2017 ORS 316.680¹
Modification of taxable income

(1) There shall be subtracted from federal taxable income:

(a) The interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission or instrumentality of the United States to the extent includable in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States. However, the amount subtracted under this paragraph shall be reduced by any interest on indebtedness incurred to carry the obligations or securities described in this paragraph, and by any expenses incurred in the production of interest or dividend income described in this paragraph to the extent that such expenses, including amortizable bond premiums, are deductible in determining federal taxable income.

(b) The amount of any federal income taxes accrued by the taxpayer during the taxable year as described in ORS 316.685 (Federal income tax deductions), less the amount of any refunds of federal taxes previously accrued for which a tax benefit was received.

(c) Amounts allowable under sections 2621(a)(2) and 2622(b) of the Internal Revenue Code to the extent that the taxpayer does not elect under section 642(g) of the Internal Revenue Code to reduce federal taxable income by those amounts.

(d) Any supplemental payments made to JOBS Plus Program participants under ORS 411.892 (Employer eligibility).

(e)(A) Federal pension income that is attributable to federal employment occurring before October 1, 1991. Federal pension income that is attributable to federal employment occurring before October 1, 1991, shall be determined by multiplying the total amount of federal pension income for the tax year by the ratio of the number of months of federal creditable service occurring before October 1, 1991, over the total number of months of federal creditable service.

(B) The subtraction allowed under this paragraph applies only to federal pension income received at a time when:

(i) Benefit increases provided under chapter 569, Oregon Laws 1995, are in effect; or

(ii) Public Employees Retirement System benefits received for service prior to October 1, 1991, are exempt from state income tax.

(C) As used in this paragraph:

(i) “Federal creditable service” means those periods of time for which a federal employee earned a federal pension.

(ii) “Federal pension” means any form of retirement allowance provided by the federal government, its agencies or its instrumentalities to retirees of the federal government or their beneficiaries.

(f) Any amount included in federal taxable income for the tax year that is attributable to the conversion of a regular individual retirement account into a Roth individual retirement account described in section 408A of the Internal Revenue Code, to the extent that:

(A) The amount was subject to the income tax of another state or the District of Columbia in a prior tax year; and

(B) The taxpayer was a resident of the other state or the District of Columbia for that prior tax year.

(g) Any amounts awarded to the taxpayer by the Public Safety Memorial Fund Board under ORS 243.954 (Definitions for ORS 243.954 to 243.974) to 243.974 (Designation of beneficiary form) to the extent that the taxpayer has not taken the amount as a deduction in determining the taxpayer’s federal taxable income for the tax year.

(h) If included in taxable income for federal tax purposes, the amount withdrawn during the tax year in qualified withdrawals from a savings network account for higher education established under ORS 178.300 (Definitions for ORS 178.300 to 178.355) to 178.355 (Withdrawals from accounts for higher education expenses).

(i) Any federal deduction that the taxpayer would have been allowed for the production, processing or sale of marijuana items authorized under ORS 475B.010 (Short title) to 475B.545 (Severability of ORS 475B.010 to 475B.545) or 475B.785 (Findings) to 475B.949 (Authority to adopt rules for ORS 475B.785 to 475B.949) but for section 280E of the Internal Revenue Code.

(j) If included in taxable income for federal tax purposes, any distributions from an ABLE account that do not exceed the qualified disability expenses of the designated beneficiary as provided in ORS 178.375 (Definitions for ORS 178.375, 178.380 and 178.385) and 178.380 (Establishment of qualified ABLE program) and rules adopted by the Oregon 529 Savings Board.

(2) There shall be added to federal taxable income:

(a) Interest or dividends, exempt from federal income tax, on obligations or securities of any foreign state or of a political subdivision or authority of any foreign state. However, the amount added under this paragraph shall be reduced by any interest on indebtedness incurred to carry the obligations or securities described in this paragraph and by any expenses incurred in the production of interest or dividend income described in this paragraph.

(b) Interest or dividends on obligations of any authority, commission, instrumentality and territorial possession of the United States that by the laws of the United States are exempt from federal income tax but not from state income taxes. However, the amount added under this paragraph shall be reduced by any interest on indebtedness incurred to carry the obligations or securities described in this paragraph and by any expenses incurred in the production of interest or dividend income described in this paragraph.

(c) The amount of any federal estate taxes allocable to income in respect of a decedent not taxable by Oregon.

(d) The amount of any allowance for depletion in excess of the taxpayer’s adjusted basis in the property depleted, deducted on the taxpayer’s federal income tax return for the taxable year, pursuant to sections 613, 613A, 614, 616 and 617 of the Internal Revenue Code.

