile doesn’t change if you are assigned to perform military ser- vice in another state, unless you take other actions to establish a new domicile there. Domicile and resi- dency are explained in more detail in “Residency.“ Exceptions to Oregon residency Even if you are domiciled in Oregon, you may be treated as a nonresident for tax purposes if you meet the requirements listed in A, B, or C: A. Special-case nonresident.

You are treated as a “special-case” nonresident of Oregon if you are stationed outside of Oregon and all three of the following are true: 1. You didn’t have a permanent residence in Ore

- gon for yourself or your family during any part of the tax year, and 2. Your permanent residence was outside Oregon

during the entire tax year, and 3. You spent less than 31 days in Oregon during

the tax year. B. DFAS address outside of Oregon.

You are treated as a nonresident of Oregon, no matter where you are stationed, if both of the following are true: 1. You are performing “active service,” as defined

in 10 United States Code (U.S.C.) Section 101(d) (3), other than annual training duty or inactive- duty training, and 2. You are a resident of another state according to

DFAS payroll records. C. Military domicile election. Under federal law, a member of the military and the member’s spouse may choose to be treated as a resident of any of the following for tax purposes: 1. The residence or domicile of the member.

2. The residence or domicile of the spouse.

3. The permanent duty station of the member.

If you meet the requirements in either A or B above or you make the election under C to treat another loca- tion as your domicile, you are treated as a nonresident for Oregon tax purposes and Oregon won’t tax your military pay. You will owe Oregon tax only if you had income from another Oregon source. This income may be from an Oregon property sale, a business, or rental property located in Oregon. If you have had Oregon income tax withheld from your military pay, you should file an Oregon nonresident tax return to get a refund of the withheld tax. If you continue to Filing an Oregon return

150-101-431 (Rev. 11-27-24) 21 be a nonresident, file an Oregon-only withholding certificate with your pay clerk as described in “With- holding exemption.” Oregon residents Stationed in Oregon. If you are domiciled in Oregon and stationed in Oregon, you are generally taxed on income from all sources, both inside and outside Oregon. This includes your military pay for service in Oregon if either of the following is true for you: • Your address in the DFAS payroll records is in Ore- gon; or • Your military pay is from annual training duty, inactive-duty training, or other service in Oregon that isn’t “active service” as defined in 10 U.S.C. Section 101(d)(3). If neither of these are true, see the Exceptions to Ore- gon residency, above, to see if you qualify for treat- ment as a nonresident for tax purposes. Stationed outside Oregon. If you are domiciled in Oregon, but you are stationed outside of the state, see the Exceptions to Oregon residency, above, to find out whether you can be treated as a nonresident of Oregon for tax purposes. If you don’t qualify as a nonresident, you will be taxed as a resident on your income from all sources, both inside and outside Oregon. Military pay subtractions [Subtraction code 319] You may qualify for more than one subtraction for military pay. To be eligible for the subtractions, the military pay must be included in federal AGI. Mili- tary pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual train- ing, weekend drills, and inactive duty training. The Oregon military pay subtractions are: • Stationed outside Oregon. As of August 1, 1990, you can subtract military pay earned while sta- tioned anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. The date wasn't set when this material was last revised. You aren’t required to be stationed in a designated com- bat zone to be eligible for this subtraction. • Guard and reserve away from home. National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time. • Active service in Oregon National Guard. Oregon National Guard members may subtract their mili- tary pay earned while in active service of the state or on state active duty under the authority of the governor. • Other military pay. You can subtract any remain- ing taxable military pay after taking the above sub- tractions, up to $6,000. Total subtraction. You may qualify for more than one military pay subtraction. However, your total subtraction can’t be more than the total military pay included in federal AGI. Note: Certain forms of military pay that aren’t included in federal AGI, such as combat pay, aren’t taxed in Oregon. They aren’t subtracted on your return because they aren’t included in your federal taxable income. The following examples show the military pay sub- tractions described above. Example 1: Seth, an Oregon resident, enlisted in the Navy. He earned $10,000 of active duty pay in Spain and $8,000 of military pay inside Oregon during the year. His address in the DFAS payroll records is in Oregon. He included the $18,000 in his federal AGI. Seth’s total military pay subtraction is $16,000. Seth can subtract the $10,000 earned outside Oregon, and $6,000 of his military pay earned in Oregon. Seth files Oregon Form OR-40 and claims his military pay sub- traction on Schedule OR-ASC. Example 2: Brett is an Oregon resident and files jointly with his wife, who lives and maintains a resi- dence in Oregon. Brett served in a designated combat zone for five months this year and earned $8,000 in combat pay. He served in Germany for the rest of the year and earned $15,000 of military pay. The presi- dent didn’t declare an end to combat zone activities this year. Because Brett excluded his combat pay on his federal return, he doesn’t have to subtract it on his Oregon return. Therefore, Brett’s Oregon subtraction is the $15,000 of military pay earned outside Oregon and included in federal AGI. Brett and his wife will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Example 3: Jessica is an Oregon resident and a mem- ber of the Oregon National Guard. She was called into active service of the state this year as part of a drug interdiction operation authorized by the gover- nor and earned $4,000 in military pay. She included the pay in her federal AGI. Jessica will file Oregon Form OR-40 and claim the whole amount as a sub- traction on Schedule OR-ASC. Example 4: Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a com- bat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and Filing an Oregon return

150-101-431 (Rev. 11-27-24) 22 again for two weeks in November. He served in Ore- gon when away from home, but was called up by the president into federal service. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and Merlin will include $31,500 of military pay in their federal AGI. Then they will determine their Oregon subtraction. • Stationed outside Oregon: All $21,000 of Ger- trude’s active duty pay is eligible for this subtrac- tion because she was stationed outside Oregon. • Guard and reserve away from home: $8,000 of Merlin’s pay is eligible for this subtraction because he was away from home for more than 21 consecu- tive days from April to July. The pay he received for the two weeks he was away from home in Novem- ber doesn’t qualify because he served in Oregon but wasn’t serving under the authority of the governor. • Other military pay: Gertrude doesn’t have any other military pay not already eligible for the other subtractions. Merlin’s remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500. Combined, Gertrude and Merlin have a military pay subtraction of $31,500, because all of their military pay is eligible for at least one of Oregon’s military pay subtractions. They will file Oregon Form OR-40 and claim the subtraction on Schedule OR-ASC. Nonresidents stationed in Oregon Oregon doesn’t tax your military pay if you are domi- ciled in another state. You don’t need to file an Oregon return unless you had other income from an Oregon source or had Oregon tax withheld from your pay. Examples of Oregon-source income include: • Wages from a job held on off-duty hours. • Earnings from an Oregon business or rental property. Note: Nonresidents’ interest income from an Oregon bank account generally isn’t taxable by Oregon. If you had Oregon tax withheld from your military pay, you should file a return to claim a refund. You should also contact your payroll clerk to stop with- holding Oregon taxes if Oregon isn’t your state of domicile. A nonresident with a permanent duty station in Oregon may elect to be taxed as an Oregon resi- dent. See “Exceptions to Oregon residency” for more information. Example 1: Selina is a nonresident of Oregon in the U.S. Navy stationed in Portland. She has no other Oregon-source income and doesn’t have Oregon income tax withheld from her military pay. Selina isn’t required to file an Oregon return. Example 2: Jared is a nonresident of Oregon in the U.S. Coast Guard stationed in Astoria. In his off-duty hours he works part-time for an Oregon employer. Because Jared has Oregon income other than his mil- itary wages, he will file Oregon Form OR-40-N as a nonresident. Filing your nonresident return If you have other income from Oregon sources, use Form OR-40-N. Enter your military income on line 7 in the federal column only. Don’t enter your mili- tary pay in the Oregon column. Report other income taxable by Oregon in the Oregon column. On Sched- ule OR-ASC-NP, enter the military wage income you reported in the federal column on line 7, but only in the federal column. In the Oregon column, enter $0. It’s important to enter your military pay this way because it affects the amount of deductions and cred- its you’re entitled to claim. Mark the “Military” box on the return. If you and your spouse file a joint federal return, and you are both nonresidents of Oregon, you must file a joint Oregon return as well. Use Form OR-40-N. If your spouse is an Oregon resident, you have the option of using the married filing separately status for Oregon. Your spouse would file Form OR-40, or Form OR-40-P if a part-year Oregon resident, and you would file Form OR-40-N. If you file a joint return, use Form OR-40-N. Filing and payment date The due date for filing a calendar year return and payment of the tax is usually April 15. If the 15th falls on a Saturday, Sunday, or legal holiday, the due date is the next working day of the month. If you are out- side the United States for military duty on the due date, the due date is extended by two months. Mark the “Extension filed” box on your return. See “Exten- sions of time to file” for more information. If you owe tax on your Oregon income tax return, you must pay the entire amount by the due date. Interest and penalty will be added to all unpaid balances. Extension for filing your return You can get an extension to file your return, but you can’t get an extension to pay your tax. More informa- tion can be found under “Extensions of time to file.” Combat zone/Contingency area. Were you sta- tioned in a combat zone or contingency area? Did you receive additional time from the IRS to file your Filing an Oregon return

150-101-431 (Rev. 11-27-24) 23 federal return and pay your tax? If both are true, Oregon allows the same additional time to file and pay your Oregon tax. Mark the “Extension filed” and “Military” boxes on your return. Keep your payroll records or other proof of your combat zone/contin- gency area service and the IRS extension with your tax records; we may request a copy at a later date. Interest and collections If your active duty service (Title 10) has materially affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity while on active duty and up to 180 days thereafter. The interest rate on tax debt owed by mili- tary members is limited to 6 percent annually. File a claim for relief by writing to us within 180 days after your active duty service has ended. Relief may not be available for the period prior to receiving your request. Include a copy of orders showing your active duty status and dates. You may qualify for relief of interest and collection activity under Oregon law if you meet all of the fol- lowing requirements: • You have a tax liability that came due while on active duty under Title 10, • You have been on active duty for more than 90 con- secutive days, • Your active duty service (Title 10) occurred on or after September 11, 2001, and • You notify us within 180 days after your active duty service has ended. Guard members called into active state service by the governor under Title 32 may qualify for relief of inter- est and collection activities on any tax owed prior to active state service. Send a written request for relief to us within 180 days after the active state service has ended. Include a copy of your orders. Relief may not be available for the period prior to receiving your notification. Withholding exemption You have the option to stop Oregon withholding from your military pay if all of the following are true: • You had a right to a refund of all 2024 Oregon income tax withheld because you had no tax liabil- ity, and • You expect a refund of all 2025 Oregon income tax withheld because you reasonably believe you won’t have any tax liability, and • For all of 2025, you expect to be stationed outside of Oregon or continue to have an address outside of Oregon in the DFAS payroll records. If all of the above are true and you don’t want Oregon tax withheld from your military pay, you must file an additional withholding certificate with your payroll office. Use Form OR-W-4, Oregon Withholding State- ment and Exemption Certificate, and follow the instruc- tions to declare that your military pay is exempt using the appropriate code. Give Form OR-W-4 to your pay clerk, and submit a new form by February 15 of each year that you’re claiming the exemption. Military spouses If you’re a military spouse, the state where you live may be different from the state where you are domi- ciled. See “Residency” for more information about determining your domicile. Under the SCRA, for tax purposes you may elect to be treated as a resident of the same state as the mili- tary member. Under MSRRA, your income may not be taxable to Oregon if your spouse is stationed in Oregon, you are living in Oregon to be with your spouse, and you are domiciled outside of Oregon. In addition, your income may not be taxable if you are domiciled in Oregon, but you are living in another state where your spouse is stationed. See “Special- case Oregon residents” in “Residency” for details. Nonresident spouse of military member stationed in Oregon MSRRA prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you’re living in Oregon only to be with your spouse who is sta- tioned here, and you’re domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and aren’t considered to be Oregon-source income. You aren’t required to file an Oregon return unless you had other income from an Oregon source or Ore- gon taxes were withheld from your pay. Examples of Oregon-source income include: • Non-military wages earned by your spouse (the military member) in Oregon. • Income from a business you operate in Oregon. • Rental income from Oregon property. If you file an Oregon return, use Form OR-40-N. Include all of your wages on line 7 in the federal col- umn only. Don’t include your exempt income (or your spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the subtraction for your spouse’s military pay, see “Filing your nonresident return”, above. Example: Staff Sergeant Wilson, USAF, and his spouse, Tracy, are Arizona residents living in Klam- ath Falls where SSgt Wilson is stationed. In addition to his military duty, SSgt Wilson works part-time at a local car dealership where Tracy works as the finance manager. They must file an Oregon nonresident Filing an Oregon return

150-101-431 (Rev. 11-27-24) 24 return to report SSgt Wilson's wages from the car dealership. They report his military pay and all of their wages in the federal column of Form OR-40-N, and only his wages from the car dealership in the Oregon column. To stop withholding of Oregon income tax from your exempt wages, complete an additional withholding certificate. Use Form OR-W-4 and follow the instruc- tions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Your employer may require proof that you qualify for the exemption. Oregon resident spouse of military member stationed outside Oregon If your spouse is stationed outside of Oregon, but you are an Oregon resident living in Oregon, your income is taxable for Oregon purposes. If you file a joint return with your spouse, use Form OR-40-N, and include all of your income in the Oregon column. If you and your spouse file a joint federal return, and your spouse isn’t a resident of Oregon, you have the option to file joint or separate returns. If you file a joint return, use Form OR-40-N; if you use the mar- ried filing separately status, use Form OR-40 (or Form OR-40-P if you’re a part-year resident) and your spouse with Oregon-source income uses Form OR- 40-N. If your spouse doesn’t have income taxable to Oregon, they aren’t required to file a separate Oregon return. Use the general instructions for all taxpayers. Do you qualify to be treated as a nonresident because you meet the “special-case resident” requirements or you’re making the election under the SCRA? If so, you aren’t taxed on your out-of-state wages or self- employment income. This is the case even if the other state can’t tax you because of MSRRA. You don’t have to file an Oregon return unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. See “Special-case Oregon residents” in “Residency” for details. If you file an Oregon return, use Form OR-40-N. Moving expenses of military spouses As the spouse of an active duty member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, your unreimbursed moving expenses may be deducted on your Oregon return only if: • Your expenses are deductible on your federal return, • You relocate to, or within, Oregon when the mili- tary member is ordered to relocate due to a perma- nent change of duty station (known as a PCS move), and • You have taxable income from employment, includ- ing self-employment, performed in Oregon. Filing an Oregon return

150-101-431 (Rev. 11-27-24) 25 Oregon tax Your Oregon income tax is based on your taxable income. Oregon taxable income is your federal taxable income with the additions, subtractions, and modifica- tions described in Oregon’s tax laws and this publica- tion. For Oregon residents, your income tax is based on your taxable income from all sources. The income tax for nonresidents is based on taxable income from Oregon sources. If you’re a part-year resident, your tax is figured the same way as a resident’s, and then your Oregon percentage is applied to the tax. Personal income tax rates (ORS 316.037) For individuals, the Oregon tax rate that applies to your taxable income increases as your income increases from one bracket to the next. The tax rates and bracket amounts for 2021 through 2024 are shown on the last page of this publication. This section provides a general outline of how to figure your tax. You can find detailed examples in the instruc- tions for your Oregon personal income tax return. Full- year residents use either the tax tables or the tax rate charts published inside Form OR-40 Instructions. Non- residents and part-year residents use the tax rate charts published inside Form OR-40-N and Form OR-40-P Instructions. Alternative tax rates. Most taxpayers use either the tax tables or rate charts in the return instructions to figure their Oregon income tax. However, there are special methods if your income includes any of these items: • Qualified business income. • Income from farming. • Capital gain from the sale of farming property. These items are described in more detail later. Elective tax for partnerships and S corporations. For tax years beginning on or after January 1, 2022 and before January 1, 2026, certain partnerships and S corporations may elect to pay income tax at the entity level. See “Pass-through entity elective tax” for more information. Amount in lieu of tax for federally-audited partner- ships. Partnerships audited at the federal level may pay an amount in lieu of Oregon income tax owed by its partners on the audit adjustments. See “CPAR tax.” Additions to tax You may have the following additions to your Ore- gon income tax to report on your return: • Interest on installment sales. • Tax recapture for nonqualified withdrawal from Oregon higher education savings plan accounts. • Tax recapture for nonqualified withdrawal from ABLE accounts. These items are described in more detail later. Credits and payments Credits. After you figure your income tax and any addi- tions to tax, determine if you are eligible for any tax credits. A few of Oregon’s tax credits are refundable, meaning you may receive a refund of any amount that is more than your tax for the year. Most are nonrefund- able and can’t be more than your tax liability for the year. Some nonrefundable credits allow any unused amount to be carried forward to a later year. Qualifica- tions and other detailed information for Oregon’s tax credits can be found in “Credits,” in the Schedule OR- ASC and OR-ASC-NP Instructions, and in the instruc- tions for your Oregon income tax return. Payments. After you determine your total tax, includ- ing any additions to tax, and subtract your tax cred- its, figure the total payments you have already made for the year. Payments may include the following: • Income tax withheld from your wages by your employer. • Tax withheld from lottery winnings, annuities, and pensions. • Estimated tax payments. • Refund from a prior year applied to this year’s esti- mated tax. • Payment made with an extension request. • Tax payments made on your behalf by a PTE. • Tax withheld from the sale of Oregon real property by a nonresident seller. Refundable credits are also considered to be tax payments. For more information about these different types of payments, see the instructions for your Oregon per- sonal income tax return and the following forms and publications: • Form OR-W-4 and Form OR-W-4 Instructions for information about withholding. • Publication OR-ESTIMATE, Oregon Estimated Income Tax Instructions, and the “Estimated tax” section of this publication. • Publication OR-40-EXT for information about request- ing an Oregon extension to file your return. • Schedule OR-K-1, Distributive Share of Income, Deduc- tions, Credits, etc., and Schedule OR-K-1 Instructions for owner taxes paid by a partnership. Oregon tax

150-101-431 (Rev. 11-27-24) 26 • Form OR-19 Instructions for tax withheld by a PTE on behalf of a nonresident owner. • Publication OR-OC for amounts in lieu of tax paid by a partnership following a CPAR adjustment. • Form OR-18-WC and Form OR-18-WC Instructions for tax withheld from the sale of Oregon real prop- erty by a nonresident seller. Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment when you file your Oregon return, com- pare your total payments with your total tax. If you are entitled to a refund, see the instructions for your Oregon return and the “Refunds” section of this pub- lication for your options. If you have a balance due, see “Payment options” for information about ways to pay your Oregon income tax. Interest and penalties You may owe penalties and interest if you don’t make your tax payments on time. If you are required to make estimated tax payments, you may owe under- payment interest if your installment payments aren’t made by the due dates, even if you are receiving a refund. See “Interest and penalties” and “Interest on underpayment of estimated tax” in this publication and Form OR-10 Instructions for details. Qualified business income reduced tax rate (ORS 316.043) If you have qualifying business income from a sole proprietorship, a partnership, or an S corporation, you may elect to calculate your Oregon income tax using a reduced tax rate for that income. The tax on the first $5 million in qualifying business income is shown in Table 4: Table 4. Tax on qualified business income Amount of qualifying business income Tax At least But not more than $0 $500,000 7 percent $500,001 $1,000,000 $35,000 plus 7.5 percent of the amount above $500,000 $1,000,001 $2,500,000 $72,500 plus 8 percent of the amount above $1,000,000 $2,500,001 $5,000,000 $192,500 plus 9 percent of the amount above $2,500,000 Qualifying business income that is more than $5 mil- lion is taxed at the maximum personal income tax rate of nine and nine-tenths percent. The qualified business income reduced tax rate is an irrevocable election for each tax year that must be made on the original return. You can’t amend to revoke or make the election after your original return is filed unless you file an amended return on or before the original due date of April 15, 2025, or if filing on extension, before the extension due date of October 15, 2025. The election is made by submitting the Schedule OR-PTE, Oregon Business Income Reduced Tax Rate Schedule, appropriate for your residency status and checking the PTE box on your Oregon income tax return. No additions, sub- tractions, or deductions other than depreciation are allowed in the calculation of the tax on qualifying income. The schedule and instructions are available for download from our website, or you can contact us to order them. You can find answers to common questions on our website. Visit www.oregon.gov/dor and search for “reduced tax rate.” Qualifications General requirements To be eligible for the reduced tax rate, you must: • Have qualified business income from the business; • Materially participate in the business; and • Employ one or more employees in Oregon who meet the employee requirements explained below. Partnership or S corporation requirements In addition to the general requirements, for a part- ner or shareholder, the partnership or S corporation must: • Have ordinary business income that doesn’t exceed $5 million; and • If ordinary business income is more than $250,000, comply with the employee-to-owner ratio require- ment shown in Table 5 or meet the income distribu- tion requirement described below. Employee-to-owner ratio requirement. Unless the income distribution requirement is met, partner- ships and S corporations with more than $250,000 in ordinary business income must have, at a minimum, the number of qualifying employees in Oregon per owner as shown in Table 5. The combined total of hours worked by the qualifying employees, up to 1,200 hours per employee, must be at least the num- ber shown in Table 5. Oregon tax

150-101-431 (Rev. 11-27-24) 27 Table 5. Partnership and S corporation employee requirements Ordinary business income is at least But not more than Employees required Aggregate hours worked by employees $0 $250,000 One 1,200 $250,001 $500,000 One per owner 1,200 per owner $500,001 $1,000,000 Two per owner 2,400 per owner $1,000,001 $2,500,000 Four per owner 4,800 per owner $2,500,001 $5,000,000 Ten per owner 12,000 per owner Income distribution requirement. A partnership or S corporation with more than $250,000 in ordinary busi- ness income may still qualify for the reduced tax rate even if the employee-to-owner ratio shown in Table 5 isn’t met, so long as income distributions don’t exceed 25 percent of ordinary business income. Calculate the percentage using the total distributions and total ordi- nary business income for the current tax year and up to two of the most recent tax years. Treat an annual amount of less than zero as zero for that year. Qualified business income. Qualified business income is income other than from passive activities as that term is defined in IRC Section 469. Income from trusts, estates, qualified joint ventures, and disregarded enti- ties doesn’t qualify. Note for tiered entities: Qualified business income passed through to a higher-tier entity from a lower-tier entity will qualify for the reduced tax rate if the lower-tier entity meets the ordinary business income and the employee or distribution requirements. PTE-E tax addition. Certain partnerships and S cor- porations may elect to pay Oregon income tax at the entity level. Individuals who are direct or indirect members of an electing entity must report an addi- tion for any PTE-E tax deducted on an entity-level federal return. The addition amount may be included in qualified business income, but only to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. Individuals must use the federal Schedule K-1 and Oregon Schedule OR-21-K-1 issued by the electing entity and this formula if not all of the ordinary busi- ness income passed through from the entity qualifies for the reduced tax rate: Qualifying business income from electing entity x Addition from Schedule OR-21-K-1, line 2 = Amount to include in qualified business income Ordinary business income from Schedule K-1, box 1 See “Pass-through entity elective tax” for more information. Example 1: Bryant and Marcus are each the sole share- holders of an S corporation. The S corporations are each 50 percent owners in a partnership. Bryant and Marcus both materially participate in the partnership, which has ordinary business income of $2 million. The partnership employs seven full-time employees who perform their work in Oregon all year long. Bryant and Marcus receive a distributive share of nonpassive income from the partnership that passes through their respective S corporations. Each also receives a salary for work performed for the partnership. The distribu- tive share of nonpassive income they receive from the partnership qualifies for the reduced tax rate because the partnership meets the ordinary business income and employee requirements. However, the salary each received from the partnership doesn’t qualify for the reduced rate. Material participation. A taxpayer materially partici- pates in an activity if the taxpayer works on a regular, continuous, and substantial basis in operations of the business. Under certain circumstances, related entities may be grouped into a single activity in order to meet this requirement. Refer to IRC Section 469 and the related IRS regulations for more detailed information. Employee requirement. The business must have the required number of employees who performed work for the entity in Oregon for the required number of hours during the tax year. An employee must work at least 30 hours in a week for that week’s hours to count. An employee can’t be an owner, a member, a limited partner, or the sole proprietor, but hours worked by an employee who is a spouse or other family member (who isn’t an owner, member, limited partner, or sole proprietor) can be used to meet the hour requirement. Example 2: Alpha Partnership has $200,000 in ordi- nary business income for the year. Alpha’s employee, Ralph, worked a total of 1,496 hours during the year in Oregon. Ralph worked 32 hours per week for 31 weeks and 24 hours per week for 19 weeks. Alpha can only count the hours for the 31 weeks that Ralph worked at least 30 hours. Alpha’s qualifying hours total 992 (32 hours x 31 weeks). This is less than the 1,200 hours required, so Alpha’s nonpassive income doesn’t qualify for the reduced tax rate. Example 3: Beta Corp, an S corporation, has three shareholders. Beta Corp has ordinary business income of $900,000, of which $300,000 is included in annual Oregon tax

150-101-431 (Rev. 11-27-24) 28 income distributions. It doesn’t meet the income dis- tribution requirement, so Beta Corp must meet the employee requirement to qualify for the reduced tax rate. The business must have at least six employees (two for each owner) who work a combined total of 7,200 quali- fying work hours (1,200 hours per employee) during the year. Seven employees (who aren’t shareholders) worked in Oregon for Beta Corp during the year. Three of the employees worked 40 hours per week for 50 weeks, for a total of 6,000 hours (3 x 40 x 50). Two employees worked 32 hours per week for 30 weeks, for a total of 1,920 hours (2 x 32 x 30). Two other employees worked 20 hours per week for 40 weeks, for a total of 1,600 hours (2 x 20 x 40). Together they worked a total of 9,520 hours (6,000 + 1,920 + 1,600). However, only the hours worked by the five employ- ees working 30 or more hours per week count toward the total required hours, and no more than 1,200 hours per employee. The employees worked a total of 5,520 qualifying hours [(3 x 1,200) + 1,920)]. For this reason, Beta Corp’s nonpassive income doesn’t qualify for the reduced tax rate. Example 4: Charlie, a sole proprietor, had three employ- ees working at his Oregon business during the year. One employee worked 32 hours a week for 20 weeks (total 640 hours) and the other two employees each worked 40 hours per week during the same 20 weeks (total 800 hours each). The hours for each employee qualify because each employee worked at least 30 hours a week. The aggregate number of hours worked by all three employees (2,240 hours) meets the 1,200-hour requirement. Therefore, Charlie’s business meets the employee requirement for the reduced tax rate. Example 5: Delta Inc. is an S corporation with two shareholders and annual ordinary business income of $800,000. It has three employees, all of whom work 35-hour weeks. The office manager and the two share- holders each work 50 weeks a year, a sales clerk works for 30 weeks a year, and a delivery driver works 20 weeks a year, for a total of 3,500 hours worked by non- owner employees. Annual income distributions to the shareholders include $150,000 in ordinary business income. With only three employees, Delta Inc. doesn’t meet the employee ratio requirement; however, because it distributes less than 25 percent of its ordinary busi- ness income to the shareholders each year, Delta’s non- passive income still qualifies for the reduced tax rate. Temporary or “leased” employees. If the business contracts with a professional employer organiza- tion to employ temporary or “leased” employees, the business can use the hours worked in Oregon by those employees to qualify for the reduced tax rate if the employee requirements are otherwise met. Amended returns Amending to elect or revoke. You can’t amend to revoke or make the election after your 2024 return is filed unless you file an amended return on or before the original due date of April 15, 2025; or if filing on extension, before the extension due date of October 15, 2025. Example 6: Liam filed his original return on March 3, 2025, and didn’t elect the qualified business income reduced tax rate. He files an amended return on April 14, 2025, to make the election to use the reduced tax rate. Liam will be allowed the qualified business income reduced tax rate because the amended return was filed before the original due date. Example 7: Maggie filed her original return with a timely-filed extension on August 19, 2025, and elected the qualified business income reduced tax rate. She files an amended return on October 10, 2025, to revoke the election. Maggie will be allowed to revoke the qualified business income reduced tax rate because the amended return was filed before the extended due date. Amended Schedule OR-PTE. You must amend Sched- ule OR-PTE if you elected to use the reduced tax rate and: • An IRS or other state audit resulted in a change that affects your Oregon return; • You amended your federal or other state return and the changes you made affect your Oregon return; • You have an NOL; or • You need to correct income or deductions you orig- inally reported. If you amend Schedule OR-PTE after the due date for the return (April 15, 2025, or October 15, 2025, if fil- ing on extension), you must report the tax using the reduced rate on the amended tax worksheet even if the amount of tax using the ordinary tax rate is less. This is because the election to use the reduced tax rate is irrevocable and can’t be changed by filing an amended return after the due date for the return. See the instructions for Schedule OR-PTE-FY, Sched- ule OR-PTE-NR, or Schedule OR-PTE-PY for addi- tional information. Farm liquidation long-term capital gain tax rate (ORS 316.045) If you sold or exchanged capital assets used in farming activities during the tax year, you may be able to apply a reduced tax rate to your net long-term capital gain. Farming activities include: Oregon tax

150-101-431 (Rev. 11-27-24) 29 • Raising, harvesting, and selling crops. • Feeding, breeding, managing, or selling: livestock, poultry, fur-bearing animals, or honeybees or the product thereof. • Dairying and selling of dairy products. • Stabling or training horses, including providing rid- ing lessons, training clinics, and schooling shows. • Propagating, cultivating, maintaining, or harvest- ing: aquatic species, birds, and other animal species. • Growing and harvesting cultured Christmas trees or certain hardwood timber. • On-site construction and maintenance of equip- ment and facilities used in farming activities. • Preparing, storing, or disposing of products or by- products raised for human or animal use on land employed in farming activities. Farming activities don’t include growing and har- vesting trees of a marketable species, other than growing and harvesting cultured Christmas trees or certain hardwood timber. General rules. The sale or exchange must end all of your ownership interests in a farming business or in property that is used in a farming business. You may not claim the special tax rate on a sale or exchange to a relative, as that term is defined by IRC Section 267. A farm dwelling or farm homesite isn’t considered to be property used in the trade or business of farming. If you have a net loss from all the assets you sold or exchanged during the year, you don’t qualify for the reduced rate on the sale or exchange of your farm assets. Partnerships or S corporations. The sale of owner- ship interests in a farming corporation, partnership, or other entity qualifies for the special tax rate. The taxpayer must have had at least a 10 percent owner- ship interest in the entity before the sale or exchange. Computing the tax. Use Publication OR-FCG, Farm Liquidation Long-Term Capital Gain Tax, to figure your tax using the reduced rate. Download the publica- tion from our website or contact us to order it. Check the box labeled “Worksheet FCG” on your Oregon tax return. Don’t include the worksheet with your return; keep it with your tax records. Farm income averaging (ORS 314.297) You can figure your Oregon income tax by averaging this year’s farm income using your farm income from the previous three (base) years. This may result in less tax if a higher tax rate applies to this year’s farm income compared to one or more of the three prior years. A farming business is the trade or business of cultivat- ing land or raising or harvesting any agricultural or horticultural commodity. Your elected farm income is the amount of your taxable income from farming that you elect to include in the calculation. You don’t have to include all of your taxable income from farming. It may be to your advantage to include less than the full amount. Schedules. Use our farm income averaging (FIA) schedules and instructions to figure your Oregon income tax. They can be downloaded from our web- site or ordered by contacting us. Be sure to mark the FIA box on your return to indi- cate that you figured your tax by averaging your farm income. Don’t include the schedules with your return; keep them with your tax records. Pass-through entity elective tax (Or Laws 2021, ch 589) Certain pass-through entities (PTEs) may elect to pay income tax at the entity level and pass along an Ore- gon tax benefit to its members. Oregon’s PTE elective tax (PTE-E tax) is available for tax years beginning on or after January 1, 2022 and before January 1, 2026. Electing PTE. An electing PTE must be a partnership, an S corporation, or a limited liability company (LLC) taxed as a partnership or S corporation. All of the PTE’s members must be individuals or other PTEs whose members are all individuals. Grantor trusts and single-member LLCs taxed as individuals are treated as individuals for purposes of the PTE-E tax. Tax rate. The tax is on the sum of the PTE members’ shares of distributive proceeds from Oregon sources. An electing PTE pays tax of 9 percent on the first $250,000 and 9.9 percent on proceeds exceeding $250,000. Making the election. The PTE makes the election by filing Form OR-21, Oregon Pass-through Entity Elective Tax Return. Form OR-21 can be filed through Revenue Online or electronically through an approved soft- ware provider. Note: Filing Form OR-21 does not sat- isfy the PTE’s requirement to file an Oregon income or excise tax return. Tax credit and addition. An individual member of an electing PTE (or a member of a PTE that is a member of an electing PTE) is allowed to claim a refundable tax credit equal to the individual’s share of the PTE-E tax paid. A credit may be claimed only on a member’s per- sonal income tax return, including a composite return joined by a nonresident member. The individual mem- ber must also report an addition for their share of the PTE-E tax that the PTE deducts on its federal return. Example: Atlas and Daughters, a partnership, has seven partners who are all individuals. The sum of the distributive proceeds from Oregon sources for all of its partners is $400,000. It elects to file Form OR-21 and pay the PTE-E tax for calendar year 2024. The PTE calculates the tax as follows: Oregon tax

150-101-431 (Rev. 11-27-24) 30 Sum of distributive proceeds $400,000

Subtract the first $250,000 - 250,000

Amount in excess of $250,000 $150,000

Tax rate on excess amount (9.9%) x 0.099

Tax on excess amount $14,850

Tax on first $250,000 at 9% (0.09) + 22,500

Total PTE-E tax $37,350

On the PTE’s federal partnership return, it deducts $37,350 in state taxes to arrive at the amount of business income distributed to its partners. For Oregon, the PTE will report each partner’s share of the $400,000 in distributive proceeds from Oregon sources, their share of the $37,350 PTE-E tax that it paid, and their share of the $37,350 in state taxes that the PTE deducted on its federal return. On their individual returns, each partner will report their dis- tributive share of business income, as reported on the PTE’s federal partnership return, in the usual man- ner. Each partner will claim a credit for their share of the PTE-E tax paid by the PTE and report an addition for their share of the state taxes that the PTE deducted on its federal return. PTE-E addition and qualified business income reduced tax rate. Individual members who are using the qualified business income reduced tax rate to cal- culate their Oregon income tax may include the addi- tion amount in their qualified business income, to the extent that the ordinary business income reported on the entity-level federal return qualifies for the reduced tax rate. See “Qualified business income reduced tax rate” for details. PTE-E tax subtraction. If the electing PTE received a refund of the PTE-E tax that it deducted on its prior- year federal return, your distributive share of the refund will be reported to you as “other income” on Schedule K-1. You may subtract the amount that you include on your federal return from your Oregon income. See “PTE-E tax refunds included on federal return” in “Subtractions” for details. See Form OR-21 Instructions or our website for more information about the PTE-E tax. Individual PTE members can find information about the tax credit and addition under “Refundable credits“ and “Additions.” CPAR tax (ORS 314.733) Partnerships with income adjustments resulting from a federal CPAR audit may elect to pay an amount in lieu of taxes owed by its partners. The amount is based on adjustments to income from Oregon sources and is calculated using the highest marginal tax rate applicable to corporate or noncorporate partners. See Publication OR-OC, Oregon Composite Return Instructions for Pass-through Entities, for instructions for paying the tax. Interest on certain installment sales (ORS 314.302) Do you have installment sales for which you had to pay interest on the deferred tax liability for fed- eral purposes? If so, you must also pay interest for Oregon. The interest is reported as an addition to tax on your Oregon return, just as it is on your federal return. The amount due is computed the same way as for federal. The interest rate for 2024 is 8 percent per year, or 0.67 percent (0.0067) per month. The inter- est rate for 2025 is 9 percent per year, or 0.75 percent (0.0075) per month. Part-year residents. For the part of the year you were a nonresident, include only those installment obligations that were from dispositions of property in this state. For the part of the year you were a resident, consider all installment obligations. Nonresidents. Include only those installment obliga- tions from dispositions of Oregon property. ABLE account or Oregon higher education savings plan account tax recapture (ORS 315.653) [Recapture code 950 or 951] If you claimed a tax credit for contributions made to an ABLE account or an Oregon higher education savings plan account and later made a nonquali- fied withdrawal of funds from the account, you may have to forfeit your tax credit. A forfeited tax credit is reported as a tax recapture on your return for the year when you made the nonqualified withdrawal. Types of nonqualified withdrawals include: • Spending the funds for a purpose that is unrelated to the purpose of the account. • Using college savings plan funds to pay tuition or other expenses for elementary or secondary school. Tax benefit. Before you report a tax recapture, you must find out if you received a tax benefit from the contributed funds that were used for a nonqualified purpose. You received a tax benefit if the contribu- tion made a difference in the amount of credit you received. Example: Jordan contributed $500 to an Oregon Col- lege Savings Plan account for the first time in 2020. Her AGI was $28,000, so she was allowed a credit for 100 percent of her contributions, up to the $150 limit for a single filer. She claimed a $150 credit on Oregon tax

