OREGON LAWS 2026 Chap. 142 CHAPTER 142 AN ACT SB 1507 Relating to revenue; creating new provisions; amending ORS 178.300, 178.375, 238A.005, 238A.125, 238A.150, 238A.170, 238A.230, 238A.370, 238A.400, 238A.410, 238A.415, 238A.430, 238A.435, 305.239, 305.494, 305.690, 305.842, 314.011, 314.306, 314.772, 315.004, 315.266, 316.012, 316.147, 316.157, 317.010, 317.097, 317A.100, 458.670, 657.010 and 657B.010; and prescribing an effective date. Be It Enacted by the People of the State of Or- egon: SECTION 1. Section 2 of this 2026 Act is added to and made a part of ORS chapter 316. SECTION 2. There shall be added to federal taxable income an amount equal to qualified passenger vehicle loan interest paid by the tax- payer and deducted on the taxpayer’s federal income tax return in the tax year, as provided in section 163(h)(4) of the Internal Revenue Code. NOTE: Section 2, shown in underlined text above, is the subject of a referendum petition. See endnote for further explanation. SECTION 3. ORS 315.266 is amended to read: 315.266. (1)(a) In addition to any other credit available for purposes of ORS chapter 316, an eligi- ble resident individual shall be allowed a credit against the tax otherwise due under ORS chapter 316 for the tax year in an amount equal to [nine] 14 percent of the earned income credit allowable to the individual for the same tax year under section 32 of the Internal Revenue Code. (b) Notwithstanding paragraph (a) of this sub- section, for a taxpayer with a dependent under the age of three at the close of the tax year, the credit allowed under this section shall be in an amount equal to [12] 17 percent of the earned income credit allowable to the individual for the same tax year under section 32 of the Internal Revenue Code. (2) A resident individual may claim a credit un- der this section, using either a Social Security num- ber or an individual taxpayer identification number, if, but for section 32(m) of the Internal Revenue Code, the individual would otherwise be eligible to claim a credit under section 32 of the Internal Re- venue Code. The credit allowed as provided in this subsection shall equal the percentage, as stated in subsection (1) of this section, of the amount that would be allowed on a federal return, based on the amount of the individual’s earned income and the other provisions of section 32 of the Internal Re- venue Code. (3) An eligible nonresident individual shall be allowed the credit computed in the same manner and subject to the same limitations as the credit allowed a resident by subsection (1) or (2) of this section. However, the credit shall be prorated using the pro- portion provided in ORS 316.117. (4) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the De- partment of Revenue terminates the taxpayer’s taxa- ble year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085. (5) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resi- dent occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117. (6) If the amount allowable as a credit under this section, when added to the sum of the amounts al- lowable as payment of tax under ORS 316.187 or 316.583, other tax prepayment amounts and other refundable credit amounts, exceeds the taxes im- posed by ORS chapters 314 and 316 for the tax year after application of any nonrefundable credits allow- able for purposes of ORS chapter 316 for the tax year, the amount of the excess shall be refunded to the taxpayer as provided in ORS 316.502. (7) The Department of Revenue may adopt rules for purposes of this section, including but not lim- ited to rules relating to proof of eligibility, the fur- nishing of information regarding the federal earned income credit claimed by the taxpayer for the tax year and policies and guidelines for the determi- nation of the amount of credit allowed under sub- section (2) of this section. (8) Refunds attributable to the earned income credit allowed under this section do not bear inter- est. SECTION 4. Section 5 of this 2026 Act is added to and made a part of ORS chapter 316. SECTION 5. There shall be added to federal taxable income an amount equal to any gain from the exchange or sale of qualified small business stock that is received by the taxpayer and excluded from income on the taxpayer’s federal income tax return in the tax year, as provided in section 1202 of the Internal Revenue Code. SECTION 6. Section 7 of this 2026 Act is added to and made a part of ORS chapter 316. SECTION 7. (1) There shall be added to fed- eral taxable income for Oregon tax purposes the difference between the amount allowable as a deduction under section 168(k) of the Internal Revenue Code as applicable to the tax year of the taxpayer and the amount allowable as a de- duction under section 168(k) of the Internal Re- venue Code as amended and in effect on December 1, 2017, as applicable to the tax year of the taxpayer. (2) Amounts added to federal taxable income for Oregon tax purposes under subsection (1) of this section may thereafter be subtracted from 1

Chap. 142 OREGON LAWS 2026 federal taxable income for Oregon tax purposes in the tax year for which the amounts would have been allowed as a deduction on the taxpayer’s federal income tax return under the Internal Revenue Code as amended and in effect on December 1, 2017, as applicable to the tax year of the taxpayer. NOTE: Section 7, shown in underlined text above, is the subject of a referendum petition. See endnote for further explanation. SECTION 8. Section 9 of this 2026 Act is added to and made a part of ORS chapter 317. SECTION 9. (1) There shall be added to fed- eral taxable income for Oregon tax purposes the difference between the amount allowable as a deduction under section 168(k) of the Internal Revenue Code as applicable to the tax year of the taxpayer and the amount allowable as a de- duction under section 168(k) of the Internal Re- venue Code as amended and in effect on December 1, 2017, as applicable to the tax year of the taxpayer. (2) Amounts added to federal taxable income for Oregon tax purposes under subsection (1) of this section may thereafter be subtracted from federal taxable income for Oregon tax purposes in the tax year for which the amounts would have been allowed as a deduction on the taxpayer’s federal income tax return under the Internal Revenue Code as amended and in effect on December 1, 2017, as applicable to the tax year of the taxpayer. NOTE: Section 9, shown in underlined text above, is the subject of a referendum petition. See endnote for further explanation. SECTION 10. (1) Sections 2 and 5 of this 2026 Act and the amendments to ORS 315.266 by sec- tion 3 of this 2026 Act apply to tax years begin- ning on or after January 1, 2026. (2) Sections 7 and 9 of this 2026 Act apply to property that is placed in service in tax years beginning on or after January 1, 2026. SECTION 11. Section 12 of this 2026 Act is added to and made a part of ORS chapter 315. SECTION 12. (1) A credit against taxes that are otherwise due under ORS chapter 316 or, if the taxpayer is a corporation, under ORS chap- ter 317 or 318 is allowed to a taxpayer for each new job in Oregon created by the taxpayer dur- ing the tax year. (2)(a) The credit allowed under this section shall be in the amount of $1,000 for each net new job created by a taxpayer in the tax year, but a taxpayer may not be certified for and may not receive a credit for more than 10 new jobs cre- ated per tax year. (b) In order to be considered in the determi- nation under this section of the eligibility and allowable credit amount for any taxpayer, an employment position must have compensation that is equal to or greater than 150 percent of the applicable minimum wage determined under ORS 653.025. (c) The number of net new jobs created by the taxpayer in a tax year shall be determined by comparing the average annual covered em- ployment of the taxpayer for the 12 months ending on June 30 of the calendar year in which the taxpayer’s tax year began and for which the credit is sought, with the 12 months ending on June 30 of the immediately preceding calendar year. (3) Prior to claiming the credit allowed under this section, a taxpayer seeking to claim the credit is required to receive written certification of eligibility from the Oregon Business Develop- ment Department. In order to receive certifica- tion, a taxpayer must attest that the taxpayer has created new jobs sufficient to be eligible for the amount of credit sought, has met the wage requirements of subsection (2)(b) of this section and is otherwise in compliance with this section. The certification shall indicate the amount of the credit to which the taxpayer is entitled for the tax year. (4) The credit allowed under this section may not exceed the tax liability of the taxpayer for the tax year. (5) Any tax credit otherwise allowable under this section that is not used by the taxpayer in a particular tax year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit re- maining unused in the next succeeding tax year may be carried forward and used in the second succeeding tax year, and likewise any credit not used in that second succeeding tax year may be carried forward and used in the third succeeding tax year but may not be carried forward for any other succeeding tax year. (6) The Oregon Business Development De- partment shall provide information to the De- partment of Revenue about all taxpayers that are eligible for a tax credit under this section, if required by ORS 315.058. (7) Information received by the Oregon Business Development Department pursuant to this section may be used only for the purpose of certification and administration of the credit. The Oregon Business Development Department may disclose this information to entities other than the Department of Revenue only if the in- formation is sufficiently aggregated or anonymized to protect the identity and confi- dential information of taxpayers. (8) The Director of the Oregon Business De- velopment Department may order the suspen- sion or revocation of a certification issued under this section, as provided in ORS 315.061. (9) The Oregon Business Development De- partment shall by rule establish: 2

OREGON LAWS 2026 Chap. 142 (a) The form and content of and deadlines for applications for the credit allowed under this section. (b) Methodology for determining net new jobs created, as provided in subsection (2) of this section, in the instance of a merger, conversion, reorganization, consolidation or acquisition af- fecting a taxpayer. SECTION 13. At the time of certification, the total amount of potential tax credits allowed under section 12 of this 2026 Act, for all taxpay- ers in this state, may not exceed $12.5 million for any tax year. If the Oregon Business Devel- opment Department receives applications for the credit sufficient to exceed this amount, the department shall by rule proportionately reduce the amount of certified credits among all tax- payers applying for the credit. SECTION 14. Section 12 of this 2026 Act ap- plies to tax years beginning on or after January 1, 2026, and before January 1, 2032. SECTION 15. ORS 314.772 is amended to read: 314.772. (1) Except as provided in ORS 314.766 (5)(b), the tax credits allowed or allowable to a C corporation for purposes of ORS chapter 317 or 318 shall not be allowed to an S corporation. The busi- ness tax credits allowed or allowable for purposes of ORS chapter 316 shall be allowed or are allowable to the shareholders of the S corporation. (2) In determining the tax imposed under ORS chapter 316, as provided under ORS 314.763, on in- come of the shareholder of an S corporation, there shall be taken into account the shareholder’s pro rata share of business tax credit (or item thereof) that would be allowed to the corporation (but for subsection (1) of this section) or recapture or recov- ery thereof. The credit (or item thereof), recapture or recovery shall be passed through to shareholders in pro rata shares as determined in the manner pre- scribed under section 1377(a) of the Internal Re- venue Code. (3) The character of any item included in a shareholder’s pro rata share under subsection (2) of this section shall be determined as if such item were realized directly from the source from which realized by the corporation, or incurred in the same manner as incurred by the corporation. (4) If the shareholder is a nonresident and there is a requirement applicable for the business tax credit that in the case of a nonresident the credit be allowed in the proportion provided in ORS 316.117, then that provision shall apply to the non- resident shareholder. (5) As used in this section, “business tax credit” means the following credits: ORS 315.104 (forestation and reforestation), ORS 315.124 (small forest option), ORS 315.133 (agricultural overtime pay), ORS 315.138 (fish screening, by-pass devices, fishways), ORS 315.141 (biomass production for biofuel), ORS 315.156 (crop gleaning), ORS 315.164 and 315.169 (agriculture workforce housing), ORS 315.176 (bovine manure), ORS 315.204 (dependent care assistance), ORS 315.208 (dependent care facilities), ORS 315.213 (contributions for child care), ORS 315.237 (employee and dependent scholarships), ORS 315.271 (individual development accounts), ORS 315.283 (affordable housing sales), ORS 315.304 (pollution control facil- ity), ORS 315.326 (renewable energy development contributions), ORS 315.331 (energy conservation projects), ORS 315.336 (transportation projects), ORS 315.341 (renewable energy resource equipment man- ufacturing facilities), ORS 315.354 and 469B.151 (en- ergy conservation facilities), ORS 315.506 (tribal taxes on reservation enterprise zones and reserva- tion partnership zones), ORS 315.507 (electronic commerce), ORS 315.514 (film production develop- ment contributions), ORS 315.518 (semiconductors), ORS 315.523 (employee training programs), ORS 315.533 (low income community jobs initiative), ORS 315.593 (short line railroads), ORS 315.640 (univer- sity venture development funds), ORS 315.643 (Op- portunity Grant Fund contributions), ORS 315.675 (Trust for Cultural Development Account contribu- tions), ORS 317.097 (loans for affordable housing), ORS 317.124 (long term enterprise zone facilities) and ORS 317.147 (loans for agriculture workforce housing) and section 9, chapter 774, Oregon Laws 2013 (alternative fuel vehicle contributions), and section 12 of this 2026 Act (new jobs). SECTION 16. ORS 178.300 is amended to read: 178.300. As used in ORS 178.300 to 178.360: (1) “Account” means an individual account es- tablished in accordance with ORS 178.300 to 178.360. (2) “Account owner” means the person who has the right to withdraw funds from the account. The account owner may also be the designated benefici- ary of the account. (3) “Board” means the Oregon 529 Savings Board established under ORS 178.310. (4) “Designated beneficiary” means, except as provided in ORS 178.350, the individual designated at the time the account is opened as having the right to receive a qualified withdrawal for the pay- ment of qualified higher education expenses, or if the designated beneficiary is replaced in accordance with ORS 178.350, the replacement. (5) “Financial institution” means a bank, a com- mercial bank, a national bank, a savings bank, a savings and loan, a thrift institution, a credit union, an insurance company, a trust company, a mutual fund, an investment firm or other similar entity au- thorized to do business in this state. (6) “Higher education institution” means an eli- gible education institution as defined in section 529(e)(5) of the Internal Revenue Code. (7) “Internal Revenue Code” means the federal Internal Revenue Code as amended and in effect on December 31, [2023] 2025. (8) “Member of the family” shall have the same meaning as contained in section 529(e) of the In- ternal Revenue Code. 3

Chap. 142 OREGON LAWS 2026 (9) “Network” means the Oregon 529 Savings Network established under ORS 178.305. (10) “Nonqualified withdrawal” means a with- drawal from an account that is not a qualified with- drawal. (11) “Qualified higher education expenses” means tuition and other permitted expenses as set forth in section 529(e) of the Internal Revenue Code for the enrollment or attendance of a designated beneficiary at a higher education institution, ex- penses associated with registered apprenticeship programs described in section 529(c)(8) of the In- ternal Revenue Code and amounts paid as principal or interest on a qualified education loan to the ex- tent allowed under section 529(c)(9) of the Internal Revenue Code. (12) “Qualified withdrawal” means a withdrawal made as prescribed under ORS 178.355 and made: (a) From an account to pay the qualified higher education expenses of the designated beneficiary; (b) As the result of the death or disability of the designated beneficiary; (c) As the result of a scholarship, allowance or payment described in section 135(d)(1)(A), (B) or (C) of the Internal Revenue Code that is received by the designated beneficiary, but only to the extent of the amount of the scholarship, allowance or payment; or (d) As a rollover or change in the designated beneficiary described in ORS 178.350. SECTION 17. ORS 178.375 is amended to read: 178.375. As used in this section and ORS 178.380 and 178.385: (1) “ABLE account” means an account estab- lished by an eligible individual, owned by the eligible individual and maintained under the qualified ABLE program established by the Oregon 529 Savings Board under ORS 178.380. (2) “ABLE Act” means the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (Di- vision B of P.L. 113-295). (3) “Designated beneficiary” has the same mean- ing as contained in section 529A of the Internal Re- venue Code. (4) “Eligible individual” has the same meaning as contained in section 529A of the Internal Revenue Code. (5) “Internal Revenue Code” means the federal Internal Revenue Code as amended and in effect on December 31, [2023] 2025. (6) “Qualified disability expense” has the same meaning as contained in section 529A of the Internal Revenue Code. SECTION 18. ORS 238A.005 is amended to read: 238A.005. For the purposes of this chapter: (1) “Active member” means a member of the pension program or the individual account program of the Oregon Public Service Retirement Plan who is actively employed in a qualifying position. (2) “Actuarial equivalent” means a payment or series of payments having the same value as the payment or series of payments replaced, computed on the basis of interest rate and mortality assump- tions adopted by the board. (3) “Board” means the Public Employees Retire- ment Board. (4) “Eligible employee” means a person who per- forms services for a participating public employer, including persons considered employees of a partic- ipating public employer under 26 U.S.C. 3121(d)(2), as in effect on January 1, [2024] 2026, and elected officials other than judges. “Eligible employee” does not include: (a) Persons engaged as independent contractors; (b) Aliens working under a training or educa- tional visa; (c) Persons provided sheltered employment or make-work by a public employer; (d) Persons categorized by a participating public employer as student employees; (e) Any person who is in custody in a state in- stitution; (f) Employees of foreign trade offices of the Ore- gon Business Development Department who live and perform services in foreign countries under the pro- visions of ORS 285A.075 (1)(g); (g) An employee actively participating in an al- ternative retirement program established under ORS 353.250 or an optional retirement plan established under ORS 341.551; (h) Employees of a public university listed in ORS 352.002 who are actively participating in an optional retirement plan offered under ORS 243.815; (i) Persons employed in positions classified as post-doctoral scholar positions by a public university listed in ORS 352.002, or by the Oregon Health and Science University, under ORS 350.370; (j) Any employee who belongs to a class of em- ployees that was not eligible on August 28, 2003, for membership in the system under the provisions of ORS chapter 238 or other law; (k) Any person who belongs to a class of em- ployees who are not eligible to become members of the Oregon Public Service Retirement Plan under the provisions of ORS 238A.070 (2); (L) Any person who is retired under ORS 238A.100 to 238A.250 or ORS chapter 238 and who continues to receive retirement benefits while em- ployed; and (m) Judges. (5) “Firefighter” means: (a) A person employed by a local government, as defined in ORS 174.116, whose primary job duties include the fighting of fires; (b) The State Fire Marshal, chief deputy state fire marshals and deputy state fire marshals; (c) An employee of the State Fire Marshal whose primary duties include fire investigation, fire pre- vention, fire safety, fire control or fire suppression; (d) An employee of the State Forestry Depart- ment who is certified by the State Forester as a professional wildland firefighter and whose primary duties include the abatement of uncontrolled fires as described in ORS 477.064; and 4

