SB 1507 updates Oregon’s tax code to conform to the federal Internal Revenue Code as of December 31, 2025, rather than the prior 2023 conformity date, and makes a series of related updates across personal income tax, corporate excise tax, the corporate activity tax, retirement-related provisions, and other statutes that rely on federal tax definitions. The bill also adds or modifies several Oregon tax provisions, including requiring Oregon taxpayers to add back certain federally deducted qualified passenger vehicle loan interest, adding back excluded gain from qualified small business stock, and adjusting Oregon’s treatment of federal bonus depreciation so that differences from the 2017 federal rules are added back and later subtracted when applicable.
The bill expands the Oregon earned income tax credit from 9 percent to 14 percent of the federal credit, and from 12 percent to 17 percent for taxpayers with a dependent under age 3. It also creates a new refundable credit for each net new Oregon job created by a taxpayer, set at $1,000 per job up to 10 jobs per year, subject to wage and certification requirements and a statewide annual cap of $12.5 million. In addition, SB 1507 updates Oregon’s treatment of retirement plan rules, minimum distribution requirements, rollover rules, military service credit, and related definitions for PERS and the Oregon Public Service Retirement Plan, while also updating references in statutes governing 529 savings accounts, ABLE accounts, unemployment insurance, paid family and medical leave, and several tax credit programs.
The bill’s impact on state law is broad and technical: it changes the federal conformity date used throughout Oregon tax law, which affects how Oregon calculates taxable income, deductions, credits, and administrative rules for individuals and businesses. It also revises or extends several tax credit and housing-related provisions, including the affordable housing loan credit, and updates statutory references in multiple chapters to keep Oregon law aligned with federal tax changes and definitions. The bill applies many of these changes to tax years beginning on or after January 1, 2026, with some retroactive administrative rules for prior years and specified no-interest treatment for resulting refunds.
Overall sentiment in the legislative record appears mixed but ultimately favorable enough for passage, with the bill advancing through committee and floor votes despite notable opposition. The Senate committee vote was narrow, the Senate rejected a minority report substitute, and the House also saw a failed motion to rerefer before final passage. That pattern suggests the bill was supported by a working majority but remained politically contested, likely because it combines routine federal conformity updates with substantive tax policy changes that affect both taxpayers and state revenue.
The main points of contention appear to have been the bill’s tax policy choices rather than the technical conformity updates themselves. Likely areas of disagreement include the increase in the earned income tax credit, the new job-creation credit and its $12.5 million statewide cap, the add-back of certain federal tax benefits such as qualified passenger vehicle loan interest and small business stock gains, and the broader fiscal effects of updating Oregon to the 2025 federal tax code. Supporters likely viewed the measure as necessary to maintain conformity and provide targeted tax relief and economic incentives, while opponents may have been concerned about revenue loss, complexity, and the selective nature of the new credits and conformity changes.
SB 1507 updates Oregon’s incorporation of federal tax law to the Internal Revenue Code in effect on December 31, 2025, and revises numerous Oregon statutes that reference federal tax definitions and rules. It changes the treatment of certain federal exclusions and deductions for Oregon tax purposes, expands the state earned income tax credit, creates a new job-creation tax credit with a statewide cap, and updates retirement, savings, unemployment, and paid leave statutes to reflect the newer federal conformity date and related federal rules. The bill affects individual taxpayers, corporations, financial institutions, employers, retirement plan participants, and recipients of various Oregon tax credits and benefits.
The bill appears to have been viewed as a largely technical conformity measure with some substantive tax policy changes, and it ultimately passed both chambers, but not without significant opposition. Narrow committee votes, a failed Senate minority report substitute, and a failed House rereferral motion indicate that while there was enough support to enact the bill, it was not broadly uncontested. The final floor votes suggest a divided legislature, with supporters favoring conformity and targeted tax relief and opponents likely concerned about fiscal impacts and policy choices embedded in the measure.
The most notable disagreements likely centered on the bill’s fiscal and policy effects: increasing the earned income tax credit, creating a new job-creation credit, and conforming Oregon law to newer federal tax provisions that may change state revenue. The add-back of qualified passenger vehicle loan interest and qualified small business stock gains may also have drawn scrutiny because they alter Oregon taxable income in ways that can raise tax liability for some taxpayers. More generally, the bill’s broad scope—touching many tax and retirement provisions at once—likely made it harder for some legislators to support as a single package, even if they agreed with the underlying conformity update.