150-101-431 (Rev. 11-27-24) 31 her 2020 Oregon return. In 2024, she withdrew $100 from the account and used it for a nonqualified pur- pose. To determine her tax benefit from the $100 she withdrew, she starts by subtracting it from her total contribution. The remaining contribution equals $400 ($500 - $100). Next, Jordan figures her credit for a $400 contribution in 2020. She finds that the credit amount would still be $150. The $100 contribution that she withdrew for a nonqualified purpose didn’t make a difference, so there was no tax benefit from it. Jordan doesn’t have to report a tax recapture on her 2024 return. Due to the fact that Oregon has also offered a sub- traction for these contributions for tax years before 2020, figuring your tax benefit could be complex. For a detailed explanation and examples, see OAR 150- 315-0065. Keep a statement showing how you calcu- lated the recapture amount with your tax records. Reporting the recapture. Report the recapture on Schedule OR-ASC, Section C or Schedule OR-ASC- NP, Section E. If the recapture is due to a nonquali- fied withdrawal of contributions to an ABLE account, use code 950. If the recapture is due to a nonquali- fied withdrawal of contributions to an Oregon higher education savings plan account, use code 951. Other individual taxes Statewide transit tax (STT) (ORS 320.550) This tax on wages funds public transportation services and improvements within Oregon. It’s not reported on your Oregon income tax return. The tax is equal to one-tenth of one percent (0.1% or 0.001) of the wages received by an employee who is an Oregon resident or a nonresident employee who performs services in Oregon. Oregon employers are required to automatically withhold the STT from your wages. If you’re an Oregon resident who earns wages from an employer outside of Oregon, your employer isn’t required to withhold the STT on your behalf, but they may choose to do so voluntarily. If your out-of-state employer doesn’t withhold the STT from your wages, you must file Form OR-STI, State- wide Transit Individual Tax Return, and pay the tax. If your employer withheld too much STT from your wages because you were working outside Oregon, you must file Form OR-STI to claim a refund. The due date for your return and payment is the same as the due date for your Oregon income tax return and payment. See Form OR-STI Instructions for more information. Transit self-employment tax The department collects self-employment taxes owed to TriMet Transportation District (TriMet) and Lane Transit District (LTD). This tax is on the self-employ- ment earnings of taxpayers doing business or provid- ing services to a location within the transit districts. It is not reported on your personal income tax return. See Publication OR-TRAN-SE, Oregon Transit Self- employment Taxes, for more information. Fiduciary tax Oregon personal income tax is imposed on the tax- able income of estates and trusts, except for trusts taxed as corporations. See Form OR-41 Instructions for more information. Oregon tax

150-101-431 (Rev. 11-27-24) 32 Payments and refunds Payment options Payment is due on April 15, 2025, regardless of any extension you may have to file your return. If pay- ment isn’t made by the due date, interest and penal- ties may be charged. See “Interest and penalties” for more information. Electronic payments from your checking or savings account You can pay your prior year income taxes, current year income taxes, and 2025 estimated income taxes directly from your checking or savings account. You also have the option to pay by direct debit when you file your return. There is no fee for this. Visit our

website for more information. Credit card payments You can pay your current year balance due, make esti- mated tax payments for 2025, and pay prior year taxes with your Discover, MasterCard, or Visa credit card. To make an online payment, go to Revenue Online on our website. A convenience fee may be charged for this service. Keep the payment confirmation number for your records. Payment by check or money order • Make your check or money order payable to Oregon Department of Revenue. • Write the tax year, the form number or type of pay- ment you’re making, and the last four digits of your SSN or ITIN on your check. • Use blue or black ballpoint pen. Don’t use red or purple ink or gel pens. • Don’t send cash or a postdated check. • If you’re mailing a payment with your return, send your payment in the same envelope with your return. Don’t use a payment voucher. • If you’re mailing a payment separate from your return, include the payment voucher, Form OR- 40-V, with your payment. Form OR-40-V is avail- able in our tax booklets and on our website. Refunds If the amount of tax you paid is more than the amount of tax due on your return, we will usually refund the amount of your overpayment. A refundable tax credit, such as the earned income credit, will be treated like an overpayment even if you didn’t pay any tax. Time limit for claiming a refund. If you have an overpay- ment of $1 or more, you must file to claim your refund within the time limit allowed by law. See “Oregon stat- ute of limitations on refunds” for more information. Refund offset. In some instances, your overpayment won’t result in a refund coming to you. If you (or your spouse, if married) owe money to the state for reasons other than this year’s tax, or if you owe money to the federal government, your refund may be used to pay the amounts you owe. This is known as an “offset.” Some common types of offsets include delinquent tax from prior years, past-due child support, delinquent student loans, and legal judgments. If you have ques- tions about a refund offset, contact us for assistance. Refund applications. When you file a return show- ing an overpayment, you may request that some or all of your refund be used to make an estimated pay- ment of next year’s tax or applied in other ways. See “Application of refund” for your options. Direct deposit. If you will be receiving a refund, you may request it to be deposited directly into your checking or savings account. See “Direct deposit of refund” for details. Paper check. A refund that isn’t offset, applied to next year’s tax or other application, or deposited directly into a bank account will be printed out and mailed to you at the address shown on your return. • Direct deposit information is invalid. If the direct deposit information you provide to us is invalid or if we are unable to complete the deposit for any reason, your refund will be issued to you by paper check instead. • Lost refund check. If your paper refund check is lost, you may request that we reissue it to you. The lost check must be at least 30 days old before it can be reissued. Contact us for assistance. • Check returned to the Department of Revenue. If the address shown on your return isn’t your cur- rent address, or if the U.S. Postal Service is unable to deliver it for any reason, your paper refund check may be returned to the Department of Reve- nue. Contact us for assistance with your unclaimed refund. • Uncashed paper checks more than two years old. If you don’t cash the paper check within two years from the date it was issued, your refund will be transferred to the Oregon State Treasury and held as “unclaimed property.” If you want to claim the refund after it has been transferred, you will have to request it from Treasury. Visit their website at www.oregon.gov/treasury for information. Refunds owed to a deceased taxpayer. If a taxpayer who was owed a refund has died, the refund may be Payments and refunds

150-101-431 (Rev. 11-27-24) 33 claimed by the taxpayer’s personal representative, heir, or the trustee of the taxpayer’s estate. See Form OR-243 Instructions for more information. Interest on refunds. Interest may be paid on some types of refunds if we are unable to issue the refund within a certain period of time. Not all types of refunds bear interest. See “How to figure interest on refunds of personal income tax” for interest rate information and examples. Kicker refunds. The Oregon surplus refund, known as the “kicker,” is available when the state declares that a minimum amount of budget surplus exists for the biennium (the state’s two-year budget period). In past years, the kicker was paid to taxpayers as an automatic refund. Now, the kicker is claimed on the return in odd-numbered tax years when a surplus has been declared. See “Oregon surplus refund” for more information. Direct deposit of refund We can deposit your income tax refund directly into an account you designate, such as a checking, sav- ings, or certain type of retirement account. Requirements for direct deposit: • The account must have routing and account num- bers and be able to accept Automated Clearing House (ACH) payments. • The final destination for the deposit can’t be out- side the United States. • If you are filing a joint return, both you and your spouse must sign the return. Note: Some accounts may not accept direct deposits. Also, some institutions don’t permit the deposit of a joint refund into an individual account. Contact your financial institution to verify your rout- ing and account numbers and to make sure your deposit will be accepted. • Routing numbers are nine digits and must begin with 01 through 12, 21 through 32, or 61 through 72. • Account numbers can be up to 17 characters, both numbers and letters. Include hyphens, but don’t include spaces or special symbols. If your account number is fewer than 17 characters, leave the unused boxes (on your return) blank. See the sample check diagram for help with identify- ing these numbers. Caution: It’s your responsibility to make sure your information is correct. These numbers can’t be changed after your return is filed, and we can’t undo a deposit that was made to the wrong account. We aren’t responsible when an institution rejects a direct deposit. If your direct deposit is rejected, we will issue a check and send it to the mailing address shown on your return. Application of refund If your original or amended return shows a refund, you may apply some or all of it to: • Make an estimated tax payment for a later tax year. • Donate to a charitable organization. Payments and refunds Direct deposit—necessary numbers

150-101-431 (Rev. 11-27-24) 34 • Make a deposit to one or more Oregon higher edu- cation savings plan accounts. • Contribute to a political party (Form OR-40 filers only). Estimated tax payment. If you apply your refund as an estimated tax payment for a later tax year, the payment will be credited to your open estimated tax account as of the date shown in Table 6. Table 6. Refund applied as estimated tax payment If you file: The payment will be credited as of: An original return on or before the due date, without extension The date that the first estimated payment of the open tax period is due (usually April 15). An original return on extension, on or before the extension due date The later of: • The due date for the first estimated payment of the open tax period (usually April 15), or • The date of the pay- ment that resulted in the refund. An original or amended return: • After the due date, without extension; or • On extension, after the extension due date The later of: • The date the return was filed, or • The date of the payment that resulted in the refund. You can’t revoke your choice to apply your refund as an estimated tax payment unless you file an amended return on or before the original due date of the return, including extensions. Example 1: Beth made four estimated tax payments for tax year 2024; her last payment was made on Janu- ary 15, 2025. On September 9, 2025, Beth filed her 2024 return on extension. Beth’s return showed a $500 refund. She chose to have the refund applied as an estimated payment. The $500 refund will be credited to Beth’s 2025 tax account as of April 15, 2025 (the first estimated payment due date for the open tax period). Example 2: Ray filed his 2023 return on May 13, 2025. Ray overpaid his 2023 tax by $2,500. He chose to apply $2,000 of the refund as an estimated tax pay- ment. Because Ray’s 2023 return was filed after the due date, the $2,000 will be applied as an estimated tax payment as of May 13, 2025, the date he filed his return. Ray will claim $2,000 as an estimated pay- ment when he files his 2025 return. Two open tax accounts. An estimated tax account is “open” for accepting payments from the first day of the tax year until 15 days after the last day of the tax year. For most taxpayers, this means they will have two “open” accounts from January 1 through January 15, one account for the later year that opens on Janu- ary 1, and one account for the earlier year that closes on January 15. If a payment from an applied refund is credited at a time when two accounts are open, the payment will be automatically applied to the later year. If you want your payment to be applied to the earlier year instead, you must contact us in writing before the account for the earlier year closes (usually January 15). Example 3: Sally filed her 2022 Oregon return in April 2023 with tax to pay. On January 10, 2025, Sally filed an amended 2022 return showing a $1,500 refund. She elected to apply the refund as an estimated pay- ment. Sally’s refund is automatically applied to her 2025 estimated tax account as of January 10, 2025, the date she filed her amended return. Sally can contact us in writing no later than January 15, 2025, the date that her estimated tax account closes for 2024, and ask that the $1,500 payment be applied to tax year 2024 instead. Other refund applications. See your return instruc- tions for details on using your refund to donate to a charitable organization, contribute to the politi- cal party of your choice (Form OR-40 filers only), or make a deposit in up to four Oregon higher educa- tion savings plan accounts. Refund processing How long will it take to get my refund? Return processing times vary due to many factors, including the complexity of the return. Electronically- filed returns generally process faster. Paper returns must have all supporting documentation included to ensure smooth processing. Paper returns can also take longer as the due date approaches, when the largest number of returns are received. To check the status of your refund, go to www.oregon.gov/dor, click on “Revenue Online,” and click on “Where’s my refund?” Refund delays Several things might delay processing of your tax return or your refund: • Failure to respond timely to requests for information. If we send you a letter requesting information to pro- cess your return, it’s important that you respond by the due date on the letter. Otherwise, we may adjust or invalidate your return. Contact us if you have ques- tions about our letter. You may view most of the let- ters we send by logging into Revenue Online. Note: If we’re requesting information about a refundable Payments and refunds

150-101-431 (Rev. 11-27-24) 35 credit, replying to our request for information via Revenue Online may enable us to respond faster. • Change in name. If you have a different name in our records from a previous filing, special han- dling will be required. • If you notified us about identity theft, special han- dling will be required. • Change in SSN. • Application for an ITIN. • Failure to attach proof of Oregon withholding (such as Form W-2 or 1099). • Failure to attach a copy of your federal return (with Schedules 1 through 3, if applicable). • Failure to include required schedules, such as Sched- ule OR-A if you’re claiming itemized deductions. • Claiming the WFHDC or manufactured dwelling park closure credit. These refundable tax credit claims are reviewed manually and take additional time to process. • Failure to identify additions, subtractions, adjust- ments, modifications, or credits. Numeric codes for identifying these are shown in the Appendix. • Debt to other agencies. If you, or your spouse, owe money to state or federal agencies (for such things as student loans, unpaid parking tickets, or back child support), your refund might be delayed or used to offset your debt. • Incorrect bank account information. Verify your bank account information for direct deposit refunds. If your bank information is incorrect, we must wait for the bank to return the funds before issuing a refund check. Injured spouse refund claims [ORS 314.415(7)] Are you filing a joint return with a spouse who is sepa- rately liable for a debt to a state or federal agency? If so, you may request that your joint refund be apportioned. When your return is processed, we will notify you of our intent to apply the joint refund to any debts owed. Within 30 days of the date of our notice, send us your request to apportion the refund. You may use federal Form 8379, Injured Spouse Alloca- tion, and fill in the Oregon refund numbers, or create your own worksheet. Separate your withholding, tax payments, and items of income. Income from jointly held property must be split evenly, including interest earned on joint bank accounts. You may submit an apportionment request through Revenue Online or mail it to this address: Attention: Accounts Resolution Team Oregon Department of Revenue 955 Center Street NE Salem OR 97301-2555 Visit www.oregon.gov/dor and search for “injured spouse” information to find answers to common questions. Oregon statute of limitations on refunds Oregon law limits the time you have to claim a refund of Oregon tax. The allowable time depends on your circumstances. Withholding and estimated tax refunds You must file your original return within three years of the due date to claim a refund of tax withheld or esti- mated tax payments. The due date doesn’t include exten- sions. If you file more than three years after the due date, the excess tax withheld or estimated tax payments can’t be refunded or applied to tax you owe for another year. Amended returns If your original return was filed within three years of the due date, you may amend (change) your return and file for a refund of an overpayment of tax by the date which is the latest of: • Three years from the due date of your original return; or • Three years from the date you filed your original return; or • Two years from the date you paid your tax or paid any part of your tax. If you file your amended return more than three years after the due date, but within two years of the date you paid tax, your refund can’t be more than the amount of tax you paid during that two-year period. Note: If we adjusted items on your return and your right to appeal has expired, you can’t use the above rules. You can't claim a refund for those items. Example: Bob filed his 2021 Oregon return and paid $300 tax due on time. In March 2024, he discovered he had forgotten to report some interest income. He amended his return. He paid $220 additional tax on April 3, 2024. On August 5, 2025, Bob discovers he failed to claim a large charitable contribution he made in 2021. Bob must amend his 2021 return by April 3, 2026. His refund will be limited to $220, the additional tax he paid within the last two years. Federal or other state corrections to tax returns Sometimes the IRS or another state corrects your return with changes that could affect your Oregon return, resulting in a refund. You have two years from the date of the correction to amend your Oregon return and claim a refund, even if the three-year stat- ute of limitations has expired. Payments and refunds

150-101-431 (Rev. 11-27-24) 36 Amended returns Reasons to file an amended return • An IRS audit (or other state audit) resulted in a change to your original return that affects your Oregon return. • You amended your federal (or other state) return and the changes you made affect your Oregon return. • You made an election on federal Form 4684, Casual- ties and Thefts, to carry back a casualty loss result- ing from a federally-declared disaster. • You are required to recapture a federal education credit for a tax year when you claimed an Oregon tuition and fees subtraction. • You have a net operating loss (NOL) to carry back, so you need to amend your return for the carry- back year. • You need to correct the income, deductions, or credits you originally reported. How do I amend my Oregon return? You will need the following items: • The tax form and instruction booklet for the year that you are amending. This will usually be the same form type as your original return, unless you filed the incorrect form for your residency status. Use the correct form type to amend. • A copy of the Oregon tax return that you originally filed for the year being amended; this will provide the guidance needed for completing your amended return. • A copy of any previously amended returns you filed for the year being amended. • A copy of all notices from us, another state, or the IRS for the tax year being amended. Follow these steps to amend your return: 1. Read through these instructions before filling out

your form. 2. Mark the “Amended” box on the return.

3. If we sent you a notice with corrections to your

return, use the figures from that notice when amending your return. 4. Use the worksheet for amended returns in the

instruction booklet to determine your amended refund or tax to pay. Complete the entire work- sheet using the corrected information. 5. If the amended return shows a refund, you can

elect to apply it as a payment of estimated tax or make other refund applications, but you can’t change any election you made on your original return. See “Application of refund“ in “Payments and refunds.“ 6. Use the “Amended statement” section of the

return to explain why you are amending your tax return. 7. Mail or drop off your amended tax return or,

if your software allows it, you may file your amended return electronically. Be sure to include a copy of the federal or other state’s corrected return or audit report. If you’re amending your Oregon return only, include a copy of your origi- nal federal return. If you don’t have a copy of your original Oregon tax return, you may request a transcript or a copy of the return from us. You can obtain copies of prior years’ returns for a small fee by going to our website, log- ging into Revenue Online, and selecting “Request Photocopies,” or by requesting copies by mail. You can also request a return transcript for free by send- ing a message in Revenue Online or by calling us directly. Mailing address. Use your current mailing address when filing an amended return, even if your current mailing address is different than the one entered on your original return. This will help us to contact you if needed. Partnership returns. Our website has information for partnerships that need to: • File an amended Form OR-OC, • Report audit adjustments made under CPAR, or • Make tax payments on behalf of partners due to CPAR adjustments. Also see “Audits and appeals.” How long do I have to file for a refund? In most cases, you must file for a refund within three years from the due date of your original return, or the date you filed your original return, whichever is later. For more information about time limits for filing a return to claim a refund, see “Oregon statute of limi- tations on refunds.” When should I file and pay if I owe additional tax? File your amended return as soon as you know that a change needs to be made. Interest is calculated from the day after the due date of the original return up to the date the tax is paid. Pay any tax and interest due as soon as possible to avoid additional interest. There may also be a penalty. Amended returns

150-101-431 (Rev. 11-27-24) 37 How do I file a protective claim for refund? You can file a protective claim for refund when the outcome of a court case or legislative action is expected to be known after the time for requesting a refund has expired. Use Form OR-PCR, Protective Claim for Refund, when your claim to a refund is con- tingent on a pending court decision or legislative action. Notify us every six months on the status of the claim. If the court decision or legislative action changes your Oregon income tax, file an amended return within 90 days of the determination. How long will it take to process my amended return? Processing time for amended returns varies. It may take six months or longer to process your amended return. How do I amend for an NOL? You may claim a refund from an NOL carryback within three years after the due date (including extensions) of the return that showed the NOL. Mark the “Amended return” box and enter the year of the NOL. See “NOLs for Oregon” in “Other items“ for more instructions. Do I change my federal tax liability on my amended return? Usually not, but there are a few exceptions to this general rule. Change allowed Changing the federal tax liability amount on your amended return is allowed only if one of these excep- tions applies: • Failure to claim on original return. You qualified for this subtraction on your original Oregon return but failed to claim it. If so, you may claim the subtraction based on your original federal income tax liability or the amount allowed by one of the other exceptions. • Correction notice from us. Did we correct the fed- eral tax subtraction on your original return? If so, change the amount on your amended return. Use the corrected amount from our notice. • Federal return amended before due date. Did you amend your federal return before the due date of the original return? If so, change the amount on your amended return. The federal tax on your amended federal return filed before the due date is the amount you will use for your amended Oregon return. • Different AGI phase-out limit. Does a different phase-out limit apply to your amended AGI? The amount of federal tax liability you may subtract on your return is limited if your AGI is within a cer- tain range. These ranges and limitation amounts can be found in Table 9 under “Federal income tax liability“ in “Subtractions.“ If your amended AGI is now within a different range, change the amount on your amended return only if the taxes you are deducting were paid or accrued during the tax year you are amending. Increase or decrease the subtraction to match the limitation amount that applies to your amended AGI. Change not allowed Unless one of the above exceptions applies, you can’t change the amount of your federal tax liability on your amended return. However, you might have a subtraction or addition on your return for the year in which you file the amended return. • More federal tax paid. Did you pay additional federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Claim the additional federal tax as a subtraction on your Oregon return in the year you paid the additional tax. • Federal tax refund. Did you get a refund of federal tax because you were audited or filed an amended return after the due date of the original return? If so, don’t change the amount on your amended return. Show the federal tax refund as an addition on your Oregon return in the year you received the refund, but only if you received a tax benefit. See “Federal income tax refunds“ in “Additions” for more information about the tax benefit doctrine. Example 1: Sergei received a notice from us in May and is filling out an amended return in July. The notice stated that his federal tax subtraction was reduced from $3,500 to $3,000. He will use the corrected fed- eral tax subtraction of $3,000 on his amended return. Example 2: Alicia paid additional federal tax in 2024 for an audit adjustment on her 2021 federal tax return. She will include the adjusted items when she com- pletes her amended 2021 Oregon tax return, but won’t change the 2021 federal tax subtraction. Because she paid the additional tax in 2024, she will subtract this amount, up to the annual limit, on her 2024 Oregon return. See “Federal income tax liability” in “Subtrac- tions“ for the federal tax subtraction limits. Example 3: Tonya, a single taxpayer, timely filed her original 2023 return with an AGI of $138,000. She paid $35,000 in federal taxes during 2023. Her federal tax subtraction was limited to $3,100 because of her AGI. In 2024, she amended her 2023 federal return to claim expenses she had left off of her original return. Her amended AGI is now $133,000. Tonya may change her federal tax liability on her amended return to $4,700, the amount she could have claimed on her original return, because her limitation amount has changed. Amended returns

150-101-431 (Rev. 11-27-24) 38 Interest and penalties Interest Interest rates are the same for taxes owed and for refunds. Interest is charged and paid on tax only. Interest isn’t charged on penalties. We don’t charge compound interest. Table 7 shows interest rates since 2018. For previous interest rates, see prior versions of this publication or contact us. Table 7. Interest percentage rates Interest as of: Annual Daily January 1, 2018 5% 0.0137% January 1, 2019 6% 0.0164% January 1, 2021 4% 0.0110% January 1, 2023 6% 0.0164% January 1, 2024 8% 0.0219% January 1, 2025 9% 0.0247% As of January 1, 2018, interest is figured daily, based on a 365-day year. The annual interest rate is 8 percent for 2024. The annual interest rate is 9 percent for 2025. The interest rate may be changed once per calendar year. Additional interest of 4 percent per year is charged as described under “Two-tiered interest on deficien- cies and delinquencies.“ How to figure interest on tax you owe Your 2024 tax must be paid by April 15, 2025, even if you requested an extension to file your return. Inter- est starts accruing on April 16 and continues to accrue every day, including the date of your payment. To figure your interest for 2025, count the number of days starting with April 16, 2025 and ending with the date of your payment. Multiply your unpaid tax by the number of days, then multiply by 0.000247 (the daily rate converted to a decimal). If you’re entering the interest amount on your return, round the total to the nearest whole dollar. Amended return. If you file an amended return, or if your taxable income changed because of a federal or state audit, and you have tax to pay, you will be charged interest starting the day after the due date of the original return until the date of your payment. Calculate interest based on the additional amount of tax you must pay. Example: Nick filed an amended income tax return for tax year 2023 on March 13, 2025. His original 2023 return was due on April 15, 2024. He paid additional tax of $500 with his amended return. Here is how Nick figures the interest that he owes: April 16, 2024 to December 31, 2024 260 days at 0.0219% 0.000219 x $500 x 260 days ...........................

= $ 28.47

January 1, 2025 to March 13, 2025 72 days at a daily rate of 0.0247% 0.000247 x $500 x 72 days .............................

= $ 8.89

Total interest $37.36 Two-tiered interest on deficiencies and delinquencies Additional interest of 4 percent per year will be charged on deficiencies or delinquencies if: • You have filed a return showing tax due (a self- assessed tax liability) and don’t pay the tax due within 60 days after the date of our Notice of Assessment, or • We have assessed an existing deficiency, and you don’t pay the assessment within 60 days after the date on the Notice of Assessment. If you appeal to us (or, in a hardship situation, to the Oregon Tax Court) without paying the tax, the increased interest rate will start 61 days after: • The date of our written objection decision; or • The date of our conference decision letter (CDL); or • The date the Magistrate Division enters its final decision; or • The date the Tax Court or the Oregon Supreme Court enters its final judgment. How to figure interest on refunds of personal income tax Generally, interest is paid on refunds issued more than 45 days after the later of: • The due date of the original return (without exten- sions), or • The date you file your original return. Note: If your refund results from a payment you made after the due date of your return (without extensions), interest will be paid if the refund is issued more than 45 days from the date of that payment. Example 1: Irina filed her original 2023 income tax return on February 18, 2025, to claim a $1,900 refund of withheld tax. The return was due on April 15, 2024. We issued the refund on May 9, 2025, more than 45 days after Irina filed the return. The interest on the refund is calculated as follows: February 19, 2025 to April 4, 2025 45 days, no interest paid April 5, 2025 to May 9, 2025 0.000247 x $1,900 x 35 days $ 16.43

Example 2: Jean filed her original 2023 return on April 15, 2024. She then filed an amended 2023 return on Feb- ruary 5, 2025, which shows a $1,000 refund of estimated Interest and penalties

150-101-431 (Rev. 11-27-24) 39 tax. Here is how we figure the interest due on Jean’s refund, as of the date she filed the amended return: April 16, 2024 to May 30, 2024 45 days, no interest paid May 31, 2024 to December 31, 2024 0.000219 x $1,000 x 215 days .........................

= $ 47.09

January 1, 2025 to February 5, 2025 0.000247 x $1,000 x 36 days ...........................

= $ 8.89

Total interest $ 55.98

Note: Interest is calculated on the amount that is a refund of tax paid, including any refund amount that you choose to donate by charitable check-off, con- tribute to a political party, or deposit into an Oregon higher education savings plan account. Refunds that don’t accrue interest. Interest isn’t paid on the portion of a refund attributable to the EIC, the Oregon Kids Credit, the AEOTC, or the WFHDC credit. Also, interest doesn’t accrue on refunds applied as an estimated payment to a later year’s tax. See “Application of refund” in “Payments and refunds.“ Tax credit auction bid payments that are returned to the bidder don’t accrue interest. Two-tiered interest on refunds The interest rate will increase if we are unable to issue a refund within 60 days from the date of a Tax Court or Supreme Court judgment. The annual rate will increase by 4 percent beginning 61 days after the date the final judgment is entered. Penalties Penalties for filing or paying late Your 2024 return must be filed by April 15, 2025. If you requested an extension, your return must be filed by October 15, 2025. Your 2024 tax must be paid by April 15, 2025, even if you requested an extension to file your return. If you’re entering a penalty amount on your return, round the total to the nearest whole dollar. Five percent failure to pay penalty. You must pay a penalty if you don’t pay your tax by the original due date of the return, even if you have an extension of time to file. The failure-to-pay penalty is 5 percent of the tax (after all credits, withholding, and payments) that wasn't paid by the original due date. You won’t be charged the 5 percent failure-to-pay penalty if you do all of the following: • File federal Form 4868, Extension of Time to File U.S. Individual Income Tax Return (the automatic extension of time to file), or send us a payment according to the instructions in Publication OR 40-EXT; - • Pay at least 90 percent of your tax after credits by the original due date; • File your return within the extension period; • Pay the balance of tax due when you file your return; and • Pay the interest on the balance of tax due when you file your return or within 30 days of the date of the bill you receive from us. If you file with a valid extension but didn’t pay 90 percent of your tax by the original due date, you will be charged the 5 percent failure-to-pay penalty. Twenty percent failure-to-file penalty. You must pay a penalty if you don’t file your return within three months after the due date (including extensions). The penalty is 20 percent of the tax (after all credits, with- holding, and payments) that wasn’t paid by the origi- nal due date. You won’t be charged the 20 percent failure-to-file penalty if you: • File federal Form 4868 (the automatic extension of time to file); or • Make a payment according to the instructions in Publication OR-40-EXT, and • File the return within three months after the due date (including extensions). Failure to file and pay. If both penalties apply, your total penalty will be 25 percent of your tax (after all credits, withholding, and payments) that wasn’t paid by April 15, 2025. Example. Emir filed his 2024 return on November 18, 2025. His return was due April 15, 2025, and he didn’t have an extension. Emir paid the tax due of $2,000 with the late-filed return. His penalties total 25 per- cent of the $2,000 tax: Failure-to-pay penalty: 0.05 x $2,000.....................

$100 Failure-to-file penalty: 0.20 x $2,000......................

$400 Total penalties: 0.25 x $2,000 $500

Note: Emir will also owe interest on the $2,000 tax. Additional 25 percent failure-to-file penalty If you fail to file a return within three months of the due date (including extensions), we may send you a notice with a demand that you file. If you don't file a return within 30 days of the date the demand let- ter was mailed, we will figure the tax for you and an additional penalty of 25 percent of the unpaid tax will be assessed for a total penalty of 50 percent. One hundred percent failure–to–file penalty If you don’t file returns for three consecutive years by the due date of the third year’s return, including Interest and penalties

150-101-431 (Rev. 11-27-24) 40 extensions, you must pay a 100 percent failure-to-file penalty on the tax due for each year. Penalty for intent to evade tax Filing a falsely prepared return with the intent to avoid tax will result in a penalty equal to 100 percent of the tax deficiency determined by the Department of Revenue. In addition, you could be charged with tax evasion, a class C felony. You could be fined up to $125,000, serve a jail sentence, or both. Total penalties The total of these penalties can’t be more than 100 per- cent of the tax due. Exceptions: Penalties for substan- tial understatement of net tax, filing a frivolous return, falsely claiming the WFHDC credit, making a non- qualified withdrawal from a first-time home buyer savings account, and abusive tax avoidance transac- tions may be imposed in addition to other penalties. Substantial understatement of net tax penalty If we determine that you have substantially under- stated your net tax on your return, you must pay a penalty equal to 20 percent of the understated tax. A penalty will be assessed if net tax for 2024 has been understated by more than $3,000 ($4,400 for a C corporation). Substantially understated net tax also includes net tax on income attributable to an abusive tax shelter, even if fully disclosed. This penalty is in addition to all other penalties pro- vided by law. $250 frivolous return penalty If you file a frivolous return that is meant to deliber- ately delay or block the administration of tax laws, you must pay a $250 penalty. “Frivolous” includes, but isn’t limited to: • An argument, without any good basis, that there has been a violation of your constitutional rights. • Reliance on a “gold standard” or “war tax” deduction. • An argument that wages or salary aren’t taxable income. • An argument that the 16th Amendment to the U.S. Constitution wasn't properly adopted. • An argument that “unenfranchised, sovereign, free- men, or natural persons” aren’t subject to tax laws. This penalty is in addition to all other penalties pro- vided by law. Working family household and dependent care (WFHDC) credit false claim penalty You may be charged a penalty if you knowingly falsely claim (or knowingly assist someone else in falsely claiming) the WFHDC credit. The penalty is up to 25 percent of the amount claimed, and is in addition to the adjustment or denial of the credit. This penalty can be charged to each person involved with the false claim. This penalty is in addition to all other penalties pro- vided by law. First-time home buyer savings account (FTHBSA) penalty for nonqualified withdrawal A penalty of 5 percent of the funds withdrawn from your FTHBSA may be imposed if you withdraw the funds from the account for a purpose other than pur- chasing a home. No penalty will be imposed if: • The account holder: — Dies.

— Files bankruptcy.