OREGON LAWS 2026 Chap. 142 (e) An employee of the Oregon Military Depart- ment whose primary duties include fighting struc- tural, aircraft, wildland or other fires. (6) “Fund” means the Public Employees Retire- ment Fund. (7)(a) “Hour of service” means: (A) An hour for which an eligible employee is directly or indirectly paid or entitled to payment by a participating public employer for performance of duties in a qualifying position; and (B) An hour of vacation, holiday, illness, inca- pacity, jury duty, military duty or authorized leave during which an employee does not perform duties but for which the employee is directly or indirectly paid or entitled to payment by a participating public employer for services in a qualifying position, as long as the hour is within the number of hours reg- ularly scheduled for the performance of duties dur- ing the period of vacation, holiday, illness, incapacity, jury duty, military duty or authorized leave. (b) “Hour of service” does not include any hour for which payment is made or due under a plan maintained solely for the purpose of complying with applicable unemployment compensation laws. (8) “Inactive member” means a member of the pension program or the individual account program of the Oregon Public Service Retirement Plan whose membership has not been terminated, who is not a retired member and who is not employed in a quali- fying position. (9) “Individual account program” means the de- fined contribution individual account program of the Oregon Public Service Retirement Plan established under ORS 238A.025. (10) “Institution of higher education” means a public university listed in ORS 352.002, the Oregon Health and Science University or a community col- lege, as defined in ORS 341.005. (11) “Member” means an eligible employee who has established membership in the pension program or the individual account program of the Oregon Public Service Retirement Plan and whose member- ship has not been terminated under ORS 238A.110 or 238A.310. (12) “Participating public employer” means a public employer as defined in ORS 238.005 that pro- vides retirement benefits for employees of the public employer under the system. (13) “Pension program” means the defined bene- fit pension program of the Oregon Public Service Retirement Plan established under ORS 238A.025. (14) “Police officer” means a police officer as described in ORS 238.005. (15) “Qualifying position” means one or more jobs with one or more participating public employers in which an eligible employee performs 600 or more hours of service in a full calendar year, or would perform 600 or more hours of service if the employee were employed for the full calendar year, excluding any service in a job for which benefits are not pro- vided under the Oregon Public Service Retirement Plan pursuant to ORS 238A.070 (2). (16) “Retired member” means a pension program member who is receiving a pension as provided in ORS 238A.180 to 238A.195. (17)(a) “Salary” means the remuneration paid to an active member in return for services to the par- ticipating public employer, including remuneration in the form of living quarters, board or other items of value, to the extent the remuneration is, or would be if the member were an Oregon resident, includable in the employee’s taxable income under Oregon law. “Salary” includes the additional amounts specified in paragraph (b) of this subsec- tion, but does not include the amounts specified in paragraph (c) of this subsection, regardless of whether those amounts are includable in taxable in- come. (b) “Salary” includes the following amounts: (A) Payments of employee and employer money into a deferred compensation plan that are made at the election of the employee. (B) Contributions to a tax-sheltered or deferred annuity that are made at the election of the em- ployee. (C) Any amount that is contributed to a cafeteria plan or qualified transportation fringe benefit plan by the employer at the election of the employee and that is not includable in the taxable income of the employee by reason of 26 U.S.C. 125 or 132(f)(4), as in effect on December 31, [2023] 2025. (D) Any amount that is contributed to a cash or deferred arrangement by the employer at the elec- tion of the employee and that is not included in the taxable income of the employee by reason of 26 U.S.C. 402(e)(3), as in effect on December 31, [2023] 2025. (E) Retroactive payments described in ORS 238.008. (F) The amount of an employee contribution to the individual account program that is paid by the employer and deducted from the compensation of the employee, as provided under ORS 238A.335 (1) and (2)(a). (G) The amount of an employee contribution to the individual account program that is not paid by the employer under ORS 238A.335. (H) Wages of a deceased member paid to a sur- viving spouse or dependent children under ORS 652.190. (c) “Salary” does not include the following amounts: (A) Travel or any other expenses incidental to employer’s business which is reimbursed by the em- ployer. (B) Payments made on account of an employee’s death. (C) Any lump sum payment for accumulated un- used sick leave, vacation leave or other paid leave. (D) Any severance payment, accelerated payment of an employment contract for a future period or advance against future wages. (E) Any retirement incentive, retirement bonus or retirement gratuitous payment. 5

Chap. 142 OREGON LAWS 2026 (F) Payment for a leave of absence after the date the employer and employee have agreed that no fu- ture services in a qualifying position will be per- formed. (G) Payments for instructional services rendered to public universities listed in ORS 352.002 or the Oregon Health and Science University when those services are in excess of full-time employment sub- ject to this chapter. A person employed under a contract for less than 12 months is subject to this subparagraph only for the months covered by the contract. (H) The amount of an employee contribution to the individual account program that is paid by the employer and is not deducted from the compensation of the employee, as provided under ORS 238A.335 (1) and (2)(b). (I) Compensation described and authorized under ORS 341.556 that is not paid by the community col- lege employing the faculty member. (J) Compensation described and authorized under ORS 352.232 that is not paid by the public university employing the officer or employee. (K) Compensation described and authorized un- der ORS 353.270 that is not paid by Oregon Health and Science University. (L) For years before 2020, any amount in excess of $200,000 for a calendar year. If any period over which salary is determined is less than 12 months, the $200,000 limitation for that period shall be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12. The board shall adopt rules adjusting this dollar limit to incorporate cost-of-living adjustments authorized by the Internal Revenue Service. (M) For years beginning on or after January 1, 2020, any amount in excess of $195,000 for a calen- dar year. If any period over which salary is deter- mined is less than 12 months, the $195,000 limitation for that period shall be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12. On January 1 of each year, the board shall adjust the dollar limit provided by this subparagraph to reflect any percentage changes in the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor. (18) “System” means the Public Employees Re- tirement System. (19) “Workers’ compensation benefits” means: (a) Payments made under ORS chapter 656; or (b) Payments provided in lieu of workers’ com- pensation benefits under ORS 656.027 (6). SECTION 19. ORS 238A.005, as amended by section 2, chapter 101, Oregon Laws 2024, is amended to read: 238A.005. For the purposes of this chapter: (1) “Active member” means a member of the pension program or the individual account program of the Oregon Public Service Retirement Plan who is actively employed in a qualifying position. (2) “Actuarial equivalent” means a payment or series of payments having the same value as the payment or series of payments replaced, computed on the basis of interest rate and mortality assump- tions adopted by the board. (3) “Board” means the Public Employees Retire- ment Board. (4) “Eligible employee” means a person who per- forms services for a participating public employer, including persons considered employees of a partic- ipating public employer under 26 U.S.C. 3121(d)(2), as in effect on January 1, [2024] 2026, and elected officials other than judges. “Eligible employee” does not include: (a) Persons engaged as independent contractors; (b) Aliens working under a training or educa- tional visa; (c) Persons provided sheltered employment or make-work by a public employer; (d) Persons categorized by a participating public employer as student employees; (e) Any person who is in custody in a state in- stitution; (f) Employees of foreign trade offices of the Ore- gon Business Development Department who live and perform services in foreign countries under the pro- visions of ORS 285A.075 (1)(g); (g) An employee actively participating in an al- ternative retirement program established under ORS 353.250 or an optional retirement plan established under ORS 341.551; (h) Employees of a public university listed in ORS 352.002 who are actively participating in an optional retirement plan offered under ORS 243.815; (i) Persons employed in positions classified as post-doctoral scholar positions by a public university listed in ORS 352.002, or by the Oregon Health and Science University, under ORS 350.370; (j) Any employee who belongs to a class of em- ployees that was not eligible on August 28, 2003, for membership in the system under the provisions of ORS chapter 238 or other law; (k) Any person who belongs to a class of em- ployees who are not eligible to become members of the Oregon Public Service Retirement Plan under the provisions of ORS 238A.070 (2); (L) Any person who is retired under ORS 238A.100 to 238A.250 or ORS chapter 238 and who continues to receive retirement benefits while em- ployed; and (m) Judges. (5) “Firefighter” means: (a) A person employed by a local government, as defined in ORS 174.116, whose primary job duties include the fighting of fires; (b) The State Fire Marshal, chief deputy state fire marshals and deputy state fire marshals; (c) An employee of the State Fire Marshal whose primary duties include fire investigation, fire pre- vention, fire safety, fire control or fire suppression; 6

OREGON LAWS 2026 Chap. 142 (d) An employee of the State Forestry Depart- ment who is certified by the State Forester as a professional wildland firefighter and whose primary duties include the abatement of uncontrolled fires as described in ORS 477.064; and (e) An employee of the Oregon Military Depart- ment whose primary duties include fighting struc- tural, aircraft, wildland or other fires. (6) “Fund” means the Public Employees Retire- ment Fund. (7)(a) “Hazardous position” means a position that does not meet the definition of a qualified public safety employee under section 72(t)(10)(B) of the In- ternal Revenue Code, but that: (A) Requires the person holding the position to work with or manage emergency or traumatic events in the regular course of work; or (B) Carries a high risk of physical harm. (b) “Hazardous position” includes and is limited to: (A) Employees of the Oregon State Hospital who have direct contact with patients; and (B) Telecommunicators, as defined in ORS 181A.355. (8)(a) “Hour of service” means: (A) An hour for which an eligible employee is directly or indirectly paid or entitled to payment by a participating public employer for performance of duties in a qualifying position; and (B) An hour of vacation, holiday, illness, inca- pacity, jury duty, military duty or authorized leave during which an employee does not perform duties but for which the employee is directly or indirectly paid or entitled to payment by a participating public employer for services in a qualifying position, as long as the hour is within the number of hours reg- ularly scheduled for the performance of duties dur- ing the period of vacation, holiday, illness, incapacity, jury duty, military duty or authorized leave. (b) “Hour of service” does not include any hour for which payment is made or due under a plan maintained solely for the purpose of complying with applicable unemployment compensation laws. (9) “Inactive member” means a member of the pension program or the individual account program of the Oregon Public Service Retirement Plan whose membership has not been terminated, who is not a retired member and who is not employed in a quali- fying position. (10) “Individual account program” means the de- fined contribution individual account program of the Oregon Public Service Retirement Plan established under ORS 238A.025. (11) “Institution of higher education” means a public university listed in ORS 352.002, the Oregon Health and Science University or a community col- lege, as defined in ORS 341.005. (12) “Member” means an eligible employee who has established membership in the pension program or the individual account program of the Oregon Public Service Retirement Plan and whose member- ship has not been terminated under ORS 238A.110 or 238A.310. (13) “Participating public employer” means a public employer as defined in ORS 238.005 that pro- vides retirement benefits for employees of the public employer under the system. (14) “Pension program” means the defined bene- fit pension program of the Oregon Public Service Retirement Plan established under ORS 238A.025. (15) “Police officer” means a police officer as described in ORS 238.005. (16) “Qualifying position” means one or more jobs with one or more participating public employers in which an eligible employee performs 600 or more hours of service in a full calendar year, or would perform 600 or more hours of service if the employee were employed for the full calendar year, excluding any service in a job for which benefits are not pro- vided under the Oregon Public Service Retirement Plan pursuant to ORS 238A.070 (2). (17) “Retired member” means a pension program member who is receiving a pension as provided in ORS 238A.180 to 238A.195. (18)(a) “Salary” means the remuneration paid to an active member in return for services to the par- ticipating public employer, including remuneration in the form of living quarters, board or other items of value, to the extent the remuneration is, or would be if the member were an Oregon resident, includable in the employee’s taxable income under Oregon law. “Salary” includes the additional amounts specified in paragraph (b) of this subsec- tion, but does not include the amounts specified in paragraph (c) of this subsection, regardless of whether those amounts are includable in taxable in- come. (b) “Salary” includes the following amounts: (A) Payments of employee and employer money into a deferred compensation plan that are made at the election of the employee. (B) Contributions to a tax-sheltered or deferred annuity that are made at the election of the em- ployee. (C) Any amount that is contributed to a cafeteria plan or qualified transportation fringe benefit plan by the employer at the election of the employee and that is not includable in the taxable income of the employee by reason of 26 U.S.C. 125 or 132(f)(4), as in effect on December 31, [2023] 2025. (D) Any amount that is contributed to a cash or deferred arrangement by the employer at the elec- tion of the employee and that is not included in the taxable income of the employee by reason of 26 U.S.C. 402(e)(3), as in effect on December 31, [2023] 2025. (E) Retroactive payments described in ORS 238.008. (F) The amount of an employee contribution to the individual account program that is paid by the employer and deducted from the compensation of the employee, as provided under ORS 238A.335 (1) and (2)(a). 7

Chap. 142 OREGON LAWS 2026 (G) The amount of an employee contribution to the individual account program that is not paid by the employer under ORS 238A.335. (H) Wages of a deceased member paid to a sur- viving spouse or dependent children under ORS 652.190. (c) “Salary” does not include the following amounts: (A) Travel or any other expenses incidental to employer’s business which is reimbursed by the em- ployer. (B) Payments made on account of an employee’s death. (C) Any lump sum payment for accumulated un- used sick leave, vacation leave or other paid leave. (D) Any severance payment, accelerated payment of an employment contract for a future period or advance against future wages. (E) Any retirement incentive, retirement bonus or retirement gratuitous payment. (F) Payment for a leave of absence after the date the employer and employee have agreed that no fu- ture services in a qualifying position will be per- formed. (G) Payments for instructional services rendered to public universities listed in ORS 352.002 or the Oregon Health and Science University when those services are in excess of full-time employment sub- ject to this chapter. A person employed under a contract for less than 12 months is subject to this subparagraph only for the months covered by the contract. (H) The amount of an employee contribution to the individual account program that is paid by the employer and is not deducted from the compensation of the employee, as provided under ORS 238A.335 (1) and (2)(b). (I) Compensation described and authorized under ORS 341.556 that is not paid by the community col- lege employing the faculty member. (J) Compensation described and authorized under ORS 352.232 that is not paid by the public university employing the officer or employee. (K) Compensation described and authorized un- der ORS 353.270 that is not paid by Oregon Health and Science University. (L) For years before 2020, any amount in excess of $200,000 for a calendar year. If any period over which salary is determined is less than 12 months, the $200,000 limitation for that period shall be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12. The board shall adopt rules adjusting this dollar limit to incorporate cost-of-living adjustments authorized by the Internal Revenue Service. (M) For years beginning on or after January 1, 2020, any amount in excess of $195,000 for a calen- dar year. If any period over which salary is deter- mined is less than 12 months, the $195,000 limitation for that period shall be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12. On January 1 of each year, the board shall adjust the dollar limit provided by this subparagraph to reflect any percentage changes in the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor. (19) “System” means the Public Employees Re- tirement System. (20) “Workers’ compensation benefits” means: (a) Payments made under ORS chapter 656; or (b) Payments provided in lieu of workers’ com- pensation benefits under ORS 656.027 (6). SECTION 20. ORS 238A.125 is amended to read: 238A.125. (1) Upon retiring at normal retirement age, a vested pension program member shall be paid an annual pension for the life of the member as fol- lows: (a) For service as a police officer or firefighter, 1.8 percent of final average salary multiplied by the number of years of retirement credit attributable to service as a police officer or firefighter. (b) For service as other than a police officer or firefighter, 1.5 percent of final average salary multi- plied by the number of years of retirement credit attributable to service as other than a police officer or firefighter. (2) Notwithstanding any provision of ORS 238A.100 to 238A.250, the annual benefit payable to a member under the pension program and under any other tax-qualified defined benefit plan maintained by the participating public employer may not exceed the applicable limitations set forth in 26 U.S.C. 415(b), as in effect on December 31, [2023] 2025. The Public Employees Retirement Board shall adopt rules for the administration of this limitation, in- cluding adjustments in the annual dollar limitation to reflect cost-of-living adjustments authorized by the Internal Revenue Service. (3) The board shall make no actuarial adjustment in a member’s pension calculated under this section by reason of the member’s retirement after normal retirement age. SECTION 21. ORS 238A.125, as amended by section 3, chapter 101, Oregon Laws 2024, is amended to read: 238A.125. (1) Upon retiring at normal retirement age, a vested pension program member shall be paid an annual pension for the life of the member as fol- lows: (a) For service as a police officer or firefighter, 1.8 percent of final average salary multiplied by the number of years of retirement credit attributable to service as a police officer or firefighter. (b) For service in a hazardous position, 1.8 per- cent of final average salary multiplied by the num- ber of years of retirement credit attributable to service in a hazardous position. (c) For service as other than a police officer or firefighter or in a hazardous position, 1.5 percent of final average salary multiplied by the number of years of retirement credit attributable to service as 8