(e) For taxable years beginning on or after January 1, 1985, the dollar amount deducted under section 151 of the Internal Revenue Code for personal exemptions for the taxable year.

(f) The amount taken as a deduction on the taxpayer’s federal return for unused qualified business credits under section 196 of the Internal Revenue Code.

(g) The amount of any increased benefits paid to a taxpayer under chapter 569, Oregon Laws 1995, under the provisions of chapter 796, Oregon Laws 1991, and under section 26, chapter 815, Oregon Laws 1991, that is not includable in the taxpayer’s federal taxable income under the Internal Revenue Code.

(h) The amount of any long term care insurance premiums paid or incurred by the taxpayer during the tax year if:

(A) The amount is taken into account as a deduction on the taxpayer’s federal return for the tax year; and

(B) The taxpayer claims the credit allowed under ORS 315.610 (Long term care insurance) for the tax year.

(i) Any amount taken as a deduction under section 1341 of the Internal Revenue Code in computing federal taxable income for the tax year, if the taxpayer has claimed a credit for claim of right income repayment adjustment under ORS 315.068 (Claim of right income repayment adjustments).

(j) If the taxpayer makes a nonqualified withdrawal, as defined in ORS 178.300 (Definitions for ORS 178.300 to 178.355), from a savings network account for higher education established under ORS 178.300 (Definitions for ORS 178.300 to 178.355) to 178.355 (Withdrawals from accounts for higher education expenses), the amount of the withdrawal that is attributable to contributions that were subtracted from federal taxable income under ORS 316.699 (Subtraction for contributions to savings network account for higher education or ABLE account).

(k) If the taxpayer makes a distribution from an ABLE account that is not a qualified disability expense of the designated beneficiary as provided in ORS 178.375 (Definitions for ORS 178.375, 178.380 and 178.385) and 178.380 (Establishment of qualified ABLE program) and rules adopted by the Oregon 529 Savings Board, the amount of the distribution that is attributable to contributions that were subtracted from federal taxable income under ORS 316.699 (Subtraction for contributions to savings network account for higher education or ABLE account).

(3) Discount and gain or loss on retirement or disposition of obligations described under subsection (2)(a) of this section issued on or after January 1, 1985, shall be treated for purposes of this chapter in the same manner as under sections 1271 to 1283 and other pertinent sections of the Internal Revenue Code as if the obligations, although issued by a foreign state or a political subdivision of a foreign state, were not tax exempt under the Internal Revenue Code. [Formerly 316.067; 1985 c.345 §7; 1985 c.802 §11; 1987 c.293 §23; 1987 c.647 §13; 1991 c.457 §7b; 1991 c.823 §3; 1995 c.556 §8; 1995 c.561 §17; 1995 c.746 §59; 1995 c.816 §32; 1997 c.99 §18; 1999 c.90 §22; 1999 c.403 §1; 1999 c.746 §12; 1999 c.981 §16; 1999 c.1005 §3; 1999 c.1007 §3; 2001 c.13 §1; 2001 c.212 §1; 2001 c.509 §18; 2003 c.280 §3; 2007 c.843 §§1,2,2a; 2009 c.202 §§1,2; 2013 c.194 §3; 2015 c.1 §74; 2015 c.699 §§20,21; 2015 c.843 §§3,4; 2016 c.91 §§8,9]

(formerly 316.067)

See also annota­tions under ORS 316.067 in permanent edi­tion.

Notes of Decisions

The $3,000 ceiling on the income tax deduc­tion is limited to each return and a married couple filing jointly may only properly take one such deduc­tion. Newell v. Dept. of Rev., 6 OTR 458 (1976)

This sec­tion does not violate equal protec­tion. Newell v. Dept. of Rev., 6 OTR 458 (1976)

Provision of this sec­tion allowing federal retire­ment benefits only limited exemp­tion from state per­sonal income tax while state retire­ment benefits were completely exempt impermissibly discriminated against employees of federal govern­ment in viola­tion of constitu­tional doctrine of intergovern­mental tax immunity. Ragsdale v. Dep. of Rev., 312 Or 529, 823 P2d 971 (1992); Anderson v. Dept. of Rev., 313 Or 1, 828 P2d 1001 (1992)

State exercised its taxing power, not its constitu­tional taking power, with amend­ment taxing pre­vi­ously exempt state employee pension benefits. Hughes v. State of Oregon, 314 Or 1, 838 P2d 1018 (1992)

Atty. Gen. Opinions

Taxability of federal income tax rebates, (1975) Vol 37, p 525

Law Review Cita­tions

16 WLR 373 (1979); 72 OLR 487 (1993)

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.