— Becomes

permanently unable to regularly per- form work at a gainful and suitable occupation due to loss of any bodily function. • The funds are withdrawn more than 10 years after the account was opened. This penalty is in addition to all other penalties provided by law. Withdrawn funds that are subject to this penalty also must be added back to Oregon income. See this topic in “Additions.” Abusive tax avoidance transaction (ATAT) penalties Penalties can be imposed on income items identified by the IRS as ATATs, including listed transactions, reportable transactions, and promotion of tax shel- ters, as follows: • A penalty of 60 percent of the understated net income from a listed transaction understatement. This penalty is in addition to and not in lieu of any other penalties. • Failure to report a reportable transaction will result in a penalty of $3,300 for an individual taxpayer or $16,700 for a corporation. • If the reportable transaction is also a listed transac- tion, the penalty is $33,000 for an individual tax- payer and $66,000 for a corporation. • A promoter of tax shelters will be assessed a pen- alty of 100 percent of the gross income derived from promoting the shelter. This penalty is in addition to and not in lieu of any other penalties. The ATAT penalties are in addition to all other penal- ties provided by law. In addition to these penalties, if we find there is a deficiency in tax paid as a result of the use of a listed transaction reported or reflected by the return, the statute of limitations for issuing a notice of that deficiency is increased from three years to nine years from the date the return was filed. Interest and penalties

150-101-431 (Rev. 11-27-24) 41 Audits and appeals What to do if your return is audited General information We audit returns for several reasons. Many audits are based on adjustments made by the IRS, with whom we share information. Other returns are selected because there are sections of tax law that require additional focus due to difficulties or frequent errors in tax law application. An audit is the process of reviewing a return to make sure it was prepared correctly. If your return is cho- sen for an audit, it doesn’t mean you made an error or are dishonest. By law, we must keep your tax information private. In rare situations involving returns filed after Decem- ber 31, 2017, we may share information between tax- payers who have claimed the same item on their indi- vidual returns in order to efficiently resolve the mat- ter—for example, divorced taxpayers who both claim an exemption credit for the same dependent. Other- wise, we are prohibited from sharing your informa- tion with anyone without your consent. People who prepare your return or represent you must also keep your information confidential. You have the right to know why we are asking for information, exactly how we will use any information you provide, and what might happen if you don’t provide the information. Our goal is to treat taxpayers fairly. We strive to be responsive to the issues and reasonable in our deci- sions and actions. We will explain any changes we make to your return. We encourage you to ask about anything you don’t understand. For more information, read our publication Your Rights as an Oregon Taxpayer. You can find the publica- tion at www.oregon.gov/dor/forms or contact us to order a copy. Types of reviews Processing adjustments. Processing adjustments are corrections we make to a return while we process it. We make some adjustments without the need for additional information, such as math errors. If we need additional information, we’ll send a letter. It’s important that we get a response by the date speci- fied in the letter. Federal audits. These audits are based on informa- tion from the IRS. This information includes their CP2000 program and federal Revenue Agent Reports. The CP2000 program matches Form W-2 and 1099 information reported by payers to what is shown on a return. A Revenue Agent Report is a federal audit report showing adjustments the IRS made to a return. If you received either of these reports from the IRS, you need to determine if the changes made by the IRS affect your Oregon return. If they do, you should amend your Oregon return as soon as possible. Inter- est charges accrue until all tax is paid. If you don’t amend your Oregon return, you may receive a notice from us showing adjustments we have made to your return. Correspondence audits. These are written requests asking you to confirm items on a return. The letter will explain what items we are reviewing and what we need to verify them. You will be asked to send copies of the documents to the auditor who will review the information and notify you of the results. Correspondence audits usually don’t require a meet- ing with the auditor. Field audits. These audits are more in-depth and typically involve a review of business income and expenses. Field audits usually require a meeting with the auditor. The time and place of the meeting will be arranged between you and the auditor. Partnership audits. The IRS makes audit adjust- ments and collects taxes at the partnership level for partnerships subject to CPAR, IRC Sections 6225 to 6227. Oregon’s CPAR provisions can be found in ORS 314.731 to 314.739. If an IRS audit under CPAR results in adjustments that affect any partner’s Oregon tax, the partnership must follow certain procedures and timelines for reporting the adjustments to Oregon. The partnership may elect to pay an amount in lieu of tax owed by the partners resulting from the adjust- ments. See Publication OR-OC or visit our website for more information. What records will I need for the audit? You’ll get a letter from us asking questions and requesting copies of specific documents. Answer the questions completely and send copies of the requested documents by the deadline in the letter. It’s important that you have a complete copy of your state and federal tax records and provide copies, as requested. See “Record-keeping requirements” in “General information” for additional tips. You should also keep a copy of your response to the audit letter. If you get a letter asking you to make an appoint- ment, contact the auditor who sent the letter. We try to schedule audit appointments at your convenience. It may be held at the business location, at your repre- sentative’s office, or at one of our field offices. The letter will explain the records needed for the audit. Organize the information for the appointment. Audits and appeals

150-101-431 (Rev. 11-27-24) 42 The auditor may ask you to make copies of the records. Generally, your return is examined in the district where you live. If your return can be examined more quickly and easily in another district (such as where the books and records are located), you may ask to have the audit transferred. Who can represent me? Throughout any audit, you can represent yourself, have someone accompany you, or designate some- one to represent you. You may represent yourself in all stages of your audit and appeal. However, if your case is hard to understand or involves many issues, you may want someone to help you. Also, if some- one else prepared the return, you may want their help. You may authorize someone to receive your confidential information (tax information authoriza- tion), or you may designate someone to represent you (power of attorney for representation) who would be able to make decisions for you. People who can repre- sent you are Oregon-licensed: • Lawyers. • Public accountants or certified public accountants. • Tax consultants. • Enrolled agents. Out-of-state CPAs may practice in Oregon if they meet the substantial equivalency requirements (ORS 673.010): 1. Licensed in another state; and 2. Have an accredited baccalaureate degree with at least 150 semester hours; and 3. Passed the Uniform CPA exam; and 4. Have a minimum of one year of experience. If you own a business and have an employee who regularly does your tax work, that employee can also represent you. You must give written authorization to a person you want to represent you. Use Form OR-AUTH-REP to authorize a representative. The auditor handling the case can provide a copy of this form, or you can download it from our website or call us to order a copy. What if I disagree with the audit results? When we propose changes to your return, we will explain the reasons for them. It’s important that you understand why we propose changes before they become final. Ask about anything that is unclear to you. If you disagree with the final changes, you can appeal. Appeal rights will be included with the notice you receive. What if the IRS or another state has audited my return? We have an agreement with the IRS to exchange tax return information. If the IRS audits an Oregon tax- payer's return, we may receive a copy of that infor- mation. If your federal return or the return you filed with another state is adjusted, you should amend your Oregon tax return if that adjustment also affects your Oregon return. If your return was previously audited by the IRS and the notice you receive from us has a different adjust- ment, send a copy of the final audit adjustments or cancellation from the IRS to us. If you filed an appeal with the IRS or the other state and you get a notice from us, send a copy of the IRS or other state appeal notification. We will suspend further action until your IRS or other state case is resolved. You have two years from the date of the correction to claim a refund of Oregon tax as a result of the audit adjustment. See “Oregon statute of limitations on refunds” in “Payments and refunds” for more information. Appeals If you disagree with an action we've taken, you have the right to appeal. Follow the appeal procedures out- lined here if you have a disagreement with: • A Notice of Deficiency or Notice of Proposed Refund Adjustment. • Our notice based on a federal audit report or an audit by another state. • Penalties or interest charges shown on our notice. • Interest charged on underpayment of estimated tax. • A Notice of Assessment. You may be able to resolve certain issues without a formal appeal process. Contact us if your disagree- ment concerns: • The date or amount of payments made to your account. • A withholding adjustment. Appealing a Notice of Deficiency or Notice of Proposed Refund Adjustment within 30 days If you disagree with a Notice of Deficiency or a Notice of Proposed Refund Adjustment, you may submit an appeal online by logging in to Revenue Online within 30 days and following the instructions on your notice. Or, you may submit an appeal in writing within 30 days from the date on our notice. Audits and appeals

150-101-431 (Rev. 11-27-24) 43 To make your appeal, choose just one of these two options: written objection or conference request. Written objection. Write to us explaining why you disagree with the Notice of Deficiency or Notice of Pro- posed Refund Adjustment. Include any new informa- tion you have. We will review your explanation, try to resolve the matter, and send you a written deci- sion. If an auditor adjusted your return, that auditor will review your explanation, along with any infor- mation you provide, and send you a written decision. Conference. Request a conference by sending us an explanation of why you disagree with our Notice of Deficiency or Notice of Proposed Refund Adjustment. Include any new information you have. Be sure to indicate that you are requesting a conference. A conference officer will discuss the matter with you or with someone you choose to represent you, usu- ally by phone. The conference officer will send you a written decision. You may choose to receive the deci- sion by either regular or certified mail. If you disagree with our decision, you may continue your appeal and will receive new appeal instructions. Appealing a Notice of Proposed Refund Adjustment after 30 days have passed If you don’t send us a written objection or conference request, but you still want to appeal a Notice of Pro- posed Refund Adjustment, you must file a complaint with the Magistrate Division of the Oregon Tax Court no later than 120 days from the date of the notice. If you don’t file a complaint within 120 days, your appeal rights will expire and the adjustment can’t be changed. See “Appealing to the Oregon Tax Court” for more information. Appealing a deficiency based on federal audit reports or audit reports of other states Do you have an appeal in progress with the IRS or another state? If so, you may have extra time to file an appeal with the Magistrate Division of the Oregon Tax Court. To see if the appeal rights apply to you, answer the following questions: 1. Did you receive an Oregon notice of a deficiency on the same item billed by the IRS or another state?

2. Did you file a timely appeal with the IRS or another state?

If you answered “no” to either question, use the appeal procedures included with your Oregon notice. If you answered “yes” to both questions, you need to send us proof of your appeal to the IRS or other state. This should include a copy of the notice from the IRS or other state, plus a copy of your written appeal request. The time allowed for filing your proof of federal or other state’s appeal varies: • Did you receive a Notice of Deficiency from us? If so, send us proof of your IRS or other state appeal within 30 days of the date on the Notice of Deficiency. Your account will be assessed without penalty and held until the appeal with the IRS or other state is resolved. • Did you receive a Notice of Assessment from us before sending us proof of the appeal? If so, send us proof of your IRS or other state appeal as soon as possible. After you file proof of your appeal, we will delay any further action on your account until the appeal process is completed. Note: Interest will continue to accrue on any unpaid tax. You must notify us within 30 days of the final resolu- tion of your appeal with the IRS or the other state. We will review the information and determine whether any adjustments need to be made to your Oregon tax return. You will receive written notification of our determination. If you disagree with our determina- tion, you may appeal within 90 days to the Magis- trate Division of the Oregon Tax Court. Your com- plete appeal rights will be explained with the written determination. Appealing penalty or interest Do you believe there is reasonable cause for a reduc- tion of penalties or interest? If so, you may ask for a waiver or reduction of part or all of the penalty and interest charges. However, we generally won’t waive interest charges. Waiver criteria are outlined in Oregon Administrative Rule (OAR) 150-305-0068. You must explain how your situation meets any of the criteria. We will review your waiver request and let you know our decision in writing. You’ll receive further appeal instructions to follow if you disagree with the decision. How to start the appeal process All appeals must be submitted through Revenue Online or sent to us in writing. If you are sending us a written appeal, you may submit it by regular mail, fax, or email. Your written appeal must include: • Your full name. • Your current mailing address. • Your SSN or ITIN. • The tax year(s) involved. • A detailed explanation of why you are appealing. Audits and appeals

150-101-431 (Rev. 11-27-24) 44 • Proof of your IRS or other state appeal, if applicable. • The waiver criteria if you are requesting a reduc- tion of penalty or interest (OAR 150-305-0068). • Any new information you want us to consider; and • A daytime phone number. Be sure to indicate whether you are making a writ- ten objection, requesting a conference, or requesting a waiver or reduction of penalties or interest. Keep us informed of any changes to your address or phone. Regular mail. Send your written appeal to: Oregon Department of Revenue PO Box 14725 Salem OR 97309-5018 Email. If you are appealing a determination made by an auditor, you may send a written objection or request for a conference to that auditor by email. You should note, however, that we are unable to guarantee the security of any information sent to us by email. Fax. You may fax your written appeal to 503-945-8738. Revenue Online. You may submit your appeal using your Revenue Online account. After logging in, sim- ply click on the link for your personal income tax account, then select the “Appeals” link and follow the instructions. Be sure that the type of appeal you select is the one you intend to choose. Go to our web

- site for more information about setting up your Rev- enue Online account. Appealing to the Oregon Tax Court If you disagree with a Notice of Assessment or a writ- ten determination following your written objec- tion or conference, you have the right to appeal. You must appeal to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the Notice of Assessment or our written determination. Complaint forms for appealing to the Magistrate Division are available from the Tax Court’s website, www.courts.oregon.gov/courts/tax, or you may con- tact the Oregon Tax Court by mail or phone: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 Mail the signed complaint form along with the fil- ing fee and a copy of the Notice of Assessment or other written determination to the above address. Note: You can’t appeal tax that you said you owed when you filed your return. Further appeal rights Tax paid in full. If you pay the tax due in the Notice of Deficiency in full, your deficiency is considered to be assessed either on the date of your payment or 30 days from the date of the notice, whichever is later. If you don’t file a timely appeal, you have two years from the date your liability is paid in full to appeal the assessment. Appeal to the Magistrate Division of the Oregon Tax Court as outlined above. Doubtful liability. In certain situations, we may con- sider your case even if you didn’t file a timely appeal. Visit our website or contact us to see if you meet the conditions for “doubtful liability” relief. Interest charges Appealing a deficiency or an assessment won’t stop interest from accruing on the taxes owed. Interest is computed from the day after the due date of the original return, without extensions, to the date of payment. Interest is charged even if you have a valid extension. If your appeal results in a reduction of the tax due, the interest charges will also be reduced. Paying your taxes during the appeal You may pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the notice, but it does stop interest from accruing on your liability. If you don’t pay before the tax is assessed, a 5 percent failure-to-pay penalty will be added to your balance due. If your appeal is successful, you will receive a refund of any overpayment, including interest. See “Payments and refunds“ for payment options, and “Interest and penalties“ for more information about the failure-to-pay penalty. Audits and appeals

150-101-431 (Rev. 11-27-24) 45 Failure to file an Oregon income tax return For information about penalties for failing to file an Oregon income tax return, see “Penalties.” Filing a return after tax is assessed When you don’t file a tax return but were required to file, we will “assess” your tax. This means we com- pute how much tax you owe based on information we have available. You will then receive a Notice of Assessment. Even if we have assessed your tax for one or more years, you may still file returns for those years. Why you should file We compute your tax assessment using the infor- mation available to us about your income, filing sta- tus, exemptions, and withholding or estimated tax payments. Because we don’t have all your tax information, we may not be able to give you all the deductions or credits you may be entitled to. Once you file a tax return, we may be able to change the tax we assessed. You may receive a refund If your withholding and/or estimated tax payments add up to more than the tax due, we may be able to refund the excess to you. However, there are time limits. If you paid more tax than you should have, a refund will be allowed only if you file your return within three years of the due date of the original return, not including extensions. For example: • The return for 2021 was due on April 18, 2022. Three years after that date is April 18, 2025. To receive a refund of excess tax payments for 2021, your return must be postmarked by April 18, 2025. • The return for 2022 was due April 18, 2023. Three years after that date is April 18, 2026. To receive a refund of excess tax payments for 2022, your return must be postmarked by April 18, 2026. Where to mail your return after tax is assessed Send paper returns, with a copy of your federal return (including Schedules 1 through 3, if applicable) to: Oregon Department of Revenue PO Box 14600 Salem OR 97309-5049 Reviewing your return After reviewing your return, if we agree with the tax you show, we will change the tax assessed. If the income, deductions, credits, or payments shown on your return don’t match our information, we will notify you. The notice we send will explain our adjustments and what to do if you disagree. Your return must include information about filing status, exemptions, income, deductions, credits, tax, and payments. It must be signed and include a state- ment that, to the best of your knowledge and belief, it’s true, correct, and complete. The full statement is printed on the forms provided by us and appears directly above the signature lines. If you change this statement on the form, your return may not be accepted. Your return also may not be accepted if: • It contains a frivolous argument concerning the payment of taxes; or • You file a return you know isn’t true or correct. You will receive a Notice of Rejection if your return isn’t accepted. This notice can be appealed to the Magistrate Division of the Oregon Tax Court within 90 days of the date of the notice, but only if your return was sent to us within 90 days of the date on the Notice of Assessment. Appealing the Notice of Assessment to the Oregon Tax Court You may also choose to file an appeal with the Mag- istrate Division of the Oregon Tax Court. Your appeal must be made within 90 days of the date of the Notice of Assessment or within two years after the tax, pen- alty, and interest shown on the notice is paid in full. If you file an appeal with the Magistrate Division, you will usually be required to file a tax return before the court will change our assessment. You can get a complaint form for filing an appeal at: Oregon Tax Court Magistrate Division 1163 State Street Salem OR 97301-2563 503-986-5650 TTY 503-986-5651 www.courts.oregon.gov/courts/tax Within 90 days of the date on your notice, mail the following items to the address above: • Your completed and signed complaint form. • Your filing fee, and • A copy of the Notice of Assessment. Failure to file

150-101-431 (Rev. 11-27-24) 46 Appealing doesn’t stop interest from being charged on the tax you owe. If you appeal and your tax assess- ment is reduced, the penalty and interest charges will also be reduced. Paying your taxes during the appeal process You can pay your balance due at any step of the appeal process. Payment doesn’t mean you agree with the assessment, but it does stop interest from accruing on the assessed tax. If you pay, you can still appeal any time within two years of the date you pay the tax, penalty, and interest shown on the Notice of Assessment. See “Payments and refunds” for payment options. Requesting a waiver of penalty or interest You can ask for a discretionary waiver of part or all of the penalty and interest charges (OAR 150-305- 0066, 150-305-0068). We can resolve most penalty and interest charge disagreements. For more information about requesting a discretionary waiver, see “Appeal- ing penalty or interest” in “Audits and appeals.“ If you believe part or all of the penalty and interest charges should be adjusted, write to: Oregon Department Revenue PO Box 14725 Salem OR 97309-5018 Failure to file

150-101-431 (Rev. 11-27-24) 47 Income What income is taxable to Oregon? Full-year residents (Form OR-40). You are taxed on income from all sources. Part-year residents (Form OR-40-P). You are taxed on income from all sources earned or received while an Oregon resident. For the period of time you were not an Oregon resident, Oregon taxes only certain income from Oregon sources. Nonresidents (Form OR-40-N). You are taxed on income from Oregon sources. This includes income shown on your federal return from Oregon wages or Oregon fees or for services performed in Oregon. Other income from Oregon sources includes: • Businesses, S corporations, partnerships, and limited liability companies taxed as partnerships located or doing business in Oregon, and in some cases, work that is performed in another state for Oregon customers. • Unemployment insurance benefits received because of an Oregon job. • Severance pay you received because of an Oregon job. • Oregon farms. • Oregon estates and trusts. • Sales of Oregon property. • Rents and royalties for use of Oregon property. • Wages for services performed in Oregon by employ- ees who also telecommute from outside the state. Note: Community property income. Oregon isn’t a community property state. If you’re a resident of Ore- gon and your spouse is a resident of a state with com- munity property laws, you may be taxed on part of your spouse’s income. Community property laws in the state where your spouse lives determine if you are taxed on any of your spouse’s income. See “Filing sta- tus” for more information about community property. Air carrier employees (OAR 150-316-0173) Nonresidents. You are exempt from Oregon tax on wages earned while working on aircraft in Oregon, if you meet all of the following qualifications: • You are a nonresident of Oregon; and • You perform regularly assigned duties on aircraft in Oregon and at least one other state as an employee of an air carrier; and • Your scheduled flight time in Oregon is 50 percent or less of your total scheduled flight time during the calendar year. Additionally, the air carrier you work for must provide: • Interstate or foreign air transportation of passen- gers or property by aircraft as a common carrier for compensation; or • Interstate or foreign transportation of mail by aircraft. If you are a federal, state, or local government employee, you may not exclude your income under this section. (U.S. Postal Service employees are considered employ- ees of the federal government.) If you meet all of these qualifications, file Form OR- 40-N and mark the “Employment exception” box on the return. [For more information about the “Employ- ment exception” box, see “Interstate transportation wages (Amtrak Act).“] Show that your income is exempt by excluding it from the Oregon column. Example 1: Chantell is a nonresident who works as a pilot for an Oregon-based corporation, transporting the corporation’s executives to various job locations in the United States. Chantell isn’t exempt from Ore- gon tax because she doesn’t work for an air carrier that provides air transportation for compensation. Her wages are subject to Oregon tax to the extent ser- vices are performed in Oregon. Example 2: George is a nonresident who works as an office manager for an air carrier. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his pilot’s license. George doesn’t qualify as exempt from Oregon tax because his “regularly assigned duties” aren’t on an aircraft, but as a manager in an office. Example 3: Allison is a nonresident and works as a flight attendant for Delta Airlines. She regularly works on flights in California, Oregon, and Washington. Her scheduled flight time in Oregon amounts to 35 percent of her total scheduled flight time this year. Because Allison meets the qualifications mentioned above, she can exclude, from the Oregon column, all of her wages from Delta Airlines on her Oregon nonresident return. Oregon withholding. To stop withholding of Oregon income tax from your exempt wages, use Form OR-W- 4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Alimony received Oregon only taxes alimony payments received that must be included on your federal return. Full-year residents. Oregon taxes all alimony you received during the year that is included on your federal return. Income

150-101-431 (Rev. 11-27-24) 48 Part-year residents. Oregon taxes any alimony you received for the part of the year you were a resident of Oregon that is included on your federal return. Nonresidents. Oregon doesn’t tax any alimony you received while a nonresident of Oregon. Business income or loss Full-year residents. Oregon taxes all of your business income (or allows your business loss) received during the year. Part-year residents. Oregon taxes all of your business income (or allows your business loss) while you’re an Oregon resident. Oregon also taxes income (or allows losses) from an Oregon business while a nonresident. Nonresidents. Oregon taxes your income (or allows your business loss) from an Oregon business. This includes apportioned business income and allocated nonbusiness income from sole proprietorships. Federal Schedule E and F income Full-year residents. Oregon taxes the income reported on federal Schedules E and F, including rent, royalty, Real Estate Mortgage Investment Conduits (REMIC), Real Estate Investment Trust (REIT), partnership, S corporation, estate, trust, and farm income. Part-year residents. Oregon taxes the income reported on federal Schedules E and F that you received while you were an Oregon resident. Oregon also taxes this income if you received or earned it from Oregon sources while a nonresident. Nonresidents. Oregon taxes the income reported on federal Schedules E and F that you received or earned from Oregon sources. Federally excluded income (ORS 316.048) Oregon doesn’t tax amounts that are excluded from federal gross income unless the Oregon legislature has created a specific addition for that type of income. Some common items that do not need to be added to your Oregon taxable income if you are excluding them from your federal gross income are: • Difficulty of care payments (also called Medicaid waiver or Notice 2014-7 payments). • Disaster relief payments. • Discharged debt under IRC Section 108(a). See “Additions” for more information on items that do need to be added to your Oregon taxable income. Gain, loss, and distributions Capital gain, loss, and distributions Full-year residents. Oregon taxes your gain or distri- bution received (or allows losses you incurred) dur- ing the year. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Part-year residents. Oregon taxes your gain or distri- bution received (or allows losses you incurred) while you were an Oregon resident. Oregon also taxes gain or distributions received (or allows losses you incurred) from Oregon sources while a nonresident. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Nonresidents. Oregon taxes your gain or distribution (or allows your loss) from Oregon sources. Limit net losses to $3,000 ($1,500 if your filing status is married filing separately). Note: See “Capital loss carryover difference” under “Additions” for information about an addition to Ore- gon income for capital losses carried over from last year’s return under certain unusual circumstances. Other gain or loss Full-year residents. Oregon taxes your gain (or allows your loss) received during the year. Part-year residents. Oregon taxes your gain (or allows your loss) while an Oregon resident. Oregon also taxes the amount from Oregon sources while a nonresident. Nonresidents. Oregon taxes your gain (or allows your loss) from Oregon sources. Global intangible low-taxed income (GILTI) This category of foreign income is included as "other income" on the federal return. It must be reported as income when it's deemed received, even if it isn't actually received by the taxpayer during the tax year. Full-year residents. This income flows through to your Oregon return. Part-year residents. Report this income in the Oregon column if you were an Oregon resident on the date you received it (actual or deemed receipt) or if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon while a nonresident. Nonresidents. Report this income in the Oregon col- umn if it’s from property employed in a business, trade, profession, or occupation carried on in Oregon. Income

150-101-431 (Rev. 11-27-24) 49 Hydroelectric dam workers [ORS 316.127(8)] Full-year residents. Oregon taxes all of your wages earned while working on the McNary, John Day, The Dalles, or Bonneville dams. Part-year residents. Oregon taxes all the income you earned during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, the wages you earned while working on any of the listed dams are exempt from Oregon tax. Mark the “Employment exception” box on your return and include only the wages you earned while working on any of the listed dams while you were an Oregon resident. Nonresidents. You are exempt from Oregon tax on wages earned while working on any of the listed dams. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. If you have any other income from Oregon sources, you must show that income in the Oregon column. Oregon withholding. To stop withholding of Ore- gon income tax from your exempt wages, use Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Individual Retirement Account (IRA) distributions Full-year residents. Oregon taxes any taxable IRA distribution you received during the year and any amounts reported in federal income that you con- verted from a traditional IRA into a Roth IRA. Part-year residents. Oregon taxes any taxable IRA distribution you received while you were an Oregon resident. Oregon also taxes income amounts from IRA conversions if you were an Oregon resident at the time of the conversion. Nonresidents. Oregon doesn’t tax any amount unless you are a nonresident domiciled in Oregon. If you are domiciled in Oregon but otherwise taxed as a non- resident, your Oregon-source IRA will still be taxed by Oregon. See “Retirement income.“ Interest and dividend income Interest Generally, interest income is only taxed by your state of residence. It includes any interest received or cred- ited to your account that you could withdraw and any interest you received on tax refunds. See the following exceptions: • Interest and dividends on government bonds of other states. • Interest and dividends on U.S. bonds and notes. Full-year residents. Oregon taxes the interest income you received and reported on your federal return. Part-year residents. Oregon taxes the interest income you received while you were an Oregon resident. Oregon also taxes Oregon business activity interest income received while a nonresident. Nonresidents. Oregon taxes the interest income you received on funds used for business activity in Ore- gon. Oregon doesn’t tax interest received on install- ment sales. Dividends Generally, dividend income is only taxed by your state of residence. Include the stock dividends you received under a public utility dividend reinvestment plan in Oregon income. Full-year residents. Oregon taxes the dividends you received during the year. Part-year residents. Oregon taxes all dividends you received while an Oregon resident that are included on your federal return. Oregon also taxes any divi- dends passed through to you during the part of the year you were a nonresident from an S corporation or partnership that has no business activity outside Oregon. Nonresidents. Oregon taxes dividends passed through to you from an S corporation or partnership that has no business activity outside Oregon. These are divi- dends your S corporation or partnership received on the stock of another corporation. Interstate transportation wages (Amtrak Act) (OAR 150-316-0173) Nonresidents. Are you a nonresident of Oregon with regularly assigned duties in Oregon and at least one other state? If you meet certain qualifications (listed below), Oregon won’t tax you on these wages. Mark the “Employment exception” box on Form OR-40-N, and exclude these wages from your Oregon income. Income

150-101-431 (Rev. 11-27-24) 50 State income tax provisions in the federal Amtrak Reau- thorization and Improvement Act of 1990, Public Law 101-322, can be found in U.S.C. Sections 11502 and 14503. These provisions, which we refer to as the “Amtrak Act,“ prohibit states and local governments from taxing compensation of certain nonresident employees who have regularly assigned duties in more than one state. If you are a federal, state, or local government employee, you may not exclude your income under these federal laws. (U.S. Postal Service employees are considered employees of the federal government.) Who qualifies? To qualify, you must work for: • An interstate railroad; or • An interstate motor carrier; or • An interstate motor private carrier. In addition, you must: • Be a nonresident of Oregon; and • Have regularly assigned duties in more than one state (that is, you perform duties in each state on a regular basis; duties you perform on an “on-call” or “as-needed” basis or on a sporadic or intermittent basis during the year aren’t considered “regularly assigned”); and • Be subject to the jurisdiction of the U.S. Secretary of Transportation; and • Not be covered under the overtime requirements of the Fair Labor Standards Act. Note: You may receive overtime payment at the discre- tion of your employer and be subject to the jurisdiction of the U.S. Secretary of Transportation. Refer to your employer to determine if you are subject to the juris- diction of the U.S. Secretary of Transportation or to the Fair Labor Standards Act. You can’t be subject to both. For employees of interstate motor carriers or motor private carriers, you must meet both of the following requirements: • Perform work that directly affects the safety of a commercial motor vehicle. This means you are required by your regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be direct and hands-on, requiring you to physically move, touch, or affect the vehicle or its contents. Super- visory, managerial, consulting, or other duties that indirectly affect the safety of a motor vehicle don’t meet the definition of “directly affects”. • Work as:

— An operator of a commercial motor vehicle;

— A mechanic;

— A freight handler; or

— Someone, other than an employer, who directly affects the safety of a motor vehicle. A commercial motor vehicle is any self-propelled or towed vehicle used on highways in interstate com- merce to transport passengers or property if such vehicle: • Has a gross vehicle weight rating of more than 10,000 pounds; or • Is designed or used to transport passengers for compensation, except for vehicles providing taxi cab service when the vehicle has a capacity of eight or fewer passengers and isn’t operated on a regular route or between specified places; or • Is designed to transport more than 15 passengers, including the driver, and isn’t used to transport passengers for compensation; or • Is used and labeled for the transportation of haz- ardous materials. Example 1: Adam and Natalya are married non- residents who are filing a joint federal return. Adam works for an Oregon interstate motor carrier as a com- mercial motor vehicle driver. He has a regular route from Idaho to Oregon, delivering products in Oregon. Because Adam is the driver of a commercial motor vehicle and has regularly assigned duties in more than one state, this income is exempt from Oregon tax. Natalya is a chef at an Oregon restaurant. They must file a joint Form OR-40-N. Only Natalya’s wages are entered in the Oregon column; Adam’s wages are exempt and aren’t included in the Oregon column. Example 2: Brenda is a nonresident who works for an interstate motor carrier as a mechanic directly affect- ing the safety of commercial motor vehicles engaged in interstate commerce. She has regular duties in a Washington terminal and an Oregon terminal. She works one day a week in Washington and four days a week in Oregon. Because Brenda directly affects the safety of a com- mercial motor vehicle in interstate commerce and performs regularly assigned duties in two states, she is exempt from Oregon tax. It doesn’t matter that the majority of her work is performed in Oregon. Brenda must file a Form OR-40-N but she won’t include these wages in the Oregon column. Example 3: Jorge is a nonresident who works as a mechanic for an interstate motor carrier, directly affecting the safety of commercial motor vehicles engaged in interstate commerce. He regularly works in Medford but is required to be on-call some week- ends to perform minor repair work. Several times a year he may travel to California to repair a flat tire, do minor engine work, etc. Jorge doesn’t have regularly assigned duties in more than one state. Duties that are performed on an on- call or as-needed basis aren’t considered to be regu- larly assigned. Jorge’s wages earned in Oregon are Income

150-101-431 (Rev. 11-27-24) 51 taxable by Oregon. He must file Form OR-40-N and report his wages in the Oregon column. Example 4: Carl is a nonresident who works for an interstate motor carrier as a driver. Carl picks up a lumber delivery truck every morning in Washing- ton and receives delivery assignments for the day. Depending on where the lumber needs to be deliv- ered, he may not come to Oregon on a daily basis. Carl may pick up and deliver lumber only within Washington or only within Oregon. Carl drives to Oregon at least once a month. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself doesn’t know what each day’s delivery route will be until customers place orders. Although Carl may not have a regular route in Wash- ington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have regularly assigned duties in two states, as long as all routes are assigned randomly among all drivers on a regu- lar basis. Carl’s wages earned in Oregon are exempt from Oregon tax. Carl must file Form OR-40-N but he won’t include these wages in the Oregon column. Example 5: Ed is a nonresident who works for an Ore- gon wholesaler as a shipping clerk. The company has one terminal in Oregon and one terminal in Washing- ton. Ed regularly works in both terminals. Although he has regularly assigned duties in two states, Ed’s Oregon wages aren’t considered exempt within the scope of the Amtrak Act. He isn’t a driver, mechanic, or freight handler. His duties don’t directly affect the safety of a vehicle. Ed’s wages earned in Oregon are taxable by Oregon. He must file Form OR- 40-N and include this income in the Oregon column. Example 6: Frieda is a nonresident who works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occa- sionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda doesn’t have “regularly assigned duties in more than one state” and she doesn’t work for an interstate motor carrier. Her Oregon-source wages are taxable by Oregon. Frieda must file Form OR-40-N and include this income in the Oregon column. Example 7: Butch is a nonresident who works for an Oregon-based interstate trucking carrier as a super- visor. His regular duties within the state of Oregon include safety training. Also, Butch frequently drives to Washington to conduct safety training. Wages for performing supervisory duties don’t qualify as exempt under the Amtrak Act. The employee’s duties must directly affect the safety of a commercial vehicle. Conducting safety training only indirectly affects the safety of a commercial motor vehicle. Butch’s wages are taxable by Oregon. He must file Form OR-40-N and include his wages in the Oregon column. Example 8: Connie Sue is a nonresident who works for an interstate trucking carrier at her company’s Oregon and Washington yards. She has a variety of duties, including helping load trucks. Connie Sue is allowed overtime as a result of being subject to the Fair Labor Standards Act. Because she is covered under the Fair Labor Stan- dards Act and isn’t subject to the jurisdiction of the Secretary of Transportation, Connie Sue doesn’t qualify for the Amtrak Act exemption. Her wages are taxable by Oregon. She must file Form OR-40-N and include her wages in the Oregon column. Employer withholding If your wages are exempt from Oregon tax under the Amtrak Act, Oregon tax doesn’t have to be withheld from your pay. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer and attach an explanation of your quali- fying duties. Submit a new form and explanation by Feb- ruary 15 of each year that you’re claiming the exemption. You must still file an Oregon tax return even if you claim exemption from withholding under the Amtrak Act. Like-kind exchange or involuntary conversion (ORS 316.738, 317.327) You may elect to defer gain on like-kind business or investment property not held primarily for sale that is exchanged, in the case of real property under IRC Section 1031, or involuntarily converted under IRC Section 1033. If Oregon real property is exchanged for real property in another state, or if property located in Oregon is involuntarily converted into similar prop- erty located outside of Oregon, include Form OR-24 with your Oregon return in the year of the exchange or conversion, or submit it to us through Revenue Online. Submit the form to us each year, until you've disposed of the like-kind property, even if you don't have to file an Oregon income tax return. Download the form from our website or call us to order it. Full-year residents. Report your Oregon gain on the sale or other disposition of the acquired property when it’s reported on your federal return. Part-year residents and nonresidents. If you were an Oregon resident at the time of the exchange or invol- untary conversion, file an Oregon return and report the Oregon portion of the gain when you report the gain on your federal return. If you were a nonresi- dent at the time you exchanged or converted your Income

150-101-431 (Rev. 11-27-24) 52 Oregon property or you're a nonresident when the gain is reported on your federal return, you will need to file an Oregon Form OR-40-N to report the gain. Market-based sourcing (ORS 314.665) Oregon has changed from sourcing business income from the place where the cost of performance is incurred to the place where the taxpayer’s market is located. This change affects nonresidents who do business in Oregon who are required to apportion their business income among two or more states. Example: Andrew, a tax professional and Washington state resident, advertises his services in Oregon, Idaho, and Washington and has clients in all three states. He provides services for his clients out of his Washing- ton office. He earned $400,000 from his Oregon clients, $350,000 from his Idaho clients, and $250,000 from his Washington clients. Although his work is performed in Washington state, Andrew would report 40 percent of his sales ($400,000) as Oregon income because 40 percent of his market is in Oregon. Retirement income Full-year and part-year residents. Most retirement income is subject to Oregon tax when received by an Oregon resident. This is true even if you were a non- resident when you earned the income. However, if you have federal pension income, you may subtract some or all of it from Oregon income. See “Federal pension income” in “Subtractions” for more information. For other exceptions, see “Previously taxed employee retirement plans” and “Previously taxed IRA conver- sions” in “Subtractions.” Nonresidents. Oregon doesn’t tax your retirement income if you are a nonresident who isn’t domiciled in Oregon. If you are an Oregon nonresident who is still domiciled in Oregon, any Oregon-source retirement income is taxable by Oregon. This applies to most forms of retirement income taxed by Oregon, including public pension plans, corporate retirement plans, Keogh plans, simplified employee pensions (SEPs), and IRAs. For the definition of domicile, see “Residency.” Example: Hiro has always resided and worked in Ore- gon, which he thinks of as his home. He recently retired and now receives his pension and interest income from Oregon. Earlier this year, he sold his Oregon residence, bought an RV, and went to Arizona, where he rents space year-round in an RV park. He intends to stay in Arizona for a year or two and then return to Oregon. Hiro hasn’t given up his Oregon driver’s license. His RV and vehicles are registered with the state of Oregon. He hasn’t changed his voter registration to any other state. Hiro hasn’t shown an intent to give up Oregon as his home, and he hasn’t maintained a permanent home elsewhere. Based on these facts, Hiro's domicile is in the state of Oregon. Although Hiro may be treated as a nonresident for tax purposes on other forms of income (his interest income isn’t taxed by Oregon), because his domicile is still Oregon, his Oregon- source retirement income is taxable by Oregon. Retirement income means income from: • Qualifying employer pension and profit-sharing plans exempt from federal tax [IRC Section 401(a)]. • Annuity plans [IRC Sections 403(a) and 403(b)]. • Cash or deferred compensation arrangements [IRC Sections 401(k) and 457 plans]. • Simplified employee pension plans [IRC Section 408(k)]. • Individual retirement arrangements [IRC Sections 408(a) and 408(b)]. • Plans for federal, state, or local government employ- ees [IRC Section 414(d)]. • Pay for uniformed service members under chapter 71 of Title 10 of the United States Code. • Trusts that were created before June 25, 1959 [IRC Section 501(c)(18)]. Payments received after termination of employ- ment qualify if the payment is made under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described above. Payments received from nonqualified deferred com- pensation plans [as described in IRC Section 3121(v) (2)(C)] qualify as retirement income if the payments are part of a series of substantially equal periodic payments made for a period of at least ten years or for the life or life expectancy of the recipient. Retirement income doesn’t include income received from: • Stock options. • Restructured stock plans. • Severance plans. Social Security and Railroad Retirement Board benefits (ORS 316.054) Oregon doesn’t tax any amount of your Social Security, Railroad Retirement Board, or railroad unemployment benefits. For information on the Railroad Retirement Board and Social Security benefits subtractions, see the related sections under “Subtractions.” Income