OREGON LAWS 2026 Chap. 142 other than a police officer or firefighter or in a haz- ardous position. (2) Notwithstanding any provision of ORS 238A.100 to 238A.250, the annual benefit payable to a member under the pension program and under any other tax-qualified defined benefit plan maintained by the participating public employer may not exceed the applicable limitations set forth in 26 U.S.C. 415(b), as in effect on December 31, [2023] 2025. The Public Employees Retirement Board shall adopt rules for the administration of this limitation, in- cluding adjustments in the annual dollar limitation to reflect cost-of-living adjustments authorized by the Internal Revenue Service. (3) The board shall make no actuarial adjustment in a member’s pension calculated under this section by reason of the member’s retirement after normal retirement age. SECTION 22. ORS 238A.150 is amended to read: 238A.150. (1) Notwithstanding any other pro- vision of ORS 238A.100 to 238A.250, an eligible em- ployee who leaves a qualifying position for the purpose of performing service in the uniformed ser- vices, and who subsequently returns to employment with a participating public employer with reemploy- ment rights under federal law, is entitled to accrue retirement credit, credit toward the probationary period required by ORS 238A.100 and credit toward the vesting requirements of ORS 238A.115 under rules adopted by the Public Employees Retirement Board pursuant to subsection (2) of this section. (2) The board shall adopt rules establishing ben- efits and service credit for any period of service in the uniformed services by an employee described in subsection (1) of this section. For the purpose of adopting rules under this subsection, the board shall consider and take into account all federal law relat- ing to benefits and service credit for any period of service in the uniformed services, including 26 U.S.C. 414(u), as in effect on December 31, [2023] 2025. Benefits and service credit under rules adopted by the board pursuant to this subsection may not exceed benefits and service credit required under federal law for periods of service in the uniformed services. SECTION 23. ORS 238A.170 is amended to read: 238A.170. (1) An active member of the pension program who is 72 years of age or older must retire not later than April 1 of the calendar year following the calendar year in which the member terminates employment with all participating public employers. An inactive member of the pension program must retire not later than April 1 of the calendar year following the calendar year in which the member attains 72 years of age. (2) Notwithstanding any other provision of ORS 238A.100 to 238A.250, the entire interest of a mem- ber of the pension program must be distributed over a time period commencing no later than the required beginning date set forth in subsection (1) of this section, and must be distributed in a manner that satisfies all other minimum distribution require- ments of 26 U.S.C. 401(a)(9) and regulations imple- menting that section, as in effect on January 1, [2024] 2026. The Public Employees Retirement Board shall adopt rules implementing those minimum dis- tribution requirements. SECTION 24. ORS 238A.230 is amended to read: 238A.230. (1) If a member of the pension program who is vested dies before the member’s effective date of retirement, the Public Employees Retirement Board shall pay the death benefit provided for in this section to: (a) The spouse of the member to the extent not provided to a former spouse in accordance with a judgment or order under ORS 238.465; (b) The former spouse of the member as provided in a judgment or order under ORS 238.465; or (c) Any other person who is constitutionally re- quired to be treated in the same manner as a spouse for the purpose of retirement benefits. (2) The death benefit to be paid under this sub- section is for the life of the member’s spouse, former spouse or other person who is constitutionally re- quired to be treated in the same manner as a spouse, and is: (a) If the member dies before the earliest retire- ment date for the member under ORS 238A.165, the actuarial equivalent of 50 percent of the pension that would otherwise have been paid to the deceased member, which shall be calculated as if the member became an inactive member on the date of death and retired at the earliest retirement date for the mem- ber as described in ORS 238A.165; (b) If the member dies on or after the earliest retirement date for the member under ORS 238A.165 and before normal retirement age under ORS 238A.160, the actuarial equivalent of the pension that would otherwise have been paid to the deceased member, which shall be calculated as if the member retired under ORS 238A.185 and as if the member’s retirement date was the first of the month following the date of death of the member; or (c) If the member dies on or after reaching normal retirement age as described in ORS 238A.160, the actuarial equivalent of the pension that would otherwise have been paid to the deceased member, which shall be calculated under ORS 238A.125 as if the member’s retirement date was the first of the month following the date of death of the member. (3) The death benefit provided under this section is first effective on the first day of the month fol- lowing the date of death of the member. (4) The surviving spouse or other person who is constitutionally required to be treated in the same manner as a spouse for the purpose of retirement benefits may elect to delay payment of the death benefit, which shall be actuarially adjusted for age and interest when payments commence, but payment must commence no later than December 31 of the calendar year in which the member would have reached 72 years of age. If a person who delays pay- 9

Chap. 142 OREGON LAWS 2026 ment under this subsection dies before payments commence: (a) The person’s beneficiary shall receive, in a lump sum, the sum of the payments the person would have received had the person not elected to delay payment of the death benefit. (b) If the person who delays payment under this subsection has not designated a beneficiary, the person’s benefit shall be paid to a personal repre- sentative appointed for the person’s estate. (5) Notwithstanding any other provision of ORS 238A.100 to 238A.250, distributions of death benefits under the pension program must comply with the minimum distribution requirements of 26 U.S.C. 401(a)(9) and the regulations implementing that sec- tion, as in effect on January 1, [2024] 2026. The board shall adopt rules implementing those minimum distribution requirements. SECTION 25. ORS 238A.370 is amended to read: 238A.370. Notwithstanding any other provision of ORS 238A.300 to 238A.415, the annual addition to the employee and employer accounts of a member of the individual account program for a calendar year, together with the annual additions to the accounts of the member under any other defined contribution plan maintained by the participating public employer for a calendar year, may not exceed the lesser of $40,000, or 100 percent of the member’s compen- sation for that calendar year. For purposes of this section, “annual addition” has the meaning given that term in 26 U.S.C. 415(c)(2), as in effect on De- cember 31, [2023] 2025, and “compensation” has the meaning given the term “participant’s compensation” in 26 U.S.C. 415(c)(3), as in effect on December 31, [2023] 2025. The Public Employees Re- tirement Board shall adopt rules for the adminis- tration of this limitation, including adjustments in the annual dollar limitation to reflect cost-of-living adjustments authorized by the Internal Revenue Service. SECTION 26. ORS 238A.400 is amended to read: 238A.400. (1) Upon retirement on or after the earliest retirement date, as described in ORS 238A.165, a member of the individual account pro- gram shall receive in a lump sum the amounts in the member’s employee account, rollover account and employer account to the extent the member is vested in those accounts under ORS 238A.320. (2) In lieu of a lump sum payment under subsec- tion (1) of this section, a member of the individual account program may elect to receive the amounts in the member’s employee account and employer ac- count, to the extent the member is vested in those accounts under ORS 238A.320, in substantially equal installments paid over a period of 5, 10, 15 or 20 years, or over a period that is equal to the antic- ipated life span of the member as actuarially deter- mined by the Public Employees Retirement Board. Installments may be made on a monthly, quarterly or annual basis. In no event may the period selected by the member exceed the time allowed by the min- imum distribution requirements described in subsec- tion (5) of this section. The board shall by rule establish the manner in which installments will be adjusted to reflect investment gains and losses on the unpaid balance during the payout period elected by the member under this subsection. The board by rule may establish minimum monthly amounts pay- able under this subsection. The board may require that a lump sum payment, or an installment sched- ule different than the schedules provided for in this subsection, be used to pay the vested amounts in the member’s accounts if those amounts are not ade- quate to generate the minimum monthly amounts specified by the rule. (3) A member of the individual account program electing to receive installments under subsection (2) of this section must designate a beneficiary or bene- ficiaries. In the event the member dies before all amounts in the employee and vested employer ac- counts are paid, the remaining account balance shall be paid in a lump sum distribution to the beneficiary or beneficiaries designated by the member. (4) A member who is entitled to receive retire- ment benefits under ORS chapter 238 may receive vested amounts in the member’s employee account, rollover account and employer account in the man- ner provided by this section when the member re- tires for service under the provisions of ORS chapter 238. (5) Notwithstanding any other provision of ORS 238A.300 to 238A.415, the entire interest of a mem- ber of the individual account program must be dis- tributed over a time period commencing no later than the latest retirement date set forth in ORS 238A.170, and must be distributed in a manner that satisfies all other minimum distribution require- ments of 26 U.S.C. 401(a)(9) and regulations imple- menting that section, as in effect on January 1, [2024] 2026. The board shall adopt rules implement- ing those minimum distribution requirements. SECTION 27. ORS 238A.410 is amended to read: 238A.410. (1)(a) If a member of the individual account program dies before retirement, the amounts in the member’s employee account, rollover account and employer account, to the extent the member is vested in those accounts under ORS 238A.320, shall be paid in a lump sum to the beneficiary or benefi- ciaries designated by the member for the purposes of this section. (b) If a member of the individual account pro- gram dies before retirement, the amounts in the em- ployee pension stability account established for the member under ORS 238A.353 shall be applied by the Public Employees Retirement Board to pay the costs of any benefit payable under ORS 238.395 or 238A.230 that accrues on or after July 1, 2020. If the amounts in the employee pension stability account exceed the costs of the benefit payable under ORS 238.395 or 238A.230 that accrues on or after July 1, 2020, the excess amounts shall be paid in a lump sum to the beneficiary or beneficiaries designated by the member for the purposes of this section. 10

OREGON LAWS 2026 Chap. 142 (2) If a member of the individual account pro- gram is married at the time of death, or there exists at the time of death any other person who is consti- tutionally required to be treated in the same manner as a spouse for the purpose of retirement benefits, the spouse or other person shall be the beneficiary for purposes of the death benefit payable under this section unless the spouse or other person consents to the designation of a different beneficiary or bene- ficiaries before the designation has been made and the consent has not been revoked by the spouse or other person as of the time of the member’s death. Consent and revocation of consent must be in writ- ing, acknowledged by a notary public, and submitted to the Public Employees Retirement Board in ac- cordance with rules adopted by the board. If the member’s spouse is designated as the member’s ben- eficiary and the marriage of the member and spouse is subsequently dissolved, the former spouse shall be treated as predeceasing the member for purposes of this section, unless the member expressly designates the former spouse as beneficiary after the effective date of the dissolution or the former spouse is re- quired to be designated as a beneficiary under the provisions of ORS 238.465. (3) For purposes of this section and ORS 238A.400 (3), if a member fails to designate a benefi- ciary, or if the person or persons designated do not survive the member, the death benefit provided for in this section shall be paid to the following person or persons, in the following order of priority: (a) The member’s surviving spouse or other per- son who is constitutionally required to be treated in the same manner as a spouse; (b) The member’s surviving children, in equal shares; or (c) The member’s estate. (4) If a small estate affidavit has been filed under ORS 114.505 to 114.560, and the death benefit does not exceed the maximum amount of personal prop- erty for which a small estate affidavit may be filed under ORS 114.505 to 114.560, the board shall pay the death benefit to the person who filed the affida- vit, if the member’s estate is the designated benefi- ciary or is receiving the payment under subsection (3) of this section. (5) The entire amount of a deceased member’s vested accounts must be distributed by December 31 of the fifth calendar year after the year in which the member died. Notwithstanding any other provision of this chapter, distributions of death benefits under the individual account program must comply with the minimum distribution requirements of 26 U.S.C. 401(a)(9) and the regulations implementing that sec- tion, as in effect on January 1, [2024] 2026. The Public Employees Retirement Board shall adopt rules implementing those minimum distribution re- quirements. SECTION 28. ORS 238A.415 is amended to read: 238A.415. (1) Notwithstanding any other pro- vision of ORS 238A.300 to 238A.415, an eligible em- ployee who leaves a qualifying position for the purpose of performing service in the uniformed ser- vices, and who subsequently returns to employment with a participating public employer with reemploy- ment rights under federal law, is entitled to credit toward the probationary period required by ORS 238A.300, credit toward the vesting requirements of ORS 238A.320 and contributions under rules adopted by the Public Employees Retirement Board pursuant to subsection (2) of this section. (2) The board shall adopt rules establishing con- tributions and service credit for any period of ser- vice in the uniformed services by an employee described in subsection (1) of this section. For the purpose of adopting rules under this subsection, the board shall consider and take into account all fed- eral law relating to benefits and service credit for any period of service in the uniformed services, in- cluding 26 U.S.C. 414(u), as in effect on December 31, [2023] 2025. Contributions and service credit un- der rules adopted by the board pursuant to this sub- section may not exceed contributions and service credit required under federal law for periods of ser- vice in the uniformed services. SECTION 29. ORS 238A.430 is amended to read: 238A.430. (1) To the extent required by law, and except as otherwise provided by rules adopted by the Public Employees Retirement Board under subsec- tion (4) of this section, any portion of a distribution of benefits described in subsection (2) of this section shall, at the election of and in lieu of distribution to the distributee, be paid directly to an eligible retire- ment plan specified by the distributee. (2) The provisions of subsection (1) of this sec- tion apply to a distribution of any benefit under the pension program or the individual account program except: (a) A distribution that is one of a series of sub- stantially equal periodic payments made at least an- nually for the life or life expectancy of the distributee, or for the joint lives or life expectancies of the distributee and a designated beneficiary; (b) A distribution that is one of a series of sub- stantially equal periodic payments made at least an- nually for a specified period of 10 years or more; and (c) A distribution to the extent that the distrib- ution is required under 26 U.S.C. 401(a)(9). (3) The provisions of subsection (1) of this sec- tion apply to any portion of a distribution of benefits under the pension program or the individual account program even though the portion consists of after- tax employee contributions that are not includable in gross income. Any portion of a distribution that consists of after-tax employee contributions that are not includable in gross income may be transferred only to an individual retirement account or annuity described in 26 U.S.C. 408(a) or (b), or to a qualified defined contribution or defined benefit plan de- scribed in 26 U.S.C. 401(a) or 403(b) that agrees to account separately for amounts transferred, includ- ing accounting separately for the portion of the dis- tribution that is includable in gross income and the portion of the distribution that is not includable in 11

Chap. 142 OREGON LAWS 2026 gross income. The amount transferred shall be treated as consisting first of the portion of the dis- tribution that is includable in gross income, deter- mined without regard to 26 U.S.C. 402(c)(1). (4) The board shall adopt rules implementing the direct rollover requirements of 26 U.S.C. 401(a)(31) and the regulations implementing that section, and may adopt administrative exceptions to the direct rollover requirements to the extent permitted by 26 U.S.C. 401(a)(31) and the regulations implementing that section. (5) All references in this section to federal laws and regulations are to the laws and regulations in effect on December 31, [2023] 2025. (6) For purposes of this section: (a) “Distributee” means a member, a member’s surviving spouse or a member’s alternate payee un- der ORS 238.465. (b) “Eligible retirement plan” means: (A) An individual retirement account described in 26 U.S.C. 408(a); (B) An individual retirement annuity described in 26 U.S.C. 408(b), other than an endowment con- tract; (C) A qualified trust under 26 U.S.C. 401(a), that is a defined contribution or defined benefit plan and permits the acceptance of rollover contributions; (D) An annuity plan described in 26 U.S.C. 403(a); (E) An eligible deferred compensation plan de- scribed in 26 U.S.C. 457(b) that is maintained by an eligible governmental employer described in 26 U.S.C. 457(e)(1)(A) and that agrees to account sepa- rately for amounts transferred into such plan from the distributing plan; or (F) An annuity contract described in 26 U.S.C. 403(b). SECTION 30. ORS 238A.435 is amended to read: 238A.435. (1) If a benefit is payable under this chapter to a beneficiary by reason of the death of a member of the system, the beneficiary may elect to have all or part of the distribution of the death benefit paid in an eligible rollover distribution to an individual retirement plan described in 26 U.S.C. 408(a), or an individual retirement annuity, other than an endowment contract, described in 26 U.S.C. 408(b), if the plan or annuity is established for the purpose of receiving the eligible rollover distribution on behalf of the designated beneficiary. (2) Subsection (1) of this section applies to an eligible rollover distribution of death benefits to a beneficiary who is not treated as the spouse of the decedent for federal tax purposes and who is the decedent’s designated beneficiary for the purposes of the minimum required distribution requirements of 26 U.S.C. 401(a)(9). To the extent provided by rules of the Public Employees Retirement Board, a trust maintained for the benefit of one or more benefici- aries must be treated by the board in the same manner as a trust that is designated as a beneficiary for the purposes of the minimum required distrib- ution requirements of 26 U.S.C. 401(a)(9). (3) As used in this section, “eligible rollover dis- tribution” has the meaning given that term in 26 U.S.C. 402(c)(4), as in effect on December 31, [2023] 2025. SECTION 31. ORS 305.239 is amended to read: 305.239. (1) Notwithstanding ORS 9.320: (a) Any person who is qualified to practice law or public accountancy in this state, any person who has been granted active enrollment to practice be- fore the Internal Revenue Service and who is quali- fied to prepare tax returns in this state or any person who is the authorized employee of a taxpayer and is regularly employed by the taxpayer in tax matters may represent the taxpayer before a tax court magistrate or the Department of Revenue in any conference or proceeding with respect to the administration of any tax. (b) Any person who is licensed by the State Board of Tax Practitioners or who is exempt from such licensing requirement as provided for and lim- ited by ORS 673.610 may represent a taxpayer before a tax court magistrate or the department in any conference or proceeding with respect to the admin- istration of any tax on or measured by net income. (c) Any shareholder of an S corporation, as de- fined in section 1361 of the Internal Revenue Code, as amended and in effect on December 31, [2023] 2025, may represent the corporation in any proceed- ing before a tax court magistrate or the department in the same manner as if the shareholder were a partner and the S corporation were a partnership. The S corporation must designate in writing a tax matters shareholder authorized to represent the S corporation. (d) An individual who is licensed as a real estate broker or principal real estate broker under ORS 696.022 or is a state certified appraiser or state li- censed appraiser under ORS 674.310 or is a regis- tered appraiser under ORS 308.010 may represent a taxpayer before a tax court magistrate or the de- partment in any conference or proceeding with re- spect to the administration of any ad valorem property tax. (e) A general partner who has been designated by members of a partnership as their tax matters partner under ORS 305.242 may represent those partners in any conference or proceeding with re- spect to the administration of any tax on or meas- ured by net income. (f) Any person authorized under rules adopted by the department may represent a taxpayer before the department in any conference or proceeding with respect to any tax. Rules adopted under this para- graph, to the extent feasible, shall be consistent with federal law that governs representation before the Internal Revenue Service, as federal law is amended and in effect on December 31, [2023] 2025. (g) Any person authorized under rules adopted by the tax court may represent a taxpayer in a pro- ceeding before a tax court magistrate. (2) A person may not be recognized as repres- enting a taxpayer pursuant to this section unless 12

