Relating to the repeal of the corporate activity tax; prescribing an effective date.
Summary
SB 487 repeals Oregon’s corporate activity tax (CAT) for tax years beginning on or after January 1, 2026. The bill removes the statutory provisions that created and governed the CAT, including the related filing, calculation, and administration sections in ORS chapter 317A, and updates cross-references in other laws to reflect the repeal date.
The bill also revises the Fund for Student Success, which currently receives CAT-related revenue. Under the measure, the fund would no longer be tied to CAT collections; instead, it would continue to exist and be funded by legislative appropriations and any gifts, grants, donations, or other public or private moneys accepted by the Department of Education. The bill preserves the fund’s education-related distribution structure, including a $40 million transfer each biennium to support the High Cost Disabilities Account, and allocations to the Student Investment Account, the Statewide Education Initiatives Account, and the Early Learning Account.
Impact
SB 487 would substantially change Oregon tax law by eliminating the corporate activity tax beginning with the 2026 tax year and repealing the statutes that implement it. It would also amend ORS 327.001 and related session-law provisions so the Fund for Student Success is no longer dependent on CAT revenue, while maintaining its role as a vehicle for education funding and transfers to specific school and early learning accounts. Businesses subject to the CAT would no longer owe the tax after the effective date, and state education finance would need to rely on other appropriations or revenue sources.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of legislative debate or formal support/opposition in the materials supplied. Based on the bill’s subject, the measure appears to be a major tax policy change with likely strong interest from both tax-reform supporters and education-funding stakeholders. The text itself is neutral and technical, but the repeal of a significant business tax suggests the bill would likely draw mixed reactions depending on views about tax relief versus school funding stability.
Contention
The central point of contention is the repeal of the corporate activity tax and the loss of a dedicated revenue stream for education. Supporters would likely favor tax relief for businesses and simplification of the tax code, while opponents would likely focus on the fiscal impact on the Fund for Student Success and the education programs it supports. Another likely issue is whether the state can replace CAT revenue with other funding sources without reducing support for schools, high-cost disability services, and early learning programs.