150-101-431 (Rev. 11-27-24) 53 State and local income tax refunds If you received a refund of income tax from another state or local government that is included in your fed- eral income, and you deducted those taxes on a prior year’s Oregon return, include the refund in your Oregon income. This refund isn’t taxable to Oregon if you didn’t deduct the taxes on an Oregon return. See “Subtractions” for information on the Oregon income tax refund subtraction. Unemployment insurance (UI) benefits and other taxable income Full-year residents. Oregon taxes UI benefits and any other taxable income you received during the year. Part-year residents. Oregon taxes UI benefits and any other taxable income you received while an Ore- gon resident. Oregon also taxes any UI benefits and other taxable income from Oregon sources or based on Oregon sources received while a nonresident. Nonresidents. Oregon taxes any UI benefits and any other taxable income included in federal AGI received from Oregon sources or based on Oregon sources. Wages, salaries, and other pay for work Full-year residents. Oregon taxes all of your earnings for services you performed inside and outside Oregon. Part-year residents. *Oregon taxes all of your earn- ings while an Oregon resident. Oregon also taxes the amount you earned working in Oregon while you were a nonresident. If your Oregon wages aren’t stated separately on your W-2, compute your Oregon-source income using the formula at the end of this section. Nonresidents. *Oregon taxes the income you earned while working in Oregon. Oregon doesn’t tax any amount you earned while you were working outside Oregon. Nonresident telecommuters who work for an Oregon employer are taxed only on the income earned from work performed in Oregon, including sick pay or other benefits. *Nonresident exceptions: To see if you qualify to exclude certain income, see “Air carrier employees,“ “Interstate transportation wages (Amtrak Act),“ or “Hydroelectric dam workers“ above, or “Waterway workers“ below. If the amount you earned working in Oregon differs from the Oregon wages shown on your Form W-2, compute your Oregon-source income using the for- mula at the end of this section. You should ask your employer to provide you with a signed explanation of the wage difference, written on company letterhead. Keep the explanation with your tax records, as we may ask for it at a later date. Important information for using this formula: When you count the number of days you actually worked in Oregon and the number of days you actually worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. Use this formula to determine total wages taxable by Oregon: Days actually worked in Oregon × Total wages = Oregon wages Total days actually worked everywhere If you only worked in Oregon, don’t use the formula above. All your earnings are taxable by Oregon, and you must report them on your Oregon return. Waterway workers (ORS 316.127) Full-year residents. Oregon taxes all the income you earned while working on a watercraft in interstate waters. Part-year residents. Oregon taxes all the income you earned while working on a watercraft in inter- state waters during the part of the year you were an Oregon resident. For the part of the year you were a nonresident, see the following guidelines. Nonresidents. Certain nonresident employees serv- ing on watercraft who have regularly assigned duties in interstate navigable waters aren’t subject to Oregon income tax. To qualify you must: • Be engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. Section 7101 or licensed or authorized under the laws of the state; or • Perform regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating in navigable waters in two or more states. If you qualify, Oregon won’t tax these wages. File Form OR- 40-N (or Form OR-40-P if a part-year resident) and exclude your wages from your Oregon income. Mark the “Employ- ment exception” box on your return. See “Interstate trans- portation wages (Amtrak Act)” for more information. To stop withholding of Oregon income tax from your exempt wages, complete Form OR-W-4. Follow the instructions to declare that your wages are exempt using the appropriate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income

150-101-431 (Rev. 11-27-24) 54 Adjustments Adjustments are deductions from your gross income. They result in “adjusted gross income,” or AGI, on your federal return. For full-year residents, these items flow through to your Oregon return. Part-year residents and nonresidents report most of these items directly on Form OR-40-P or OR-40-N. Enter the fed- eral amount in the federal column and the Oregon amount, if any, in the Oregon column. If the item has an adjustment code, enter the federal and Oregon amounts in section A of Schedule OR-ASC-NP, then enter the totals from section A on your return. Your Oregon adjustment can’t be more than the adjust- ment on your federal return. Alimony paid Oregon allows a deduction for alimony paid under a divorce decree or separation agreement if the deduc- tion is allowed on your federal return. The alimony you paid must be taxable income to your former spouse. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the alimony you paid while an Oregon resident with a partial deduction for alimony paid while a nonresi- dent if you had Oregon-source income and the deduc- tion was allowed on your federal return. Use the for- mula under Nonresidents to determine the nonresi- dent portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for alimony you paid while a nonresident if you had Ore- gon-source income and the deduction was allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Alimony you paid while a nonresident = Nonresident deduction Total income received while a nonresident Certain business expenses of reservists, performing artists, and fee-basis government officials [Adjustment code 002] Reservists If you were a National Guard or reserve member of the U.S. Armed Forces who traveled more than 100 miles from your home to perform services, you may be able to deduct certain business expenses you paid or incurred in connection with that service. For more information, see the instructions for federal Form 2106, Employee Business Expenses. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Oregon doesn’t tax the reservist income of nonresidents, so you can’t deduct expenses you incurred while you were a nonresident. You may deduct only the expenses you incurred while you were an Oregon resident. Your Oregon deduction while you were a nonresident is $0. Performing artists If you were a qualified performing artist, you may be able to deduct business expenses you paid or incurred in connection with your services in the per- forming arts as an employee. For qualifications and other information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com- bines the expenses you paid while you were an Oregon resident, along with a partial deduction for the expenses you paid while you were a nonresident if you had Oregon-source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Nonresidents. Oregon allows a partial deduction for these business expenses while you were a non- resident if you had income from an Oregon source. Your Oregon deduction can’t be more than your fed- eral deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Performing artist employee business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Fee-basis government officials If you are a government official who is paid on a fee basis instead of wages or salary, you may be able to deduct certain business expenses you paid or incurred Adjustments

150-101-431 (Rev. 11-27-24) 55 in connection with services you performed. For more information, see the instructions for federal Form 2106. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the expenses you paid while you were an Oregon res- ident with a partial deduction for the expenses you paid while you were a nonresident if you had Ore- gon-source income. Use the formula under Nonresi- dents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the expenses you paid while you were a nonresi- dent if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Official business expenses paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Educator expenses If you were an eligible educator in 2024, you can deduct up to $300 of qualified expenses you paid in 2024. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $600. For information about eligibility and qualified expenses, see the instructions for your federal return or IRS Publication 529, Miscellaneous Deductions. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com- bines the qualified educator expenses you paid while you were an Oregon resident with the expenses you paid while working in an Oregon elementary or sec- ondary school while you were a nonresident. Add the two amounts together for your total Oregon deduc- tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a deduction for the expenses you paid while working in an Oregon ele- mentary or secondary school. Your Oregon deduc- tion can’t be more than the deduction allowed on your federal return. If you didn’t work in an Oregon elementary or secondary school, your Oregon deduc- tion is $0. Health savings account (HSA) deduction [Adjustment code 003] You may be able to take this federal deduction if you made contributions to an HSA during 2024. For more information about this deduction, see the instruc- tions for federal Form 8889 or IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction com- bines the HSA contributions you made while you were an Oregon resident with a partial deduction for contributions you made while you were a non- resident if you had Oregon-source income. Use the formula under Nonresidents to determine the non- resident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduc- tion. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for HSA contributions you made while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × HSA contribution made while a nonresident = Nonresident deduction Total income from all sources while a nonresident IRA or self-employed SEP and SIMPLE contributions These federal deductions are for contributions made to an IRA, SEP (simplified employee pension), SIM- PLE (savings incentive match plan for employees), or other qualified retirement plan for yourself or, if you’re a sole proprietor or partner in a small busi- ness, your employees. Oregon follows the federal definition of earned income and compensation used to calculate your IRA and other retirement plan deductions. For more Adjustments

150-101-431 (Rev. 11-27-24) 56 information about these deductions, see these IRS publications: • Publication 590-A, Contributions to Individual Retire- ment Arrangements (IRAs). • Publication 560, Retirement Plans for Small Business. • Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Note: If any part of your contribution deduction came from the rollover of an individual develop- ment account (IDA), you must add back the amount already subtracted as an IDA contribution. See “Indi- vidual development account” under “Additions” for more information. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. You may be limited in the amount of IRA or other retirement plan contributions you can deduct for Oregon. Use these formulas to figure your deduction: IRA formula. For the part of the year you were a non- resident, use this formula to determine your Oregon deduction: Oregon compensation while a nonresident × IRA contributions made while a nonresident = Nonresident deduction Total compensation while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Self-employed SEPs, SIMPLEs, and other qualified plans. Use this formula to determine your Oregon deduction for the part of the year you were a nonresident: Oregon earned income while a nonresident × Contributions made while a nonresident = Nonresident deduction Total earned income while a nonresident Add the amount you paid while an Oregon resident to your nonresident deduction. The deduction in the Oregon column is limited by: • The federal limitations, and • Income taxed by Oregon. Moving expenses (ORS 316.048) This deduction is only allowed for active-duty mem- bers of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or their spouses, who are ordered to relocate to or within Oregon due to a permanent change in duty station (known as a PCS move), if the deduction is allowed on the federal return. See “Military personnel filing information” for more information. Penalty on early withdrawal of savings [Adjustment code 004] This federal deduction is for taxpayers who paid a penalty to a financial institution for early withdrawal of funds from a time savings account, certificate of deposit, or similar type of deposit. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction is the portion of the penalty amount you claimed on your federal return that is related to interest income that is taxed by Oregon. If the penalty isn’t related to interest income taxed by Oregon, your Oregon deduction is $0. Example: Liam claimed a deduction of $1,800 on his federal return for an early withdrawal penalty. Only 30 percent of the interest income related to this penalty is taxable by Oregon. Liam’s Oregon deduction is also limited to 30 percent of the penalty, so his deduction will be $540 ($1,800 x 0.30). Nonresidents. Because Oregon generally doesn’t tax interest income of a nonresident, your Oregon deduc- tion is $0. Enter the full amount on the federal line on Schedule OR-ASC-NP and $0 on the Oregon line. Self-employed health insurance If you’re self-employed, you may be able to claim this federal deduction for the amount you paid for health insurance for yourself, your spouse, and your dependents. This deduction is limited to earned income from your trade or business for which the insurance plan was established. For more information about this deduc- tion, see IRS Publication 535, Business Expenses. Adjustments

150-101-431 (Rev. 11-27-24) 57 Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is 100 percent of your health insurance premiums related to your self-employment for the part of the year you were an Oregon resident com- bined with the health insurance premiums paid by an Oregon business from which you received self- employment income while a nonresident. Your total Oregon deduction is limited to the earnings from self-employment reported in the Oregon column. Self-employment tax If you were self-employed, you may deduct up to one-half of your self-employment tax on your federal return. For more information about this deduction, see the instructions for federal Schedule SE, Self- Employment Tax. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents and nonresidents. Your Oregon deduction is the proportional amount of self-employ- ment tax that is related to earnings taxed by Oregon. Your Oregon deduction can’t be more than your fed- eral deduction. Use this formula to determine your Oregon deduction: Self-employment earnings taxed by Oregon × Federal deduction for self-employment tax = Oregon deduction Total self-employment earnings Student loan interest You may be able to take this federal deduction if you paid interest in 2024 on a qualified student loan, your filing status isn’t married filing separately, your AGI is less than the federal threshold, and you (or your spouse, if filing jointly) aren’t claimed as a dependent on someone else’s return. For more information, see the instructions for your federal return or IRS Publi- cation 970, Tax Benefits for Education. Full-year residents. The federal deduction flows through to your Oregon return via your federal AGI. Don’t claim an additional deduction on your Oregon return. Part-year residents. Your Oregon deduction combines the student loan interest you paid while you were an Oregon resident with a partial deduction for interest you paid while you were a nonresident if you had Oregon- source income. Use the formula under Nonresidents to determine the nonresident portion of your Oregon deduction. Add the two amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Nonresidents. Oregon allows a partial deduction for the student loan interest you paid while you were a nonresident if you had Oregon-source income. Your Oregon deduction can’t be more than the deduction allowed on your federal return. Your Oregon deduc- tion can’t be more than your federal deduction. Use this formula to determine your Oregon deduction: Oregon-source income while a nonresident × Student loan interest paid while a nonresident = Nonresident deduction Total income from all sources while a nonresident Other adjustments on federal Form 1040, Schedule 1, lines 23 and 25 [Adjustment code 005] These deductions from federal income are included on Form 1040, Schedule 1, lines 23 through 25: • Archer MSA deduction. • Jury duty pay you gave your employer because your employer paid your salary while you served on the jury. • Deductible expenses related to income from the rental of personal property for profit. • Nontaxable amount of Olympic, Paralympic, and U.S. Olympic Committee income. • Reforestation amortization and expenses. • Contributions to Section 501(c)(18)(D) pension plans. • Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041). • Other write-in adjustments listed on Schedule 1, line 24z. Add together the amounts from Schedule 1, lines 23 and 25. Full-year residents. These adjustments flow through to your Oregon return via your federal AGI. Don’t claim any additional deductions on your Oregon return. Part-year residents. Your Oregon deduction com- bines the amount of any adjustment(s) you incurred while you were an Oregon resident with any adjust- ment that is deductible from Oregon-source income while you were a nonresident. Combine these amounts together for your total Oregon deduction. Your Oregon deduction can’t be more than the deduc- tions allowed on your federal return. Nonresidents. Oregon allows a deduction for adjust- ments that are deductible from Oregon-source income. Your Oregon deduction can’t be more than the deduc- tions allowed on your federal return. If none of your adjustments are deductible from Oregon-source income, your Oregon deduction is $0. Adjustments

150-101-431 (Rev. 11-27-24) 58 Additions Generally, additions are items the federal govern- ment doesn’t tax but Oregon does. Additions increase your income taxed by Oregon. Numeric codes are provided with the explanation for most additions. A modification code is provided if an addition must be reported as a “negative modifica- tion” by a part-year resident or nonresident. Enter the numeric code and the dollar amount of each addition or modification on Schedule OR-ASC or OR-ASC- NP. Your total additions and modifications are then reported on your return. If a numeric code isn’t provided for an addition or modification, the amount is reported directly on your return. Itemized deduction add backs. The items listed below are related to itemized deductions. If you’re claiming any of these as itemized deductions on Schedule OR-A, you may have to report an addition on Schedule OR-ASC or a negative modification on Schedule OR-ASC-NP. • Claim of right income repayments. • Donations to disqualified charitable organizations. • Federal estate tax on income in respect of a decedent. • Gambling losses related to tax-exempt lottery winnings. • Oregon IDA Initiative Fund donations. • Oregon Production Investment Fund contributions. • University Venture Development Fund contributions. • Medical expenses claimed for the WFHDC credit. Fiduciary additions. If the instructions for reporting an addition on a fiduciary return are different from the instructions for reporting an addition on a personal income tax return, they are noted within each section. ABLE account subtraction nonqualified withdrawal [ORS 316.680(2)(L)] [Addition code 164] Did you withdraw funds from an Oregon ABLE account for a purpose other than paying for quali- fied disability expenses? If the withdrawn funds were from contributions previously subtracted on your Ore- gon return, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. Qualified disability expenses are defined in IRC Sec- tion 529A. For more information about Oregon ABLE accounts and examples of qualified withdrawals, see “ABLE account contributions” in “Refundable credits.“ Accumulation distribution from certain domestic trusts (ORS 316.737) [Addition code 132] If you used federal Form 4970 to figure the partial tax on a distribution of accumulated income from a domestic trust created before March 1, 1984, contact us or email the Fiduciary Unit at estate.help.dor@dor. oregon.gov for information about this addition. Capital loss carryover difference [Addition code 162] This addition affects few taxpayers. You'll have an addition on your Oregon return only if you're carry- ing over a capital loss from last year’s return and last year’s federal AGI was within the limits in Table 8. If so, use the Capital loss carryover difference work- sheet in the Appendix to calculate your addition. Table 8. Capital loss carryover difference If line 11 on your 2023 Form 1040 was less than line 12, and— you filed: and: was more than: Form OR-40 Line 7 Line 14 plus line 18 minus the larger of line 8 or Form 1040, line 7*. Form OR-40-P Line 29S Line 33S plus (line 42 times line 35) minus the larger of lines 13S* or 30S. Form OR-40-N Line 29S Line 33S plus line 44 minus the larger of lines 13S* or 30S. you may have an addition on your 2024 Oregon return. * As a positive amount. Claim of right income repayments [ORS 316.680(2)(i)] [Addition code 103] [Modification code 649] Are you taking a deduction on your federal return under IRC Section 1341(a) for a repayment of more than $3,000 of income that was included in a prior year’s taxable income under a claim of right? If so, and you’re claiming the Oregon credit for the same repayment, you can’t deduct the repayment on your Oregon return. Additions

150-101-431 (Rev. 11-27-24) 59 If you claimed the repayment deduction on Sched- ule OR-A, you must add back the itemized deduc- tion amount. Use addition code 103 or report a nega- tive modification using code 649. If you claimed the repayment deduction on a federal form or schedule other than Schedule A, you must add back the deduc- tion as an addition on Schedule OR-ASC, section A or Schedule OR-ASC-NP, section B. See Publication OR-CRC, Claim of Right Income Repay- ments, for more information. You can download the publication from our website or contact us to order it. Note: If you’re claiming a deduction on your federal return for repaid income that wasn’t taxed by Ore- gon, see “Federal law disconnect” in “Other items.” Fiduciary addition. If the repayment is allowed as a deduction on Form 1041 and the Oregon credit is claimed on Form OR-41, report the deducted amount as an addition on Schedule OR-ASC-FID. Depletion in excess of property basis [ORS 316.680(2)(d)] [Addition code 151] Depletion is using up natural resources by mining, quarrying, drilling, or felling. The depletion deduc- tion allows an owner or operator to account for the reduction of a product’s reserves. If you claim percentage depletion on your federal return, you must add to your Oregon income any deple- tion that is more than your adjusted basis in the prop- erty. The addition includes any depletion in excess of basis taken by an S corporation or partnership of which you are a shareholder or partner. Usually you need to add to Oregon income any depletion that is a preference item subject to the federal alternative minimum tax. Disposition of inherited Oregon farmland or forestland (ORS 316.844) [Addition code 106] You may have an addition on your return if: • You dispose of farmland you inherited from some- one who died on or after October 5, 1973, and before January 1, 1987; or • You dispose of forestland you inherited from someone who died on or after November 1, 1981, and before January 1, 1987. You may have this addition because the valuation of the land for Oregon inheritance tax purposes may differ from the valuation for federal estate tax purposes. Generally, the federal valuation is the fair market value of the property at the date of the previ- ous owner’s death. The Oregon valuation is usually less than the federal valuation, because for inheri- tance tax purposes the property may have been val- ued as farm-use or forestland. Farm-use value. If the previous owner died on or after October 5, 1973, but before September 13, 1975, use the farm-use value for the year preceding death. If death occurred on or after September 13, 1975, use the farm- use value for the year of death. You won’t have this addition if the carryover basis was elected for a death after December 31, 1976, but before November 7, 1978. Forest-use value. Use the forest-use value for the year of death. How to figure the addition. This addition is equal to the difference between: • The taxable gain or loss, using the Oregon valua- tion as your basis, and • The taxable gain or loss, using the federal valuation as your basis. This addition will increase the gain or reduce the loss you reported on your federal return. Transfers of property. An addition is required when the beneficiary sells the inherited property. It’s also required when: • You recognize gain or loss on property that acquired the inherited property’s basis due to a nontaxable exchange or involuntary conversion. • You recognize gain or loss on property you received as a gift from a donor who inherited it. Example: Anne inherited farmland from a relative who died on March 1, 1986. She sold the land in 2024 for $1,100,000. The fair market value at the date of the relative’s death was $180,000. The farm-use value of the land on the 1986–87 property tax statement was $50,000. Anne must show a $130,000 addition on Schedule OR-ASC. Here is how she figures her addition: Oregon valuation: Selling price $ 1,100,000 Less: Farm-use value – 50,000 Gain

$ 1,050,000 Federal valuation: Selling price $ 1,100,000 Less: Fair market value

on March 1, 1986 – 180,000 Gain

– 920,000 Difference in total gain

Addition amount

$ 130,000 Additions

150-101-431 (Rev. 11-27-24) 60 Disqualified charitable donations (ORS 128.760, 128.763) [Addition code 160] [Modification code 650] The Oregon Department of Justice (DOJ) issues dis- qualification orders to charitable organizations that fail to spend at least 30 percent of their annual functional expenses for program services. Names of disquali- fied organizations can be found by contacting DOJ. For more information, visit the DOJ website, www. doj.state.or.us. The organization is required to notify you that your donation may not be deducted on your Oregon return. If you made such a donation, you must report an addition on Schedule OR-ASC for the amount of the donation that you deducted on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Federal business income deduction (ORS 316.859) [Schedule OR-ASC-FID only: Addition code 185] Oregon is disconnected from the federal deduction for qualified business income in IRC Section 199A. Personal income tax returns. This deduction doesn’t flow through to the Oregon return. No addition is required. Fiduciary returns. Report the amount from federal Form 1041, line 20, as an addition on Schedule OR- ASC-FID using code 185. See “Qualified business income reduced tax rate” in “Oregon tax” for information about Oregon’s reduced tax rate for sole proprietorships and pass-through entities. Federal election on interest and dividends of a minor child (ORS 316.372) [Addition code 107] Did you use federal Form 8814, Parents’ Election to Report Child’s Interest and Dividends, to report the interest or dividends of your minor child on your federal return? If so, you must add the amount subject to the special federal tax to Oregon income. You must also include any interest or dividends your child received on bonds or notes of another state or local government that you didn’t include as income on your federal return. Full-year residents. Oregon taxes the smaller of line 13 or 14 from Form 8814. Oregon also taxes any inter- est or dividends your child received from state and local governments outside Oregon. Part-year residents. Oregon taxes the interest and dividends your child received while you were an Oregon resident. Nonresidents. Oregon generally doesn’t tax interest or dividends received while you were a nonresident. Federal estate tax [ORS 316.680(2)(c)] [Addition code 157] [Modification code 605] Federal estate tax on income in respect of a decedent (IRD) is allowed as a deduction on your federal return. If any of this tax is on income not taxed by Oregon, you must show an addition on your Oregon return. Use this formula to figure the Oregon addition: IRD not taxable by Oregon × Federal estate tax deducted on the federal return = Oregon addition IRD included in federal taxable income Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Fiduciary returns. Federal estate tax on IRD is allowed as a deduction on federal Form 1041 when the tax on that income will be paid by the recipient. An addition is required if the deducted tax is on income not taxed by Oregon. See the instructions for Form OR-41, Schedule 2, line 16. Federal income tax refunds (ORS 316.685) [Addition code 109] [Modification code 601] Did you get a federal tax refund because of a federal audit or amended return? If so, you may need to add part or all of that refund to your Oregon income. An explanation of the federal income tax liability sub- traction can be found in “Subtractions.” Tax benefit doctrine. You need to add back only refunds of federal tax for which you received a ben- efit in a prior year. Example 1: Rosa subtracted her entire federal tax liability of $2,800 on her 2022 Oregon return. In 2024, she amended her 2022 federal return. Rosa reduced her federal tax to $2,300 and received a federal refund of $500. She received a $500 tax benefit because she subtracted $500 more on her 2022 Oregon return than her corrected federal tax liability. Rosa will have an addition of $500 on her 2024 return. When to report the refund. As a general rule, report the refund in the year you get it. The rules for fig- uring the addition are explained here, but first, note these exceptions: Additions

150-101-431 (Rev. 11-27-24) 61 Exception 1 If there is an error on your federal return, we may correct your federal tax liability when your Oregon return is pro- cessed. This may decrease your federal tax subtraction. When the IRS later refunds the difference between your correct federal liability and the liability on your original return, don’t report the refund as an addition. Because the tax subtraction on your original Oregon return was corrected, you didn’t receive a tax benefit from the total federal tax subtracted on your original return. Example 2: The Jacksons showed a $3,700 federal tax lia- bility on their federal return. They claimed a federal tax subtraction for that same amount on their Oregon return. When their Oregon return was processed, we discov- ered a math error on their federal return. We figured the Jacksons’ correct federal tax as $2,400 and reduced their Oregon federal tax subtraction to that amount. The Jack- sons received the IRS refund of $1,300. They won’t report the refund as an addition on their current year Oregon return because they didn’t receive a tax benefit for it. Exception 2 If you file an amended return before the filing due date for that tax year, your amended return is treated as your original return for that year. In this case, the federal tax subtraction is corrected to reflect the fed- eral income tax liability on your amended return. Example 3: Heather filed this year's federal and Oregon returns in February. Her federal tax liability was $4,800, which she subtracted in full on her Oregon return. In March, she amended her federal return to claim addi- tional deductions. She refigured her federal tax as $3,000. She also amended her Oregon return to claim the same additional deductions and reduce her federal tax subtrac- tion by $1,800 (from $4,800 to $3,000). The $1,800 federal refund she receives won’t be reported as income on her Oregon return. Because Heather filed the amended Ore- gon return before the original due date, her amended return is treated as her original return this year. Figuring the addition You must report as an addition the amount of the fed- eral refund from which you received a tax benefit. The tax benefit is the amount of federal tax you deducted in a prior year and received as a refund in a later year, if the amount you received reduced your Oregon tax- able income in the prior year. Use the limit that applied to your federal tax liability subtraction for the prior year. The maximum allow- able subtraction amount for the past few years can be found on the last page of this publication. See “Fed- eral income tax liability” and Table 9 in “Subtrac- tions” for more information about annual limits. Use this worksheet to figure your tax benefit. 1. Original federal tax liability from

the prior year, up to annual limit. 1._________ 2. Corrected federal tax liability from

the prior year, up to annual limit. 2. ________

3. Line 1 minus line 2. This is the tax

benefit you received from your refund. 3. ________

Example 4: Jill’s 2022 federal tax liability was $9,000. Her subtraction was limited to $7,250, which she subtracted on her Oregon return. Jill amended her 2022 federal return and received a refund of $4,000 in 2024. The addi- tion on Jill’s 2024 return will be $2,250, figured as follows: 1. Federal tax subtracted on Jill’s 2022

Oregon return (limit $7,250). $ 7,250 2. Less: Corrected federal tax ($9,000 – $4,000) (limit $7,250). -5,000 3. Tax benefit received and Jill’s Oregon addition. $ 2,250 Example 5: Ella’s 2021 original federal tax liability was $8,200. She amended her 2021 federal return and part- year Oregon return in January 2024. She received a $1,000 federal refund in 2024. Ella doesn’t change the federal tax amount on her amended Oregon return. Her 2021 corrected federal tax is $7,200. Because Ella’s cor- rected federal tax is still more than the $7,050 maximum subtraction she claimed on her Oregon return, she didn’t receive a tax benefit from the federal refund. Ella doesn’t have an addition to report on her 2024 Oregon return. Nonresidents. A nonresident’s tax benefit from federal tax refunds is the difference between the tax actually subtracted on the prior year’s return and the tax that would have been subtracted had the federal return been correct. If the amounts on your federal return changed because you amended your federal return or because it was audited, your Oregon percentage may also change. Use the corrected percentage to figure the tax benefit. Example 6: Brokston was a nonresident with Oregon- source income in 2022. His original federal tax was $8,600. His Oregon percentage was 40 percent. In March 2024, he amended his 2022 federal and Oregon returns. Brokston doesn’t change the federal tax amount on his amended Oregon return. He received a $4,500 federal refund in 2024. His revised Oregon percentage for 2022 was 50 percent. He received a tax benefit of $850 from the refund. He figures his tax benefit as follows: 1. Original federal tax liability (limit $7,250) $ 7,250 × original Oregon percentage. × 0.40

$ 2,900 2. Less: Corrected federal tax ($8,600 - $4,500) (limit $7,250) $ 4,100 × revised Oregon percentage. × 0.50

– 2,050 3. Tax benefit received and

Brokston’s Oregon addition. $ 850

Additions

150-101-431 (Rev. 11-27-24) 62 Full-year residents. Enter the tax benefit as an addition on Schedule OR-ASC, section A, using addition code 109. Part-year residents and nonresidents. Use a minus sign to enter the tax benefit as a negative modifica- tion on Schedule OR-ASC-NP, section D, using modi- fication code 601. Federal subsidies for employer prescription drug plans (ORS 316.837) [Addition code 123] Employers who provide a prescription drug plan for their retired employees may receive a federal subsidy if they meet the requirements in 42 U.S.C. Section 1395w- 132. This subsidy is excluded from federal taxable income under IRC Section 139A. Oregon law doesn’t allow this exclusion. If you’re an employer with a qualified plan for your retired employees and you received this subsidy, you’ll have an addition on your Oregon return. Full-year residents. Enter the full amount of the sub- sidy on Schedule OR-ASC. Part-year residents and nonresidents. Enter the full amount of the subsidy on the federal line on Schedule OR-ASC-NP. On the Oregon line, enter any amount received while an Oregon resident and the amount attributable to Oregon-source income while a nonresident. First-time home buyer savings account nonqualified withdrawal (ORS 316.801, OAR 150-316-0607) [Addition code 166] Funds that are withdrawn from a first-time home buyer savings account (FTHBSA) but aren’t used to pay eligible costs must be added back to Oregon income if: • The withdrawn funds were previously subtracted on an Oregon return, and • The funds weren’t redeposited within 60 days into another FTHBSA held by the taxpayer. For more information about the FTHBSA subtraction, eligible costs, and other requirements, see this topic in “Subtractions.” Penalty. Nonqualified withdrawals that require an add back are also subject to a 5 percent penalty. See this topic in “Interest and penalties” and in the return instructions. Gambling losses claimed as an itemized deduction (ORS 461.560) [Addition code 134] [Modification code 604] If you claimed gambling losses as an itemized deduc- tion on Schedule OR-A, you may have an addition on your Oregon return. Your gambling losses are limited to the amount of your gambling winnings taxed by Oregon. Oregon doesn’t tax Oregon Lottery winnings of $600 or less from a single ticket or play. See “Oregon lottery winnings“ under “Subtractions” for more information. Example 1: Angela reported total gambling income of $580 on her federal return ($500 from the Oregon Lottery plus $80 from horse races). On Schedule OR-A, Angela deducted $300 of gambling losses. Angela will subtract $500 in Oregon Lottery winnings from her Oregon income. Her net gambling winnings, taxable by Oregon, are reduced to $80. Because Angela may not claim more in gambling losses than her gambling winnings taxable by Oregon, she can’t claim more than $80 in gambling losses on her Oregon return. She is required to reduce her deduction for gambling losses from $300 to $80. The difference of $220 is an Oregon addition. Gambling winnings reported in federal AGI $ 580

Less subtraction for Oregon Lottery winnings (500)

Net gambling winnings taxable by Oregon $ 80

Gambling losses claimed on Schedule OR-A $ 300

Net gambling winnings included in Oregon income -80

Reduction in gambling losses— Oregon addition $ 220

Example 2: Satish won $100 from playing video poker and $400 from Oregon lottery tickets. He included all $500 in gambling winnings on his federal return, and he’s deducting $300 in gambling losses on Schedule OR-A. Satish is subtracting the $400 in lottery win- nings on his Oregon return because they’re exempt from Oregon tax. Because only $100 of his gambling winnings are taxed by Oregon, Satish must add back $200 ($300 - $100) of the gambling losses he’s deduct- ing on Schedule OR-A. Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica- tion on Schedule OR-ASC-NP. Additions

150-101-431 (Rev. 11-27-24) 63 Income taxes paid to another state by a pass-through entity (ORS 316.082) [Addition code 148] If you’re an owner of a PTE with income that is taxed by more than one state, report an addition if: • The PTE paid tax to another state on your behalf on income that is also taxed by Oregon; • You’re claiming a credit for tax the PTE paid to the other state on your behalf; and • The PTE deducted the tax paid on your behalf on its own return. The amount of your addition is the lesser of the tax that was paid or deducted by the PTE on its return. Note: See the instructions for fiduciary returns at the end of this section if a credit is claimed on Form OR-41. Example 1: Chad owns 5 percent of West Group, LLP, a limited partnership doing business in Utah. The LLP paid or withheld $10,000 of Utah income tax on Chad’s behalf in 2024 and deducted that amount on the LLP’s 2024 federal return. Chad filed his own Utah nonresident return for 2024. His Utah tax liabil- ity was $9,000. He’ll receive a $1,000 refund in 2025. On his 2024 Oregon return, Chad calculates his 2024 credit based on his $9,000 Utah tax liability. The income from the LLP that flowed through to Chad’s return was reduced by the amount of tax that the LLP paid and deducted. For this reason, Chad must add the lesser of the tax paid ($10,000) or deducted ($9,000) to his income. Chad adds $9,000 to his income on Schedule OR-ASC. Example 2: Susan owns 50 percent of Painter, Inc., an Oregon S corporation. Painter, Inc. pays California income tax. It deducts the tax on its corporate return. It paid California $30,000 of 2024 tax for her in 2024, and $10,000 of 2024 tax in January 2025. The corporation paid $2,000 of tax for her with its 2024 tax return filed in 2025. Susan elects to be included in the group nonresident return that Painter, Inc. files with California. She calcu- lates her credit for 2024 using $42,000: $30,000 in pay- ments made in 2024, and the $12,000 in 2024 tax paid in 2025. She claims the full credit on her 2024 return. Because Painter, Inc. is deducting the tax on its own return, Susan must add the lesser of the total tax paid or deducted to her income. This is true whether Susan’s share of the tax was paid when the composite return was filed or was paid or withheld by Painter, Inc. during the tax year. For 2024, she adds $30,000 to her Oregon income on Schedule OR-ASC. She'll add the remaining $12,000 to her Oregon taxable income on her 2025 return. Credit claimed on fiduciary return. If a credit is claimed on Form OR-41 for income taxes paid to another state, and the taxes on which the credit is based are deducted on federal Form 1041, line 11, the taxes must be restored to income on the Oregon return. Report the smaller of the other state’s 2024 tax liability or the tax claimed as a deduction on Form 1041 as an addition on Schedule OR- ASC-FID, section 1. For more information and exam- ples, see the instructions for Schedule OR-ASC-FID. Individual development account (IDA) (ORS 315.271, 316.848) [Addition code 137, 138, or 159] [Modification code 648] For more information about IDAs, see this topic under "Subtractions." Donation credit. If you’re claiming an itemized deduc- tion for donations you made to the Oregon IDA Initia- tive Fund and you’re claiming a credit based on those donations, you must report the amount you’re deducting as an addition on Schedule OR-ASC using addition code 138 or as a negative modification on Schedule OR-ASC- NP using modification code 648. Nonqualified withdrawal. Did you make a nonquali- fied withdrawal from your IDA during the year? If so, you must report the amount as an addition on Sched- ule OR-ASC or OR-ASC-NP. Use addition code 137. Rollover to retirement account. Did you roll funds from your IDA account over to a retirement account? Were you allowed to deduct the amount of IDA funds contributed to the retirement account on your federal return? If so, the amount you deducted that was already subtracted as an IDA contribution on an Oregon return must be added back. Report the amount deducted on your federal return as an addition on Schedule OR-ASC or OR-ASC-NP. Use addition code 159. Interest and dividends on government bonds of other states [ORS 316.680 (2)(a)] [Addition code 158] Full-year residents. Oregon taxes interest and divi- dends on bonds and notes of another state or political subdivision of another state that you didn’t include on your federal return. This income is an addition using Schedule OR-ASC. Did you report the interest or dividends of your minor child on your federal return? And, did your child receive interest or dividends from another state or political subdivision? If so, include this income as an addition using Schedule OR-ASC. See “Federal election on interest and dividends of a minor child.” Part-year residents. Oregon taxes all interest and dividends you earned on all bonds or notes when you were an Oregon resident. Oregon also taxes the Additions

150-101-431 (Rev. 11-27-24) 64 interest and dividends on bonds or notes of another state (or political subdivision of another state) earned from an Oregon business, partnership, or S corporation during the part of the year you were a nonresident. Nonresidents. Oregon will only tax this income if it comes from an Oregon business, partnership, or S corporation.