OREGON LAWS 2026 Chap. 142 there is first filed with the magistrate or department a written authorization, or unless it appears to the satisfaction of the magistrate or department that the representative does in fact have authority to repre- sent the taxpayer. A person recognized as an au- thorized representative under rules or procedures adopted by the tax court shall be considered an au- thorized representative by the department. (3) A taxpayer represented by someone other than an attorney is bound by all things done by the authorized representative, and may not thereafter claim any proceeding was legally defective because the taxpayer was not represented by an attorney. (4) Prior to the holding of a conference or pro- ceeding before the tax court magistrate or depart- ment, written notice shall be given by the magistrate or department to the taxpayer of the provisions of subsection (3) of this section. SECTION 32. ORS 305.494 is amended to read: 305.494. Notwithstanding ORS 9.320, any share- holder of an S corporation as defined in section 1361 of the Internal Revenue Code, as amended and in effect on December 31, [2023] 2025, may represent the corporation in any proceeding before the Oregon Tax Court in the same manner as if the shareholder were a partner and the S corporation were a part- nership. SECTION 33. ORS 305.690 is amended to read: 305.690. As used in ORS 305.690 to 305.753, un- less the context otherwise requires: (1) “Commission” means the Oregon Charitable Checkoff Commission. (2) “Department” means the Department of Re- venue. (3) “Internal Revenue Code” means the federal Internal Revenue Code as amended and in effect on December 31, [2023] 2025. SECTION 34. ORS 305.842 is amended to read: 305.842. As used in ORS 307.130, 307.147, 307.580, 308A.450, 310.140, 310.800 and 311.666, “Internal Re- venue Code” means the federal Internal Revenue Code as amended and in effect on December 31, [2023] 2025. SECTION 35. ORS 314.011 is amended to read: 314.011. (1) As used in this chapter, unless the context requires otherwise, “department” means the Department of Revenue. (2) As used in this chapter: (a) Any term has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, un- less a different meaning is clearly required or the term is specifically defined in this chapter. (b) Except where the Legislative Assembly has provided otherwise, a reference to the laws of the United States or to the Internal Revenue Code refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect: (A) On December 31, [2023] 2025; or (B) If related to the definition of taxable income, as applicable to the tax year of the taxpayer. (c) With respect to ORS 314.105, 314.256 (relating to proxy tax on lobbying expenditures), 314.260 (1)(b), 314.302, 314.306, 314.330, 314.360, 314.362, 314.385, 314.402, 314.410, 314.412, 314.525, 314.767 (7), 314.771 and 314.772 and other provisions of this chapter, ex- cept those described in paragraph (b) of this subsec- tion, any reference to the laws of the United States or to the Internal Revenue Code means the laws of the United States relating to income taxes or the Internal Revenue Code as they are amended on or before December 31, [2023] 2025, even when the amendments take effect or become operative after that date, except where the Legislative Assembly has specifically provided otherwise. (3) Insofar as is practicable in the administration of this chapter, the department shall apply and fol- low the administrative and judicial interpretations of the federal income tax law. When a provision of the federal income tax law is the subject of con- flicting opinions by two or more federal courts, the department shall follow the rule observed by the United States Commissioner of Internal Revenue until the conflict is resolved. Nothing contained in this section limits the right or duty of the depart- ment to audit the return of any taxpayer or to de- termine any fact relating to the tax liability of any taxpayer. (4) When portions of the Internal Revenue Code incorporated by reference as provided in subsection (2) of this section refer to rules or regulations pre- scribed by the Secretary of the Treasury, then such rules or regulations shall be regarded as rules adopted by the department under and in accordance with the provisions of this chapter, whenever they are prescribed or amended. (5)(a) When portions of the Internal Revenue Code incorporated by reference as provided in sub- section (2) of this section are later corrected by an Act or a Title within an Act of the United States Congress designated as an Act or Title making technical corrections, then notwithstanding the date that the Act or Title becomes law, those portions of the Internal Revenue Code, as so corrected, shall be the portions of the Internal Revenue Code incorpo- rated by reference as provided in subsection (2) of this section and shall take effect, unless otherwise indicated by the Act or Title (in which case the provisions shall take effect as indicated in the Act or Title), as if originally included in the provisions of the Act being technically corrected. If, on account of this subsection, any adjustment is required to an Oregon return that would otherwise be prevented by operation of law or rule, the adjustment shall be made, notwithstanding any law or rule to the con- trary, in the manner provided under ORS 314.135. (b) As used in this subsection, “Act or Title” in- cludes any subtitle, division or other part of an Act or Title. SECTION 36. ORS 314.306 is amended to read: 13

Chap. 142 OREGON LAWS 2026 314.306. (1) If a taxpayer excludes an amount from federal gross income by reason of the discharge of indebtedness of the taxpayer under section 108(a)(1)(A) of the Internal Revenue Code (relating to discharge of indebtedness in a bankruptcy de- clared under U.S.C. Title 11), then, with respect to that portion of the excluded amount that is appor- tioned to Oregon, the taxpayer shall apply the rules in 11 U.S.C. 346(j), as amended and in effect on De- cember 31, [2023] 2025. (2) If a taxpayer excludes an amount from federal gross income by reason of the discharge of indebt- edness of the taxpayer under section 108(a)(1)(B) or (C) of the Internal Revenue Code (relating to dis- charge of indebtedness in insolvency or discharge of qualified farm indebtedness), then, with respect to that portion of the excluded amount that is appor- tioned to Oregon, the following paragraphs shall ap- ply, in the following order: (a) If the taxpayer has made the election under section 108(b)(5) of the Internal Revenue Code to first reduce the basis of the depreciable property of the taxpayer, the election shall also be effective for Oregon tax purposes. A corresponding reduction in the basis of the depreciable property of the taxpayer shall be made for Oregon tax purposes. (b) The amount, if any, by which the following attributes are reduced under section 108(b)(1) of the Internal Revenue Code for federal tax purposes shall be added back for Oregon tax purposes: (A) Federal net operating loss. (B) Capital loss carryover. (C) Basis of the property of the taxpayer, ex- cluding amounts subject to the election under sec- tion 108(b)(5) of the Internal Revenue Code. (D) Passive activity loss carryover. (c) Excluding amounts subject to the election in section 108(b)(5) of the Internal Revenue Code: (A) Any Oregon net operating loss of an individ- ual or corporate taxpayer, including a net operating loss carryover to the taxpayer, shall be reduced by the amount of discharged indebtedness. (B) Any net capital loss for the taxable year of the discharge, and any capital loss carryover to the taxable year, shall be reduced by the amount of dis- charged indebtedness minus the total amount taken into account under subparagraph (A) of this para- graph. (C) The basis of the property of the taxpayer shall be reduced by the amount of discharged indebtedness minus the total amount taken into ac- count under subparagraphs (A) and (B) of this para- graph. (D) The passive activity loss carryover under section 469(b) of the Internal Revenue Code from the taxable year of the discharge shall be reduced by the amount of discharged indebtedness minus the total amount taken into account under subparagraphs (A), (B) and (C) of this paragraph. SECTION 37. ORS 315.004 is amended to read: 315.004. (1) Except when the context requires otherwise, the definitions contained in ORS chapters 314, 316, 317 and 318 are applicable in the construc- tion, interpretation and application of the personal and corporate income and excise tax credits con- tained in this chapter. (2)(a) For purposes of the tax credits contained in this chapter, any term has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required or the term is specifically defined for purposes of constru- ing, interpreting and applying the credit. (b) With respect to the tax credits contained in this chapter, any reference to the laws of the United States or to the Internal Revenue Code means the laws of the United States relating to income taxes or the Internal Revenue Code as they are amended on or before December 31, [2023] 2025, even when the amendments take effect or become operative af- ter that date. (3) Insofar as is practicable in the administration of this chapter, the Department of Revenue shall apply and follow the administrative and judicial in- terpretations of the federal income tax law. When a provision of the federal income tax law is the subject of conflicting opinions by two or more federal courts, the department shall follow the rule observed by the United States Commissioner of Internal Re- venue until the conflict is resolved. Nothing con- tained in this section limits the right or duty of the department to audit the return of any taxpayer or to determine any fact relating to the tax liability of any taxpayer. (4) When portions of the Internal Revenue Code incorporated by reference as provided in subsection (2) of this section refer to rules or regulations pre- scribed by the Secretary of the Treasury, then such rules or regulations shall be regarded as rules adopted by the department under and in accordance with the provisions of this chapter, whenever they are prescribed or amended. (5)(a) When portions of the Internal Revenue Code incorporated by reference as provided in sub- section (2) of this section are later corrected by an Act or a Title within an Act of the United States Congress designated as an Act or Title making technical corrections, then notwithstanding the date that the Act or Title becomes law, those portions of the Internal Revenue Code, as so corrected, shall be the portions of the Internal Revenue Code incorpo- rated by reference as provided in subsection (2) of this section and shall take effect, unless otherwise indicated by the Act or Title (in which case the provisions shall take effect as indicated in the Act or Title), as if originally included in the provisions of the Act being technically corrected. If, on account of this subsection, any adjustment is required to an Oregon return that would otherwise be prevented by operation of law or rule, the adjustment shall be made, notwithstanding any law or rule to the con- trary, in the manner provided under ORS 314.135. (b) As used in this subsection, “Act or Title” in- cludes any subtitle, division or other part of an Act or Title. 14

OREGON LAWS 2026 Chap. 142 SECTION 38. ORS 316.012 is amended to read: 316.012. Any term used in this chapter has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required or the term is specifically defined in this chapter. Except where the Legislative Assembly has provided otherwise, any reference in this chapter to the laws of the United States or to the Internal Re- venue Code refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect: (1) On December 31, [2023] 2025; or (2) If related to the definition of taxable income, as applicable to the tax year of the taxpayer. SECTION 39. ORS 316.147 is amended to read: 316.147. As used in ORS 316.147 to 316.149, un- less the context requires otherwise: (1) “Eligible taxpayer” includes any individual who must pay taxes otherwise imposed by this chapter and: (a) Who pays or incurs expenses for the care of a qualified individual, through a payment method determined by rule of the Department of Revenue; and (b) Who has a household income, for the taxable year, not to exceed the maximum amount of house- hold income allowed in ORS 310.640 (1989 Edition) for a homeowner or renter refund. (2) “Household income” means the aggregate in- come of the eligible taxpayer and the spouse of the taxpayer who reside in the household, that was re- ceived during a calendar year. “Household income” includes payments received by the eligible taxpayer or the spouse of the taxpayer under the federal So- cial Security Act for the benefit of a minor child or minor children who reside in the household. (3) “Income” means “adjusted gross income” as defined in the federal Internal Revenue Code, as amended and in effect on December 31, [2023] 2025, even when the amendments take effect or become operative after that date, relating to the measure- ment of taxable income of individuals, estates and trusts, with the following modifications: (a) There shall be added to adjusted gross income the following items of otherwise exempt income: (A) The gross amount of any otherwise exempt pension less return of investment, if any. (B) Child support received by the taxpayer. (C) Inheritances. (D) Gifts and grants, the sum of which are in excess of $500 per year. (E) Amounts received by a taxpayer or spouse of a taxpayer for support from a parent who is not a member of the taxpayer’s household. (F) Life insurance proceeds. (G) Accident and health insurance proceeds, ex- cept reimbursement of incurred medical expenses. (H) Personal injury damages. (I) Sick pay that is not included in federal ad- justed gross income. (J) Strike benefits excluded from federal gross income. (K) Worker’s compensation, except for re- imbursement of medical expense. (L) Military pay and benefits. (M) Veteran’s benefits. (N) Payments received under the federal Social Security Act that are excluded from federal gross income. (O) Welfare payments, except as follows: (i) Payments for medical care, drugs and medical supplies, if the payments are not made directly to the welfare recipient; (ii) In-home services authorized and approved by the Department of Human Services; and (iii) Direct or indirect reimbursement of ex- penses paid or incurred for participation in work or training programs. (P) Nontaxable dividends. (Q) Nontaxable interest not included in federal adjusted gross income. (R) Rental allowance paid to a minister that is excluded from federal gross income. (S) Income from sources without the United States that is excluded from federal gross income. (b) Adjusted gross income shall be increased due to the disallowance of the following deductions: (A) The amount of the net loss, in excess of $1,000, from all dispositions of tangible or intangible properties. (B) The amount of the net loss, in excess of $1,000, from the operation of a farm or farms. (C) The amount of the net loss, in excess of $1,000, from all operations of a trade or business, profession or other activity entered into for the pro- duction or collection of income. (D) The amount of the net loss, in excess of $1,000, from tangible or intangible property held for the production of rents, royalties or other income. (E) The amount of any net operating loss carryovers or carrybacks included in federal ad- justed gross income. (F) The amount, in excess of $5,000, of the com- bined deductions or other allowances for depreci- ation, amortization or depletion. (G) The amount added or subtracted, as required within the context of this section, for adjustments made under ORS 316.680 (2)(d) and 316.707 to 316.737. (c) “Income” does not include the following: (A) Any governmental grant that must be used by the taxpayer for rehabilitation of the homestead of the taxpayer. (B) Any refund of Oregon personal income taxes that were imposed under this chapter. (4) “Qualified individual” includes an individual at least 60 years of age on the date that the ex- penses described in subsection (1)(a) of this section are paid or incurred by the eligible taxpayer: (a) Whose household income does not exceed $7,500 for the calendar year in which the taxable year of the taxpayer begins; 15

Chap. 142 OREGON LAWS 2026 (b) Who is eligible for authorized services as de- fined in ORS 410.410 under Oregon Project Inde- pendence; (c) Who is certified by the Department of Human Services; and (d) Whose care or any portion thereof is not paid for under ORS chapter 414. SECTION 40. ORS 316.157 is amended to read: 316.157. (1) In the case of an eligible individual, there shall be allowed as a credit against the taxes otherwise due under this chapter for the taxable year an amount equal to the lesser of the tax liabil- ity of the taxpayer or nine percent of net pension income. (2) For purposes of this section: (a) “Eligible individual” means any individual who is receiving pension income and who has at- tained 62 years of age before the close of the taxable year. (b) “Household income” means the aggregate in- come of the taxpayer and the spouse of the taxpayer who reside in the household, that was received dur- ing the taxable year for which a credit is claimed, except that “household income” does not include Social Security benefits received by the taxpayer or the spouse of the taxpayer. (c) “Income” means “adjusted gross income” as defined in the federal Internal Revenue Code, as amended and in effect on December 31, [2023] 2025, even when the amendments take effect or become operative after that date, relating to the measure- ment of taxable income of individuals, estates and trusts, with the following modifications: (A) There shall be added to adjusted gross in- come the following items of otherwise exempt in- come: (i) The gross amount of any otherwise exempt pension less return of investment, if any. (ii) Child support received by the taxpayer. (iii) Inheritances. (iv) Gifts and grants, the sum of which are in excess of $500 per year. (v) Amounts received by a taxpayer or spouse of a taxpayer for support from a parent who is not a member of the taxpayer’s household. (vi) Life insurance proceeds. (vii) Accident and health insurance proceeds, except reimbursement of incurred medical expenses. (viii) Personal injury damages. (ix) Sick pay that is not included in federal ad- justed gross income. (x) Strike benefits excluded from federal gross income. (xi) Worker’s compensation, except for re- imbursement of medical expense. (xii) Military pay and benefits. (xiii) Veteran’s benefits. (xiv) Payments received under the federal Social Security Act that are excluded from federal gross income. (xv) Welfare payments, except as follows: (I) Payments for medical care, drugs and medical supplies, if the payments are not made directly to the welfare recipient; (II) In-home services authorized and approved by the Department of Human Services; and (III) Direct or indirect reimbursement of ex- penses paid or incurred for participation in work or training programs. (xvi) Nontaxable dividends. (xvii) Nontaxable interest not included in federal adjusted gross income. (xviii) Rental allowance paid to a minister that is excluded from federal gross income. (xix) Income from sources without the United States that is excluded from federal gross income. (B) Adjusted gross income shall be increased due to the disallowance of the following deductions: (i) The amount of the net loss, in excess of $1,000, from all dispositions of tangible or intangible properties. (ii) The amount of the net loss, in excess of $1,000, from the operation of a farm or farms. (iii) The amount of the net loss, in excess of $1,000, from all operations of a trade or business, profession or other activity entered into for the pro- duction or collection of income. (iv) The amount of the net loss, in excess of $1,000, from tangible or intangible property held for the production of rents, royalties or other income. (v) The amount of any net operating loss carryovers or carrybacks included in federal ad- justed gross income. (vi) The amount, in excess of $5,000, of the com- bined deductions or other allowances for depreci- ation, amortization or depletion. (vii) The amount added or subtracted, as re- quired within the context of this section, for adjust- ments made under ORS 316.680 (2)(d) and 316.707 to 316.737. (C) “Income” does not include the following: (i) Any governmental grant that must be used by the taxpayer for rehabilitation of the homestead of the taxpayer. (ii) Any refund of Oregon personal income taxes that were imposed under this chapter. (d) “Net pension income” means: (A) For eligible individuals filing a joint return, the lesser of the pension income of the eligible indi- viduals received during the taxable year or the ex- cess, if any, of $15,000 over the sum of the following amounts: (i) Any Social Security benefits received by the eligible individual, or by the spouse of the individ- ual, during the taxable year; and (ii) The excess, if any, of household income over $30,000. (B) For an eligible individual filing a return other than a joint return, the lesser of the pension income of the eligible individual received during the taxable year or the excess, if any, of $7,500 over the sum of the following amounts: (i) Any Social Security benefits received by the eligible individual during the taxable year; and 16

