2017 ORS 316.157¹
Credit for retirement income

(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 liability 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 attained 62 years of age before the close of the taxable year.

(b) “Household income” means the aggregate income of the taxpayer and the spouse of the taxpayer who reside in the household, that was received during 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, 2016, even when the amendments take effect or become operative after that date, relating to the measurement 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:

(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 adjusted gross income.

(x) Strike benefits excluded from federal gross income.

(xi) Worker’s compensation, except for reimbursement 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 expenses 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 production 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 adjusted gross income.

(vi) The amount, in excess of $5,000, of the combined deductions or other allowances for depreciation, amortization or depletion.

(vii) The amount added or subtracted, as required within the context of this section, for adjustments made under ORS 316.680 (Modification of taxable income) (2)(d) and 316.707 (Computation of depreciation of property under federal law) to 316.737 (Amount specially taxed under federal law to be included in computation of state taxable income).

(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 individuals received during the taxable year or the excess, 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 individual, 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

(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 employee 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 subdivision of this state, or a public retirement system created by an Act of this state or a political subdivision 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, including 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 pursuant to an eligible deferred compensation plan which satisfies the requirements of section 457 of the Internal Revenue Code;

(E) Distributions or withdrawals from or pursuant to an individual retirement account, annuity or trust or simplified employee pension which satisfies the requirements of section 408 of the Internal Revenue Code; and

(F) Distributions or withdrawals from or pursuant to an employee annuity, including custodial accounts treated as annuities, subject to section 403 (a) or (b) of the Internal Revenue Code.

(f) “Social Security benefits” means Social Security 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 (Taxable year), or if the Department of Revenue terminates the tax year of the eligible individual under ORS 314.440 (Tax as debt), the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085 (Taxable year).

(4) If a change in the status of the eligible individual from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with subsection (1) of this section. [1991 c.823 §5; 1997 c.839 §13; 1999 c.90 §12; 2001 c.660 §39; 2015 c.348 §19; 2015 c.480 §9; 2016 c.33 §22; 2017 c.315 §24; 2017 c.527 §22]

Note: Section 36, chapter 913, Oregon Laws 2009, provides:

Sec. 36. A credit may not be claimed under ORS 316.157 (Credit for retirement income) for tax years beginning on or after January 1, 2020. [2009 c.913 §36; 2013 c.750 §9]

Chapter 316

Notes of Decisions

Unless the divorce decree specifically designates that pay­ments are for child support, pay­ments will be treated as alimony. Henderson v. Dept. of Rev., 5 OTR 153 (1972)

The goal of this chapter is to incorporate all of the pro­vi­sions of the federal Internal Revenue Code; taxable income should be adjusted whenever the result of the adjust­ment is to give effect to the policies or principles of the federal Internal Revenue Code, even though no express authority for the adjust­ment is present in the statutes. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974); Smith v. Dept. of Rev., 270 Or 456, 528 P2d 73 (1974)

By its enact­ment of this chapter, the legislature intended to adopt §172 of the federal Internal Revenue Code allowing for the carryback and carryforward of net operating losses. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974)

Where plaintiff failed to ap­peal timely as re­quired by this sec­tion, ap­peal rights were not preserved so that cause could be considered on merits. Dela Rosa v. Dept. of Rev., 11 OTR 201 (1989), aff’d 313 Or 284, 832 P2d 1228 (1992)

Where taxpayers paid foreign income taxes on foreign income and claimed foreign taxes paid as federal tax credit and as state business expense deduc­tion, taxpayers who claim federal foreign tax credit are entitled only to foreign tax deduc­tion provided in ORS 316.690 (Foreign income taxes). Whipple v. Dept. of Rev., 309 Or 422, 788 P2d 994 (1990)

For purposes of claim preclusion, all issues re­gard­ing taxpayer’s income tax liability for tax year constitute same claim. U.S. Bancorp v. Dept. of Revenue, 15 OTR 13 (1999)

Atty. Gen. Opinions

Political contribu­tions as credit against Oregon tax return, (1974) Vol 37, p 159

Law Review Cita­tions

57 OLR 309 (1978); 16 WLR 373 (1979)

1 Legislative Counsel Committee, CHAPTER 316—Personal Income Tax, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors316.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 316, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano316.­html (2017) (last ac­cessed Mar. 30, 2018).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.