Fiduciary returns. Report the addition on Form OR-41, Schedule 2, line 14. No addition code is needed. Related expenses You may reduce your addition by the amount of investment expenses that: • Aren’t deducted elsewhere on your return, and • Could be deducted if the income were included on your federal return. Other federally-exempt obligations You will have an Oregon addition for interest or dividends on obligations of any authority, commis- sion, instrumentality, or territorial possession of the United States. These are exempt from federal tax but not Oregon tax [ORS 316.680(2)(b)]. Oregon doesn’t tax interest or dividends on obliga- tions that states can’t tax under federal law. Examples of such obligations are bonds issued by: • Territory of Guam. • Commonwealth of Puerto Rico. • Territory of Puerto Rico. • Territory of Samoa. • Territory of Virgin Islands. Lump-sum distribution from a qualified retirement plan (ORS 316.737) [Addition code 139] Did you complete federal Form 4972 to figure the tax on your qualified lump-sum distribution using the 20 percent capital gain election and/or the 10-year tax option? If so, part or all of your lump-sum distribution wasn't included in your federal AGI. The excluded portion of your distribution must be included as an addition to your Oregon income. Election to use 20 percent capital gain on federal Form 4972. Did you average the ordinary portion of your lump-sum distribution on federal Form 4972? Did you choose the 20 percent capital gain election on Form 4972? If you chose either of these options, you will add to Oregon income the total amount of taxable income shown on your federal Form 1099-R. Example 1: Gary got a $20,000 lump-sum distribution from his employer. Of this, $12,000 was capital gain income, and $8,000 was ordinary income. Using federal Form 4972, he chose to use the 10-year averaging method only on the $8,000 of ordinary income. He chose the 20 percent capital gain election on the $12,000 capital gain income. Gary will add all of his $20,000 lump-sum dis- tribution to his Oregon income on Schedule OR-ASC. Election to treat the entire distribution as ordinary income and average it. Did you average all of your lump-sum distribution (ordinary income and capital gain portions) on federal Form 4972? If so, you will have an addition for the entire lump-sum distribu- tion to report on Schedule OR-ASC or OR-ASC-NP. Example 2: John received a $40,000 lump-sum distribu- tion from his employer; $30,000 was capital gain income and $10,000 was ordinary income. He chose to average the entire distribution of $40,000 as ordinary income on his federal Form 4972. John will add all of his $40,000 lump-sum distribution to his Oregon income. Election not to average any of your lump-sum distri- bution. Did you choose not to average any of your lump-sum distribution? If you included it in federal AGI, there is no addition on your Oregon return. Nonresident capital losses and loss carryovers (OAR 150-316-0006) [Addition code 161] Capital losses and losses carried over from prior years may be claimed on an Oregon return only if: • The capital loss was incurred while you were an Oregon resident; or • If you were a nonresident when the capital loss was incurred, the loss was attributable to Oregon sources. If you have a capital loss or are carrying over a loss from a prior year on this year’s return (or are using the loss to offset capital gain), and the loss doesn’t meet these requirements, you will have an addition on your Oregon return. Full-year residents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to offset capital gain on your return, report the loss amount as an addition on Schedule OR-ASC. Part-year residents and nonresidents. If the loss was incurred while you were a nonresident and it wasn’t attributable to Oregon sources, and you’re claiming the loss or using it to reduce Oregon capital gain on your return, report the loss amount to the extent that it reduces the Oregon gain as an addition on Sched- ule OR-ASC-NP. Example 1: Louise moved to Oregon and became a resident on June 1. Before she became a resident, Louise incurred a $50,000 capital loss from non-Oregon sources. After she became a resident, Louise recognized a capital Additions

150-101-431 (Rev. 11-27-24) 65 gain of $70,000. On her federal return, she’s offsetting the $70,000 gain with the $50,000 loss, for a net gain of $20,000. Because she wasn’t a resident when she incurred the loss, and the loss wasn’t from Oregon sources, Louise must report a $50,000 addition on Schedule OR-ASC-NP. Example 2: Eric is a Missouri resident who recognizes a $25,000 capital gain from Oregon sources. On his fed- eral return, Eric offsets the capital gain with $10,000 in capital losses from Missouri sources, for a net gain of $15,000. He reports the $15,000 capital gain in the Ore- gon column on his nonresident return. Eric must report the $10,000 loss as an addition on Schedule OR-ASC-NP. Oregon higher education savings plan subtraction nonqualified withdrawal [ORS 316.680(2)(j)] [Addition code 117] Did you withdraw funds from an Oregon higher edu- cation savings plan account for nonqualified purposes, where the funds were subtracted on a prior year’s Oregon return? Nonqualified purposes include using funds in the account to pay tuition at a K-12 school. If so, you must report an addition on Schedule OR-ASC or OR-ASC-NP for the amount you withdrew. IRC Sec- tion 529(e) defines qualified higher education expenses. If a portion of the withdrawal was used for qualified purposes, use any reasonable method to determine the amount of the addition. Keep a copy of this determina- tion with your tax records. For more information about these plans see this topic under “Refundable credits.” Oregon Production Investment Fund contributions (ORS 315.514) [Addition code 144] [Modification code 644] If you claimed an itemized deduction on Sched- ule OR-A or a business expense deduction for the amount you or your business paid for your Oregon Production Investment Fund tax credit, you will have an addition for the amount of your deduction. Example: Beth bid on $2,000 worth of Oregon Produc- tion Investment Fund credits during this year’s auc- tion. She won all the credits she bid on and paid $1,900 for them. On her Oregon return Beth will claim an Oregon Production Investment Fund credit of $2,000. If she claims the $1,900 she paid for the credits as an itemized deduction on Schedule OR-A, she must add back that amount to her income. She reports both the credit and the addition on Schedule OR-ASC. For more information on the Oregon Production Invest- ment Fund, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report your addition as a negative modifica- tion on Schedule OR-ASC-NP. Passive foreign investment company income (ORS 316.737) [Addition code 140] You must add income from a passive foreign investment company (PFIC) that consists of excess distributions that you received during the year but didn’t include in your gross income under IRC Section 1291. Your addition amount is the income from all PFICs that you used in the calculation of the increased tax entered on federal Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, line 16c. PTE-E tax deducted on entity-level federal return (Or Laws 2022, ch 82, § 3) [Addition code 167] Certain PTEs may elect to pay Oregon income tax at the entity level (PTE-E tax). If you’re a member of an entity that elected to pay the PTE-E tax, you must report an addition for your share of the tax deducted by the electing entity on an entity-level federal return. The electing entity must send you Schedule OR- 21-K-1, Distributive Share of Proceeds, Addition, and Credit, to report your share of the PTE-E tax deducted on the entity’s federal return. Your addition amount can be found on Schedule OR-21-K-1, line 2. Are you a member of more than one electing entity? If so, your addition amount is the sum of all your shares of PTE-E tax deducted on those entities’ federal returns. Report the addition on your return for the same year that you report your income from each electing entity. Treatment for qualified business income reduced tax rate. If you’re using the qualified business income reduced tax rate to figure your tax, you may include the addition amount in your qualified business income to the extent that the ordinary business income passed through from the electing entity qualifies for the reduced tax rate. See “Qualified business income reduced tax rate” in “Oregon tax” for more information. Refundable tax credit. You may claim a refundable tax credit for the taxes paid by an electing entity. See “Pass- through entity elective taxes paid” in “Refundable credits.” For more information about the PTE-E tax, see “Pass- through entity elective tax” in “Oregon tax.” Refund of Oregon-only itemized deductions from a prior year [Addition code 136] You may have an addition if you: • Claimed itemized deductions for Oregon but not for federal on a previous year’s return; Additions

150-101-431 (Rev. 11-27-24) 66 • Received a refund this year of an item you deducted on the previous year’s Schedule OR-A; and • Don’t have to include the refund as income on this year’s federal return because you didn’t itemize deductions on the previous year’s federal return. You must add back the refunded item only to the extent that you received a tax benefit from the amount refunded. For an explanation of tax benefit with examples, see “Tax benefit doctrine” under “Federal income tax refunds.” Part-year residents and nonresidents. Enter the addi- tion amount on both the federal and Oregon lines on Schedule OR-ASC-NP, Section C. Research and development for semiconductor companies (ORS 315.518) [Addition code 188] If you claimed the research and development for semi- conductor companies’ credit and you claimed a busi- ness expense deduction for the expenses or payments that qualified for the credit, you will have an addition for the amount of the credit. For partners in a partner- ship or shareholders of an S corporation that qualified for the credit, the addition amount should be listed on the partner’s or shareholder’s Schedule OR-K-1. Example: Alberto is a shareholder in an S corporation that works in the semiconductor industry and receives certification for the research and development for semi- conductor companies’ credit. The corporation deducts research expenses from gross income in the same man- ner as other business expenses. When Alberto receives his Schedule OR-K-1 from the corporation, it lists Alber- to’s addition and credit amounts. Alberto reports both the credit and the addition on Schedule OR-ASC. For more information on the research and develop- ment for semiconductor companies’ credit, see this topic under “Carryforward credits.” University Venture Development Fund contributions (ORS 315.640) [Addition code 146] [Modification code 646] If you claimed a deduction on Schedule OR-A for the amount of your University Venture Development Fund contribution, you will have an Oregon addition for the amount of your deduction. Example: Amelia made a contribution to a University Venture Development Fund in the amount of $100,000. She may claim a total credit of 60% of her contribu- tion, or $60,000, limited to her tax liability for the year. This year, Amelia’s tax liability is $23,000. On her Ore- gon return she will claim a credit of $23,000 for her contribution. The rest of her credit is carried forward to a later year. If Amelia claims the $100,000 contribu- tion as an itemized deduction on Schedule OR-A, she must add back the $100,000 to her income on Schedule OR-ASC in the tax year the itemized deduction was claimed. For more information on the University Venture Development Fund tax credit, see this topic under “Carryforward credits.” Part-year residents and nonresidents. Use a minus sign to report the addition as a negative modification on Schedule OR-ASC-NP. Unused business credits [ORS 316.680(2)(f)] [Addition code 122] Did you claim a deduction on your federal return for unused business credits (UBC)? Oregon doesn’t allow this deduction. Full-year residents. You must report your federal UBC deduction as an Oregon addition. Part-year residents. You will have an Oregon addition for your federal UBC deduction related to any UBC earned while you were an Oregon resident. You also must include any federal UBC deduction related to Oregon credits earned while you were a nonresident. Nonresidents. You will have an addition for your fed- eral UBC deduction related to Oregon credits earned from Oregon sources. WFHDC medical expenses [Addition code 163] [Modification code 651] Some expenses for the care of qualifying persons who aren’t able to care for themselves may qualify as expenses for purposes of claiming the WFHDC credit and also as medical expenses for purposes of claiming itemized deductions. You can use these expenses for either the WFHDC credit or as a medical expense deduc- tion, but they can’t be used for both. If you choose to use them for both, you’ll have an addition on your Oregon return. Use the WFHDC medical expense worksheet in the Appendix to figure the Oregon addition. Full-year residents. Report any required add back amount on Schedule OR-ASC. Part-year residents and nonresidents. Use a minus sign to report any required add back amount as a negative modification on Schedule OR-ASC-NP. For more information about the WFHDC credit, see this topic under “Refundable credits” or Schedule OR-WFHDC Instructions, Oregon Working Family Household and Dependent Care Credit. Additions

150-101-431 (Rev. 11-27-24) 67 Subtractions Generally, subtractions are items the federal govern- ment taxes but Oregon doesn’t. Subtractions reduce your income taxed by Oregon. Numeric codes are provided with the explanation for most subtractions. For part-year residents and nonresidents, some subtractions will be reported as modifications. This is required when an amount you are subtracting must be adjusted for Oregon tax pur- poses. When this is the case, a modification code is provided with the explanation for that subtraction. Enter the numeric code and the dollar amount of each subtraction or modification on Schedule OR-ASC or Schedule OR-ASC-NP. The total dollar amount of subtractions and modifications is then reported on your return. If a numeric code isn’t provided for a subtraction or modification, the amount is reported directly on your return. ABLE account deposit fiscal-year carryforward (ORS 316.699) [Subtraction code 360] This subtraction is only available for fiscal-year filers with a carryforward from the tax year that began in 2019. The maximum amount you can carry forward and subtract on your 2024 return is $5,885 if you file a joint return ($2,940 for all others). This maximum applies to the combined total of ABLE account and Oregon higher education savings plan account con- tributions carried forward. American Indian (ORS 316.777) [Subtraction code 300] Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true: • You are an enrolled member of a federally recog- nized American Indian tribe, and • Your income is derived from sources within feder- ally recognized Indian country in Oregon, and • You lived in federally recognized Indian country in Oregon at the time the income is earned. “Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the U.S. government for a tribe. For enrolled members of federally recognized Ameri- can Indian tribes who live in Indian country in Ore- gon, income exempt from Oregon income tax includes: • Wages earned for work performed in Indian coun- try in Oregon. • Income from business or real estate located in Indian country in Oregon. • Retirement income if the contributions to the plan came from or were connected with services per- formed in Indian country. • Unemployment insurance benefits if the benefits were received as a result of work performed in Indian country. • Interest, dividends, and capital gains from the sale of stocks and other intangibles, regardless of where the accounts are located. • Gambling winnings from Indian gaming centers (casinos). • Indian tribal disbursements from casino earnings. You must live on and have income derived from sources within Indian country in Oregon and be an enrolled member of a federally recognized tribe to subtract the income listed above. You don’t have to live in and have income from the same Indian coun- try. The areas where you live and derive income must both be Indian country to qualify for the subtraction. To claim the subtraction, you must report your total income on both your federal and Oregon tax returns. Keep a completed copy of Schedule OR-EIS, Exempt Income Schedule for Enrolled Members of a Federally Rec- ognized Indian Tribe, with your tax records. We may ask for it later. Go to our website to download the schedule or call us. You must include the following information on the schedule: • The street address of the place you worked, • The street address of the place you lived, and • The tribe you are enrolled with and your member- ship number. You must use the street address of your residence on the schedule so we can verify that you lived in Indian coun- try when you earned your income. However, you may use your post office box address on your tax return. If you meet all of the requirements for exemption from Oregon withholding, use Form OR-W-4 to declare that your income is exempt using the appro- priate code. Give Form OR-W-4 to your employer, and submit a new form by February 15 of each year that you’re claiming the exemption. Income earned in Oregon but outside of Indian coun- try will be taxed by Oregon. Also, any Oregon income Subtractions

150-101-431 (Rev. 11-27-24) 68 earned by a member not living in Indian country will be taxed by Oregon. Each member of a household with income must meet these qualifications in order to claim the subtraction of their income. If you are an enrolled member of a federally recog- nized tribe and a member of the U.S. Armed Forces stationed in Oregon, you may be entitled to an addi- tional subtraction. For more information, see “Mili- tary personnel filing information.” AmeriCorps educational award (ORS 316.847) [Subtraction code 362] Were you an AmeriCorps volunteer? If you received a national service, summer of service, or silver scholar educational award from the federal Corporation for National and Community Service this year, you may subtract the award amount to the extent that it is included in your federal taxable income. The amount you are awarded under 42 U.S.C. Section 12602 must be received after your required term of service is com- pleted. You can’t subtract any amount that you are deducting elsewhere on your return. Artist’s charitable contribution (ORS 316.838) [Subtraction code 301] [Modification code 600] Oregon allows a subtraction to artists who contribute art objects they’ve created to a recognized charitable organization or governmental unit. What qualifies as an “art object?” The art object must be a painting, sculpture, photo- graph, graphic or craft art, industrial design, costume

or fashion design, tape or sound recording, or film that qualifies for a charitable contribution deduction under IRC Section 170. The charitable organization isn’t required to use the art object for the same purpose or function that quali- fies it for its federal tax exemption. You may deduct your charitable contribution even if the charitable organization sells the art object. You must have an appraisal report showing the fair market value of the art object at the time of the con- tribution. Keep the appraisal report with your tax records; we may ask for it later. How to calculate the subtraction The subtraction is equal to the difference between: 1. The amount that would have been allowed as an itemized deduction if you could deduct the fair market value of the art (subject to the federal con- tribution limit)*, and 2. The actual allowable amount as an itemized deduc- tion under federal tax law. *Federal law limits charitable contributions. Contributions to some organizations are limited to 50 percent of your federal AGI. Contributions to others are limited to 30 per- cent of your AGI. Use these limits when you figure your deduction. Example: Ronda’s AGI is $10,000. She donated one of her paintings to an organization for display in a building. The painting has a basis (cost) of $300 and a FMV of $6,000. Here is how she computes her subtraction: 1. Amount allowed as a

charitable contribution

if computed using FMV. $ 6,000

2. Amount allowed as a

charitable contribution limited to 50% of AGI. $ 5,000

3. Lesser of line 1 or line 2. $ 5,000

4. Amount allowed as a charitable

contribution on Schedule OR-A (basis). ($300) 5. Ronda’s subtraction

(line 3 minus 4). $ 4,700

Part-year residents and nonresidents. Follow the same rules as a full-year resident. You don’t have to prorate this subtraction. Part-year residents: Enter your subtraction in section D of Schedule OR-ASC- NP using modification code 600. Nonresidents: Enter your subtraction amount on the “Charitable art donation“ line on Form OR-40-N. Capital Construction Fund (CCF) contributions (ORS 316.048) [Subtraction code 339] If you subtracted your contributions to your qualify- ing CCF account on your federal return, you may also subtract that amount on your Oregon return. See IRS Publication 595, Capital Construction Fund for Commer- cial Fishermen, for more information. The subtraction for Oregon is the same as the amount you identified as “CCF” and subtracted on your fed- eral return. Part-year residents and nonresidents. Enter the full subtraction amount on the federal line on Schedule OR-ASC-NP, section C. The amount allowed on the Oregon line is the Oregon percentage of your fishing trade or business that qualifies you for a CCF account. Subtractions

150-101-431 (Rev. 11-27-24) 69 Example: Greg moved out of Oregon in May and con- tinued his fishing business in California. His Oregon net fishing income is $10,000 and his California net fishing income is $30,000. He put $15,000 into his CCF account during the past year. On Schedule OR-ASC- NP, Greg will enter $40,000 for his fishing income on the federal line and $10,000 on the Oregon line. Greg’s CCF subtraction on the federal line is the full $15,000. Since 25 percent of his eligible income was Oregon source, he is allowed a CCF subtraction of $3,750 ($15,000 x 25%) on the Oregon line. Casualty loss from state-declared emergency (ORS 316.850) [Subtraction code 388] [Modification code 654] Did you experience a loss in Oregon that resulted from an event that was the subject of a state of emer- gency declared by the governor or that occurred in an area subject to an Emergency Conflagration Act order? If so, you may subtract on your Oregon return the amount of loss that you can’t deduct on your fed- eral return due to IRC Section 165(h)(5). IRC Section 165(h)(5) disallows personal casualty losses from being deducted during tax years 2018- 2025 unless the loss is due to a federally declared disaster. Oregon law, however, allows those losses if they meet specific criteria. In addition to being due to a state-declared emer- gency in Oregon, the loss must: • Occur during tax years beginning on or after Janu- ary 1, 2020, and before January 1, 2026; • Not be a loss due to theft; and • Not be taken into account as a deduction on your federal return. See the instructions for federal Schedule A and Form 4684 to determine the amount of your Oregon sub- traction, subject to the restrictions above. Construction worker and logger commuting expenses (ORS 316.812, 316.824, 316.832) [Subtraction code 303] If you are a qualified construction worker or logger, you may deduct certain commuting expenses from your Oregon taxable income. To claim these expenses, you must have worked at one or more construction projects or logging operation sites more than 50 miles from your home. A construction project is construction, alteration, repair, improvement, moving, or demolition of a structure. A logging operation is the commercial harvesting of forest products. People in other occupa- tions aren’t eligible for this subtraction. Management personnel aren’t eligible for this subtraction either. Qualifying workers. Loggers must be fallers or buck- ers who maintain their own equipment and are paid on a per-unit-cut basis. Construction workers must be members of a recognized trade, craft, or union. Qualifying expenses. You may claim the actual cost of gas, oil, repairs, and maintenance for your vehicle for getting to and from work sites that are more than 50 miles from your home or you may use the standard mileage rate to figure your expenses, but not both. If you use your vehicle both for business and personal purposes, you must determine your portion of busi- ness use. Keep a mileage log book during the year to track your business use and record all business trip miles. You should also record your starting and ending odometer reading for your vehicle each year. You may claim only the business portion of your repairs and maintenance as commuting expenses. You can’t claim depreciation. To claim the actual business expenses for your qualified commute miles, you will need to keep your vehicle records during the year. Keep receipts for all your fuel (such as gas, diesel), oil change, repair, and maintenance costs in your permanent tax records. Example: Ewan is a construction worker. He uses his truck for both personal and business purposes. He worked on three construction jobs during the year. Two of the jobs were located more than 50 miles away from his home. Ewan kept a log book in his truck and recorded each trip to and from the construction sites. He also kept a record of all his truck expenses—his receipts for diesel fuel, oil changes, repairs, and main- tenance for the year. These receipts totaled $4,215. Ewan’s odometer readings were: Year end: December 31 38,306

Year beginning: January 1 26,327

Total miles driven 11,979

Ewan’s mileage log book showed that his mileage to and from qualified construction job sites totaled 4,716 miles. He will use this formula to determine the business use of his truck and the amount of truck expenses which will qualify for this subtraction: Qualified construction miles × actual expenses = Subtraction Total miles driven 4,716 × $4,215 = $1,659 11,979 Subtractions

150-101-431 (Rev. 11-27-24) 70 Ewan will claim a subtraction of $1,659 on Schedule OR-ASC. Duration of project. If you are a construction worker, claim only your expenses for the first year of continu- ous employment at any one construction site. If your employment continues beyond one year, the job site is considered permanent. You may not subtract any addi- tional commuting costs for going to and from that site after the first year at that worksite. If your employment at that job site is temporarily interrupted, don’t count the interruption when you figure the one-year limit. If you are a logger, there is no limit on how long you can work at the same job site and still claim expenses. How to claim the subtraction. Claim your commut- ing expenses on Schedule OR-ASC or OR-ASC-NP. Part-year residents and nonresidents. You can claim only expenses related to income that you included in the Oregon column of your Oregon return. Domestic international sales corporation (DISC) dividend payments (ORS 316.749) [Subtraction code 352] Oregon allows a subtraction for the dividend pay- ments you received from a DISC. You can claim the subtraction if all of the following are true: • The DISC dividend payments are included in your federal AGI, and • The DISC was formed by January 1, 2014, and • The DISC is subject to the 2.5% tax. Federal gain previously taxed by Oregon [ORS 314.290 (repealed), 316.716] [Subtraction code 306] Oregon law used to require an addition for gain on the sale or exchange of certain property deferred on the fed- eral return. This statute was repealed in 2001. If you were required to make this addition before 2001, you have already been taxed by Oregon for the gain on the sale or exchange of your property. If this gain is now included in your federal income, you may claim a subtraction for the amount of the gain previously taxed by Oregon. Federal income tax liability (ORS 316.680, 316.685, 316.695) Part A: Federal income tax liability subtraction [Form OR-40, line 10] [Form OR-40-N or OR-40-P, line 40] Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] Current year’s federal income tax liability. Oregon allows a subtraction for your current year’s federal income tax liability after credits. The subtraction for 2024 is limited to $8,250 ($4,125 if your filing status is married filing separately). It may be limited further based on your AGI; see Table 9. The subtraction is based on the accrual method of accounting. This means you subtract the total amount of your federal tax liability after credits for the cur- rent tax year (not less than zero) as shown on your original return, regardless of when you pay it. The subtraction is limited to income tax. This includes alternative minimum tax, tax on an IRA, and recap- ture taxes. You can’t include self-employment tax or Social Security (FICA) tax. You also can’t include penalties, interest, or any shared responsibility pay- ment required by the federal Affordable Care Act. Federal income tax credits, except for the EITC, reduce your federal tax subtraction. The credits for federal tax on special fuels, special oils, and a regu- lated investment company won’t reduce your federal tax subtraction. Don’t enter less than $0 or more than your limit. Use the federal tax worksheet to figure your subtraction. RDPs: Use amounts from your actual federal return(s), not your “as if” return. Additional federal income tax paid or determined. If you paid additional federal tax because your federal return was amended or audited, you may be able to claim an additional subtraction or modification for it in the year the tax was paid or determined, which- ever is later. Your additional prior year’s federal tax plus your current year’s federal tax can't be more than your current year federal tax subtraction limit. This subtraction applies only to additional federal income tax paid because your return was amended or audited. It doesn’t include withholding tax, advance tax payments, interest, penalties, or paying the tax due on your original federal return. Use Part B of the federal tax worksheet to figure your federal tax from a prior year. If you're a resident, report the amount using subtrac- tion code 309; if you're a part-year resident or nonresi- dent, report the amount using modification code 602. Subtractions

150-101-431 (Rev. 11-27-24) 71 Amended returns. If your federal tax liability for a prior year is changed, see “Amended returns” to determine whether you should change the amount of the subtraction on your amended Oregon return. Federal tax worksheet Note: All references to federal Form 1040 in this worksheet also include references to Forms 1040-SR and 1040-NR, unless otherwise indicated. Instructions for Part A: Federal tax liability subtraction worksheet Line 1: Enter your federal tax liability after nonre- fundable credits but before other taxes. This is found on Form 1040, line 22. Line 2: Do you have to repay some of the advance pre- mium tax credit that you received during the year? If so, enter your excess advance premium tax credit repayment. This is found on Form 1040, Schedule 2, line 1a. Otherwise, enter $0. Line 3: Line 1 minus line 2. If the result is less than zero, enter $0. Line 4: Enter the total of any other taxes, plus any additions to tax that include only income tax, such as recapture taxes, from Form 1040, Schedule 2, lines 8, 16, and 17. Also include the amount reported on Schedule 2, line 10, only if you’re repaying a 2008 first-time homebuyer credit and filing federal Form 5405, Repayment of the First-Time Homebuyer Credit. Include any tax on non-effectively connected income from Form 1040-NR, line 23a. Don’t include any addi- tions to tax from Schedule 2, line 17 that are penal- ties, interest, excise tax, or other amounts that aren’t income tax. If you have no other taxes, enter $0. Line 5: Add lines 3 and 4. This is your federal income tax liability before refundable credits. Line 6: Enter your American Opportunity credit from Form 1040 or 1040-SR, line 29. Line 7: Enter your total premium tax credit amount from federal Form 8962, line 24. This is your allow- able premium credit regardless of any excess advance payments you received or credit you’re claiming on your federal return. Line 8: Add lines 6 and 7. These are the total refund- able credits that must be subtracted from your federal income tax liability. Line 9: Line 5 minus line 8. If less than zero, enter $0. This is your federal income tax liability after refund- able credits (other than the EITC). Line 10: Enter your maximum allowable federal tax liability subtraction amount from Table 9. Don’t enter more than your limit or less than zero. Line 11: Enter the smaller of line 9 or line 10. This is your federal tax liability subtraction. Part A: Federal tax liability subtraction 1. Federal tax liability

(Form 1040, line 22). 1.

_________

2. Excess advance

premium tax credit (Form 1040, Schedule 2, line 1a). 2.

_________

3. Line 1 minus line 2. (If less than

$0, enter $0.) 3.

_________

4. Other taxes (see instructions). 4.

_________

5. Line 3 plus line 4. 5.

_________

6. American Opportunity credit

(Form 1040 or 1040-SR, line 29). 6.

_________

7. Premium tax credit

(Form 8962, line 24). 7.

_________

8. Line 6 plus line 7. 8.

_________

9. Line 5 minus line 8. (If less than

$0, enter $0). 9.

_________

10. Maximum subtraction amount

from Table 9. 10.

_________

11. Smaller of line 9 or

line 10. This is your federal tax liability subtraction. 11.

_________

Part B: Federal income tax paid for a prior year [Subtraction code 309] [Modification code 602] 1. Enter maximum amount from

Table 9 (Part A, line 10). 1.

_________

2. Enter federal tax liability

subtraction (Part A, line 11). 2.

_________

3. Line 1 minus line 2. If the result is

0, Stop—you can’t deduct your federal tax from a prior year. If greater than $0, continue to line 4. 3.

_________

4. Enter the amount of federal tax

you paid in 2024 for a prior year. 4.

_________

5. Enter the smaller of line 3 or line

4 here and on Schedule OR-ASC, section B (subtraction code 309) or Schedule OR-ASC-NP, section D (modification code 602). 5.

_________

Subtractions

150-101-431 (Rev. 11-27-24) 72 Part C: Foreign income tax subtraction [Subtraction code 311] [Modification code 603] If your total federal tax subtraction (Part A, line 11 plus Part B, line 5) is $8,250 ($4,125 if your filing sta- tus is married filing separately), Stop—you can’t sub- tract your foreign tax (ORS 316.690). Otherwise, con- tinue to Step 1. 1. Enter $8,250 ($4,125 if your filing

status is married filing separately). 1.

_________

2. Enter your total federal tax liability

subtraction (Part A, line 11 plus Part B, line 5). 2.

_________

3. Line 1 minus line 2. 3.

_________

4. Enter the amount paid in foreign

tax, but not more than $3,000 ($1,500 if your filing status is married filing separately). 4.

_________

5. Enter the smaller of line 3 or

line 4 here and on Schedule OR-ASC section B (subtraction code 311) or Schedule OR-ASC-NP section D (modification code 603). 5.

_________

Table 9. Federal tax liability subtraction AGI phase-out If your filing status is: and your federal AGI is: then your maximum allowable tax liability subtraction is: at least— but less than— Single 0 $125,000 $8,250 $125,000 $130,000 $6,600 $130,000 $135,000 $4,950 $135,000 $140,000 $3,300 $140,000 $145,000 $1,650 $145,000 or more $0 Married filing separately 0 $125,000 $4,125 $125,000 $130,000 $3,330 $130,000 $135,000 $2,475 $135,000 $140,000 $1,650 $140,000 $145,000 $825 $145,000 or more $0 Married filing jointly Head of household Qualifying surviving spouse 0 $250,000 $8,250 $250,000 $260,000 $6,600 $260,000 $270,000 $4,950 $270,000 $280,000 $3,300 $280,000 $290,000 $1,650 $290,000 or more $0 Federal mortgage interest credit (ORS 316.716) [Subtraction code 320] [Modification code 607] If all of the following are true for you, you may have a subtraction for mortgage interest on your Oregon return: • You’re claiming a mortgage interest credit on your federal return, • You’re claiming your mortgage interest as an item- ized deduction on federal Schedule A, • You reduced your mortgage interest deduction by the federal mortgage interest credit, and • You’re claiming the same reduced amount of mort- gage interest on Schedule OR-A. Claim a subtraction for the amount of mortgage interest credit allowed on your federal return. Take the subtraction in the year of the payment even if the federal credit is carried forward. Example 1: Shawn and Phillip pay $5,000 in mortgage interest this year. They are entitled to a 50 percent credit, limited to $2,000, on their federal return. They claim the credit and reduce their itemized deduc- tion for mortgage interest to $3,000. They include the same $3,000 deduction on Schedule OR-A, and claim a $2,000 subtraction on Schedule OR-ASC. Example 2: Use the same facts as Example 1, except that Shawn and Phillip’s federal tax liability is $1,500. They claim $1,500 as a credit on their federal return, claim a deduction of $3,000 in mortgage interest on Schedule A, and have a $500 credit to carry over to next year. They include the $3,000 deduction on Schedule OR-A and subtract $2,000 on Schedule OR-ASC. They don’t have a carryforward amount for Oregon. Federal pension income [ORS 316.680(1)(e)] [Subtraction code 307] You may be able to subtract some or all of your tax- able federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It doesn’t include disability payments if you haven’t attained the minimum retirement age. The subtrac- tion amount is based on the number of months of federal service or points earned for retirement before and after October 1, 1991: • If all of your months of federal service occurred or points were earned before October 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return. Subtractions

150-101-431 (Rev. 11-27-24) 73 • If you have no months of service or points earned before October 1, 1991, you can’t subtract any fed- eral pension. • If your service occurred or points were earned both before and after October 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service or points earned before October 1, 1991, by your total months of service or points earned. Round your percentage to three places (example: 0.4576 = 45.8%). Once you determine the percentage, it will remain the same from year to year. Federal Thrift Savings Plan (TSP). Once a taxpayer is a retiree, withdrawals from federal TSP accounts are eligible for the subtraction based on dates of ser- vice. Withdrawals prior to retirement aren’t eligible because the taxpayer must be a retiree at the time of withdrawal to be eligible for the subtraction. If the taxpayer moves money from a TSP to another type of account, the account loses its character and is no lon- ger a federal pension. In this case, future withdraw- als wouldn't be eligible for the subtraction. Full-year residents. If you're eligible for the federal pension income subtraction, enter the amount on Schedule OR-ASC. Part-year residents. If you received the federal pen- sion income during the part of the year when you were a resident and you're eligible for the subtrac- tion, enter the amount on both the federal and Ore- gon lines of Schedule OR-ASC-NP. Include your fed- eral pension income received during the part of the year when you were a nonresident only if you were domiciled in Oregon during that time. If you were not domiciled in Oregon during the part of the year that you were a nonresident, exclude the income you received during that time from your Oregon income on your part-year return, and don't claim a subtrac- tion for any portion of that income. Nonresidents. Claim a subtraction for federal pen- sion income only if you reported it on your Oregon return. Oregon doesn’t tax your retirement income unless you have kept Oregon as your domicile. For more information, see “Income.” Use this worksheet to determine your federal pension income subtraction amount: 1. Federal pension income included in federal AGI. 1.

$ ___________

2. a. Months of service or points earned from _______

(federal service start date) to October 1, 1991. a. ____ months*/points

b. Months of service or points earned from _______

(federal service start date) to _______ (federal

service retirement date). b. ____ months**/points

Divide the number of months or points on

line a by the total number of months or points on line b. This is your federal pension subtraction percentage. Round the decimal three places and enter it here. 2.

___________

3. Multiply

line 1 by the decimal on line 2. This is your federal pension subtraction. 3. $

___________

* Federal service start date: If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service. If your federal service start date was the 16th through the end of a month, don’t

include the first partial month of service. Start counting the months of federal service with the first full month.

** Federal service retirement date: If your federal service retirement date was the 1st through the 15th of a month, don’t count this final partial month when counting the total months of federal service. If your retirement date was the 16th through the end of the month, include the entire

month when counting the total months of federal service.