OREGON LAWS 2026 Chap. 142 (ii) The excess, if any, of household income over $15,000. (e) “Pension income” means income included in Oregon taxable income from: (A) Distributions from or pursuant to an em- ployee pension benefit plan, as defined in section 3(2) of the Employee Retirement Income Security Act of 1974, which satisfies the requirements of section 401 of the Internal Revenue Code; (B) Distributions from or pursuant to a public retirement system of this state or a political subdi- vision of this state, or a public retirement system created by an Act of this state or a political subdi- vision of this state, or the public retirement system of any other state or local government; (C) Distributions from or pursuant to a federal retirement system created by the federal government for any officer or employee of the United States, in- cluding any person retired from service in the United States Civil Service, the Armed Forces of the United States or any agency or subdivision thereof; (D) Distributions or withdrawals from or pursu- ant to an eligible deferred compensation plan which satisfies the requirements of section 457 of the In- ternal Revenue Code; (E) Distributions or withdrawals from or pursu- ant to an individual retirement account, annuity or trust or simplified employee pension which satisfies the requirements of section 408 of the Internal Re- venue Code; and (F) Distributions or withdrawals from or pursu- ant to an employee annuity, including custodial ac- counts treated as annuities, subject to section 403 (a) or (b) of the Internal Revenue Code. (f) “Social Security benefits” means Social Secu- rity benefits, as defined in section 86 of the Internal Revenue Code (Title II Social Security or tier 1 railroad retirement benefits). (3) If a change in the taxable year of the eligible individual occurs as described in ORS 314.085, or if the Department of Revenue terminates the tax year of the eligible individual under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085. (4) If a change in the status of the eligible indi- vidual from resident to nonresident or from nonresi- dent to resident occurs, the credit allowed by this section shall be determined in a manner consistent with subsection (1) of this section. SECTION 41. ORS 317.010 is amended to read: 317.010. As used in this chapter, unless the con- text requires otherwise: (1) “Centrally assessed corporation” means every corporation the property of which is assessed by the Department of Revenue under ORS 308.505 to 308.674. (2) “Department” means the Department of Re- venue. (3)(a) “Consolidated federal return” means the return permitted or required to be filed by a group of affiliated corporations under section 1501 of the Internal Revenue Code. (b) “Consolidated state return” means the return required to be filed under ORS 317.710 (5). (4) “Doing business” means any transaction or transactions in the course of its activities conducted within the state by a national banking association, or any other corporation; provided, however, that a foreign corporation whose activities in this state are confined to purchases of personal property, and the storage thereof incident to shipment outside the state, shall not be deemed to be doing business un- less such foreign corporation is an affiliate of an- other foreign or domestic corporation which is doing business in Oregon. Whether or not corporations are affiliated shall be determined as provided in section 1504 of the Internal Revenue Code. (5) “Excise tax” means a tax measured by or ac- cording to net income imposed upon national bank- ing associations, all other banks, and financial, centrally assessed, mercantile, manufacturing and business corporations for the privilege of carrying on or doing business in this state. (6) “Financial institution” has the meaning given that term in ORS 314.610 except that it does not in- clude a credit union as defined in ORS 723.006, an interstate credit union as defined in ORS 723.001 or a federal credit union. (7) “Internal Revenue Code,” except where the Legislative Assembly has provided otherwise, refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect: (a) On December 31, [2023] 2025; or (b) If related to the definition of taxable income, as applicable to the tax year of the taxpayer. (8) “Oregon taxable income” means taxable in- come, less the deduction allowed under ORS 317.476, except as otherwise provided with respect to insur- ers in subsection (11) of this section and ORS 317.650 to 317.665. (9) “Oregon net loss” means taxable loss, except as otherwise provided with respect to insurers in subsection (11) of this section and ORS 317.650 to 317.665. (10) “Taxable income or loss” means the taxable income or loss determined, or in the case of a cor- poration for which no federal taxable income or loss is determined, as would be determined, under chap- ter 1, Subtitle A of the Internal Revenue Code and any other laws of the United States relating to the determination of taxable income or loss of corporate taxpayers, with the additions, subtractions, adjust- ments and other modifications as are specifically prescribed by this chapter except that in determin- ing taxable income or loss for any year, no deduction under ORS 317.476 or 317.478 and section 45b, chap- ter 293, Oregon Laws 1987, shall be allowed. If the corporation is a corporation to which ORS 314.280 or 314.605 to 314.675 (requiring or permitting appor- tionment of income from transactions or activities carried on both within and without the state) ap- plies, to derive taxable income or loss, the following shall occur: (a) From the amount otherwise determined under this subsection, subtract nonapportionable income, 17

Chap. 142 OREGON LAWS 2026 or add nonapportionable loss, whichever is applica- ble. (b) Multiply the amount determined under para- graph (a) of this subsection by the Oregon appor- tionment percentage defined under ORS 314.280, 314.650 or 314.667, whichever is applicable. The re- sulting product shall be Oregon apportioned income or loss. (c) To the amount determined as Oregon appor- tioned income or loss under paragraph (b) of this subsection, add nonapportionable income allocable entirely to Oregon under ORS 314.280 or 314.625 to 314.645, or subtract nonapportionable loss allocable entirely to Oregon under ORS 314.280 or 314.625 to 314.645. The resulting figure is “taxable income or loss” for those corporations carrying on taxable transactions or activities both within and without Oregon. (11) As used in ORS 317.650 to 317.665, “insurer” means any domestic, foreign or alien insurer as defined in ORS 731.082 and any interin- surance and reciprocal exchange and its attorney in fact with respect to its attorney in fact net income as a corporate attorney in fact acting as attorney in compliance with ORS 731.458, 731.462, 731.466 and 731.470 for the reciprocal or interinsurance ex- change. However, “insurer” does not include title insurers or health care service contractors operating pursuant to ORS 750.005 to 750.095. SECTION 42. ORS 317.097 is amended to read: 317.097. (1) As used in this section: (a) “Annual rate” means the yearly interest rate specified on the note, and not the annual percentage rate, if any, disclosed to the applicant to comply with the federal Truth in Lending Act. (b) “Bonds” means a bond, as defined in ORS 286A.001, if issued on behalf of the Housing and Community Services Department, or bonds, as de- fined in ORS 456.055, if issued by a housing author- ity. (c) “Finance charge” means the total of all in- terest, loan fees, interest on any loan fees financed by the lending institution, and other charges related to the cost of obtaining credit. (d) “Lending institution” means any insured in- stitution, as that term is defined in ORS 706.008, any mortgage banking company that maintains an office in this state or any community development corpo- ration that is organized under the Oregon Nonprofit Corporation Law. (e) “Limited equity cooperative” means a coop- erative corporation formed under ORS chapter 62 whose articles of incorporation, in addition to the other requirements of ORS chapter 62, prohibit members from selling their ownership interests: (A) To any person other than a low income per- son; or (B) For a sales price that exceeds the sum of: (i) The price the member paid for the ownership interest; (ii) The cost of any permanent improvements the member made to the housing unit during the member’s ownership; (iii) Any special assessments the member paid to the limited equity cooperative during the member’s ownership that were expended to make permanent improvements to the building in which the member’s housing unit is located; and (iv) A return on the amounts described in sub- subparagraphs (i) to (iii) of this subparagraph, com- puted from the year in which the respective amount was paid, that equals the greater of the result of adjusting each amount by the percentage increase, if any, in the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor, or of increasing each amount by three percent compounded annually. (f) “Manufactured dwelling park” has the mean- ing given that term in ORS 446.003. (g) “Nonprofit corporation” means a corporation that is exempt from income taxes under section 501(c)(3) or (4) of the Internal Revenue Code as amended and in effect on December 31, [2023] 2025. (h) “Preservation project” means housing that was previously developed as affordable housing with a contract for rent assistance from the United States Department of Housing and Urban Development or the United States Department of Agriculture and that is being acquired by a sponsoring entity. (i) “Qualified assignee” means any investor par- ticipating in the secondary market for real estate loans. (j) “Qualified borrower” means any borrower that is a sponsoring entity that has a controlling interest in the real property that is financed by a qualified loan. A controlling interest includes a con- trolling interest in the general partner of a limited partnership that owns the real property. (k) “Qualified loan” means: (A) A loan that meets the criteria stated in sub- section (5) of this section or that is made to refi- nance a loan that meets the criteria described in subsection (5) of this section; (B) The purchase by a lending institution of bonds, the proceeds of which are used to finance or refinance a loan that meets the criteria described in subsection (5) of this section; or (C) A qualified mortgage loan fund. (L) “Qualified mortgage loan fund” means a fund that: (A) Is operated by a lending institution described in subsection (12) of this section; (B) Makes mortgages to first-time home buyers; (C) Makes mortgages for homes subject to a land trust mortgage; and (D) Makes mortgages to households that, at the time of mortgage origination, have income that is 80 percent or less of area median income as defined in ORS 458.610. (m) “Sponsoring entity” means a nonprofit cor- poration, nonprofit cooperative, state governmental entity, local unit of government as defined in ORS 18

OREGON LAWS 2026 Chap. 142 466.706, housing authority or any other person, pro- vided that the person has agreed to restrictive cove- nants imposed by a nonprofit corporation, nonprofit cooperative, state governmental entity, local unit of government or housing authority. (2) The Department of Revenue shall allow a credit against taxes otherwise due under this chap- ter for the tax year to a lending institution that makes a qualified loan certified by the Housing and Community Services Department as provided in sub- section (7) of this section. The amount of the credit is equal to the difference between: (a) The amount of finance charge charged by the lending institution during the tax year at an annual rate less than the market rate for a qualified loan that complies with the requirements of this section; and (b) The amount of finance charge that would have been charged during the tax year by the lend- ing institution for the qualified loan for housing construction, development, acquisition or rehabili- tation measured at the annual rate charged by the lending institution for nonsubsidized loans made un- der like terms and conditions at the time the quali- fied loan for housing construction, development, acquisition or rehabilitation is made. (3) The maximum amount of credit for the dif- ference between the amounts described in subsection (2)(a) and (b) of this section may not exceed four percent of the average unpaid balance of the quali- fied loan during the tax year for which the credit is claimed. (4) Any tax credit allowed under this section that is not used by the taxpayer in a particular year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit remaining unused in the next suc- ceeding tax year may be carried forward and used in the second succeeding tax year, and likewise, any credit not used in that second succeeding tax year may be carried forward and used in the third suc- ceeding tax year, and any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth suc- ceeding tax year, but may not be carried forward for any tax year thereafter. (5) To be eligible for the tax credit allowable under this section, a lending institution must make a qualified loan by either purchasing bonds, the proceeds of which are used to finance or refinance a loan that meets the criteria stated in this subsec- tion, or making a loan directly to: (a) An individual or individuals who own a dwelling, participate in an owner-occupied commu- nity rehabilitation program and are certified by the local government or its designated agent as having an income level when the loan is made of 80 percent of the area median income or less; (b) A qualified borrower who: (A) Uses the loan proceeds to finance construc- tion, development, acquisition or rehabilitation of housing, including housing in the form of a limited equity cooperative; and (B) Provides a written certification executed by the Housing and Community Services Department that the: (i) Housing created by the loan is or will be oc- cupied by households earning 80 percent of the area median income or less; and (ii) Full amount of savings from the reduced in- terest rate provided by the lending institution is or will be passed on, in the form of reduced housing payments, to the tenants or to the holders of propri- etary leases in a limited equity cooperative; (c) Subject to subsection (14) of this section, a qualified borrower who: (A) Uses the loan proceeds to finance construc- tion, development, acquisition or rehabilitation of housing consisting of a manufactured dwelling park; and (B) Provides a written certification executed by the Housing and Community Services Department that the housing will continue to be operated as a manufactured dwelling park during the period for which the tax credit is allowed; (d) A qualified borrower who: (A) Uses the loan proceeds to finance acquisition or rehabilitation of housing consisting of a preser- vation project; and (B) Provides a written certification executed by the Housing and Community Services Department that the housing preserved by the loan: (i) Is or will be occupied by households earning 80 percent of the area median income or less; and (ii) Is the subject of a rent assistance contract with the United States Department of Housing and Urban Development or the United States Depart- ment of Agriculture that will be maintained by the qualified borrower; (e) A qualified borrower who: (A) Uses the loan proceeds to finance construc- tion, development, acquisition or rehabilitation of housing; and (B) Provides a written certification executed by the Housing and Community Services Department or the governmental party to the rent assistance contract that the housing preserved by the loan: (i) Is or will be occupied by households earning 80 percent of the area median income or less; and (ii) Is the subject of a rent assistance contract with the federal government or with a state or local government that will be maintained by the qualified borrower and that limits a tenant’s rent to no more than 30 percent of their income; (f) A qualified borrower who: (A) Uses the loan proceeds to finance preserva- tion or rehabilitation of housing; and (B) Provides a written certification executed by the Housing and Community Services Department that the housing preserved or rehabilitated by the loan: (i) Is or will be occupied by households earning 80 percent of the area median income or less; and 19

Chap. 142 OREGON LAWS 2026 (ii) Is currently characterized by financial or physical distress that threatens its ongoing viability as an affordable housing resource; or (g) A qualified mortgage loan fund. (6) A loan made to refinance a loan that meets the criteria stated in subsection (5) of this section must be treated the same as a loan that meets the criteria stated in subsection (5) of this section. (7) For a qualified loan to be eligible for the tax credit allowable under this section, the Housing and Community Services Department must execute a written certification for the qualified loan that: (a) States that the qualified loan is within the limitation imposed by subsection (8) of this section; and (b) Specifies the period, as determined by the Housing and Community Services Department, dur- ing which the tax credit is allowed for the qualified loan, not to exceed: (A) 30 years, for a qualified loan with a contract for rent assistance or financing resources from the United States Department of Agriculture, for new housing construction, acquisition of housing or a preservation project; or (B) 20 years, for any other type of qualified loan. (8) The Housing and Community Services De- partment may certify qualified loans that are eligible under subsection (5) of this section if the total cred- its attributable to all qualified loans eligible for credits under this section and then outstanding do not exceed $35 million for any fiscal year. In making loan certifications under subsection (7) of this sec- tion, the Housing and Community Services Depart- ment shall attempt to distribute the tax credits statewide, but shall concentrate the tax credits in those areas of the state that are determined by the Oregon Housing Stability Council to have the great- est need for affordable housing. (9) The tax credit provided for in this section may be taken whether or not: (a) The financial institution is eligible to take a federal income tax credit under section 42 of the In- ternal Revenue Code with respect to the project fi- nanced by the qualified loan; (b) The project receives financing from bonds, the interest on which is exempt from federal taxa- tion under section 103 of the Internal Revenue Code; or (c) The project receives moneys from the Elderly and Disabled Housing Fund under ORS 456.535. (10) For a qualified loan defined in subsection (1)(k)(B) of this section financed through the pur- chase of bonds, the interest of which is exempt from federal taxation under section 103 of the Internal Revenue Code, the amount of finance charge that would have been charged under subsection (2)(b) of this section is determined by reference to the fi- nance charge that would have been charged if the federally tax exempt bonds had been issued and the tax credit under this section did not apply. (11) A lending institution may sell a qualified loan for which a certification has been executed to a qualified assignee whether or not the lending in- stitution retains servicing of the qualified loan so long as a designated lending institution maintains records, annually verified by a loan servicer, that establish the amount of tax credit earned by the taxpayer throughout each year of eligibility. (12) Notwithstanding any other provision of law, a lending institution that is a community develop- ment corporation organized under the Oregon Non- profit Corporation Law may transfer all or part of a tax credit allowed under this section to one or more other lending institutions that are stockholders or members of the community development corporation or that otherwise participate through the community development corporation in the making of one or more qualified loans for which the tax credit under this section is allowed. (13) The lending institution shall file an annual statement with the Housing and Community Ser- vices Department, specifying that it has conformed with all requirements imposed by law to qualify for a tax credit under this section. (14) Notwithstanding subsection (1)(j) and (m) of this section, a qualified borrower on a loan to fi- nance the construction, development, acquisition or rehabilitation of a manufactured dwelling park un- der subsection (5)(c) of this section must be: (a) A nonprofit corporation, manufactured dwell- ing park nonprofit cooperative, state governmental entity, local unit of government as defined in ORS 466.706 or housing authority; or (b) A nonprofit corporation or housing authority that has a controlling interest in the real property that is financed by a qualified loan. A controlling interest includes a controlling interest in the gen- eral partner of a limited partnership that owns the real property. (15) The Department of Revenue may require that a lending institution that has earned the credit and a lending institution that intends to claim the credit jointly file a notice, as prescribed by the De- partment of Revenue. The notice must comply with ORS 315.056 (2) or 315.058 (2). (16) The Housing and Community Services De- partment shall provide information to the Depart- ment of Revenue about all certifications executed under this section, if required by ORS 315.058. (17) The Housing and Community Services De- partment and the Department of Revenue may adopt rules to carry out the provisions of this section. SECTION 43. ORS 317A.100, as amended by section 6, chapter 502, Oregon Laws 2025, is amended to read: 317A.100. As used in ORS 317A.100 to 317A.158: (1)(a) “Commercial activity” means: (A) The total amount realized by a person, aris- ing from transactions and activity in the regular course of the person’s trade or business, without de- duction for expenses incurred by the trade or busi- ness; (B) If received by a financial institution: 20