Keep a copy of this worksheet with your permanent tax records. Use the same percentage from line 2 to determine your federal pension subtraction in future years. Example 1: Jared worked for the U.S. Department of Agriculture from May 1, 1977, until July 31, 2012. He worked a total of 423 months—173 months before October 1, 1991. This year, he received federal pension income of $65,000. He can subtract 40.9 percent (173 ÷ 423) or $26,585 (0.409 × $65,000) of his federal pension. Jared will continue to subtract 40.9 percent of his federal pension from Oregon income in future years. Subtractions

150-101-431 (Rev. 11-27-24) 74 Example 2: Robin served in the U.S. Army Reserves from June 20, 1987 through May 18, 2012. As a retired mem- ber of the reserves, Robin’s service is easier measured by the retirement points she earned. Her Chronological Statement of Retirement Points shows that she earned 1,917 retirement points before October 1, 1991, out of a total 3,510. Robin received $25,000 in pension benefits this year. This worksheet shows how she will determine her federal pension subtraction. 1. Federal pension income included in federal AGI. 1. $ 25,000

2. a. Points earned before October 1, 1991. a. 1,917 points

b. Total points earned. b. 3,510 points

Divide the number of points on

line a by the total number of points on line b. Round the decimal three places. This is Robin’s federal pension subtraction percentage. 2. 0.546

3. Multiply

line 1 by the decimal on line 2. This is Robin’s federal pension subtraction. 3. $ 13,650

Federal tax credits (ORS 316.716) [Subtraction code 340] [Modification code 609] These credits are not related to individual health insurance premium credits allowed by the federal Affordable Care Act. To claim certain federal tax credits, such as the mort- gage interest credit or the employer credit for paid family leave allowed by IRC Section 45S, you must reduce your business expenses or itemized deduc- tions on your federal return by the amount of the credit you figured for the year. Oregon allows a subtraction for the amount reduced on your federal return. Subtract the entire reduction amount in the year you first claimed the federal credit, even if the federal credit is carried over. Part-year residents and nonresidents: Report the reduction amount as a subtraction if the item you reduced was reported on a federal form or sched- ule other than Schedule A. If you were required to reduce an itemized deduction, report the reduction amount as a modification, not as a subtraction. Mortgage interest credit. Were you required to reduce your mortgage interest deduction because you claimed the federal mortgage interest credit? See “Federal mortgage interest credit” for detailed infor- mation about this subtraction. Health Coverage Tax Credit (HCTC). If you claimed this credit on your federal return, you might be allowed a subtraction on your Oregon return. This credit isn’t related to the premium credit allowed by the federal Affordable Care Act. Oregon allows a subtraction or modification for the self-employed health insurance deduction or itemized deductions you couldn’t claim on your federal return because you claimed the HCTC. Part-year residents and nonresidents doing business in Oregon. If your federal credit is related to a busi- ness operated entirely in Oregon, don’t prorate your subtraction. If the credit is related to a business not operated solely in Oregon, you must prorate your sub- traction. Use this formula to determine the amount to subtract on the Oregon line on Schedule OR-ASC-NP: Sales in Oregon × Expenses not allowed on your federal return Sales everywhere Enter the expenses not allowed on your federal return on the federal line on the schedule. Partnerships and S corporations. If your federal credit is from a partnership or S corporation, you may subtract a percentage of the expenses not deductible on your federal partnership or S corporation return. This amount will usually be the same as the percent- age of total partnership or S corporation income you report on your return. Nonresidents or part-year resi- dents must use the percentage explained in the previ- ous paragraph to further prorate the expenses. Film production labor rebate (ORS 316.698) [Subtraction code 336] Companies producing commercials, television shows, or movies in Oregon may be eligible for a cash rebate against payroll taxes if they qualify for the Greenlight Oregon Labor Rebate (GOLR) program. This program is administered by the Oregon Film and Video Office. Visit their website, www.oregonfilm.org, for more information. You may subtract the amount of your GOLR rebate to the extent that it is included in your federal income. Subtractions

150-101-431 (Rev. 11-27-24) 75 First-time home buyer savings account (FTHBSA) contributions and earnings (ORS 316.798, 316.800) [Subtraction code 361] Oregon allows a subtraction for amounts you depos- ited during the tax year into a designated FTHBSA, along with any earnings on your deposits. Who may claim the subtraction? Any Oregon resident who hasn’t purchased or owned a single-family home, either individually or jointly, in the three years prior to the date they purchase a new home in Oregon and makes deposits into their desig- nated FTHBSA may qualify for this subtraction. What are the requirements? A FTHBSA can be opened any time between January 1, 2019 and December 31, 2026. Beginning in tax year 2025, account holders will need to fill out Form OR- HOME when opening an account. Money deposited in the account must be used to pay qualifying costs of buying a single-family home within 10 years of open- ing the account. What costs will qualify? You must use your FTHBSA funds to pay costs asso- ciated with buying a home, such as: • Down payment. • Title insurance and other closing costs. • Realtor commissions. • Appraisal and inspection fees. • Loan origination fees. What’s the tax benefit of my FTHBSA? For 2024, up to $5,935 in deposits and earnings for the year may be subtracted by an individual filer each year—up to $11,865 each year if you’re filing a joint return—for up to ten years or an aggregate total of $50,000. The annual limit is adjusted each year for inflation. The maximum subtraction amount is lim- ited by your federal AGI as shown in Table 10. Note: Deposits or earnings that exceed the subtraction limit for the year can’t be carried forward to a later year. Only those amounts that were deposited or earned during the tax year may be subtracted from that year’s Oregon taxable income. Table 10. FTHBSA subtraction limits If your filing status is: and your federal AGI is: then your maximum allowable FTHBSA subtraction is: at least— but less than— Married filing jointly 0 $149,000 $11,865 $149,000 $158,000 $9,495 $158,000 $167,000 $7,120 $167,000 $176,000 $4,750 $176,000 $187,000 $2,375 $187,000 or more 0 All others 0 $104,000 $5,935 $104,000 $111,000 $4,750 $111,000 $117,000 $3,560 $117,000 $123,000 $2,375 $123,000 $131,000 $1,190 $131,000 or more 0 Penalty and add back for nonqualified withdrawal. If the funds in your FTHBSA are withdrawn within 10 years of opening the account, but aren’t used to pur- chase a home, a 5 percent penalty may be imposed on the amount withdrawn. See this topic in “Interest and penalties.” You will also be required to add back any withdrawn amounts you previously subtracted. See this topic in “Additions.” Note: You may trans- fer funds from your FTHBSA and deposit them into another FTHBSA that you hold at the same or a dif- ferent financial institution; to avoid the penalty and the add back requirement, the transfer (or the home purchase) must be completed within 60 calendar days of the withdrawal. For more information about the FTHBSA program, visit our website. Foreign income tax (ORS 316.690) [Subtraction code 311] [Modification code 603] You can subtract taxes paid to a foreign country if on your federal return: • You claimed a credit for taxes you paid to a foreign country; or • You didn’t claim a credit for tax you paid to a for- eign country and you didn’t claim foreign taxes as an itemized deduction. Your foreign tax subtraction plus the subtraction for your current federal tax liability plus any additional federal tax paid for a prior year can’t be more than Subtractions

150-101-431 (Rev. 11-27-24) 76 $8,250 ($4,125 if your filing status is married filing separately). The foreign tax portion of your federal tax subtrac- tion can’t be more than $3,000 ($1,500 if your filing status is married filing separately). Itemized deduction. If you claimed foreign income taxes as an itemized deduction on your federal return, you may claim them in full on Schedule OR-A. The amount you may deduct on your Schedule OR-A isn’t subject to the same limit as the subtraction. See the instructions for Schedule OR-A for more information. If you claim the foreign taxes as an itemized deduc- tion, you may not also claim them as a subtraction. Use Part C of the Federal tax worksheet to figure your foreign tax subtraction. IDA contributions (ORS 316.848) [Subtraction code 314] An IDA is a matched savings account that builds the financial management skills of qualifying Orego- nians while they save toward a defined goal. An IDA allows an individual in a lower-income household to accumulate assets tax-free. As the account holder, you make deposits to your own account. Your depos- its are matched with private donations. Withdrawals made for a qualified purpose are tax free. Qualified purposes include: • Paying higher education expenses or medical expenses; or • Purchasing a primary residence; or • Saving for retirement; or • Starting your own business. Oregon allows a subtraction on your tax return for deposits you make to your IDA through the Neigh- borhood Partnership Fund. Your subtraction includes the interest earned on your IDA funds if the interest is included in your federal taxable income. Subtract the amount of the deposits made during the year, plus taxable interest earned, on Schedule OR-ASC or OR-ASC-NP. For more information about establishing an IDA, contact The Neighborhood Partnership Fund at 503- 226-3001 or www.neighborhoodpartnerships.org. Income on a composite return (OAR 150-314-0515) [Form OR-40-N/OR-40-P only: Subtraction code 341] If you’re a nonresident PTE owner who elects to join in a composite filing, the PTE will file Form OR-OC, Oregon Composite Return, to report your income and pay tax on your behalf. If you have other Oregon- source income, you must also file your own nonresi- dent personal income tax return to report and pay tax on this income. Follow the instructions for filing Form OR-40-N if you have income that wasn’t included in a compos- ite filing. All of your PTE income must be reported on the return, including the income reported on the composite return. However, because the income on the composite return has already been taxed, subtract that income on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Note: Don’t claim the tax paid on your behalf by the PTE as a payment on your Form OR-40-N. That pay- ment was already used to pay the tax on the income reported on the composite return. Interest and dividends on U.S. bonds and notes [ORS 316.680(1)(a)] [Subtraction code 315] Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest. You may also subtract U.S. government interest (called state exempt-interest dividends) from regu- lated investment companies and asset pools man- aged by a fiduciary. These include, but aren’t limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or asset pool must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The sub- traction is limited to your share of the amount of interest actually earned from qualifying U.S. govern- ment securities. You can’t subtract amounts when the U.S. govern- ment only guarantees the security. If you receive dis- tributions from a retirement plan, you may not sub- tract pension income received from funds invested in U.S. government securities. Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon. Following is a detailed list of bonds and notes that may or may not qualify for this subtraction. For a list of obligations that are exempt from both state and federal taxation, see “Interest and dividends on gov- ernment bonds of other states“ in “Additions.“ Subtractions

150-101-431 (Rev. 11-27-24) 77 Qualifies Bond/note

Yes Banks for Cooperatives District of

Columbia. Yes Commodity Credit Corporation.

No* Export-Import Bank.

No Farmers Home Administration.

Yes Federal Deposit Insurance Corporation.

Yes Federal Farm Credit Bank.

Yes Federal Financing Bank.

No Federal Home Loan Mortgage Corpora

- tion (Freddie Mac). Yes Federal Home Loan Bank.

Yes Federal Intermediate Credit Bank.

Yes Federal Land Bank and Federal Land

Bank Association. No Federal National Mortgage Association

(Fannie Mae). Yes Federal Savings and Loan Insurance

Corporation. No Federal tax refunds.

Yes Financing Corporation (FICO).

Yes General Insurance Fund.

No* Government National Mortgage Asso

- ciation (Ginnie Mae). Yes Government Services Administration

(GSA Public Building Trust Participation Certificate). No International Bank for Reconstruction

and Development. Yes Production Credit Association (PCA).

Yes Resolution Funding Corporation

(REFCO). No Repurchase agreements (Repos).

Yes Series EE, HH, and I Bonds.

No* Small Business Administration.

No# Student Loan Marketing Association

(Sallie Mae). Yes Tennessee Valley Authority.

Yes Treasury bills and notes—interest.

No Treasury bills and notes—gain on sale.

No U.S. Merchant Marine bonds.

Yes U.S. Postal Service bonds.

No* Washington (D.C.) Metropolitan Transit

Authority. Yes Zero coupon obligations of the U.S. (for

example, “CATs,” “STRIPS,” “TIGRs,” etc.). *If the creditor has defaulted and the U.S. government/ Export-Import Bank is paying the interest, it’s nontaxable. #Sallie Mae became a private enterprise in 2004. Related expenses You must reduce your subtraction for expenses con- nected with U.S. bonds and notes if the expenses are included in your Oregon itemized deductions on Schedule OR-A. These expenses include interest paid on money borrowed to buy the bonds and notes and costs incurred in the production of income from the bonds and notes. Legislative Assembly expenses (ORS 171.072) [Subtraction code 335] Members of the Oregon Legislative Assembly receive allowances for expenses they incur while perform- ing their official duties. Each legislator must choose whether to include their allowance in taxable income. When an allowance is included in taxable income, the legislator may deduct the expenses they incurred while performing their official legislative duties. If the legislator does not include their expense allow- ance in their taxable income, they can’t claim any deductions for their expenses. Oregon doesn’t tax the allowances received by legisla- tors. If you served as an Oregon legislator during 2024 and you chose to include your allowance in your tax- able income, you may subtract any allowance amount that you haven’t deducted elsewhere on your return. Example: Peter served as an Oregon senator during the tax year. He chose to have his allowance included in his taxable income. On his Schedule OR-A, he deducts all but $1,000 of the expenses he incurred while performing his official legislative duties. He may claim a subtraction for the remaining $1,000 on his Oregon return. Manufactured dwelling park capital gain exclusion (Notes following ORS 316.792) [Subtraction code 338] Amounts received from the sale of a manufactured dwelling park to certain organizations are exempt from Oregon income tax. If you included this gain in income on your federal return, you may claim a subtraction for the gain amount on your Oregon return. Enter the amount on Schedule OR-ASC or OR-ASC-NP. To qualify, the park must have been: Subtractions

150-101-431 (Rev. 11-27-24) 78 • Sold to a tenants’ association nonprofit organiza- tion, community development corporation, or a housing authority; or • Destroyed by a natural disaster and sold to a non- profit corporation or housing authority that will redevelop the site as a manufactured dwelling park. For purposes of this exclusion, a “natural disaster” includes any disaster resulting in the declaration of a state of emergency by the governor of Oregon, or by the governing body of an Oregon city or county, for wildfires, floods, tsunamis, earthquakes or simi- lar events, including disasters begun by negligent or intentional acts. Manufactured dwelling park closure payments (ORS 316.795) [Subtraction code 344] Payments received from your former landlord because your manufactured dwelling park was closed are exempt from state taxation. These payments must be included in your federal income in order to be sub- tracted on your Oregon return. If you didn't include them in federal income, don't subtract them. Marijuana business expenses [ORS 316.680(1)(i)] [Subtraction code 359] Did you operate a business as a medical marijuana dispensary or as a producer, processor, wholesaler, or retailer of medical or recreational marijuana with a license issued by the Oregon Health Authority (OHA) or the Oregon Liquor and Cannabis Commis- sion (OLCC) under ORS Chapter 475B? If so, you may subtract certain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi- ness expenses on your federal return, other than the cost of goods sold, if your business involves the cul- tivation, manufacture, distribution, or sale of certain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and necessary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Con- trolled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter- mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Erin has a business licensed by the OLCC to sell marijuana in Oregon. Her store sold medi- cal and recreational marijuana products. Her gross sales for the year totaled $750,000. After deducting $350,000 in cost of goods sold, her gross profit was $400,000, which she reported as business income on her federal Schedule C. Along with paying the cost of the goods she sold, Erin had ordinary and necessary retail business expenses. She completed a second Schedule C for Oregon only and determined that her expenses, other than cost of goods sold, totaled $150,000. She claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Matt grows marijuana in his garage and sells it to his coworkers and friends. This year, he made $50,000 from these sales. He spent $15,000 on costs of goods sold during the year, and another $10,000 in other ordinary and necessary business expenses. Matt doesn’t have a license to produce or sell marijuana in Oregon, but he must file federal and Oregon tax returns to report his income. On his fed- eral return, he must report $50,000 in gross income and can deduct $15,000 for the cost of the goods he sold. He can’t deduct his other business expenses on his federal return. Matt also can’t take an Oregon sub- traction for those other business expenses because he doesn’t have a license issued by the OHA or OLCC. Oregon higher education savings plan deposits fiscal-year carryforward (ORS 316.699) [Subtraction code 324] This subtraction is only available for fiscal-year filers with a carryforward from the tax year that began in 2019. The maximum amount you can carry forward and subtract on your 2024 return is $5,885 if you file a joint return ($2,940 for all others). This maximum applies to the combined total of ABLE account and Oregon higher education savings plan account con- tributions carried forward. Subtractions

150-101-431 (Rev. 11-27-24) 79 Oregon income tax refund (ORS 316.695) [Form OR-40-P/Form OR-40-N only: Subtraction code 325] Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon doesn’t allow a subtraction for an income tax refund from any other state. Full-year filers: This subtrac- tion is claimed on Form OR-40. Part-year and non- resident filers: Claim this subtraction on Schedule OR-ASC-NP, section C. Oregon Investment Advantage

(ORS 316.778) [Subtraction code 342] Oregon has an income tax exemption program for business development in Oregon. The program is available to both new and expanding businesses. Who is eligible for the exemption? The exemption is a 10-year waiver of all income and excise taxes relating to qualifying business opera- tions. Business Oregon (the Oregon Business Devel- opment Department, or OBDD) administers this program. To qualify, a company must create at least five new full-time, year-round jobs that meet minimum pay requirements. Facility operations must be the first of their kind in Oregon for the company and must not compete with existing area businesses. Areas that qualify for development can change from year to year. Local unemployment rates and per capita income as of the date of application for preliminary certification determine eligibility. For a list of qualifying counties, go to www.oregon.gov/biz. How is a facility certified? There are two application forms necessary for this program. A preliminary certification is completed before hiring or any construction work is done. An annual certification is then completed for each of the 10 years that the income tax exemption is claimed. To find out more about this program or download an application form, contact Business Oregon at www.oregon.gov/biz. How is the subtraction computed? The exempt income is determined by multiplying the taxpayer’s federal taxable income by the ratio of their federal AGI derived from the business over their total federal AGI. The resulting amount is then multiplied by the ratio of the business’ income derived from the business’ sales at the certified facility over its sales from all business activities. Nonresident and part-year resident taxpayers deter- mine exempt income by multiplying only Oregon- sourced federal taxable income in the first step of the computation above. See our administrative rule for additional informa- tion on determining income derived from qualifying activities (OAR 150-316-0600). Oregon Lottery winnings (ORS 461.560) [Subtraction code 322] Oregon won’t tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and aren’t eligible for the subtraction. “Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery doesn’t include gambling winnings from other sources, such as tribal gaming centers. If you’re a Native American, see the “American Indian” sub- traction for more information. Winnings of more than $600 from a single ticket or play are fully taxable and may be reported by the Oregon State Lottery on Form W-2G. Lottery win- nings that are more than $1,500 must have 8 percent withheld for Oregon taxes. If state income tax wasn’t withheld from your gambling winnings consider making estimated tax payments or increasing your withholding from your wages. To increase your Ore- gon wage withholding, complete Form OR-W-4. Give the form to your employer. Example: Margaret purchased two Oregon Lot- tery tickets and won $1,000 on one ticket and $500 on the other. She also won $300 from a lottery ticket she bought in Idaho, and $150 on a slot machine at an Oregon casino. Margaret included all $1,950 in winnings on her federal return. Margaret can sub- tract $500 of her Oregon Lottery ticket winnings on Schedule OR-ASC. Nonresidents: Oregon Lottery winnings are taxable to nonresidents. Oregon Lottery winnings included in federal taxable income are eligible for the subtrac- tion when winnings per ticket or play are $600 or less. Exception for pre-1998 tickets: You may subtract all Oregon Lottery winnings included in your federal Subtractions

150-101-431 (Rev. 11-27-24) 80 income from tickets purchased prior to January 1, 1998. Did you assign your lottery winnings to a pri- vate company and receive a lump-sum settlement? If so, your settlement isn’t taxable by Oregon if your winning ticket was purchased before January 1, 1998. Winnings from tickets purchased on or after January 1, 1998 are fully taxable. Gambling loss deduction. If you’re deducting gam- bling losses related to your tax-exempt lottery win- nings on Schedule OR-A, you must add back the amount that exceeds the winnings that are taxed by Oregon. See this topic under “Additions” for more information. Paid Leave Oregon benefits deducted on federal Schedule A [ORS 316.695(1)(d)] [Subtraction code 386] If you took paid medical, family, or safe leave on or after September 3, 2023, you may have received ben- efits through the state’s Paid Leave Oregon program. If so, part of your benefits may have included con- tributions you made as an employee through payroll deductions or by contributions you made if you’re self-employed and chose to be covered by the state program. Contributions you make to the Paid Leave Oregon program are considered to be a payment of Oregon income tax. For that reason, they can’t be included in your Oregon itemized deductions as a payment of state income tax. Benefits you receive from the Paid Leave Oregon program may be included in your federal taxable income. However, in some cases, you may be allowed to reduce your benefit income by the amount of the contributions you made for the type of benefits you received. Because you couldn’t deduct your contributions for these benefits on your Oregon return, Oregon has already taxed the portion of your benefits that is from those contributions. If you’re reducing your benefit income on your federal return for contributions you made for the type of benefits you received, you don’t need to do anything on your Oregon return. The income reduction will flow through automatically. If you’re not reducing your benefit income on your federal return, you may claim a subtraction on your Oregon return for your contributions. Limit your subtraction to the amount of contributions you made for the type of benefits you received that Oregon has already taxed. Example 1: Oliver made contributions to the Paid Leave Oregon program through payroll deductions by his employer. In October, Oliver’s son broke his arm, and Oliver took several weeks of family leave to care for him. Oliver received $3,000 in family leave benefits from the program. Of this amount, $600 was attributable to Oliver’s family leave contributions. Oliver doesn’t itemize deductions on the federal return, so he reduces the benefit income by the con- tribution amount and includes $2,400 ($3,000 - $600) in income. Because the benefit income is reduced on the federal return, Oliver doesn’t report a subtraction on the Oregon return. Example 2: Same facts as in Example 1, but Oliver itemizes deductions on the federal return. Oliver includes the entire $3,000 benefit amount in income and the $600 contribution portion as an itemized deduction on his federal return. Because he is claim- ing an itemized deduction for his contributions instead of reducing his benefit income, Oliver may claim a $600 subtraction on Schedule OR-ASC. For more information about the Paid Leave Oregon program, visit www.paidleave.oregon.gov. Previously taxed employee retirement plan contributions (ORS 316.159) [Subtraction code 327] If you are an Oregon resident who made contribu- tions to a traditional IRA, Keogh, SEP, or certain other retirement plans while you were a nonresident, you may claim a subtraction for your distributions up to the amount of your contributions that were taxed by the state where you were a resident, if all of the fol- lowing are true. You: • Deducted your contributions on your federal return for the year the contributions were made. • Filed an income tax return with the state where you were a resident for the year when you deducted the contributions on your federal return. • Couldn’t claim the same (or any) deduction on your state income tax return for the contributions you deducted on your federal return. • Weren’t required to file a nonresident Oregon return for the year when the contributions were deducted on your federal return. • Weren’t allowed a credit for taxes paid to another state on an Oregon return which included the con- tributions in the credit calculation. • Were not allowed to claim a subtraction, deduction, exemption, or other tax benefit in another state for your distributions from the plan before you became an Oregon resident. Subtractions

150-101-431 (Rev. 11-27-24) 81 • Are now receiving distributions from the plan to which you made contributions as a nonresident. • Included the distributions in your federal AGI this year. All distributions you receive after becoming an Ore- gon resident are initially considered to be a recovery of your contributions. You may claim a subtraction for your distributions each year that you are a resi- dent, up to the total amount of contributions that were previously taxed, even if you have received dis- tributions before becoming an Oregon resident. No subtraction is allowed for interest or other invest- ment income from your contributions, or for contri- butions that weren’t previously taxed. A statement showing the contributions you made when you were a nonresident and the amounts that were deducted on your federal returns but taxed on your state income tax returns will help you figure your subtraction. Keep this statement with your tax records. Example 1: Peggy was a California resident when she made contributions to her employer-based retirement plan. She deducted the contributions on both her fed- eral and California returns. After Peggy became an Oregon resident, she started taking retirement dis- tributions. Because Peggy’s contributions weren’t taxed on her California returns, she can’t take the subtraction. Example 2: Ronald was a Kansas resident when he made contributions to the state’s public employee retirement fund. He deducted the contributions on his federal returns, but his contributions were included in income on his Kansas income tax returns. Ronald became an Oregon resident and this year he started taking distributions from his retirement plan. Because his contributions were previously taxed by Kansas, Ronald can take the subtraction. He can take the subtraction each year until the total amount of his previously taxed contributions has been recovered. Example 3: Harley was a Washington state resident when she made contributions to a traditional IRA. Her contributions were deducted on her federal return. Because Washington doesn’t have a state income tax, she didn’t pay state income tax on the contributions. Last year she became an Oregon resi- dent, and this year she started taking distributions from her IRA account. Harley can’t take the subtrac- tion because her contributions weren’t previously taxed by another state. Example 4: Bill was a California resident when he made contributions to a Roth IRA. The contribu- tions were not deducted on his federal or California returns. Bill is 65 years old and became an Oregon resident last year. He began taking distributions this year from the Roth IRA account, which he held for more than five years. Because he meets the age and holding requirements for his Roth IRA, his dis- tributions aren’t included in his federal income. He can’t take the subtraction because the income isn’t included in his federal AGI, it wasn’t previously taxed by the other state, and it wasn’t deducted on his federal return. For additional examples, see OAR 150-316-0230. Previously taxed IRA conversions [ORS 316.680(1)(f)] [Subtraction code 348] Oregon allows a subtraction for converting a tra- ditional IRA to a Roth IRA, if the IRA is taxed by another state. You must include the payments in fed- eral taxable income to claim the subtraction. Example: Susan lived in New York in March of last year, when she converted her $100,000 traditional IRA to a Roth IRA. In September, she moved to Oregon. New York state will tax her IRA when she becomes a nonresident. Susan can subtract the amount included in federal income when she files her Oregon tax return. Psilocybin business expenses [ORS 316.680(1)(j)] [Subtraction code 385] Did you operate a business as a manufacturer or seller of psilocybin products, an operator of a psilo- cybin service center, or a facilitator of psilocybin ser- vices licensed by the Oregon Health Authority (OHA) under ORS Chapter 475A? If so, you may subtract cer- tain business expenses on your Oregon return that you can’t deduct on your federal return due to IRC Section 280E. IRC Section 280E keeps you from deducting busi- ness expenses on your federal return, other than the cost of goods sold, if your business involves the cul- tivation, manufacture, distribution, or sale of certain controlled substances. Oregon law, however, allows a subtraction for the same ordinary and necessary expenses you incur for your business that are allowed for other types of businesses operating in this state. If the expense would have been allowed for federal purposes, but your business falls within the Con- trolled Substances Act (21 U.S.C. Sections 801 et seq.), you are allowed a subtraction on your Oregon return. See the instructions for the appropriate federal schedule for determining the net income from your business to be reported on your federal return. The Subtractions

150-101-431 (Rev. 11-27-24) 82 schedule showing income after allowable federal deductions is submitted with your federal return. Complete a second Oregon-only schedule to deter- mine the expense amount you can subtract on your Oregon return. Report this amount on Schedule OR-ASC, Section B or Schedule OR-ASC-NP, section C. Keep the Oregon-only schedule with your tax records. Example 1: Doug has a business licensed by the OHA to manufacture and sell psilocybin products to licensed psilocybin service centers. His gross sales for the year totaled $100,000. After deducting $20,000 in cost of goods sold, his gross profit was $80,000, which he reported as business income on his federal Schedule C. Along with paying the cost of the goods he sold, Doug had other ordinary and necessary business expenses. He completed a second Schedule C for Oregon only and determined that his expenses, other than cost of goods sold, totaled $15,000. He claimed this amount as a subtraction on Schedule OR-ASC. Example 2: Eleanor grows mushrooms containing psi- locybin in her basement and sells them to her friends. This year, she made $40,000 from these sales. She spent $3,000 on cost of goods sold during the year, and another $15,000 in other ordinary and necessary business expenses. Eleanor doesn’t have a license to manufacture or sell psilocybin products in Oregon, but she must file federal and Oregon tax returns to report her income. On her federal return, she must report $40,000 in gross income and can deduct $3,000 for the cost of the goods she sold. She can’t deduct her other business expenses on her federal return. Eleanor also can’t take an Oregon subtraction for those other business expenses because she doesn’t have a license issued by the OHA. PTE-E tax refund included on entity- level federal return (ORS 305.100) [Subtraction code 387] If you’re a member of a PTE that made the election to pay Oregon’s PTE-E tax for a prior year, you may be able to claim this subtraction if: • The PTE deducted the PTE-E tax on its federal return; • You reported an addition for your distributive share of the deducted amount on your own return; • The PTE later received a refund of some or all of the deducted PTE-E tax; and • You included some or all of your distributive share of the refunded tax in your federal taxable income. Your subtraction is limited to the amount of the refund that you included on your federal return. Public Safety Memorial Fund award [ORS 316.680(1)(g)] [Subtraction code 329] Amounts awarded to you by the Public Safety Memo- rial Fund Board may be subtracted from Oregon income. The award must be included in federal tax- able income to claim the subtraction. Public Safety Memorial Fund Awards are for public safety officers with certain job-related permanent total disabilities. These awards are also available to family members of a public safety officer who is killed in the line of duty or while interceding in a crime. Railroad Retirement Board benefits (ORS 316.054) [Subtraction code 330] The Railroad Retirement Act of 1974 prohibits states from taxing certain railroad benefits. This act per- tains to all benefits issued by the Railroad Retirement Board (RRB). Oregon allows a subtraction for Tier 1 RRB benefits (the same as for Social Security benefits). The subtraction has been extended by administrative rule to the other supplemental RRB benefits including Tier 2, windfall, vested dual, supplemental annuities, unemployment, and sickness (OAR 150-316-0065). Tier 1 benefits. Tier 1 benefits are reported like Social Security on your federal return. Subtract these ben- efits with Social Security on the Oregon return. Tier 2, windfall, vested dual, supplemental annuities, unemployment and sickness paid by the RRB. These benefits are reported as wages or on the private pen- sion line of your federal return. Subtract these ben- efits on Schedule OR-ASC, section B or Schedule OR- ASC-NP, section C. Other benefits. A retired railroad employee may receive other retirement benefits from their employer. Benefits paid by private railroad employers are pri- vate pensions taxed the same on both the federal and Oregon returns. There is no Oregon subtraction for retirement benefits paid by private railroad employers. Only benefits paid by the RRB qualify for the subtrac- tion. RRB benefits are reported on Form 1099, except for sickness benefits, which are reported on Form W-2. All 1099s issued by the RRB, other than 1099-G for RRB unemployment benefits, are labeled Form RRB-1099-R. More information on RRB benefits is available on the board’s website at www.rrb.gov. Subtractions

150-101-431 (Rev. 11-27-24) 83 Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claim- ing the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed. Social Security benefits (ORS 316.054) Oregon doesn’t tax Social Security benefits. Any Social Security benefits included in your federal AGI are subtracted on your Oregon return. Special Oregon medical (ORS 316.693) [Subtraction code 351] You may qualify for the special Oregon medical sub- traction if: • You or your spouse turned 66 by the end of the tax year; • Your federal AGI doesn’t exceed $200,000 ($100,000 if your filing status is single or married filing sepa- rately); and • You or your spouse have qualifying medical or dental expenses. Medical or dental expenses qualify if they can be included in itemized deductions. See IRS Publica- tion 502, Medical and Dental Expenses, to see which expenses qualify. You can’t subtract expenses: • For anyone under age 66; • For dependents, regardless of their age; or • That are deducted elsewhere on your return. Table 11. Special Oregon medical subtraction— maximum amount If your filing status is: And your federal adjusted gross income from Form OR-40, line 7 or Form OR-40-N or OR-40-P, line 29F is: Then your maximum allowable medical subtraction per qualifying taxpayer is: at least— but less than— Married filing jointly, Head of household, Qualifying surviving spouse 0 $50,000 $1,800 $50,000 $100,000 $1,400 $100,000 $200,001 $1,000 $200,001 or more 0 Single or Married filing separately 0 $25,000 $1,800 $25,000 $50,000 $1,400 $50,000 $100,001 $1,000 $100,001 or more 0 The maximum amount you can subtract for each qualifying person is shown in Table 11. Use the table and the Special Oregon medical subtraction work- sheet to determine the amount of your subtraction. Shared expenses. Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy doesn’t affect the price of the pol- icy, it’s reasonable to count all children on the policy as one individual. For example, the cost of insurance premiums for a policy covering two adults and four children can be divided by three. Example 1: Chloe and Sam were ages 67 and 62 at the end of the tax year. They filed a joint return with one depen- dent (Sam’s mother), federal AGI of $55,000, and itemized deductions for Oregon. During the tax year they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in premi- ums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Oregon medical subtraction because Sam doesn’t meet the age requirement and Sam’s mother is a dependent. Subtractions

150-101-431 (Rev. 11-27-24) 84 Example 2: Peter turned 66 during the tax year. He’s self-employed and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on Schedule OR-A. He also deducted 100 percent of his self-employed health insurance premiums, totaling $2,500, on his fed- eral return. Only the $3,200 in medical expenses Peter claimed on Schedule OR-A will be used to calculate his special Oregon medical subtraction because they haven’t been fully deducted. The worksheet will help him calculate the amount of his subtraction. Special Oregon medical subtraction worksheet instructions Line 1: Enter each person’s qualifying medical and den- tal expenses that you’re claiming as itemized deduc- tions on Schedule OR-A. Enter your expenses in col- umn (A) and your spouse’s expenses in column (B). If you’re not including medical expenses in your Oregon itemized deductions or you’re claiming the standard deduction on your Oregon return, skip lines 2–4, enter the amount from line 1 on line 5, and go to line 6. Line 2: Enter the total medical and dental expenses you’re claiming as an itemized deduction (Schedule OR-A, line 1), even if they are for a spouse or depen- dent whose expenses don’t qualify. Line 3: Line 1 divided by line 2. Round to three deci- mal places. For example, 0.7308 is rounded to 0.731. Line 4: Enter the lesser of the amount you entered on line 2, above, or the amount on line 3 of your Schedule OR-A. Line 5: Multiply line 3 times line 4 and round to whole dollars. (For example: $101.49 is rounded to $101.) Line 6: Enter the maximum allowable medical sub- traction for your filing status and federal AGI from Table 11. Don’t enter more than $1,800 in each column. Line 7: Enter the smaller of line 5 or line 6. Line 8: Combine the amounts from line 7, columns (A) and (B). This is your special Oregon medical subtraction. Full-year residents. Enter the amount from line 8 on Schedule OR-ASC, section B. Part-year residents and nonresidents. Enter the full amount from line 8 on both the federal and Oregon lines on Schedule OR-ASC-NP, section C. Special Oregon medical subtraction worksheet:

Column Column

(A) (B)

You Spouse

1. Medical and dental

expenses for each qualifying taxpayer. 1. $ $

2. Total medical and

dental expenses claimed (Schedule OR-A, line 1). 2. $ $

3. Line 1 divided by line 2.

Round to three decimal places. 3.

4. Enter the smaller of

line 2, above, or Schedule OR-A, line 3. 4. $ $

5. Line 3 times line 4.

Round to the nearest dollar. 5. $ $

6. Maximum allowable

medical subtraction from Table 11. 6. $ $

7. Enter the smaller of

line 5 or line 6. 7. $ $

8. Combine the amounts

from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $

Example 3: Leah and Tyler are ages 67 and 61 at the end of the tax year. They file a joint return with fed- eral AGI of $45,000 and itemize their deductions for Oregon. During the year, they paid $4,700 in medi- cal and dental expenses claimed on Schedule OR-A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medi- cal insurance policy covering both of them. Only Leah’s expenses qualify for the special Oregon medi- cal subtraction because only she met the age require- ment. Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows: Subtractions

150-101-431 (Rev. 11-27-24) 85

Column Column

(A) (B)

Leah Tyler

1. Medical and dental

expenses for each qualifying taxpayer. 1. $ 2,150 $

2. Total medical and

dental expenses claimed (Schedule OR-A, line 1). 2. $ 4,700 $

3. Line 1 divided by line 2.

Round to three decimal places. 3. 0.457

4. Enter the smaller of

line 2, above, or Schedule OR-A, line 3. 4. $ 3,375 $

5. Line 3 times line 4.

Round to the nearest dollar. 5. $ 1,542 $

6. Maximum allowable

medical subtraction from Table 11. 6. $ 1,800 $

7. Enter the smaller of line

5 or line 6. 7. $ 1,542 $

8. Combine the amounts

from line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,542

Leah and Tyler will claim $1,542 on Schedule OR-ASC. Example 4: Kenneth and Sophia were both age 66 at the end of the tax year. They file a joint return with fed- eral AGI of $78,000. Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses dur- ing the year. They are self-employed and claimed $3,400 for self-employed health insurance premiums on their federal return. They claimed the remaining $8,900 on line 1 of Schedule OR-A. Of this amount, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia calculate their special Oregon medical subtraction as follows:

Column Column

(A) (B)

Kenneth Sophia

1. Medical and dental

expenses for each qualifying taxpayer. 1. $ 1,200 $ 7,700

2. Total medical and

dental expenses claimed (Schedule OR-A, line 1). 2. $ 8,900 $ 8,900

3. Line 1 divided by line 2.

Round to three decimal places. 3. 0.135 0.865

4. Enter the smaller of

line 2, above, or Schedule OR-A, line 3. 4. $ 5,850 $ 5,850

5. Line 3 times line 4.

Round to the nearest dollar. 5. $ 790 $ 5,060

6. Maximum allowable

medical subtraction from Table 11. 6. $ 1,400 $ 1,400

7. Enter the smaller of line

5 or line 6. 7. $ 790 $ 1,400

8. Combine the amounts from

line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 2,190

Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they don’t include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that haven’t been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that haven’t been previously deducted, and $1,400, the maximum amount allowed Sophia). Example 5: Margaret is age 67 at the end of the tax year. She’s single and has a federal AGI of $27,000. During the year, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret doesn’t itemize her deductions because her standard deduction is greater than her itemized deductions for Subtractions

150-101-431 (Rev. 11-27-24) 86 Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows: Column Column

(A) (B)

Margaret Spouse

1. Medical and dental

expenses for each qualifying taxpayer. 1. $ 1,200 $

2. Total medical and

dental expenses claimed (Schedule OR-A, line 1). 2. $ $

3. Line 1 divided by line 2.

Round to three decimal places. 3.