OREGON LAWS 2026 Chap. 142 (i) If the reporting person for a financial institu- tion is a holding company, all items of income re- ported on the FR Y-9 filed by the holding company; (ii) If the reporting person for a financial insti- tution is a bank organization, all items of income reported on the call report filed by the bank organ- ization; and (iii) If the reporting person for a financial insti- tution is a nonbank financial organization, all items of income reported in accordance with generally ac- cepted accounting principles; and (C)(i) If received by an insurer, as reported on the statement of premiums accompanying the annual statement required under ORS 731.574 to be filed with the Director of the Department of Consumer and Business Services, all gross direct life insurance premiums, gross direct accident and health insur- ance premiums and gross direct property and casu- alty insurance premiums; and (ii) The gross amount of surplus lines premiums received on Oregon home state risks as shown in the report required by ORS 735.465. (b) “Commercial activity” does not include: (A) Interest income except: (i) Interest on credit sales; or (ii) Interest income, including service charges, received by financial institutions; (B) Receipts from the sale, exchange or other disposition of an asset described in section 1221 or 1231 of the Internal Revenue Code, without regard to the length of time the person held the asset; (C) If received by an insurer, federally reinsured premiums or income from transactions between a reciprocal insurer and its attorney in fact operating under ORS 731.142; (D) Receipts from hedging transactions, to the extent that the transactions are entered into prima- rily to protect a financial position, including trans- actions intended to manage the risk of exposure to foreign currency fluctuations that affect assets, li- abilities, profits, losses, equity or investments in foreign operations, risk of exposure to interest rate fluctuations or risk of commodity price fluctuations; (E) Proceeds received attributable to the repay- ment, maturity or redemption of the principal of a loan, bond, mutual fund, certificate of deposit or marketable instrument; (F) The principal amount received under a re- purchase agreement or on account of any trans- action properly characterized as a loan to the person; (G) Contributions received by a trust, plan or other arrangement, any of which is described in section 501(a) of the Internal Revenue Code, or to which title 26, subtitle A, chapter 1, subchapter (D) of the Internal Revenue Code applies; (H) Compensation, whether current or deferred, and whether in cash or in kind, received or to be received by an employee, a former employee or the employee’s legal successor for services rendered to or for an employer, including reimbursements re- ceived by or for an individual for medical or educa- tion expenses, health insurance premiums or employee expenses or on account of a dependent care spending account, legal services plan, any cafe- teria plan described in section 125 of the Internal Revenue Code or any similar employee reimburse- ment; (I) Proceeds received from the issuance of the taxpayer’s own stock, options, warrants, puts or calls, or from the sale of the taxpayer’s treasury stock; (J) Proceeds received on the account of payments from insurance policies, including crop insurance policies, owned by the taxpayer, except those pro- ceeds received for the loss of commercial activity; (K) Gifts or charitable contributions received, membership dues received by trade, professional, homeowners’ or condominium associations, payments received for educational courses, meetings or meals, or similar payments to a trade, professional or other similar association, and fundraising receipts received by any person when any excess receipts are donated or used exclusively for charitable purposes; (L) Damages received as the result of litigation in excess of amounts that, if received without liti- gation, would be treated as commercial activity; (M) Property, money and other amounts received or acquired by an agent on behalf of another in ex- cess of the agent’s commission, fee or other re- muneration; (N) Tax refunds from any tax program, other tax benefit recoveries and reimbursements for the tax imposed under ORS 317A.100 to 317A.158 made by entities that are part of the same unitary group as provided under ORS 317A.106, and reimbursements made by entities that are not members of a unitary group that are required to be made for economic parity among multiple owners of an entity whose tax obligation under ORS 317A.100 to 317A.158 is re- quired to be reported and paid entirely by one owner, as provided in ORS 317A.106; (O) Pension reversions; (P) Contributions to capital; (Q) Receipts from the sale, transfer, exchange or other disposition of motor vehicle fuel or any other product used for the propulsion of motor vehicles; (R) In the case of receipts from the sale of ciga- rettes or tobacco products by a wholesale dealer, retail dealer, distributor, manufacturer or seller, an amount equal to the federal and state excise taxes paid by any person on or for such cigarettes or to- bacco products under subtitle E of the Internal Re- venue Code or ORS chapter 323; (S) In the case of receipts from the sale of malt beverages or wine, as defined in ORS 471.001, cider, as defined in ORS 471.023 or distilled liquor, as de- fined in ORS 471.001, by a person holding a license issued under ORS chapter 471, an amount equal to the federal and state excise taxes paid by any person on or for such malt beverages, wine or distilled liq- uor under subtitle E of the Internal Revenue Code or ORS chapter 471 or 473, and any amount paid to the Oregon Liquor and Cannabis Commission for sales of distilled spirits by an agent appointed under ORS 471.750; 21

Chap. 142 OREGON LAWS 2026 (T) In the case of receipts from the sale of marijuana items, as defined in ORS 475C.009, by a person holding a license issued under ORS 475C.005 to 475C.525, an amount equal to the federal and state excise taxes paid by any person on or for such marijuana items under subtitle E of the Internal Revenue Code or ORS 475C.670 to 475C.734 and any local retail taxes authorized under ORS 475C.453; (U) Local taxes collected by a restaurant or other food establishment on sales of meals, prepared food or beverages; (V) Tips or gratuities collected by a restaurant or other food establishment and passed on to em- ployees; (W) Receipts realized by a vehicle dealer certi- fied under ORS 822.020 or a person described in ORS 320.400 (8)(a)(B) from the sale or other transfer of a motor vehicle, as defined in ORS 801.360, to another vehicle dealer for the purpose of resale by the transferee vehicle dealer, but only if the sale or other transfer was based upon the transferee’s need to meet a specific customer’s preference for a motor vehicle or is an exchange of new vehicles between franchised motor vehicle dealerships; (X) Registration fees or taxes collected by a ve- hicle dealer certified under ORS 822.020 or a person described in ORS 320.400 (8)(a)(B) at the sale or other transfer of a motor vehicle, as defined in ORS 801.360, that are owed to a third party by the pur- chaser of the motor vehicle and passed to the third party by the dealer; (Y) Receipts from a financial institution for ser- vices provided to the financial institution in con- nection with the issuance, processing, servicing and management of loans or credit accounts, if the fi- nancial institution and the recipient of the receipts have at least 50 percent of their ownership interests owned or controlled, directly or constructively through related interests, by common owners; (Z) In the case of amounts retained as commis- sions by a holder of a license under ORS chapter 462, an amount equal to the amounts specified under ORS chapter 462 that must be paid to or collected by the Department of Revenue as a tax and the amounts specified under ORS chapter 462 to be used as purse money; (AA) Receipts of residential care facilities as de- fined in ORS 443.400 or in-home care agencies as defined in ORS 443.305, to the extent that the re- ceipts are derived from or received as compensation for providing services to a medical assistance or Medicare recipient; (BB) Dividends received; (CC) Distributive income received from a pass- through entity; (DD) Receipts from sales to a wholesaler in this state, if the seller receives certification at the time of sale from the wholesaler that the wholesaler will sell the purchased property outside this state; (EE) Receipts from the wholesale or retail sale of groceries, including receipts of a person that owns groceries at the time of sale and compensation of any consignee engaged in effecting the sale of gro- ceries on behalf the owner of the groceries, but only to the extent that the compensation relates to gro- cery sales; (FF) Receipts from transactions among members of a unitary group; (GG) Moneys, including public purpose charge moneys collected under ORS 757.612 and moneys collected to plan for and pursue cost-effective energy efficiency resources under ORS 757.054, that are collected from customers, passed to a utility and ap- proved by the Public Utility Commission and that support energy conservation, renewable resource ac- quisition and low-income assistance programs; (HH) Moneys collected by a utility from custom- ers for the payment of loans through on-bill financ- ing; (II) Surcharges collected under ORS 757.736; (JJ) Moneys passed to a utility by the Bonneville Power Administration for the purpose of effectuating the Regional Power Act Exchange credits or pursu- ant to any settlement associated with the exchange credit; (KK) Moneys collected or recovered, by entities listed in ORS 756.310, cable operators as defined in 47 U.S.C. 522(5), telecommunications carriers as de- fined in 47 U.S.C. 153(51) and providers of informa- tion services as defined in 47 U.S.C. 153(24), for fees payable under ORS 756.310, right-of-way fees, fran- chise fees, privilege taxes, federal taxes and local taxes; (LL) Charges assessed under ORS 759.685 and paid into the Residential Service Protection Fund; (MM) Universal service surcharge moneys col- lected or recovered and paid into the universal ser- vice fund established in ORS 759.425; (NN) Moneys collected for public purpose fund- ing as described in ORS 759.430; (OO) Moneys collected or recovered and paid into the federal universal service fund as determined by the Federal Communications Commission; (PP) In the case of a seller or provider of tele- communications services, the amount of tax imposed under ORS 403.200 for access to the emergency communications system that is collected from sub- scribers or consumers; (QQ) In the case of a transient lodging tax col- lector, the amount of tax imposed under ORS 320.305 and of any local transient lodging tax imposed upon the occupancy of transit lodging; (RR) In the case of a seller of bicycles, the amount of tax imposed under ORS 320.415 upon re- tail sales of bicycles; (SS) In the case of a qualified heavy equipment provider, the amount of tax imposed under ORS 307.872 upon the rental price of heavy equipment; (TT) Farmer sales to an agricultural cooperative in this state that is a cooperative organization de- scribed in section 1381 of the Internal Revenue Code; (UU) Revenue received by a business entity that is mandated by contract or subcontract to be dis- tributed to another person or entity if the revenue constitutes sales commissions that are paid to a 22

OREGON LAWS 2026 Chap. 142 person who is not an employee of the business en- tity, including, without limitation, a split-fee real estate commission; (VV) Receipts from the sale of fluid milk by dairy farmers that are not members of an agricul- tural cooperative; and (WW)(i) Cost paid by a dealer for items of pre- cious metal. (ii) As used in this subparagraph, “item of pre- cious metal” means an item of gold, silver, platinum, rhodium or palladium that has been put through a process of smelting or refining and that is in a state or condition that its value depends on its contents and not its form. (2) “Cost inputs” means: (a) The cost of goods sold as calculated in arriv- ing at federal taxable income under the Internal Re- venue Code; or (b) In the case of a taxpayer that is engaged in a farming operation, as defined in ORS 317A.102, and that does not report cost of goods sold for federal tax purposes, the taxpayer’s operating expenses exclud- ing labor costs. (3) “Doing business” means engaging in any ac- tivity, whether legal or illegal, that is conducted for, or results in, the receipt of commercial activity at any time during a calendar year. (4) “Excluded person” means any of the follow- ing: (a) Organizations described in sections 501(c) and 501(j) of the Internal Revenue Code, unless the ex- emption is denied under section 501(h), (i) or (m) or under section 502, 503 or 505 of the Internal Re- venue Code. (b) Organizations described in section 501(d) of the Internal Revenue Code, unless the exemption is denied under section 502 or 503 of the Internal Re- venue Code. (c) Organizations described in section 501(e) of the Internal Revenue Code. (d) Organizations described in section 501(f) of the Internal Revenue Code. (e) Charitable risk pools described in section 501(n) of the Internal Revenue Code. (f) Organizations described in section 521 of the Internal Revenue Code. (g) Qualified state tuition programs described in section 529 of the Internal Revenue Code. (h) Foreign or alien insurance companies, but only with respect to the underwriting profit derived from writing wet marine and transportation insur- ance subject to tax under ORS 731.824 and 731.828 or if an insurance company is subject to the retali- atory tax under ORS 731.854 and 731.859. (i) Governmental entities. (j) Any person with commercial activity that does not exceed $750,000 for the tax year, other than a person that is part of a unitary group as provided in ORS 317A.106 with commercial activity in excess of $750,000. (k) Hospitals subject to assessment under ORS 414.855, long term care facilities subject to assess- ment under ORS 409.801 or any entity subject to as- sessment under ORS 414.880 or section 3 or 5, chapter 538, Oregon Laws 2017. (L) Manufactured dwelling park nonprofit coop- eratives organized under ORS chapter 62. (5) “Financial institution” has the meaning given that term in ORS 314.610, except that “financial in- stitution” does not include a credit union. (6)(a) “FR Y-9” means the consolidated or parent-only financial statements that a holding com- pany is required to file with the Federal Reserve Board pursuant to 12 U.S.C. 1844. (b) In the case of a holding company required to file both consolidated and parent-only financial statements, “FR Y-9” means the consolidated finan- cial statements that the holding company is required to file. (7) “Governmental entity” means: (a) The United States and any of its unincor- porated agencies and instrumentalities. (b) Any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States. (c) The State of Oregon and any of its unincor- porated agencies and instrumentalities. (d) Any county, city, district or other political subdivision of the state. (e) A special government body as defined in ORS 174.117. (f) A federally recognized Indian tribe. (8) “Groceries” means food as defined in 7 U.S.C. 2012(k), but does not include cannabinoid edibles or marijuana seeds. (9)(a) “Hedging transaction” means a hedging transaction as defined in section 1221 of the Internal Revenue Code or a transaction accorded hedge ac- counting treatment under Financial Accounting Standards Board Statement No. 133. (b) “Hedging transaction” does not include a transaction in which an actual transfer of title of real or tangible property to another entity occurs. (10) “Insurer” has the meaning given that term in ORS 317.010. (11) “Internal Revenue Code,” except where the Legislative Assembly has provided otherwise, refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect on December 31, [2023] 2025. (12) “Labor costs” means total compensation of all employees, not to include compensation paid to any single employee in excess of $500,000. (13)(a) “Motor vehicle fuel or any other product used for the propulsion of motor vehicles” means: (A) Motor vehicle fuel as defined in ORS 319.010; and (B) Fuel the use of which in a motor vehicle is subject to taxation under ORS 319.530. (b) “Motor vehicle fuel or any other product used for the propulsion of motor vehicles” does not mean: (A) Electricity; or 23