4. Enter the smaller of line

2 above, or Schedule OR-A, line 3. 4. $ $

5. Line 3 times line 4.

Round to the nearest dollar. 5. $ 1,200 $

6. Maximum allowable

medical subtraction from Table 11. 6. $ 1,400 $

7. Enter the smaller of

line 5 or line 6. 7. $ 1,200 $

8. Combine the amounts from

line 7, columns (A) and (B). This is your special Oregon medical subtraction. 8. $ 1,200

The medical expenses paid by Margaret for her 9-year-old granddaughter don’t qualify for the sub- traction because she is a dependent. Example 6: Same as Example 5, except that Margaret isn’t an Oregon resident. She enters $1,200 on both the federal and Oregon lines of Schedule OR-ASC-NP, section C. State and local government bond interest (ORS 316.056) [Subtraction code 317] You can subtract interest or dividends on obligations of counties, cities, districts, ports, or other public or municipal corporations or political subdivisions of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by the State of Oregon to the extent included for federal income tax purposes. You can also subtract interest paid on bonds issued by an interstate bridge commission formed along the border of Oregon and Washington to the extent included for federal income tax purposes. Related expenses You must reduce your subtraction if you’re including interest you paid on debt incurred to carry the obliga- tions or securities or other expenses incurred in the production of income from these obligations in your Oregon itemized deductions on Schedule OR-A. Taxable benefits for former RDPs (ORS 314.023, OAR 150-316-0009) [Subtraction code 347] If you and your RDP were legally married or dis- solved your partnership during the year, you may be allowed an Oregon subtraction for: • The imputed value of certain fringe benefits pro- vided by your employer for your RDP for the part of the year you were still registered domestic partners. • The transfer of funds from your former domestic partner upon a dissolution decree. The fringe benefits typically include, but aren’t lim- ited to, health insurance and tuition payments. You must have included the imputed value of the benefits in your federal income to claim the Oregon subtrac- tion. The imputed value will be included in the total compensation (Box 1) shown on your Form W-2. The transfer of funds typically include, but aren’t limited to, retirement funds. You must have included these amounts in your federal income to claim the Oregon subtraction. Example: Ruth and Jan entered into an RDP eight years ago. They were legally married on June 16 of this tax year. Ruth and Jan must file this year’s tax return as married filing jointly for both federal and Oregon purposes. They won’t file an “as-if” federal return. Instead, they will attach their actual federal return to their Oregon return. Ruth’s employer provides health insurance benefits for Jan, and the imputed value of those benefits were included in Box 1 of Ruth’s W-2 for the portion of the year that Ruth and Jan weren't married (January 1 through June 15). Ruth may claim a subtraction for the value of the imputed benefits included in federal income, as reported on her W-2. Subtractions

150-101-431 (Rev. 11-27-24) 87 U.S. government interest in IRA or Keogh distributions (ORS 316.681) [Subtraction code 331] Interest and dividends on U.S. bonds and notes are exempt from state tax. See “Interest and dividends on U.S. bonds and notes.” Answer these questions to see if you have a subtraction on your Oregon return for exempt income related to your retirement distributions: 1. Did you have any distributions from a self- employed retirement plan or an IRA? 2. Was any part of your self-employed retirement plan or your IRA invested in U.S. bonds and notes? 3. Did you include your self-employed retirement plan or IRA distribution in your 2024 federal AGI? If you answered “yes” to all the questions above, you may take a subtraction on Schedule OR-ASC or OR-ASC-NP for the retirement plan exempt earnings included in your distribution. Use a worksheet like the one shown in the example here or in OAR 150-316-0525 to calculate your sub- traction. Keep the worksheet with your records; we may ask for it later. Example: Donna retired last year and began tak- ing distributions of $10,000 each year from her IRA. The IRA is invested in U.S. government securities so Donna uses the following information to calculate her subtraction for years 1 and 2:

Year 1 Year 2

Current year earnings $4,000 $5,000

Current year distribution $10,000 $10,000

Account balance at 12/31 $100,000 $95,000

Total exempt earnings on account at 12/31 $ 40,000 $45,000

Worksheet Year 1 Year 2

1. Total account balance

at year end. $100,000 $95,000

2. Current year

distribution. + 10,000 + 10,000

3. Line 1 plus line 2. $110,000 $105,000

4. Total exempt earnings

on account at year end. $ 40,000 $45,000

5. Total exempt part of

distributions from all prior years. – 0 – $3,636

6. Line 4 minus line 5,

but not less than zero.

$40,000 $41,364 7. Line 6 divided by line 3.

Oregon exempt ratio. 0.3636 0.3939

8. Line 2 multiplied by

line 7. Oregon exempt portion of current year’s distribution. $3,636 $3,939

Wildfire civil action legal fees (Or Laws 2024, ch 50, § 3) [Subtraction code 313] If you paid legal fees as a plaintiff in litigation related to a qualified wildfire and would have been able to deduct those fees as a miscellaneous itemized deduc- tion on your federal return under IRC Sections 63(d) and 67, as in effect on December 21, 2017, you may subtract those fees on your Oregon return. A qualifying wildfire is a wildfire that meets one of the following conditions: • Is the subject of a state of emergency declared by the Governor; • Occurs in an area subject to an executive order of the Governor invoking the Emergency Conflagra- tion Act; or • Is a federally declared disaster, whether located within Oregon or elsewhere. The declaration or executive order relating to the wildfire must have been issued on or after January 1, 2018, and before January 1, 2026, to qualify. You can claim the subtraction even if you don’t item- ize deductions on your return. The subtraction is limited to the amount of legal fees that exceed 2 per- cent of your federal AGI. Wildfire civil action settlement or judgment (Or Laws 2024, ch 50, § 2) [Subtraction code 312] If you received income from a judgment or settlement of a civil action arising from a qualifying wildfire during the tax year, you may subtract that amount from your Oregon taxable income. You may only subtract amounts that are included in your federal AGI, and the amounts cannot be compensation for losses, expenses, or other damages for which you already received compensation through insurance or other means. If you were able to claim a deduction or a credit on your federal return for the income, you can’t subtract it on your Oregon return. A qualifying wildfire is a wildfire that meets one of the following conditions: • Is the subject of a state of emergency declared by the governor; • Occurs in an area subject to an executive order of the governor invoking the Emergency Conflagra- tion Act; or • Is a federally declared disaster, whether located within Oregon or elsewhere. The declaration or executive order relating to the wildfire must have been issued on or after January 1, 2018, and before January 1, 2026, to qualify. Subtractions

150-101-431 (Rev. 11-27-24) 88 Other items Net operating losses (NOLs) (ORS 316.028) [Addition code 116] [Subtraction code 321] An Oregon NOL is figured the same as in IRC Section 172(c). You may have an Oregon NOL without having a federal NOL, or vice versa. Your Oregon NOL is computed under the federal method and definitions using Oregon sources without Ore- gon modifications, additions, and subtractions. The only Oregon modification necessary is to subtract prohibited amounts. Oregon doesn’t allow an NOL from a non-Oregon source that occurred while you were a nonresident. Prohibited amounts Amounts Oregon is prohibited from directly or indi- rectly taxing include interest earned from Treasury bonds, Treasury notes, and other obligations of the United States. Federal depreciation disconnect If you had an NOL in 2009 or 2010 and also claimed depreciation or expensing not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. See “Deprecia- tion difference for Oregon.” Computation of the NOL Full-year residents. Generally, the computation of the Oregon NOL for a resident is the same as the federal NOL, except for the prohibited amount modification. (See Prohibited amounts above.) The computation of the Oregon NOL begins with fed- eral AGI. Reduce AGI by federal exemptions, federal deductions, and the prohibited amount modifica- tion to arrive at the modified Oregon taxable income (OTI). Then adjust the modified OTI as required by IRC Section 172(d). Required adjustments are: 1. Oregon NOL deduction (NOLD) from prior years included in Oregon income after adjustments. 2. Net Oregon capital loss deduction. 3. Federal personal exemption amount (this will be .) 5 2 0 2 r a e y x a t h g u o r h t 0 $ 4. Excess of nonbusiness deductions over nonbusi- ness income included in modified Oregon taxable income. Example 1: Maria and Jaime filed joint federal and Oregon tax returns for 2024. On their federal return, they reported wages of $56,000, a business loss of $80,000, a gain on the sale of stock of $500, and inter- est income of $900 from a bank. They reported total itemized deductions of $34,000, which were all non- business and included $4,000 in Oregon withholding. On their Oregon return, Maria and Jaime reported an addition of $500 of municipal bond interest from California that was exempt from federal income tax. Their Oregon NOL is computed as follows: Federal tax return 56,000 $

Wages 900

Interest income (80,000)

Schedule C loss 500

Schedule D stock gain 22,600)

($

Federal AGI 0

Personal exemptions (34,000)

Schedule A deductions 56,600)

($

Federal taxable income

Computation of Oregon NOL ) 22,600

($

Federal AGI 0

Personal exemptions (34,000)

Schedule A deductions ) 56,600

($

Modified Oregon taxable income Adjustments:

0

Personal exemptions 34,000

Nonbusiness deductions ) (1,400

Nonbusiness income Nonbusiness deductions in 32,600

excess of nonbusiness income ) 24,000

($

Oregon NOL Note: The $500 in California municipal bond interest and the $4,000 in Oregon withholding aren't used in this calculation. Compute the Oregon NOL based on federal NOL methods and definitions. Use Oregon sources with- out Oregon adjustments (modifications, additions, and subtractions), except for prohibited amounts. Example 2: Use the same facts as in Example 1, except the $900 interest is from U.S. government securities (a prohibited amount). The Oregon NOL for Maria and Jaime is computed as follows: Federal tax return 56,000 $

Wages

900

Interest from U.S. government securities ) 80,000 (

Schedule C loss Other items

150-101-431 (Rev. 11-27-24) 89

Schedule D stock gain 500

) 22,600

($

Federal AGI 0

Personal exemptions (34,000)

Schedule A deductions ) 56,600

($

Federal taxable income Computation of Oregon NOL ) 22,600

($

Federal AGI ) (900

U.S. government interest 0

Personal exemptions

)0 0 0,4 3(

Schedule A deductions ) 57,500

($

Modified Oregon taxable income Adjustments:

0

Personal exemptions 34,000

Nonbusiness deductions ) (1,400

Nonbusiness income 32,600

Excess nonbusiness deductions ) 24,900

($

Oregon NOL Note: ,t n u o m a d e ti b i h o r p a ,ts e r e t n i t n e m n r e v o g .S. U

isn’t used to compute an Oregon NOL. Oregon NOL carryover or carryback. With the excep- e h t s w o ll o f n o g e r O ,) w o le b e e s( s L O N

g n i m r a f f o n o it ,2 7 1 n o itc e S C R I n i s w al k c a b y r r a c d n a r e v o y r r a c S R I although prohibited amounts aren’t taken into con-

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n a elif o t the Oregon NOL to the year the loss may first be applied. You aren’t allowed an NOL carryback or carryover on an Oregon return if the loss was incurred while you were a nonresident and wasn’t attributable to Oregon sources. If your Oregon NOL is less than your federal NOL, report the difference as an addition on Sched- ule OR-ASC, Section A, or Schedule OR-ASC, Section B. For more information, see IRS Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Exception for farming NOLs. Starting with losses aris- ing in 2023, you can elect to carry an Oregon farming NOL back to any of the prior three years, instead of the two years allowed by IRC Section 172. However, if you make this election, you must add back any fed- eral NOLD on your Oregon return that you carried to the same year before you deduct the farming NOLD. Part-year residents and nonresidents. You’re allowed an Oregon NOL if it’s generated from Oregon sources. Use the federal method without modifications except for prohibited amounts. Computing an Oregon NOL begins with “income after adjustments” from the Oregon column. Reduce this amount by federal exemptions and deductions (attributable to Oregon sources) to arrive at the modified OTI. Then adjust the modified OTI as required by IRC Section 172(d). The required adjustments are the same as those listed for full-year residents. Example 3: In 2023, while they were residents of California, Robin and Valerie incurred losses from an Oregon partnership creating an $85,000 Oregon-only NOL. The next year, Robin and Valerie move to Oregon and file a part-year Oregon return. They report federal income after adjustments of $385,000, Oregon income after adjust- ments of $235,000, and federal itemized deductions of $72,000 that aren’t subject to AGI limits. Using the federal NOL rules, they determine that their NOL carryover is less than 80 percent of their taxable income before the loss is applied. Robin and Valerie calculate their Oregon taxable income as follows:

Federal Oregon $ 385,000 Income after adjustments $ 235,000 (85,000 ) (85,000 ) NOLD $ 300,000 $ 150,000 Modified income after adjustments 7,000 7,000 Additions per Oregon return (2,000 ) (2,000 ) Subtractions per Oregon return Modified income after subtractions $ 305,000 $ 155,000

Oregon percentage: 155,000 ÷ 305,000 = 50.8% Less: Standard or itemized deductions recomputed for revised federal AGI (72,000 ) -0 -* Federal tax subtraction $ 233,000 Oregon taxable income as revised *The federal tax subtraction is $0 when federal AGI is $290,000 or more for joint filers. Example 4: Leslie and Jill live in Vancouver, Washington. Leslie operates a business in Oregon. Leslie and Jill filed a nonresident Oregon return for 2023 reporting an Oregon-only NOL of $6,000. Leslie and Jill carried the NOL over to 2024. In 2024, Leslie and Jill report Oregon income after adjustments of $1,600, federal income after adjustments of $32,000, and their Oregon percentage is 5 percent ($1,600 ÷ $32,000). Their income after Other items

150-101-431 (Rev. 11-27-24) 90 adjustments for both federal and Oregon includes a $2,000 capital loss on the sale of some Oregon property. They are claiming the federal standard deduction, and have Oregon itemized deductions of $13,200. Leslie and Jill calculate their NOLD and the carryover to the next year as follows: ($6,000) NOL carried forward from 2023 $1,600 Oregon income after adjustments 2,000 Add: Oregon capital loss deduction $3,600 Modified Oregon income as revised (0 ) Less: Prohibited amounts Oregon percentage of standard or itemized (660 ) deductions recomputed for revised federal AGI (0.05 x $13,200) $2,940 Modified Oregon taxable income x 0.80 Multiply by 80 percent (federal limitation) 2,352 Limit for NOLD ($3,648 ) Carryover of NOL available for next year NOL as a subtraction. Generally, your NOL carryback and carryover amounts will be reflected in your federal AGI. However, if you have an NOL carryback or carryover for Oregon only, the loss won’t be reflected in your federal AGI; in that case, claim your carryback or carryover as a subtraction on Schedule OR-ASC, Section B, or Schedule OR-ASC-NP, Section C. Example 5: Same facts as Example 4. For federal purposes, Leslie and Jill's NOL will be entirely absorbed in 2024. The $3,648 that is available to be carried forward to their 2025 return won't be reflected in their 2025 federal AGI. They'll compute the NOLD amount for 2025 as they did for 2024, and claim the allowable amount as a subtraction on Schedule OR-ASC-NP. Depreciation difference for Oregon (ORS 316.707, 316.716, 316.739) [Addition code 152] [Subtraction code 354] Your Oregon depreciation or amortization deduction is generally the same as for federal purposes. It won’t be the same in the following cases: • You transferred property into Oregon’s taxing jurisdiction. • The asset was placed in service in tax years begin- ning on or after January 1, 1985, and you took a cor- responding tax credit on your federal return that isn’t available on the Oregon return. • Assets were placed in service between 1981 and 1985 (Accelerated Cost Recovery System [ACRS] assets), and you didn’t make the adjustment align- ing Oregon basis with federal basis for them. If you made the adjustment on your 1996 tax return, there won’t be a depreciation difference. • The asset was placed in service during tax years 2009 or 2010 and you claimed bonus depreciation or additional expensing under IRC Sections 168(k) or 179. For tax years 2009 and 2010, Oregon gen- erally allowed the same expensing of qualifying assets under IRC Sections 168(k) and 179 as allowed under 2008 federal law. Because of this disconnect an addition is required, leaving a higher adjusted basis for Oregon to be depreciated over the life of the asset. Most taxpayers with an addition for this disconnect in 2009 or 2010 will have future year subtractions over the remaining life of the asset. NOL and federal depreciation disconnect. Your Ore- gon NOL is the same as your federal NOL. Therefore if you had an NOL in 2009 or 2010 and also claimed depreciation or expenses not allowed by Oregon, your future year subtractions are reduced by the amount already included in the NOL. Oregon Depreciation Schedule. Use Schedule OR- DEPR to determine if your Oregon depreciation is the same as, or different from, your federal depreciation. Oregon depreciation on all property – Federal depreciation on the same property = Oregon difference in depreciation Oregon subtraction. If your Oregon depreciation is more than your federal depreciation on the same property, you’ll have a subtraction (subtraction code 354) for the difference. Oregon addition. If your Oregon depreciation is less than your federal depreciation on the same property, you’ll have an addition (addition code 152) for the difference. Go to our website to download Schedule OR-DEPR, or contact us to order it. Federal depreciation disconnect ] 3 5 1 e d o c n o iti d d A [ This addition is used for reporting a difference in fed- eral and Oregon depreciation deductions due to a new Other items

150-101-431 (Rev. 11-27-24) 91 change in federal law from which Oregon has discon- nected. As of the date this publication was last revised, Oregon had not disconnected from any new federal depreciation expense provisions for this tax year. If your depreciation expense deduction for Oregon differs from federal for reasons other than a new federal disconnect, see “Depreciation difference for Oregon” and Schedule OR-DEPR Instructions. Partnership and S corporation modifications for Oregon (ORS 314.712-314.752) [Addition code 119] [Subtraction code 323] If you received Schedule OR-K-1 from a PTE (partner- ship, S corporation, or LLC filing as either), then you may have Oregon modifications or credits that flow through to your Oregon return. Your modification or credit is based on the total for the business multiplied by your ownership percentage, which should have been calculated by the business. If the PTE provided you with a specific code for an Oregon addition or subtraction, use that code. Oth- erwise, use the above codes to identify the addition or subtraction. If the PTE operates both in and out of Oregon, it has an apportionment percentage for the year. This per- centage shows how much of the PTE’s income was from Oregon sources. If you were a nonresident for all or part of the year, this percentage should appear on your Schedule OR-K-1, since it shows you how much of the income from your business is Oregon source. The PTE should have already multiplied your share of Oregon additions and subtractions by the PTE’s apportionment percentage. Business tax credits. Oregon credits that flow through may be required to be multiplied by your Oregon per- centage on your part-year or nonresident return. See “Credits” for requirements. CPAR adjustments (ORS 314.733) [Addition code 187] [Subtraction code 384] If you’re an owner of a partnership that was subject to a partnership-level audit by the IRS (or you’re an owner of a tiered partner of such a partnership), and the partnership doesn’t elect to pay the CPAR tax, you must file an original or amended return for the adjusted year. Report an increase in income using addition code 187 or report a decrease in income using subtraction code 384, whichever is applicable. Use these codes even if another code is assigned for the specific type of increased or decreased income. See “CPAR tax” in “Oregon tax” or visit our website for more information. Basis of business assets transferred into Oregon (ORS 316.707) [Addition code 150] [Subtraction code 358] There are several ways that nonresidents can bring assets into Oregon’s taxing jurisdiction. For example: • You become an Oregon resident and transfer busi- ness assets into Oregon. • You become an Oregon resident and leave the assets in the other state. • You open a business in Oregon and transfer busi- ness assets into Oregon. Did you transfer business assets into Oregon? If so, the basis for Oregon depreciation will be either the federal unadjusted basis or fair market value at the time of transfer, whichever is smaller. The federal unadjusted basis is the original cost before adjustments. Adjustments include reductions for investment tax credits, depletion, amortization, depreciation, or amounts expensed under IRC Sec- tion 179. The fair market value and useful life are fig- ured when you bring the asset into Oregon. Reduce the federal unadjusted basis or the fair mar- ket value of the asset by any Oregon depreciation previously allowed. Example: Bob was a California resident. He has owned a business in Yreka, California since 2000. Bob bought an office building in Yreka for $800,000. He placed it in service March 1, 2000. For federal purposes, the build- ing is 31½-year real property and is being depreciated using the applicable percentages. On January 1, 2020, Bob bought a truck for $45,000. For federal purposes, the truck is five-year property and is being depreci- ated using the applicable percentages. On January 1, 2024, Bob moved to Ashland, but he con- tinues to operate his business in Yreka. At that time, the building had a fair market value of $1,473,000, and the truck’s fair market value was $27,000. Because Bob is an Oregon resident, he must determine his Oregon basis to depreciate his assets for Oregon. The Oregon adjusted basis is computed as follows: Building Smaller of: Cost of building $ 800,000 (federal unadjusted basis) Less: Depreciation previously allowed – 0 for Oregon tax purposes $ 800,000 Net basis Other items

150-101-431 (Rev. 11-27-24) 92 or Fair market value as of January 1, 2024 $ 1,473,000 Less: Depreciation previously allowed – 0 for Oregon tax purposes $ 1,473,000 Oregon fair market value Bob will depreciate the building for Oregon using the $800,000 federal unadjusted basis and Modified Accelerated Cost Recovery System (MACRS) depre- ciation for its original federal applicable recovery period. Truck Smaller of: Cost of truck (federal unadjusted basis) $ 45,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 $ 45,000 Net basis or Fair market value as of January 1, 2024 $ 27,000 Less: Depreciation previously allowed for Oregon tax purposes – 0 $ 27,000 Oregon fair market value Bob will depreciate the truck for Oregon using the $27,000 Oregon fair market value and MACRS depre- ciation for its original applicable federal recovery period. Gain or loss on sale of depreciable property with different basis for Oregon (ORS 316.716) [Addition code 154] [Subtraction code 355] Gain or loss on property you began depreciating after 1980 and before 1985. During the tax year, did you sell property you began depreciating after December 31, 1980, and before January 1, 1985? If you did and didn’t make the one-time adjustment on your 1996 Oregon return, your gain or loss for Oregon may differ from your gain or loss for federal purposes. If you sold this property during the year, you must make an adjustment on your return to reconcile your Oregon basis to your federal basis. To figure your gain or loss for Oregon, use the depre- ciation you claimed on your Oregon return in prior years. Subtract the total amount of gain or loss for Oregon property you began depreciating after 1980 and before 1985 from your gain or loss for federal purposes for the same property. The difference is an Oregon addition or subtraction. Keep a worksheet with your tax records to show how you figured the difference. Addition or subtraction If Oregon depreciation is less than your federal depreciation, you will have an Oregon subtraction. If Oregon depreciation is more than your federal depre- ciation, you will have an Oregon addition. Partnerships and S corporations Partnerships report differences between federal and Oregon depreciation on the Oregon partner- ship return. S corporations report the differences on Schedule SM of the Oregon S corporation return. The differences must also be shown on the partner’s or shareholder’s Schedule OR-K-1 or equivalent. The differences will be added to or subtracted from income on the individual partner’s or shareholder’s Oregon income tax return. Gain on the sale of an Oregon residence (ORS 316.048) [Addition code 152] [Subtraction code 354] Generally, Oregon will tax the gain from the sale of your residence only when the federal government taxes it. Oregon won’t tax any gain excluded on your federal return. This is true even if you reinvest in a home outside Oregon. The Oregon basis of your home is generally the same as your federal basis. If your gain is taxed by the fed- eral government, Oregon will tax the same amount of gain. Exception: If you were renting out a house and then converted it to your personal residence, the Oregon basis may not be the same as the federal basis due to depreciation differences. Note: If you are also taxed by another state or coun- try on some or all of the gain, see “Taxes imposed by other jurisdiction on mutually-taxed gain from sale of residence“ under “Standard credits.“ Fiduciary adjustment from Oregon estates and trusts (ORS 316.697) [Addition code 133] [Subtraction code 310] The same modifications that apply to an individual return also apply to an Oregon estate or trust return. Combined, this is called the fiduciary adjustment. If you’re a beneficiary of an estate or trust, you must report your share of the fiduciary adjustment. This should be shown on the Schedule K-1 which you receive from the estate or trust. Report it on Sched- ule OR-ASC or OR-ASC-NP as an addition using code 133 or as a subtraction using code 310. Other items

150-101-431 (Rev. 11-27-24) 93 Example: Frank reported $5,000 of trust income from R&C Farewell Trust on federal Schedule E. Of this, $2,500 was from interest on U.S. obligations, which isn’t taxable by Oregon. He also received interest income of $1,000 from the trust that wasn't included in his federal income. This interest was from Cali- fornia bonds and is taxable by Oregon. Frank should claim a $1,500 subtraction, the net of both fiduciary adjustment items, using subtraction code 310. Part-year residents. Oregon taxes the fiduciary adjustment if it relates to Oregon income or if you were an Oregon resident on the last day of the trust’s taxable year. Nonresidents. Oregon taxes the fiduciary adjustment if it relates to Oregon income. (PALs)

Passive activity losses

(ORS 314.300) [Addition code 155] [Subtraction code 356] Generally, a passive activity is any: • Rental activity including equipment and real estate, regardless of your level of participation; or • Business in which you don’t materially participate on a regular, continuous, and substantial basis. Oregon generally adopted the federal passive loss rules in the federal Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. There are some differences in passive losses for Oregon. How to compute and report passive losses for Oregon 1. Modify the federal passive loss by the applicable additions and subtractions listed under “Oregon modifications to federal passive activity losses.“ 2. Apply the federal passive loss limitations to the Oregon passive loss you computed in step 1 above. This will determine how much is deductible for Oregon. To apply the income limitations, use fed- eral AGI before modifying for Oregon additions or subtractions. 3. Figure the difference between the passive loss reported on your federal return and the deduct- ible Oregon loss you figured above. You will claim an addition or subtraction on your Oregon return. 4. Keep a schedule with your tax records showing your computations for steps 1, 2, and 3 above. 5. Also keep a schedule (when applicable) showing the allocation of Oregon modifications between the Oregon passive loss activities and other busi- ness activities. Example: Depreciation modification. Elijah has deter- mined that his depreciation for Oregon is more than his federal depreciation by $1,000. Ordinarily, he would report a $1,000 subtraction on his Oregon return for the difference in depreciation. Of the $1,000 difference in depreciation, $600 is allo- cable to passive activities and $400 is allocable to other business activities. His Oregon passive activity loss is his federal passive activity loss increased by the $600 difference in depreciation. He reports the remaining $400 difference in depreciation allocable to other business activities as a subtraction on his Oregon return. Passive activity credits. You can offset in full the tax credits related to a passive activity against your Ore- gon tax liability for the taxable year. Active participants in rental real estate activities. The $25,000 offset for rental real estate activities provided in IRC Section 469(i) applies to deductions allowed under federal and Oregon law. Don’t reduce the off- set by deduction equivalents defined in IRC Section 469(j)(5). The phaseout amounts ($100,000/$150,000) are based on federal AGI regardless of whether you are a full-year resident, part-year resident, or nonresi- dent of Oregon. Part-year residents. Compute your passive activity losses from activities carried on while an Oregon resident. Add those connected with Oregon sources while a nonresident. Modify the result by applicable additions and subtractions listed here. Nonresidents. Compute your passive activity losses from activities connected with Oregon sources. Modify the loss by the applicable additions and subtractions listed here. The loss must be connected with Oregon sources even if you later become an Oregon resident. Oregon modifications to federal passive activity losses Listed here are some of the modifications you must make for Oregon: 1. Additions: • Interest or dividends on obligations of another state. • Depletion in excess of the adjusted basis of property. • Gain on voluntary or involuntary conversions or exchanges of Oregon property reinvested outside Oregon when no election is made to defer it. 2. Subtractions: • Gain or loss on the sale of public utility stock where dividends were reinvested. • Interest or dividends on obligations of the U.S. government. • Wages you didn’t deduct from federal taxable income because you claimed the federal work opportunity credit. • Interest or dividends on obligations of Oregon political subdivisions. Other items

150-101-431 (Rev. 11-27-24) 94 3. Additions or subtractions: • Differences in depreciation. • Differences in gain or loss from basis differences in the sale of an asset. Note: Items used to modify the federal passive activ- ity loss must occur in the ordinary course of a trade or business. See OAR 150-314-0110 for more information. Suspended losses (ORS 316.048) [Addition code 156] [Subtraction code 357] Suspended losses are passive activity losses that must be carried over from the loss year to a later tax year. These losses may be used to offset gain when you dispose of your entire interest in the passive activity in a fully taxable transaction under IRC Section 469. You may have an addition if the transaction is taxable by Oregon and a suspended loss was incurred while you were a nonresident. You may have a subtraction if the transac- tion is not taxable by Oregon but you were a resident dur- ing the year when the suspended loss was incurred. See “Passive activity losses” for more information. Oregon percentage (ORS 316.117) Part-year residents and nonresidents must compute an Oregon percentage. This determines allowable deduc- tions, modifications, Oregon tax, and some tax credits. In most cases, you’ll divide your income after sub- tractions from the Oregon column by your income after subtractions from the federal column. Carry the decimal to three places and enter the figure on the Oregon percentage line. Don’t fill in more than 100 percent or less than 0. Negative income. If the federal column is negative and the Oregon column is positive, your Oregon percentage is 100 percent. If the federal column is positive and the Oregon column is negative, your Oregon percentage is 0 percent. If both columns are negative, treat both col- umns as if they were positive and then: • If the Oregon number is smaller than the federal number, your Oregon percentage is 100 percent. • If the federal number is smaller than the Oregon num- ber, divide the federal number by the Oregon number. See Table 12 for examples. Example: Lisa reported $30,000 of income after sub- tractions in the federal column. She reported $10,000 of income after subtractions in the Oregon column. Here’s how she figured her Oregon percentage: $10,000 ÷ $30,000 = 0.333 or 33.3% Table 12. Oregon percentage examples Federal column Oregon column Oregon percentage ($20,000) $42,000 100.0% $50,000 ($22,000) 0.0% ($25,000) ($15,000) 100.0% ($12,000) ($15,000) 80.0%

Deductions and modifications (ORS 316.695) You may claim either Oregon itemized deduc- tions or Oregon’s standard deduction, whichever is larger, but not both. You can claim Oregon item- ized deductions even if you’re claiming the stan- dard deduction on your federal return. Oregon itemized deductions Oregon Schedule OR-A. Oregon has its own form for reporting itemized deductions. If you're itemizing your deductions for Oregon, include Schedule OR-A with your Oregon return whether or not you're item- izing deductions on your federal return. You still use federal definitions and AGI to figure any itemized deduction limitations. For more information, see the instructions for Schedule OR-A. Itemized deduction add backs Certain items that you may be including on Sched- ule OR-A must be modified for Oregon purposes. If you’re claiming a deduction that must be modified for Oregon, you may need to add back some (or all) of the amount you deducted. All deductions that must be added back can be found under “Additions.” Follow these instructions for reporting an itemized deduction add back: • Full-year residents: Enter the amount you’re add- ing back with the indicated addition code on Sched- ule OR-ASC, section A. • Part-year residents and nonresidents: Use the indicated modification code and enter the dollar amount with a minus sign to report the add back as a “negative modification” on Schedule OR-ASC- NP, section D. Other Oregon modifications Part-year residents and nonresidents. Most income items that are modified for Oregon are reported as additions or subtractions. However, a few items must be reported by part-year residents and nonresidents as modifications on Schedule OR-ASC-NP. These are: • -tr a p ( n o itc a rt b u s n o it u b irt n o c el b a tir a h c s’tsitr A year filers only). Other items

150-101-431 (Rev. 11-27-24) 95 • Federal income tax refund addition (negative modification). • Subtraction for federal tax from a prior year. • Foreign tax subtraction. See these items under “Additions” or “Subtractions” and the instructions for Schedules OR-ASC and OR- ASC-NP for more information. Oregon standard deduction Use the standard deduction only if it’s larger than your Oregon itemized deductions. If your filing status is married filing separately and your spouse itemizes, your standard deduction is $0. Generally, your standard deduction is based on your filing status: Single ……………………………………………

$2,745 Married filing jointly………………………………

$5,495 Married filing separately If spouse claims standard deduction………

$2,745 If spouse claims itemized deductions ……………

$0 Head of household ……………………………

$4,420 Qualifying surviving spouse …………………

$5,495 Standard deduction—Non-U.S. citizens without per- manent resident status. Your standard deduction is $0, but you may claim itemized deductions. Standard deduction—Short-period return. Individu- als filing a short-period return may not claim a stan- dard deduction. Standard deduction—Age 65 or older, blind. If you or your spouse turned 65 on or before January 1, 2025, or if you or your spouse are blind, you’re entitled to an additional deduction amount. If you checked one or more of the boxes on line 17 of your Oregon Form OR-40 or line 38 of your Oregon Form OR-40-N or OR-40-P, multiply the number of boxes checked by: • $1,000 if married or qualifying surviving spouse. • $1,200 if single or head of household. Add this amount to the standard deduction amount for your filing status from above. Example 1: Matt and Sandy are married and file a joint return. Matt is 67 years old, and Sandy, age 62, is blind. They check boxes 17a and 17d on their Form OR-40. Their total standard deduction is $7,210. They figure their standard deduction as follows: Standard deduction for their filing 5 9 4,5 $ status MFJ 0 0 0,2 $ 2 x $1,000

Total standard deduction 5 9 4,7 $ Standard deduction—Single or married filing jointly dependents. If you (or you and your spouse, if fil- ing jointly) can be claimed as a dependent on another person’s return, use the following worksheets to fig- ure your standard deduction. Use these worksheets even if the other person doesn’t claim you (or your spouse, if filing jointly). Earned income includes salaries, wages, tips, profes- sional fees, or other amounts received as pay for work you actually perform, and any part of a scholarship or fellowship grant that you must include in your gross income. Use your earned income from all sources even if you are a part-year resident or nonresident. Standard deduction worksheet for single dependents

1. Enter your earned income. 1. 450 $ 2.

Additional $450.

2. 3. Add lines 1 and 2. 3. 1,300 $ 4. Minimum standard deduction. 4. 5. Enter the larger of line 3 or 4. 5. 2,745 $ 6.

Basic standard deduction for single. 6.

7. Enter the smaller of line 5 or 6. 7. If age 65 by 1/1/2025, enter $1,200; 8.

8. if not, enter $0. 9.

If blind, enter $1,200; if not, enter $0. 9. Add lines 7, 8, and 9. This is your 10.

10. standard deduction. Example 2: Homer is single, age 17, not blind, and claimed as a dependent by his father. He had $1,135 of earned income. Homer’s standard deduction is $1,585, figured as follows: 1,135 $ 1. Enter your earned income. 1. 450 $ 2.

Additional $450.

2. 1,585 $ 3. Add lines 1 and 2. 3. Minimum standard deduction, 4. 1,300 $ 4.

set amount. 1,585 $ 5. Enter the larger of line 3 or 4. 5. 2,745 $ 6.

Basic standard deduction for single. 6. 1,585 $ 7. Enter the smaller of line 5 or 6. 7. If age 65 by 1/1/2025, enter $1,200; 8. 0 $ 8. if not, enter $0. 0 $ 9.

If blind, enter $1,200; if not, enter $0. 9. Add lines 7, 8, and 9. This is your 10.

1,585 $ 10.

standard deduction. Other items

150-101-431 (Rev. 11-27-24) 96 Standard deduction worksheet for married filing jointly (MFJ) dependents

1. Enter your earned income. 1. 0 5 4 $ 2. Additional $450.

2.

3. Add lines 1 and 2. 3. 0 0 3,1 $ 4. Minimum standard deduction. 4.

5. Enter the larger of line 3 or 4. 5. 5 9 4,5 $ 6. Standard deduction for MFJ. 6.

7. Enter the smaller of line 5 or 6. 7. If age 65 by 1/1/2025, enter $1,000; 8.

8. if not, enter $0. 9.

If blind, enter $1,000; if not, enter $0. 9. Add lines 7, 8, and 9. This is your 10.