Chap. 142 OREGON LAWS 2026 (B) Electric batteries or any other mechanical or physical component or accessory of a motor vehi- cle. (14) “Person” includes individuals, combinations of individuals of any form, receivers, assignees, trustees in bankruptcy, firms, companies, joint-stock companies, business trusts, estates, partnerships, limited liability partnerships, limited liability com- panies, associations, joint ventures, clubs, societies, entities organized as for-profit corporations under ORS chapter 60, C corporations, S corporations, qualified subchapter S subsidiaries, qualified sub- chapter S trusts, trusts, entities that are disregarded for federal income tax purposes and any other enti- ties. (15) “Retailer” means a person doing business by selling tangible personal property to a purchaser for a purpose other than: (a) Resale by the purchaser of the property as tangible personal property in the regular course of business; (b) Incorporation by the purchaser of the prop- erty in the course of regular business as an ingredi- ent or component of real or personal property; or (c) Consumption by the purchaser of the property in the production for sale of a new article of tangi- ble personal property. (16) “Taxable commercial activity” means com- mercial activity sourced to this state under ORS 317A.128, less any subtraction pursuant to ORS 317A.119. (17)(a) “Taxpayer” means any person or unitary group required to register, file or pay tax under ORS 317A.100 to 317A.158. (b) “Taxpayer” does not include excluded per- sons, except to the extent that a tax-exempt entity has unrelated business income as described in the Internal Revenue Code. (18) “Tax year” means, except as otherwise pro- vided in ORS 317A.103, a taxpayer’s annual ac- counting period used for federal income tax purposes under section 441 of the Internal Revenue Code. (19)(a) “Unitary business” means a business en- terprise in which there exists directly or indirectly between the members or parts of the enterprise a sharing or exchange of value as demonstrated by: (A) Centralized management or a common exec- utive force; (B) Centralized administrative services or func- tions resulting in economies of scale; or (C) Flow of goods, capital resources or services demonstrating functional integration. (b) “Unitary business” may include a business enterprise the activities of which: (A) Are in the same general line of business, such as manufacturing, wholesaling or retailing; or (B) Constitute steps in a vertically integrated process, such as the steps involved in the production of natural resources, which might include explora- tion, mining, refining and marketing. (20) “Unitary group” means a group of persons with more than 50 percent common ownership, ei- ther direct or indirect, that is engaged in business activities that constitute a unitary business. (21) “Wholesaler” means a person primarily do- ing business by merchant distribution of tangible personal property to retailers or to other whole- salers. SECTION 44. ORS 317A.100, as amended by section 20, chapter 4, Oregon Laws 2025, and section 6, chapter 502, Oregon Laws 2025, is amended to read: 317A.100. As used in ORS 317A.100 to 317A.158: (1)(a) “Commercial activity” means: (A) The total amount realized by a person, aris- ing from transactions and activity in the regular course of the person’s trade or business, without de- duction for expenses incurred by the trade or busi- ness; (B) If received by a financial institution: (i) If the reporting person for a financial institu- tion is a holding company, all items of income re- ported on the FR Y-9 filed by the holding company; (ii) If the reporting person for a financial insti- tution is a bank organization, all items of income reported on the call report filed by the bank organ- ization; and (iii) If the reporting person for a financial insti- tution is a nonbank financial organization, all items of income reported in accordance with generally ac- cepted accounting principles; and (C)(i) If received by an insurer, as reported on the statement of premiums accompanying the annual statement required under ORS 731.574 to be filed with the Director of the Department of Consumer and Business Services, all gross direct life insurance premiums, gross direct accident and health insur- ance premiums and gross direct property and casu- alty insurance premiums; and (ii) The gross amount of surplus lines premiums received on Oregon home state risks as shown in the report required by ORS 735.465. (b) “Commercial activity” does not include: (A) Interest income except: (i) Interest on credit sales; or (ii) Interest income, including service charges, received by financial institutions; (B) Receipts from the sale, exchange or other disposition of an asset described in section 1221 or 1231 of the Internal Revenue Code, without regard to the length of time the person held the asset; (C) If received by an insurer, federally reinsured premiums or income from transactions between a reciprocal insurer and its attorney in fact operating under ORS 731.142; (D) Receipts from hedging transactions, to the extent that the transactions are entered into prima- rily to protect a financial position, including trans- actions intended to manage the risk of exposure to foreign currency fluctuations that affect assets, li- abilities, profits, losses, equity or investments in foreign operations, risk of exposure to interest rate fluctuations or risk of commodity price fluctuations; 24

OREGON LAWS 2026 Chap. 142 (E) Proceeds received attributable to the repay- ment, maturity or redemption of the principal of a loan, bond, mutual fund, certificate of deposit or marketable instrument; (F) The principal amount received under a re- purchase agreement or on account of any trans- action properly characterized as a loan to the person; (G) Contributions received by a trust, plan or other arrangement, any of which is described in section 501(a) of the Internal Revenue Code, or to which title 26, subtitle A, chapter 1, subchapter (D) of the Internal Revenue Code applies; (H) Compensation, whether current or deferred, and whether in cash or in kind, received or to be received by an employee, a former employee or the employee’s legal successor for services rendered to or for an employer, including reimbursements re- ceived by or for an individual for medical or educa- tion expenses, health insurance premiums or employee expenses or on account of a dependent care spending account, legal services plan, any cafe- teria plan described in section 125 of the Internal Revenue Code or any similar employee reimburse- ment; (I) Proceeds received from the issuance of the taxpayer’s own stock, options, warrants, puts or calls, or from the sale of the taxpayer’s treasury stock; (J) Proceeds received on the account of payments from insurance policies, including crop insurance policies, owned by the taxpayer, except those pro- ceeds received for the loss of commercial activity; (K) Gifts or charitable contributions received, membership dues received by trade, professional, homeowners’ or condominium associations, payments received for educational courses, meetings or meals, or similar payments to a trade, professional or other similar association, and fundraising receipts received by any person when any excess receipts are donated or used exclusively for charitable purposes; (L) Damages received as the result of litigation in excess of amounts that, if received without liti- gation, would be treated as commercial activity; (M) Property, money and other amounts received or acquired by an agent on behalf of another in ex- cess of the agent’s commission, fee or other re- muneration; (N) Tax refunds from any tax program, other tax benefit recoveries and reimbursements for the tax imposed under ORS 317A.100 to 317A.158 made by entities that are part of the same unitary group as provided under ORS 317A.106, and reimbursements made by entities that are not members of a unitary group that are required to be made for economic parity among multiple owners of an entity whose tax obligation under ORS 317A.100 to 317A.158 is re- quired to be reported and paid entirely by one owner, as provided in ORS 317A.106; (O) Pension reversions; (P) Contributions to capital; (Q) Receipts from the sale, transfer, exchange or other disposition of motor vehicle fuel or any other product used for the propulsion of motor vehicles; (R) In the case of receipts from the sale of ciga- rettes or tobacco products by a wholesale dealer, retail dealer, distributor, manufacturer or seller, an amount equal to the federal and state excise taxes paid by any person on or for such cigarettes or to- bacco products under subtitle E of the Internal Re- venue Code or ORS chapter 323; (S) In the case of receipts from the sale of malt beverages or wine, as defined in ORS 471.001, cider, as defined in ORS 471.023 or distilled liquor, as de- fined in ORS 471.001, by a person holding a license issued under ORS chapter 471, an amount equal to the federal and state excise taxes paid by any person on or for such malt beverages, wine or distilled liq- uor under subtitle E of the Internal Revenue Code or ORS chapter 471 or 473, and any amount paid to the Oregon Liquor and Cannabis Commission for sales of distilled spirits by an agent appointed under ORS 471.750; (T) In the case of receipts from the sale of marijuana items, as defined in ORS 475C.009, by a person holding a license issued under ORS 475C.005 to 475C.525, an amount equal to the federal and state excise taxes paid by any person on or for such marijuana items under subtitle E of the Internal Revenue Code or ORS 475C.670 to 475C.734 and any local retail taxes authorized under ORS 475C.453; (U) Local taxes collected by a restaurant or other food establishment on sales of meals, prepared food or beverages; (V) Tips or gratuities collected by a restaurant or other food establishment and passed on to em- ployees; (W) Receipts realized by a vehicle dealer certi- fied under ORS 822.020 or a person described in ORS 320.400 (8)(a)(B) from the sale or other transfer of a motor vehicle, as defined in ORS 801.360, to another vehicle dealer for the purpose of resale by the transferee vehicle dealer, but only if the sale or other transfer was based upon the transferee’s need to meet a specific customer’s preference for a motor vehicle or is an exchange of new vehicles between franchised motor vehicle dealerships; (X) Registration fees or taxes collected by a ve- hicle dealer certified under ORS 822.020 or a person described in ORS 320.400 (8)(a)(B) at the sale or other transfer of a motor vehicle, as defined in ORS 801.360, that are owed to a third party by the pur- chaser of the motor vehicle and passed to the third party by the dealer; (Y) Receipts from a financial institution for ser- vices provided to the financial institution in con- nection with the issuance, processing, servicing and management of loans or credit accounts, if the fi- nancial institution and the recipient of the receipts have at least 50 percent of their ownership interests owned or controlled, directly or constructively through related interests, by common owners; (Z) In the case of amounts retained as commis- sions by a holder of a license under ORS chapter 25

Chap. 142 OREGON LAWS 2026 462, an amount equal to the amounts specified under ORS chapter 462 that must be paid to or collected by the Department of Revenue as a tax and the amounts specified under ORS chapter 462 to be used as purse money; (AA) Receipts of residential care facilities as de- fined in ORS 443.400 or in-home care agencies as defined in ORS 443.305, to the extent that the re- ceipts are derived from or received as compensation for providing services to a medical assistance or Medicare recipient; (BB) Dividends received; (CC) Distributive income received from a pass- through entity; (DD) Receipts from sales to a wholesaler in this state, if the seller receives certification at the time of sale from the wholesaler that the wholesaler will sell the purchased property outside this state; (EE) Receipts from the wholesale or retail sale of groceries, including receipts of a person that owns groceries at the time of sale and compensation of any consignee engaged in effecting the sale of gro- ceries on behalf the owner of the groceries, but only to the extent that the compensation relates to gro- cery sales; (FF) Receipts from transactions among members of a unitary group; (GG) Moneys, including public purpose charge moneys collected under ORS 757.612 and moneys collected to plan for and pursue cost-effective energy efficiency resources under ORS 757.054, that are collected from customers, passed to a utility and ap- proved by the Public Utility Commission and that support energy conservation, renewable resource ac- quisition and low-income assistance programs; (HH) Moneys collected by a utility from custom- ers for the payment of loans through on-bill financ- ing; (II) Surcharges collected under ORS 757.736; (JJ) Moneys passed to a utility by the Bonneville Power Administration for the purpose of effectuating the Regional Power Act Exchange credits or pursu- ant to any settlement associated with the exchange credit; (KK) Moneys collected or recovered, by entities listed in ORS 756.310, cable operators as defined in 47 U.S.C. 522(5), telecommunications carriers as de- fined in 47 U.S.C. 153(51) and providers of informa- tion services as defined in 47 U.S.C. 153(24), for fees payable under ORS 756.310, right-of-way fees, fran- chise fees, privilege taxes, federal taxes and local taxes; (LL) Charges assessed under ORS 759.685 and paid into the Residential Service Protection Fund; (MM) Universal service surcharge moneys col- lected or recovered and paid into the universal ser- vice fund established in ORS 759.425; (NN) Moneys collected for public purpose fund- ing as described in ORS 759.430; (OO) Moneys collected or recovered and paid into the federal universal service fund as determined by the Federal Communications Commission; (PP) In the case of a seller or provider of tele- communications services, the amount of tax imposed under ORS 403.200 for access to the emergency communications system that is collected from sub- scribers or consumers; (QQ) In the case of a transient lodging tax col- lector, the amount of tax imposed under ORS 320.305 and of any local transient lodging tax imposed upon the occupancy of transit lodging; (RR) In the case of a seller of bicycles, the amount of tax imposed under ORS 320.415 upon re- tail sales of bicycles; (SS) In the case of a qualified heavy equipment provider, the amount of tax imposed under ORS 307.872 upon the rental price of heavy equipment; (TT) Farmer sales to an agricultural cooperative in this state that is a cooperative organization de- scribed in section 1381 of the Internal Revenue Code; (UU) Revenue received by a business entity that is mandated by contract or subcontract to be dis- tributed to another person or entity if the revenue constitutes sales commissions that are paid to a person who is not an employee of the business en- tity, including, without limitation, a split-fee real estate commission; (VV) Receipts from the sale of fluid milk by dairy farmers that are not members of an agricul- tural cooperative; and (WW)(i) Cost paid by a dealer for items of pre- cious metal. (ii) As used in this subparagraph, “item of pre- cious metal” means an item of gold, silver, platinum, rhodium or palladium that has been put through a process of smelting or refining and that is in a state or condition that its value depends on its contents and not its form. (2) “Cost inputs” means: (a) The cost of goods sold as calculated in arriv- ing at federal taxable income under the Internal Re- venue Code; or (b) In the case of a taxpayer that is engaged in a farming operation, as defined in ORS 317A.102, and that does not report cost of goods sold for federal tax purposes, the taxpayer’s operating expenses exclud- ing labor costs. (3) “Doing business” means engaging in any ac- tivity, whether legal or illegal, that is conducted for, or results in, the receipt of commercial activity at any time during a calendar year. (4) “Excluded person” means any of the follow- ing: (a) Organizations described in sections 501(c) and 501(j) of the Internal Revenue Code, unless the ex- emption is denied under section 501(h), (i) or (m) or under section 502, 503 or 505 of the Internal Re- venue Code. (b) Organizations described in section 501(d) of the Internal Revenue Code, unless the exemption is denied under section 502 or 503 of the Internal Re- venue Code. (c) Organizations described in section 501(e) of the Internal Revenue Code. 26

OREGON LAWS 2026 Chap. 142 (d) Organizations described in section 501(f) of the Internal Revenue Code. (e) Charitable risk pools described in section 501(n) of the Internal Revenue Code. (f) Organizations described in section 521 of the Internal Revenue Code. (g) Qualified state tuition programs described in section 529 of the Internal Revenue Code. (h) Foreign or alien insurance companies, but only with respect to the underwriting profit derived from writing wet marine and transportation insur- ance subject to tax under ORS 731.824 and 731.828 or if an insurance company is subject to the retali- atory tax under ORS 731.854 and 731.859. (i) Governmental entities. (j) Any person with commercial activity that does not exceed $750,000 for the tax year, other than a person that is part of a unitary group as provided in ORS 317A.106 with commercial activity in excess of $750,000. (k) Long term care facilities subject to assess- ment under ORS 409.801. (L) Manufactured dwelling park nonprofit coop- eratives organized under ORS chapter 62. (5) “Financial institution” has the meaning given that term in ORS 314.610, except that “financial in- stitution” does not include a credit union. (6)(a) “FR Y-9” means the consolidated or parent-only financial statements that a holding com- pany is required to file with the Federal Reserve Board pursuant to 12 U.S.C. 1844. (b) In the case of a holding company required to file both consolidated and parent-only financial statements, “FR Y-9” means the consolidated finan- cial statements that the holding company is required to file. (7) “Governmental entity” means: (a) The United States and any of its unincor- porated agencies and instrumentalities. (b) Any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States. (c) The State of Oregon and any of its unincor- porated agencies and instrumentalities. (d) Any county, city, district or other political subdivision of the state. (e) A special government body as defined in ORS 174.117. (f) A federally recognized Indian tribe. (8) “Groceries” means food as defined in 7 U.S.C. 2012(k), but does not include cannabinoid edibles or marijuana seeds. (9)(a) “Hedging transaction” means a hedging transaction as defined in section 1221 of the Internal Revenue Code or a transaction accorded hedge ac- counting treatment under Financial Accounting Standards Board Statement No. 133. (b) “Hedging transaction” does not include a transaction in which an actual transfer of title of real or tangible property to another entity occurs. (10) “Insurer” has the meaning given that term in ORS 317.010. (11) “Internal Revenue Code,” except where the Legislative Assembly has provided otherwise, refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect on December 31, [2023] 2025. (12) “Labor costs” means total compensation of all employees, not to include compensation paid to any single employee in excess of $500,000. (13)(a) “Motor vehicle fuel or any other product used for the propulsion of motor vehicles” means: (A) Motor vehicle fuel as defined in ORS 319.010; and (B) Fuel the use of which in a motor vehicle is subject to taxation under ORS 319.530. (b) “Motor vehicle fuel or any other product used for the propulsion of motor vehicles” does not mean: (A) Electricity; or (B) Electric batteries or any other mechanical or physical component or accessory of a motor vehi- cle. (14) “Person” includes individuals, combinations of individuals of any form, receivers, assignees, trustees in bankruptcy, firms, companies, joint-stock companies, business trusts, estates, partnerships, limited liability partnerships, limited liability com- panies, associations, joint ventures, clubs, societies, entities organized as for-profit corporations under ORS chapter 60, C corporations, S corporations, qualified subchapter S subsidiaries, qualified sub- chapter S trusts, trusts, entities that are disregarded for federal income tax purposes and any other enti- ties. (15) “Retailer” means a person doing business by selling tangible personal property to a purchaser for a purpose other than: (a) Resale by the purchaser of the property as tangible personal property in the regular course of business; (b) Incorporation by the purchaser of the prop- erty in the course of regular business as an ingredi- ent or component of real or personal property; or (c) Consumption by the purchaser of the property in the production for sale of a new article of tangi- ble personal property. (16) “Taxable commercial activity” means com- mercial activity sourced to this state under ORS 317A.128, less any subtraction pursuant to ORS 317A.119. (17)(a) “Taxpayer” means any person or unitary group required to register, file or pay tax under ORS 317A.100 to 317A.158. (b) “Taxpayer” does not include excluded per- sons, except to the extent that a tax-exempt entity has unrelated business income as described in the Internal Revenue Code. (18) “Tax year” means, except as otherwise pro- vided in ORS 317A.103, a taxpayer’s annual ac- counting period used for federal income tax purposes under section 441 of the Internal Revenue Code. (19)(a) “Unitary business” means a business en- terprise in which there exists directly or indirectly 27

Chap. 142 OREGON LAWS 2026 between the members or parts of the enterprise a sharing or exchange of value as demonstrated by: (A) Centralized management or a common exec- utive force; (B) Centralized administrative services or func- tions resulting in economies of scale; or (C) Flow of goods, capital resources or services demonstrating functional integration. (b) “Unitary business” may include a business enterprise the activities of which: (A) Are in the same general line of business, such as manufacturing, wholesaling or retailing; or (B) Constitute steps in a vertically integrated process, such as the steps involved in the production of natural resources, which might include explora- tion, mining, refining and marketing. (20) “Unitary group” means a group of persons with more than 50 percent common ownership, ei- ther direct or indirect, that is engaged in business activities that constitute a unitary business. (21) “Wholesaler” means a person primarily do- ing business by merchant distribution of tangible personal property to retailers or to other whole- salers. SECTION 45. ORS 458.670 is amended to read: 458.670. As used in this section and ORS 458.675 to 458.700, unless the context requires otherwise: (1) “Account holder” means a resident of this state who: (a) Is 12 years of age or older; (b) Is a member of a lower income household; and (c) Has established an individual development account with a fiduciary organization. (2) “Fiduciary organization” means an organiza- tion selected under ORS 458.695 to administer state moneys directed to individual development accounts and that is: (a) A nonprofit, fund raising organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code as amended and in effect on December 31, [2023] 2025; or (b) A federally recognized Oregon Indian tribe that is located, to a significant degree, within the boundaries of this state. (3) “Financial institution” means: (a) An organization regulated under ORS chap- ters 706 to 716 or 723; or (b) In the case of individual development ac- counts established for the purpose described in ORS 458.685 (1)(c), a financial institution as defined in ORS 178.300. (4) “Individual development account” means a contract between an account holder and a fiduciary organization, for the deposit of funds into a financial institution by the account holder and the deposit of matching funds into a designated account by the fiduciary organization, to allow the account holder to accumulate assets for use toward achieving a specific purpose approved by the fiduciary organiza- tion. (5) “Lower income household” means a house- hold having an income equal to or less than the greater of the following: (a) 80 percent of the median household income for the area as determined by the Housing and Community Services Department. In making the de- termination, the department shall give consideration to any data on area household income published by the United States Department of Housing and Urban Development. (b) 200 percent of the poverty guidelines as de- termined by the Housing and Community Services Department. In making the determination, the de- partment shall give consideration to poverty guide- lines published by the United States Department of Health and Human Services and may consider other income data periodically published by other federal or Oregon agencies. (6)(a) “Net worth” means a calculation based on the net value of assets of a household established by rule by the Housing and Community Services De- partment. (b) “Net worth” does not include: (A) Equity in one residence and in one vehicle. (B) Holdings in pension accounts valued at less than $120,000. (7) “Resident of this state” has the meaning given that term in ORS 316.027. SECTION 46. ORS 657.010 is amended to read: 657.010. As used in this chapter, unless the con- text requires otherwise: (1) “Base year” means the first four of the last five completed calendar quarters preceding the ben- efit year. (2) “Benefits” means the money allowances pay- able to unemployed persons under this chapter. (3) “Benefit year” means a period of 52 consec- utive weeks commencing with the first week with respect to which an individual files an initial valid claim for benefits, and thereafter the 52 consecutive weeks period beginning with the first week with re- spect to which the individual next files an initial valid claim after the termination of the individual’s last preceding benefit year except that the benefit year shall be 53 weeks if the filing of an initial valid claim would result in overlapping any quarter of the base year of a previously filed initial valid claim. (4) “Calendar quarter” means the period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31, or the ap- proximate equivalent thereof, as the Director of the Employment Department may, by rule, prescribe. (5) “Client employer” means an employer that enters into a PEO relationship. (6) “Client worker” means an individual who performs services for compensation for the client of a professional employer organization. (7) “Contribution” or “contributions” means the money payments required by this chapter, or volun- tary payments permitted, to be made to the Unem- ployment Compensation Trust Fund. 28

OREGON LAWS 2026 Chap. 142 (8) “Covered employee” means a client worker for whom a PEO has assumed employer responsibil- ities under a PEO relationship. (9) “Educational institution,” including an insti- tution of higher education, means an institution: (a) In which participants, trainees or students are offered an organized course of study or training designed to transfer to them knowledge, skills, in- formation, doctrines, attitudes or abilities from, by or under the guidance of an instructor or teacher; (b) That is accredited, registered, approved, li- censed or issued a permit to operate as a school by the Department of Education or other government agency, or that offers courses for credit that are transferable to an approved, registered or accredited school; (c) In which the course or courses of study or training that it offers may be academic, technical, trade or preparation for gainful employment in a re- cognized occupation; and (d) In which the course or courses of study or training are offered on a regular and continuing ba- sis. (10) “Employment office” means a free public employment office or branch thereof, operated by this state or maintained as a part of a state- controlled system of public employment offices. (11) “Hospital” has the meaning given that term in ORS 442.015. (12) “Institution of higher education” means an educational institution that: (a) Admits as regular students only individuals having a certificate of graduation from a high school, or the recognized equivalent of such a cer- tificate; (b) Is legally authorized in this state to provide a program of education beyond high school; (c) Provides an educational program for which it awards a bachelor’s or higher degree, or provides a program that is acceptable for full credit toward such a degree, a program of post-graduate or post- doctoral studies, or a program of training to prepare students for gainful employment in a recognized oc- cupation; and (d) Is a public or other nonprofit institution. (13) “Instructional capacity” does not include services performed as an instructional assistant as defined in ORS 342.120. (14) “Internal Revenue Code” means the federal Internal Revenue Code, as amended and in effect on December 31, [2023] 2025. (15) “Labor dispute” means any concerted or de- liberate action by two or more individuals or by an employing unit resulting in either a strike or lock- out in which wages, hours, working conditions or terms of employment of the individuals are involved. (16) “Lockout” means any refusal by an employer to permit employees to work as a result of a dispute with the employees affecting wages, hours or other terms or conditions of their employment. (17) “Nonprofit employing unit” means an or- ganization, or group of organizations, described in section 501(c)(3) of the Internal Revenue Code that is exempt from income tax under section 501(a) of the Internal Revenue Code. (18) “PEO relationship” means an agreement be- tween a PEO and a client employer under which certain employer responsibilities for some or all of the client employer’s workers are allocated. (19)(a) “Professional employer organization” or “PEO” means a person required to be licensed under ORS 656.855 that enters into a PEO relationship with a client employer. (b) “Professional employer organization” or “PEO” does not mean a person that solely provides workers to a client on a temporary basis or a person that provides payroll processing or similar adminis- trative services without assuming employer respon- sibilities for client workers. (20) “State” includes, in addition to the states of the United States of America, the District of Co- lumbia and Puerto Rico. However, for all purposes of this chapter the Virgin Islands shall be considered a state on and after the day on which the United States Secretary of Labor first approves the Virgin Islands’ law under section 3304(a) of the Federal Unemployment Tax Act as amended by Public Law 94-566. (21) “Strike” means any concerted act of em- ployees in a lawful refusal under applicable state or federal law to perform work or services for an em- ployer. (22) “Taxes” means contributions. (23) “Temporary basis” means providing workers to a client: (a) For special situations, including but not lim- ited to employee absences, employee leaves, profes- sional skill shortages, seasonal workloads and special assignments and projects with the expecta- tion that the position will be terminated when the special situation ends. (b) As probationary new hires with a reasonable expectation of transitioning to permanent employ- ment with the client, if the client uses a preestab- lished probationary period in its overall employment selection program. (24) “Valid claim” means any claim for benefits made in accordance with ORS 657.260 if the individ- ual meets the wages-paid-for-employment require- ments of ORS 657.150. (25) “Week” means any period of seven consec- utive calendar days ending at midnight, as the di- rector may prescribe by rule. SECTION 47. ORS 657B.010 is amended to read: 657B.010. As used in this chapter: (1) “Alternate base year” means the last four completed calendar quarters preceding the benefit year. (2) “Average weekly wage” means the amount calculated by the Employment Department as the state average weekly covered wage under ORS 657.150 (4)(e) as determined not more than once per year. 29

Chap. 142 OREGON LAWS 2026 (3) “Base year” means the first four of the last five completed calendar quarters preceding the ben- efit year. (4) “Benefits” means family and medical leave insurance benefits. (5)(a) “Benefit year” means, except as provided in paragraph (b) of this subsection, a period of 52 consecutive weeks beginning on the Sunday imme- diately preceding the date on which family leave, medical leave or safe leave commences. (b) “Benefit year” means, in the event that the 52-week period described in paragraph (a) of this subsection would result in an overlap of any quarter of the base year of a previously filed valid claim, a period of 53 consecutive weeks beginning on the Sunday immediately preceding the date on which family leave, medical leave or safe leave commences. (6) “Child” means: (a) A biological child, adopted child, stepchild or foster child of a covered individual or of the covered individual’s spouse or domestic partner; (b) A person who is or was a legal ward of a covered individual or of the covered individual’s spouse or domestic partner; or (c) A person who is or was in a relationship of in loco parentis with a covered individual or with the covered individual’s spouse or domestic partner. (7) “Claimant” means an individual who has submitted an application or established a claim for benefits. (8) “Contribution” or “contributions” means the money payments made by any of the following under ORS 657B.150: (a) An employer; (b) An employee; (c) A self-employed individual; (d) A tribal government; or (e) An employee of a tribal government. (9) “Covered individual” means any one of the following who qualifies under ORS 657B.015 to re- ceive family and medical leave insurance benefits: (a) An eligible employee; (b) A self-employed individual; or (c) An employee of a tribal government. (10) “Domestic partner” means an individual joined in a domestic partnership. (11) “Domestic partnership” has the meaning given that term in ORS 106.310. (12) “Eligible employee” means: (a)(A) An employee who has earned at least $1,000 in wages during the base year; or (B) If an employee has not earned at least $1,000 in wages during the base year, an employee who has earned at least $1,000 in wages during the alternate base year; and (b) An employee to whom paid family and med- ical leave insurance benefits may be available under ORS 657B.015. (13) “Eligible employee’s average weekly wage” means an amount calculated by the Director of the Employment Department by dividing the total wages earned by an eligible employee during the base year by the number of weeks in the base year. (14)(a) “Employee” means: (A) An individual performing services for an em- ployer for remuneration or under any contract of hire, written or oral, express or implied. (B) A home care worker as defined in ORS 410.600. (b) “Employee” does not include: (A) An independent contractor as defined in ORS 670.600. (B) A participant in a work training program administered under a state or federal assistance program. (C) A participant in a work-study program that provides students in secondary or postsecondary ed- ucational institutions with employment opportunities for financial assistance or vocational training. (D) A railroad worker exempted under the fed- eral Railroad Unemployment Insurance Act. (E) A volunteer. (F) A judge as defined in ORS 260.005. (G) A member of the Legislative Assembly. (H) A holder of public office as defined in ORS 260.005. (15)(a) “Employer” means any person that em- ploys one or more employees working anywhere in this state or any agent or employee of such person to whom the duties of the person under this chapter have been delegated. (b) “Employer” includes: (A) A political subdivision of this state or any county, city, district, authority or public corpo- ration, or any instrumentality of a county, city, dis- trict, authority or public corporation, organized and existing under law or charter; (B) An individual; (C) Any type of organization, corporation, part- nership, limited liability company, association, trust, estate, joint stock company or insurance company; (D) Any successor in interest to an entity de- scribed in subparagraph (C) of this paragraph; (E) A trustee, trustee in bankruptcy or receiver; or (F) A trustee or legal representative of a de- ceased person. (c) “Employer” does not include the federal gov- ernment or a tribal government. (16) “Employment agency” has the meaning given that term in ORS 658.005. (17) “Family and medical leave insurance bene- fits” means the wage replacement benefits that are available to a covered individual under ORS 657B.050 or under the terms of an employer plan approved under ORS 657B.210, for family leave, medical leave or safe leave. (18)(a) “Family leave” means leave from work taken by a covered individual: (A) To care for and bond with a child during the first year after the child’s birth or during the first year after the placement of the child through foster care or adoption; (B) To effectuate the legal process required for placement of a foster child or the adoption of a child; or 30

OREGON LAWS 2026 Chap. 142 (C) To care for a family member with a serious health condition. (b) “Family leave” does not mean: (A) Leave described in ORS 659A.159 (1)(a) ex- cept for leave to care for a child who requires home care due to an illness, injury or condition that is a serious health condition; (B) Leave described in ORS 659A.159 (1)(b); or (C) Leave authorized under ORS 659A.093. (19) “Family member” means: (a) The spouse of a covered individual; (b) A child or the child’s spouse or domestic partner; (c) A parent or the parent’s spouse or domestic partner; (d) A sibling or stepsibling of a covered individ- ual or the sibling’s or stepsibling’s spouse or domes- tic partner; (e) A grandparent of a covered individual or the grandparent’s spouse or domestic partner; (f) A grandchild of a covered individual or the grandchild’s spouse or domestic partner; (g) The domestic partner of a covered individual; or (h) Any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship. (20) “Medical leave” means leave from work taken by a covered individual that is made necessary by the individual’s own serious health condition. (21) “Parent” means: (a) A biological parent, adoptive parent, stepparent or foster parent of a covered individual; (b) A person who was a foster parent of a cov- ered individual when the covered individual was a minor; (c) A person designated as the legal guardian of a covered individual at the time the covered indi- vidual was a minor or required a legal guardian; (d) A person with whom a covered individual was or is in a relationship of in loco parentis; or (e) A parent of a covered individual’s spouse or domestic partner who meets a description under paragraphs (a) to (d) of this subsection. (22) “Safe leave” means leave taken for any pur- pose described in ORS 659A.272. (23) “Self-employed individual” means: (a) An individual who has self-employment in- come as defined in section 1402(b) of the Internal Revenue Code as amended and in effect on Decem- ber 31, [2023] 2025; or (b) An independent contractor as defined in ORS 670.600. (24) “Serious health condition” means: (a) An illness, injury, impairment or physical or mental condition that requires inpatient care in a hospital, hospice or residential medical care facility; (b) An illness, disease or condition that in the medical judgment of the treating health care pro- vider poses an imminent danger of death, is terminal in prognosis with a reasonable possibility of death in the near future, or requires constant care; (c) Any period of disability due to pregnancy, or period of absence for prenatal care; or (d) Any period of absence for the donation of a body part, organ or tissue, including preoperative or diagnostic services, surgery, post-operative treatment and recovery. (25) “Third party administrator” means a third party that enters into an agreement with the Direc- tor of the Employment Department to implement and administer the paid family and medical leave pro- gram established under this chapter. (26) “Tribal government” means: (a) A tribal government as defined in ORS 181A.940; or (b) A federally recognized Indian tribe. (27)(a) “Wages” has the meaning given that term in ORS 657.105. (b) “Wages” does not mean contribution amounts paid to the Paid Family and Medical Leave Insur- ance Fund by an employer on behalf of an employee under ORS 657B.150 (5). SECTION 48. (1) Except as provided in sub- sections (2) and (3) of this section, the amend- ments to statutes by sections 16 to 47 of this 2026 Act apply to transactions or activities oc- curring on or after January 1, 2026, in tax years beginning on or after January 1, 2026. (2) The effective and applicable dates, and the exceptions, special rules and coordination with the Internal Revenue Code, as amended, relative to those dates, contained in federal law amending the Internal Revenue Code and en- acted before January 1, 2026, apply for Oregon personal income and corporate excise and in- come tax purposes, to the extent they can be made applicable, in the same manner as they are applied under the Internal Revenue Code and related federal law. (3)(a) If a deficiency is assessed against any taxpayer for a tax year beginning before Janu- ary 1, 2026, and the deficiency or any portion thereof is attributable to any retroactive treat- ment under the amendments to ORS 178.300, 178.375, 305.239, 305.494, 305.690, 305.842, 314.011, 314.306, 315.004, 316.012, 316.147, 316.157, 317.010, 317.097 and 317A.100 by sections 16, 17 and 31 to 44 of this 2026 Act, then any interest or penalty assessed under ORS chapter 305, 314, 315, 316, 317, 317A or 318 with respect to the deficiency or portion thereof shall be canceled. (b) If a refund is due any taxpayer for a tax year beginning before January 1, 2026, and the refund or any portion thereof is due the tax- payer on account of any retroactive treatment under the amendments to ORS 178.300, 178.375, 305.239, 305.494, 305.690, 305.842, 314.011, 314.306, 315.004, 316.012, 316.147, 316.157, 317.010, 317.097 and 317A.100 by sections 16, 17 and 31 to 44 of this 2026 Act for a tax year beginning before January 1, 2026, then notwithstanding ORS 305.270 or 314.415 or any other law, the refund or portion thereof shall be paid without interest. 31

Chap. 142 OREGON LAWS 2026 (c) Any changes required because of the amendments to ORS 178.300, 178.375, 305.239, 305.494, 305.690, 305.842, 314.011, 314.306, 315.004, 316.012, 316.147, 316.157, 317.010, 317.097 and 317A.100 by sections 16, 17 and 31 to 44 of this 2026 Act for a tax year beginning before January 1, 2026, shall be made by filing an amended re- turn within the time prescribed by law. (d) If a taxpayer fails to file an amended re- turn under paragraph (c) of this subsection, the Department of Revenue shall make any changes under paragraph (c) of this subsection on the return to which the changes relate within the period specified for issuing a notice of deficiency or claiming a refund as otherwise provided by law with respect to that return, or within one year after a return for a tax year beginning on or after January 1, 2026, and before January 1, 2027, is filed, whichever period expires later. SECTION 49. This 2026 Act takes effect on the 91st day after the date on which the 2026 regular session of the Eighty-third Legislative Assembly adjourns sine die. Approved by the Governor April 9, 2026 Filed in the office of Secretary of State April 9, 2026 Effective date June 5, 2026 NOTE: Specified parts of chapter 142, Oregon Laws 2026 (Enrolled Senate Bill 1507), are the subject of a referendum peti- tion filed with the Secretary of State on April 10, 2026, and ap- proved for circulation on April 14, 2026. Referendum petitioners have until the 90th day after adjournment sine die [June 4, 2026] to file signatures with the Secretary of State for verification. If the referendum petition is filed with the required number of sig- natures of electors, the parts that are the subject of the referen- dum petition, indicated as underlined text above, will be submitted to the people for their approval or rejection at the regular general election held on November 3, 2026. 32