10. standard deduction. Example 3: Jack and Kris are married and are both full-time college students. Jack is 20 and Kris is 21. Neither is blind. They live in Jack’s parents’ home and are both claimed as dependents by Jack’s par- ents. Jack and Kris work part-time at the university. Together they had $7,620 of wage income. Jack and Kris will file a joint tax return. They calculate their standard deduction as follows: 1. Enter your earned income. 1. 7,620 $ 2. Additional $450. 2. 450 $ 3. Add lines 1 and 2. 3. 8,070 $ 4. 4. Minimum standard deduction. 1,300 $ Enter the larger of line 3 or 4. 5. 5. 8,070 $ 6. Basic standard deduction for MFJ. 6. 5,495 $ 7. Enter the smaller of line 5 or 6. 7. 5,495 $ If age 65 by 1/1/2025, enter $1,000; 8. if not, enter $0. 8. $ 0 9. If blind, enter $1,000; if not, enter $0. 9. $ 0 10. Add lines 7, 8, and 9. This is your standard deduction. 10. 5,495 $ Oregon surplus refund (ORS 291.349) The Oregon surplus refund, known as the “kicker,” is a way for state government to return some of your taxes to you when revenues are more than predicted. Every two years, the Oregon Department of Admin- istrative Services (DAS) determines whether there is a surplus and the amount to be returned to taxpay- ers as a kicker. If there’s a surplus, the kicker may be claimed on the return or donated to the State School Fund. The kicker is available only on the return for an odd-numbered year. If there’s no surplus, or if the tax year is even-numbered, no kicker is available. There is no kicker available for tax year 2024. Oregon deferral of reinvested capital gain (Or Laws 1995, ch 809) [Addition code 118] From 1996 to 1999, taxpayers were allowed to defer their Oregon personal income tax on certain capital gains if the gains were timely reinvested in assets used in types of business activities. An addition is required for the tax year when the deferred gain must be recognized. Reasons for recognition include ceasing to use the asset in an approved manner, dis- posing of the asset, and ending approved business activities. Federal law disconnect [Addition code 131] Use this addition code to report items that were excluded or deducted from your federal taxable income and should be added back for Oregon pur- poses, where those items don’t already have an assigned addition code. Contact us if you have ques- tions about a situation involving a disconnect from federal taxable income that isn’t described elsewhere in this publication. Other items

150-101-431 (Rev. 11-27-24) 97 Credits Types of credits There are three types of Oregon tax credits: standard, carryforward, and refundable. In addition, some of these credits require certification from another state agency. Certain credits must be prorated on part-year and nonresident returns. Refer to the instructions for the credit you are claiming for specific details. Standard credits. These credits aren’t refundable. They can’t exceed your tax liability for the current tax year. Unused credit in excess of your tax liability can’t be carried forward to a later tax year. Carryforward credits. These credits aren’t refund- able. They can’t exceed your tax liability for the cur- rent tax year, but you may carry forward the unused amount to a later tax year. Refundable credits. Refundable credits may exceed your tax liability for the year. The amount of the credit that exceeds your tax liability will be refunded to you. Certified credits. For certain credits, you must qual- ify, apply, and be certified before you can claim them on your return. Other agencies, not the Department of Revenue, are responsible for certifying these cred- its. Contact information can be found in the instruc- tions for each certified credit in this section. Full-year residents. All credits you qualify for are allowed on Form OR-40. Part-year residents and nonresidents. You must pro- rate certain Oregon credits by multiplying your total credit by your Oregon percentage from Form OR- 40-N or OR-40-P to figure the amount you can claim on your Oregon return. You must prorate the follow- ing credits: • ABLE account contributions. • Agricultural employer overtime tax credit. • Agriculture workforce housing. • Crop donation. • Earned income. • Employer scholarship. • Fish screening devices. • t n u o c c a

n al p s g n i v a s

n o it a c u d e r e h g i h

n o g e r O contributions. • Oregon Cultural Trust. • Oregon Kids’ Credit. • Oregon Veterans’ Home physicians. • Personal exemption. • Reservation enterprise zone. • Rural emergency medical technicians. • Rural medical practitioners. • Short line railroad rehabilitation. • University Venture Development Fund contributions. • Working family household and dependent care. S corporation shareholders. Certain carryforward credits earned by S corporations pass through to shareholders, who then claim these credits on their personal income tax returns. Each of these credits may only be claimed on an Oregon personal income tax return by shareholders of an S corporation that qualifies for the credit or, if the credit is transferable, is a qualified transferee of the credit from another corporation that earned the credit. Except as noted, each credit is limited to the shareholder’s income tax liability for the year, although the carryforward pro- visions may vary. For more information about credits available to S corporations, visit our website. Tax recaptures. Forfeited credits are reported as tax recaptures on Schedule OR-ASC, section C, or Schedule OR-ASC-NP, section E, and on your Oregon return as an addition to tax. See “Additions to tax” in “Oregon tax” for more information. Claiming credits. The exemption credit, political contribution credit (full-year filers), earned income credit, and Oregon Kids Credit are claimed on spe- cific lines on the return. All other credits are reported on Schedule OR-ASC or Schedule OR-ASC-NP. The schedule contains sections that are specific for each of the three types of credits. Enter the credit code and the amount you are claiming in the applicable sec- tion. The total dollar amount of the credits entered in each section is reported on your return. See the explanation for the specific credit on the following pages to find its code number and more detailed instructions. A list of all credits and their code numbers is included in the Appendix. If you claim any credits on Schedule OR-ASC or OR-ASC- NP, include the schedule when you file your return. Credits

150-101-431 (Rev. 11-27-24) 98 Standard credits Exemption credit (ORS 316.085) This year’s maximum credit is $249 for each quali- fying personal exemption. The exemption amount is indexed for inflation. A personal exemption credit isn’t allowed if your fed- eral AGI on line 7 of Form OR-40, or line 29F of Form OR-40-N or Form OR-40-P exceeds: • $200,000 for married filing jointly, head of house- hold, or qualifying surviving spouse; or • $100,000 if your filing status is single or married filing separately. Part-year residents and nonresidents. Multiply your personal exemption credit by your Oregon percentage. Personal exemption The term “personal exemption” refers to an individ- ual who qualifies for a personal exemption deduction on the federal return under IRC Section 151. Through tax year 2025, the amount of the federal deduction is $0; however, the qualifications for the deduction under IRC Sections 151 and 152 haven’t changed, and neither have the qualifications for claiming the Ore- gon personal exemption credit. An individual who qualifies for a personal exemption deduction under IRC Sections 151 and 152 includes: • The taxpayer (including both the primary and sec- ondary taxpayers who file a joint return); • The taxpayer’s spouse, if the taxpayer is filing a separate return and the spouse has no gross income and doesn’t qualify for an exemption deduction on another taxpayer’s return; and • The taxpayer’s qualifying child or qualifying relative. Qualifying child. A qualifying child is an individual who is the taxpayer’s: • Child or the child’s descendant, or • Sibling or stepsibling, or their descendant. The term “child” includes stepchildren, legally- adopted children, and foster children who have been placed with the taxpayer by an authorized placement agency or by court order. At the end of the calendar year, the child must be: • Under the age of 19; or • A student under the age of 24; or • An individual with a permanent and total disability, regardless of age. A “student” is an individual who attended an edu- cational organization on a full-time basis during each of five calendar months during the tax year. The educational organization must have a regular faculty and curriculum, with a regularly-enrolled student body who attend where the organization’s educa- tional activities normally take place. An “individual with a permanent and total disabil- ity” is one who is unable to engage in any “substantial gainful activity,” as that term is defined under federal law, due to a physical or mental impairment that is medically determinable and can be expected to result in death, or which has lasted, or can be expected to last, for at least 12 continuous months. Qualifying relative. A qualifying relative is an indi- vidual for whom the taxpayer pays over one-half of the individual’s support for the year, and who is the taxpayer’s: • Child, sibling, stepsibling, or half sibling, or their descendant, who isn’t also a qualifying child of the taxpayer; • Parent, or their ancestor; • Stepparent or parent-in-law; • Sibling-in-law; • Parent’s sibling; or • An individual who isn’t listed above but is a mem- ber of the taxpayer’s household and has the same principal place of abode as the taxpayer. The qualifying relative can’t have gross income for 2024 that exceeds $5,050, and can’t be claimed on another tax- payer’s return. They must also be a U.S. citizen or national, or a resident of the United States, Mexico, or Canada. Special rule for divorced or separated parents. If a qualifying child receives over one-half of their sup- port from parents who are divorced, legally sepa- rated, or living apart for the last six months of the year, and the child is in the custody of one or both parents for more than half of the year, the personal exemption credit for the child may be claimed by the noncustodial parent if the custodial parent (the par- ent who has custody for the greater part of the year) makes a written statement releasing the exemption to the noncustodial parent for the tax year. The cus- todial parent’s written statement should be kept with the taxpayer’s records; we may ask for it later. For additional information about requirements for the personal exemption deduction, including details about certain exceptions and support limitations, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information. Credits–Standard

150-101-431 (Rev. 11-27-24) 99 You and your spouse You are allowed one personal exemption credit for yourself if no one else can claim you as a dependent. You are allowed one personal exemption credit for your spouse if no one else can claim your spouse as a dependent and: • You’re filing a joint return, or • Your filing status is married filing separately and your spouse has no income. If someone else can claim you as a dependent, you can’t claim an exemption for yourself. If someone else can claim your spouse as a dependent, you can’t claim their exemption. This is true even if the other person doesn’t claim you (or your spouse) as a dependent. Severe disability (ORS 316.752, 316.758) Did you have a severe disability at the end of the tax year? If so, you can claim an additional personal exemption credit if your federal AGI doesn’t exceed $100,000, regardless of your filing status. You may qualify for the additional exemption even if someone else can claim you as a dependent. You’re considered to have a severe disability if any of the following apply: • You permanently lost the use of one or both feet or legs; or • You permanently lost the use of both hands; or • You’re permanently blind; or • You have a permanent condition or an impairment of indefinite duration that limits your ability to:

— Earn a living, or

— Maintain a household, or

— Transport yourself. Deafness or hearing impairment alone don’t qualify as a severe disability for purposes of this additional exemption credit. This is true regardless of any special equipment you may use in your home or workplace. You don’t qualify for this exemption if: • You have a temporary disability from an injury or illness and are expected to recover; or • Your condition keeps you from doing your former work but not from doing other kinds of work with- out special equipment; or • Your federal AGI is more than $100,000, regardless of your filing status. To confirm that you have a permanent severe disabil- ity, your physician must write a letter describing it. Keep the letter with your permanent health records. If you qualify, check the “Severe disability” exemp- tion box on your return. If your spouse qualifies, they may also claim this additional exemption credit. All dependents You are allowed one personal exemption credit for: • Each qualifying child you're able to claim as a dependent, and • Each of your other qualifying relatives. On your Oregon return, you must include the fol- lowing information for all dependents: first and last name, relationship to you, Social Security number, and date of birth. Child with a disability (ORS 316.099) You may be entitled to an additional exemption credit for your dependent child who has a qualifying dis- ability. To qualify, all of the following must be true. Your federal AGI isn’t more than $100,000, regardless of your filing status, and your child: • Qualified as your dependent for the year, and • Was eligible for early intervention or special edu- cation services, as defined by the Department of Education, and • Was considered to have a disability as of Decem- ber 31, 2024, under the federal Individuals with Disabilities Education Act, and • Was age 21 or younger at the end of the tax year. Eligible disabilities and their Oregon Department of Education code numbers include:

— Autism spectrum disorder (82).

— Communication disorder (50).

— Deafblindness (43).

— Developmental delay (98).

— Emotional disturbance (60).

— Hearing impairment (20).

— Intellectual disability (10).

— Orthopedic impairment (70).

— Other health impairment (80).

— Specific learning disability (90).

— Traumatic brain injury (74).

— Visual impairment (40). Each year, you must be able to provide an eligibility statement that confirms one of the disabilities listed above and the cover sheet from the child’s Individu- alized Education Program (IEP) or Individualized Family Service Plan (IFSP). Keep the eligibility state- ment and cover sheet with your permanent health records. If your dependent qualifies, mark the “Child with qualifying disability” box by your dependent’s name on your return. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Credits–Standard

150-101-431 (Rev. 11-27-24) 100 Income taxes paid to another state on mutually-taxed income (ORS 316.082, 316.131) [Credit code 802] You may be able to claim a credit on your Oregon return if you have income that was taxed by Oregon and another state. If you pay tax to both Oregon and the other state, you have “mutually-taxed income.” Jurisdiction to tax. Certain types of income can be taxed by only one state. This credit is allowed only if Oregon taxed the income and the other state also had a right to tax the same income. For instance, if you live in Oregon, other states can’t tax your pen- sion income. Only the state you live in can tax your pension income. Therefore, if you pay tax to Oregon and another state on your pension income, you can’t take a credit for that tax. You can’t take a credit for paying tax you don’t owe. State income tax only. This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, excise tax, alterna- tive minimum tax (AMT), property tax, or other state taxes that aren’t based on income. For example, the Idaho Permanent Building Fund Tax and the Wash- ington Business and Occupation (B & O) Tax and Capital Gains Tax don’t qualify because they aren’t based on income. Nonresident reciprocity. Oregon is one of five states that allow a credit to be claimed by a nonresident for tax paid to the nonresident’s home state on income that is taxed by Oregon and the home state. The other four states are Arizona, California, Indiana, and Vir- ginia. If you are a resident of one of those four states, you may claim a credit on your Oregon nonresident return for tax you paid to your home state on the mutually-taxed income. Sale of residence. If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either this credit or the credit for mutually-taxed gain on the sale of residential prop- erty. You can’t claim both credits. See “Taxes imposed by other jurisdiction on mutually-taxed gain from sale of residence“ for more information about that credit. When can this credit be claimed? You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit. Tax paid in different years. If you paid tax to Oregon and another state on the same income, but in different tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information. Who may claim this credit? Full-year residents. Claim the credit on your Oregon return only if the income is taxed by both Oregon and a state other than Arizona, California, Indiana, or Virginia. If you are a full-year Oregon resident with income that is taxed by Arizona, California, Indiana, or Virginia, you must claim the credit on the nonresident return that you file with that state; don’t claim the credit on your Oregon return. See “Note for full-year residents” and “Exception for Oregon resident partners and S corporation shareholders.” Example 1: Roy is a full-year Oregon resident. He has wages from a job in Idaho and income from rental property he owns in California. His Idaho wages and California rental income are taxed by Oregon as well as those states. Roy may claim a credit on his Oregon return for taxes paid to Idaho. He must claim a credit on his California nonresident return for taxes paid to Oregon. Note for full-year residents. If one of the listed states doesn’t allow the credit on your nonresident return, you may amend your Oregon return to claim the credit for taxes paid to that state. You must provide proof of the following: You paid tax to Arizona, California, Indiana, or

1. Virginia on income that was also taxed by Oregon; You paid that state’s tax at or before the time you 2. filed your Oregon return; You properly claimed the credit for taxes paid to 3. Oregon on the nonresident return you filed with that state; and That state didn’t allow your credit. 4. Part-year residents. Your credit is a combination of an amount based on your mutually-taxed income during the part of the year that you were a nonresi- dent and an amount based on your mutually-taxed income during the part of the year that you were a resident. • Claim the credit on your Oregon return for the part of the year you were a nonresident of Oregon only if you pay taxes on income that is mutually taxed by Oregon and Arizona, California, Indiana, or Virginia. If the income was taxed by Oregon and a state other than those listed, you must claim a credit for taxes paid to Oregon on the return you file with the other state. See “Note for nonresidents.” • Claim the credit on your Oregon return for the part of the year you were a resident of Oregon if you pay Oregon tax on income that was mutually taxed by a state other than Arizona, California, Indiana, Credits–Standard

150-101-431 (Rev. 11-27-24) 101 or Virginia (or you meet the “Exception for Oregon resident partners and S corporation shareholders”). See “Note for full-year residents“ above. Example 2: Charlotte operates a business in Oregon. She moved from Oregon to Virginia in May, but con- tinued to have income from her Oregon business after she moved. She also had income during the year from rental properties she owns in Oregon, Virginia, and Georgia. She files a part-year Oregon return, a part-year Virginia return, and a nonresident Geor- gia return. She will claim a credit for taxes paid to another state on each kind of income as follows: • Oregon business income. Charlotte will pay tax to Oregon for the part of the year she was a resident, and to both Oregon and Virginia for the part of the year she was a nonresident. She may claim a credit on her Oregon return for taxes paid to Virginia for the part of the year that she was a nonresident of Oregon. • Georgia rental income. Charlotte will pay tax to both Oregon and Georgia on this income only dur- ing the part of the year that she was a resident of Oregon. Once she moved to Virginia and was no longer an Oregon resident, Oregon stopped having the right to tax this income. She may claim a credit on her Oregon return for tax paid to Georgia only for the part of the year that she was an Oregon resi- dent. She will claim a credit on her Virginia return for tax paid to Georgia for the part of the year that she was a Virginia resident. • Virginia rental income. Charlotte will pay tax to both Oregon and Virginia for the part of the year that she was a resident of Oregon, and only to Vir- ginia after she moves. She can’t claim a credit on her Oregon return for taxes paid to Virginia on this income when she was an Oregon resident. Instead, she must claim a credit for taxes paid to Oregon on her Virginia return for the part of the year that she was a nonresident of Virginia. Example 3: Kim and Jimmy lived and worked in New Mexico. At the end of August, they quit their jobs and moved to Oregon. In September they both got new jobs in Oregon. Their wages were their only source of income for the year. Kim and Jimmy paid tax to New Mexico only on the wages they earned when they lived in New Mexico, and they paid Oregon tax only on the wages they earned after they moved to Oregon. They can’t claim a credit for tax paid to either state because they didn’t have income that was mutually taxed by both states. Nonresidents. You may claim a credit on your Ore- gon return for tax paid to your state of residence on mutually-taxed income if your state offers a recipro- cal credit for Oregon residents. As noted above, the states with a reciprocal credit are Arizona, Califor- nia, Indiana, or Virginia. If you pay Oregon tax on income that is also taxed by a state other than those listed, you must claim the credit for taxes you paid to Oregon on the return you file with the other state. See “Note for nonresidents.“ Example 4: Elisa, a calendar-year taxpayer, was a resident of Indiana who receives income from an upscale boutique she owns in Oregon. Last year, Elisa claimed a credit for taxes paid to Indiana on the mutually-taxed income from the boutique on her Oregon nonresident return. On January 1 of this year, Elisa moved away from Indiana and became a resident of Hawaii. She still receives income from the boutique in Oregon. Because Hawaii isn’t one of the nonresident reciprocity states, Elisa must claim a credit for taxes paid to Oregon on the return she files with Hawaii. Note for nonresidents. If a state (other than those listed above) doesn’t allow your credit, you may amend your Oregon nonresident return to claim the credit for taxes paid to that state. You must provide proof of the following: You paid tax to a state (other than Arizona, Cali 1. - fornia, Indiana, or Virginia) on income that was also taxed by Oregon; and You paid the other state’s tax at or before the time 2. you filed your Oregon return; and You properly claimed the credit for taxes paid to 3. Oregon on the other state’s return; and The other state didn’t allow your credit. 4. How do I calculate the credit amount? The procedure for calculating the credit depends on whether you are a full-year resident, a part-year resident, or a nonresident of Oregon. If you paid tax to multiple states on income that is also taxed by Oregon, calculate the credit for each state separately, without regard to any credit for tax paid to any other state. Use these formulas and definitions to calculate the credit amount according to your residency status. Formula I Modified AGI taxed by both states Modified AGI x Your Oregon tax after all other credits Formula II Modified AGI taxed by both states Total income on the other state’s return x Other state’s tax after all other credits Modified AGI • Full-year residents. Your modified AGI is your fed- eral AGI modified by certain Oregon additions and subtractions. Credits–Standard

150-101-431 (Rev. 11-27-24) 102 • Part-year residents and nonresidents. Your modi- fied AGI is the part of your federal AGI that is tax- able to Oregon, modified by certain Oregon addi- tions and subtractions. Oregon additions. These are generally items of income that are taxed by Oregon but not by the federal government. See “Additions” for more information. Oregon subtractions. These are generally items of income that are taxed by the federal government but not by Oregon. For example, U.S. bond interest is an Oregon subtraction because it’s income reported on your federal return that isn’t taxed by Oregon. Note: Don’t subtract the federal tax you paid on the sub- tracted income, because it isn’t an income item. See “Subtractions” for more information. Oregon tax after all other credits Your Oregon tax after all other credits is your tax after all credits except the credit for taxes paid to another state on mutually-taxed income, the surplus refund, the credit for taxes imposed by another juris- diction on mutually-taxed gain from the sale of a per- sonal residence, the claim of right income repayment credit, and the credit for PTE-E taxes paid. Full-year residents Claim the credit on your Oregon return only if your income is taxed by Oregon and a state other than Ari- zona, California, Indiana, or Virginia. The credit for a full-year resident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to the other state; or • The amount calculated with Formula I. Note: Full-year residents don't use Formula II. Example 5: Manar's AGI is $44,000. This includes $10,000 of rental income taxed by both Oregon and Idaho and $5,000 of U.S. bond interest. She received $1,000 in interest from municipal bonds from another state. She has a federal tax liability of $3,000. Her Idaho income tax is $300. Her net Oregon tax is $2,000 (before her credit for income taxes paid to another state). Here’s how she calculates her modified AGI and Formula I: $ 44,000 Federal AGI Modifications + 1,000 Add municipal bond interest $ 45,000 ) – (5,000 Less U.S. bond interest $ 40,000 Modified AGI Note: The federal tax subtraction isn’t used in this computation because it isn’t an income item. Formula I: ($10,000 ÷ $40,000) × $2,000 = $500. Manar’s credit is $300, the smallest of: • Her Oregon tax after all other credits ($2,000); or • The tax actually paid to Idaho ($300); or • The amount from Formula I ($500). Part-year residents Your credit for the part of the year that you were a nonresident is the smallest of: • Your Oregon tax on mutually-taxed income from the nonresident period after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia on that same income; or • The amount figured using Formula I; or • The amount figured using Formula II. For the part of the year that you were a resident, your credit is the smallest of: • Your Oregon tax on mutually-taxed income while you were a resident after all other credits; or • The tax on that same income you actually paid to a state other than Arizona, California, Indiana, or Virginia; or • The amount calculated with Formula I. Important—Don't use Formula II to calculate the credit for the part of the year that you were a resident. Example 6: Ezra moved from Idaho to Oregon on September 1. He sold Oregon property on June 10, and sold Idaho property on October 18. He worked in Idaho all year. His Idaho income tax after credits is $2,000; of this amount, $700 is on income he received when he was an Oregon resident. His Oregon income tax liability after other credits is $400; of this amount, $150 is on income received during the part of the year when he wasn't an Oregon resident. His income on his Oregon and Idaho returns is: Oregon income $ 13,500

Sale of Oregon property June 10

9,000

Wages September 1 to December 31 500

Interest September 1 to December 31 Sale of Idaho property October 18: + 6,000*

Idaho capital gain reported $ 29,000

Total AGI taxable to Oregon Idaho income 0 0 5,3 1 $

Sale of Oregon property June 10

27,000

Wages January 1 to December 31 1,000

Interest January 1 to August 31 Sale of Idaho property October 18: 6,000

Idaho capital gain reported. Credits–Standard

150-101-431 (Rev. 11-27-24) 103 ($3,600)

Less Idaho capital gain exclusion* 2,400

Net capital gain taxed by Idaho Total AGI taxable to Idaho $ 43,900

*If the other state has any income exclusion that applies to the mutually-taxed income, you must adjust the mutually- taxed income by the exclusion amount. In this example, Ezra’s federal capital gain is $19,500. Idaho allows Ezra to exclude 60 percent, or $3,600, of his $6,000 capital gain from the sale of the Idaho property. Ezra’s mutually-taxed income is $24,900 [($6,000 – $3,600) + 13,500 + 9,000]. Nonresident period. Ezra had $13,500 in mutually- taxed income while he was a nonresident. However, because Idaho isn’t one of the four listed states, Ezra must claim his credit for the tax paid to Oregon while he was an Idaho resident on his Idaho part-year return. Residency period. Ezra had $11,400 in mutually- taxed income when he was an Oregon resident: the $9,000 in wages earned from working in Idaho, and the $2,400 portion of the capital gain taxed by Idaho. His total income while he was a resident was $16,000: the $9,000 in wages, $1,000 in interest, and $6,000 cap- ital gain from the Idaho property. Ezra compares the tax paid to Oregon and Idaho on income received while he was an Oregon resident to the result he gets from Formula I: Formula I: ($11,400 ÷ $16,000) × $250 = $178 His credit for the resident part of the year is $178, the smallest of: • His Oregon tax after all other credits ($250); • The tax actually paid to Idaho ($700); or • The amount from Formula I ($178). Nonresidents The credit for a nonresident is the smallest of: • Your Oregon tax after all other credits; or • The tax you actually paid to Arizona, California, Indiana, or Virginia; or • The amount figured using Formula I; or • The amount figured using Formula II. Example 7: Mary is a full-year resident of California. She lived in Oregon for 10 years prior to retiring to California. While living in Oregon, she acquired and maintained rental property there. She now receives installment payments from the sale of the property and pays tax to California on the gain and inter- est. Her California income tax after credits is $100. Because she is an Oregon nonresident, only the gain is taxed on her Oregon nonresident return. Her Ore- gon tax after credits is $350. Her income is as follows: Oregon income Capital gain on installment sale $ 10,000

of real property

$ 10,000

Total AGI taxable to Oregon California income Capital gain on installment sale $ 10,000

of real property 5,000 Interest on installment sale 8,000 Other interest )0 0 0,0 2( Business loss $3,000 Total AGI taxable to California Her income taxed by both states is $10,000. To figure her credit, Mary compares the tax she paid to Oregon and California to the results of both Formula I and Formula II. • Formula I: ($10,000 ÷ $10,000) × $350 ($350). • Formula II: ($10,000 ÷ $3,000) × $100 ($333). Her Oregon credit is $100, the smallest of: • Her Oregon tax after all other credits ($350); or • The tax actually paid to California ($100); or • The amount from Formula I ($350); or • The amount from Formula II ($333). Where do I claim the credit? A credit for taxes paid on income taxed by more than one state is reported on Schedule OR-ASC, section C or Schedule OR-ASC-NP, section E. Use credit code 802. Enter the dollar amount of the credit and the two-letter postal abbreviation for the other state. If you are claiming a credit for taxes paid to more than one state, list each state separately. Include Schedule OR-ASC or OR-ASC-NP when you file your Oregon return, and keep the following with your tax records: A complete copy of the other state’s income tax 1. return; and Proof of payment of the tax, such as: 2.

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— A receipt of tax payment. No carryforward. The credit can’t be more than your Oregon tax liability for the year. Itemized deduction You can’t take a credit and a deduction for the same item on your return. If you're claiming a credit for taxes paid to another state on your Oregon return, Credits–Standard

150-101-431 (Rev. 11-27-24) 104 you must omit the tax on which the credit is based from your Oregon itemized deductions. See the instructions for Schedule OR-A. Fiduciary returns. See the note under “Income taxes paid to another state by a pass-through entity” in “Additions” if the tax on which the credit is based is deducted on federal Form 1041. Exception for Oregon resident partners and S corporation shareholders Pass-through income taxes paid to another state [Credit code 815] Owners of companies taxed in Oregon as partner- ships or S corporations may be able to claim a credit on their resident Oregon return for their proportion- ate share of income taxes paid to another state by the entity. The tax must be an income tax, not a mini- mum tax. For example, Washington state's B & O tax doesn't qualify for this credit. Claim the credit on your resident return, if: • You elected to be included in the entity’s group/ composite filing for the other state and the entity paid your tax liability; or • The entity was taxed directly by the other state. You’re considered to have paid a pro rata share of the income tax imposed on the entity by the other state. For an Oregon resident partner or S corporation shareholder, the allowable credit is the smallest of the following: • Oregon tax on the individual’s return; or • The individual’s pro rata share of the other state’s tax; or • The individual’s pro rata share of the mutually- taxed income from an S corporation or partnership return:

— Divided by the individual’s modified Oregon income, and

— Multiplied by the Oregon tax liability from the individual return. Example 1: Oliver is a full-year Oregon resident with modified Oregon income of $30,400 and Oregon tax (after all other credits) of $1,538. Oliver is a 10 percent shareholder of My Corp., an electing S corporation in California. California has a corporate tax of 1.5 per- cent of income, with a minimum corporate franchise tax of $800. For this tax year, My Corp. earned $10,000 in ordinary business income, so Oliver’s share is $1,000. The corporation must pay California $800 of tax, and only $150 is attributable to income ($10,000 × 1.5%). Oliver’s share of this tax is $15. The $650 bal- ance paid by My Corp is a minimum franchise tax and doesn’t qualify for this credit. Oliver’s Oregon credit for income taxes paid to another state is $15, the smallest of: • Oregon tax after all other credit: $1,538. • Pro rata share of California’s tax: $15. • ($1,000 ÷ $30,400) × $1,538 = $51. Oliver claims the credit on Schedule OR-ASC using credit code 815. Example 2: Monte, an Oregon resident, receives part- nership income from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia doesn’t allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Monte can claim a credit on his Oregon resident return. Example 3: Kate, an Oregon resident, receives income from a partnership doing business in Hawaii. She reports AGI of $21,000, including gain on the sale of partnership property in Hawaii of $5,000. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Kate’s modified AGI is $20,000 ($21,000 of AGI minus the $1,000 basis adjustment). The mutually-taxed income is $4,000 ($5,000 gain minus the $1,000 basis adjustment). Her Oregon tax after all other credits is $1,100. Her pro rata share of Hawaii tax is $360. Kate’s Oregon credit for income taxes paid to Hawaii is $220, the smallest of: • Oregon tax after all other credits: $1,100. • Pro rata share of Hawaii’s tax: $360. • Formula I: ($4,000 ÷ $20,000) x $1,100 = $220. Note: Because Kate is an Oregon resident, she doesn’t use Formula II. Addition. If the PTE paid income tax to another state for itself or on your behalf and is deducting the tax on its own return, you’ll need to add the tax payment on your return. See “Income taxes paid to another state by a pass-through entity” in “Additions.” Oregon Cultural Trust contributions (ORS 315.675) ] 7 0 8 e d o c ti d e r C [ Did you make a donation to an Oregon nonprofit cul- tural organization during the tax year? If so, you can make a matching donation to the Trust for Cultural Development Account and get an Oregon tax credit. Credits–Standard

150-101-431 (Rev. 11-27-24) 105 How much is the credit? You may get a credit of up to 100 percent of the amount of the matching contribution, to a maximum credit of $500 per taxpayer ($1,000 on jointly filed returns). For spouses who file separate returns, each may claim a share that would have been allowed on a joint return in proportion to the contribution each spouse made. Be sure to keep receipts from both organizations with your tax records. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Itemized deduction You can’t claim an itemized deduction for a contribu- tion to a charitable organization to the extent that you received something of value, such as a tax credit, for your contribution. If you’re itemizing deductions for Oregon, don’t include your contribution to the Ore- gon Cultural Trust on Schedule OR-A. For more information, contact the Oregon Cul- tural Trust at 503-986-0088 or visit their website at .g r o.ts u rtl a r u tl u c. w w w Oregon Veterans’ Home physicians (ORS 315.624) [Credit code 808] Physicians who provide medical care to residents of an Oregon Veterans’ Home (OVH) may be eligible for a credit of up to $5,000 per year. Who can claim the credit? Any resident or nonresident individual physician may qualify for the credit. The physician must be licensed to practice in Oregon (ORS chapter 677). They must pro- vide care to a minimum of at least eight residents at an OVH. S corporation shareholders and partnership mem- bers may only claim a credit based on the care they pro- vided. The full amount of the credit shall be allowed to each taxpayer who qualifies in an individual capacity. How much is the credit? The credit is equal to the lesser of: • $1,000 for every eight residents for whom the physi- cian provides care at an OVH; or • $5,000. Part-year residents and nonresidents. Multiply the credit amount allowable to a full-year resident by your Oregon percentage. Certification required You must obtain a letter from the OVH where you provided care. The letter must state that you missed no more than 5 percent of your scheduled visits dur- ing the tax year. Keep the letter with your tax records; we may request it at a later date. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Political contributions (ORS 316.102) [Credit code 809—Schedule OR-ASC-NP only] Oregon law allows a tax credit for political contribu- tions. You may not claim this credit if your federal AGI exceeds $150,000 on a jointly filed return, or $75,000 on all other returns. To qualify, you must have contributed money in the tax year you claim the credit. You must reduce the amount of your contribution by the fair market value (FMV) of any items or services you receive in exchange for your contribution. Contributions of goods or services don’t qualify. Keep receipts from the candidate or organization with your tax records. You can use copies of canceled checks as your receipt. How much is the credit? Your credit is equal to your contribution, limited to $100 on a joint return or $50 on a single or separate return. The $3 check-off on the Oregon tax return doesn’t qualify for this credit. Partners or S corporation shareholders can claim a credit for their share of political contributions made by the partnership or S corporation. The contribu- tion must meet all statutory requirements. The $50 and $100 limits apply individually to each partner’s or shareholder’s return. Which contributions qualify? Candidates and their principal campaign commit- tees. You can claim a credit for a contribution to a candidate for federal, state, or local elective office, or to the candidate’s principal campaign committee. To qualify, at least one of the following must occur in Oregon in the same calendar year in which you made your contribution: • The candidate’s name must be listed on a primary, general, or special election ballot, Credits–Standard

150-101-431 (Rev. 11-27-24) 106 • A prospective petition of nomination must be filed by or for the candidate, • A declaration of candidacy must be filed by or for the candidate, • A certificate of nomination must be filed by or for the candidate, or • A designation of a principal campaign committee must be filed with the Oregon Secretary of State’s Office. Note: The designation must be made in each year that a contribution is made in order to qualify under this provision. Political action committees. You can claim a credit for contributions to political action committees (PACs). The PAC must have certified the name of its politi- cal treasurer with the appropriate filing officer, usu- ally the Secretary of State for statewide or regional elections, your county clerk for county elections, or your city recorder for city elections. PACs registered with the Federal Elections Commission may not be required to register in Oregon. Political parties. Political parties can be national, state, or local committees of major political parties. Oregon also allows a tax credit for contributions made to minor political parties that qualify under state law. Contact the Oregon Secretary of State’s Office in Salem at 503-986-1518 to see if a particular party qualifies. Newsletter fund–credit not allowed. Oregon doesn’t allow a credit for contributions made to a newsletter fund. Example 1: Holly contributes $275 for a fund-raising dinner for a presidential candidate. The FMV of the dinner was $35. Holly’s political contribution is $240, because she must reduce her $275 contribution by the $35 FMV of the dinner she received. Being single, Holly’s political contribution credit is limited to $50. Example 2: Burt donated a desk, chair, and a four- drawer file cabinet to his favorite PAC headquarters. The FMV of the furniture is $410. Burt has a written receipt from the PAC. He can’t claim a political contri- bution credit because he didn’t contribute money to the PAC. His contribution of office furniture doesn’t qualify for the credit. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Reservation enterprise zone (ORS 315.506) [Credit code 810] Businesses in an Oregon reservation enterprise zone that pay tax to tribal governments can claim a credit against their Oregon income tax. The credit is equal to either: • The tribal property tax on a business facility that is paid or incurred during the tax year; or • Any tribal tax paid or incurred during the tax year the business first begins to operate in the reserva- tion enterprise zone. The credit is allowed only if the tax is imposed uni- formly in the territory. Contact the Oregon Business Development Depart- ment for the location of reservation enterprise zones .z i b / v o g. n o g e r o. w w w :t a Who can claim the credit? The credit is available to individuals, partnerships, and corporations. Any business activity qualifies, except property leasing. The business must have begun in 2002 or later. To compute your credit, fill out Schedule OR-REZT, Reservation Enterprise Zone Tax Credit. Download the schedule from our website or call us to order it. Keep the completed schedule with your tax records. Part-year residents and nonresidents. Multiply the credit allowable to a full-year resident by your Ore- gon percentage. No carryforward. The credit can’t be more than your tax liability for the year. Any credit not used this year is lost. Retirement income (ORS 316.157) ] 1 1 8 e d o c ti d e r C [ Who can claim the credit? If you were age 62 or older at the end of the year, and receive taxable retirement income, you may qualify for this credit. Retirement income includes payments in Oregon taxable income from: • State or local government public pensions. • Employee pensions. • Individual retirement plans. • Employee annuity plans. • Deferred compensation plans including defined benefits, profit sharing, and 401(k)s. • Federal pensions (includes military) not subtracted from Oregon taxable income. How do you qualify for the credit? • Your household income is less than $22,500 ($45,000 if married filing jointly); and • Your Social Security and/or Tier 1 Railroad Retire- ment Board (RRB) benefits are less than $7,500 ($15,000 if married filing jointly), and • Your household income plus your Social Security and Tier 1 RRB benefits is less than $22,500 ($45,000 if married filing jointly). Credits–Standard

150-101-431 (Rev. 11-27-24) 107 What’s included in household income? Household income generally includes all income (both taxable and nontaxable) each spouse received during the year. Household income includes gross income reduced by adjustments as reported in your federal AGI. You also need to include items not in your federal AGI. These items include but aren’t limited to:

• Veteran’s and military benefits.

• Gifts and grants (total amount minus $500).

• Disability pay.

• Nontaxable dividends (other than “return of capital”).

• Inheritance.

• Insurance proceeds.

• Nontaxable interest.

• Lottery winnings.

• RRB benefits (Tier 2 only).

• Scholarships.

• IRA conversions included in AGI. See the Household income checklist in the Appen- dix for more help. Don’t include:

• Social Security and Tier 1 RRB benefits.

• Your state tax refund.

• Pension income excluded from federal AGI that is a return of your contributions.

• Pensions that are rolled over into an IRA that aren’t included in AGI. To determine household income, you must separate income (or loss) from businesses, farms, rentals or roy- alties, and dispositions of tangible or intangible prop- erty. Combine all income from similar sources for net income or loss. Any net loss from the source is lim- ited to $1,000. NOL carrybacks or carryforwards aren’t allowed. Capital loss carryforwards aren’t allowed. If the combined total of your depreciation, depletion, and amortization deductions is more than $5,000, you must add the excess back into household income. You must also increase your household income by the Oregon income tax modification for depletion in excess of basis. How much is the credit? Use this worksheet to calculate your credit: Enter the retirement income of the eligible

1.

individual(s) included on Form OR-40, line 7; or Form OR-40-N or OR-40-P Oregon column, lines 15S and 16S. (Don’t include Social