Restores the corporate excise tax credit allowed for qualified research activities at an increased maximum amount.

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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 2117
Sponsored by Representative RESCHKE (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced. The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: The Act brings back a tax credit for research expenditures. (Flesch Readability Score:
69.7).
Restores the corporate excise tax credit allowed for qualified research activities at an increased
maximum amount. Provides for refundability and transferability of the credit. Allows the option for
research and development expenditures to be fully deducted in the tax year paid or incurred, rather
than treated as capital expenditures and amortized over five years.
Applies to tax years beginning on or after January 1, 2025, and before January 1, 2031.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to tax treatment of research expenditures; creating new provisions; amending ORS 317.152,
317.154 and 317.850 and section 6, chapter 911, Oregon Laws 1989; and prescribing an effective
date.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
Sections 2 to 4 of this 2025 Act are added to and made a part of ORS chapter
317.
SECTION 2. If the amount allowable as a credit under ORS 317.152 or 317.154, when added
to the sum of the amount of estimated tax paid under ORS 314.515 and any other tax pre-
payment amounts, exceeds the taxes imposed by ORS chapters 314 and 317 for the tax year
(reduced by any nonrefundable credits allowable for purposes of ORS chapter 317 for the tax
year), the amount of the excess shall be refunded to the taxpayer as provided in ORS 314.415.
SECTION 3. (1) A person that has obtained a tax credit under ORS 317.152 or 317.154 may
transfer all or a portion of the credit to a taxpayer subject to tax under ORS chapter 316,
317 or 318.The transfer must comply with ORS 315.056.
(2) The Oregon Business Development Department may establish by rule a minimum
discounted value of a tax credit under this section.
(3) Notwithstanding ORS 317.152 (6) or 317.154 (7), a transferee may claim a credit
transferred under this section only in the three consecutive tax years that begin with the
tax year in which the transferee pays for the credit.
SECTION 4.
(1) There may be subtracted from federal taxable income for Oregon tax
purposes the difference between the amount allowable as a deduction under section 174 of
the Internal Revenue Code as applicable to the tax year of the taxpayer and the amount al-
lowable as a deduction under section 174 of the Internal Revenue Code as amended and in
effect on December 20, 2017, and applicable to tax years beginning before January 1, 2022.
(2) Amounts subtracted from federal taxable income for Oregon tax purposes under
subsection (1) of this section shall thereafter be added to federal taxable income for Oregon
NOTE: Matter in boldfaced type in an amended section is new; matter [ italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 2653
HB 2117
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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 section 174 of the Internal Revenue Code
as amended and in effect on December 31, 2017, and applicable to tax years beginning on or
after January 1, 2022.
SECTION 5.
ORS 317.152 is amended to read:
317.152. (1) A credit against taxes otherwise due under this chapter shall be allowed to eligible
taxpayers for increases in qualified research expenses and basic research payments. The credit shall
be determined in accordance with section 41 of the Internal Revenue Code, except as follows:
(a) The applicable percentage specified in section 41(a) of the Internal Revenue Code shall be
five percent.
(b) “Qualified research” and “basic research” shall consist only of research conducted in
Oregon.
(c) The following do not apply to the credit allowable under this section:
(A) Section 41(c)(4) of the Internal Revenue Code (relating to the alternative incremental credit).
(B) Section 41(h) of the Internal Revenue Code (relating to termination of the federal credit).
(2) For purposes of this section, “eligible taxpayer” means a corporation, other than a corpo-
ration excluded under Internal Revenue Code section 41(e)(7)(E).
(3) The Income Tax Regulations as prescribed by the Secretary of the Treasury under authority
of section 41 of the Internal Revenue Code apply for purposes of this section, except as modified by
this section or as provided in rules adopted by the Department of Revenue.
(4) The maximum credit under this section may not exceed [ $1 million] $2 million.
(5) A deduction may not be taken for the portion of expenses or payments, otherwise allowable
as a deduction, that is equal to the amount of the credit claimed under this section.
(6) Any tax credit that is otherwise allowable under this section and that is not used by the
taxpayer in that year may be carried forward and offset against the taxpayer’s tax liability for the
next succeeding tax year. Any credit remaining unused in such 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, 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 succeeding tax year, but may not be carried forward for any tax year
thereafter.
SECTION 6.
ORS 317.154 is amended to read:
317.154. (1) A credit against taxes otherwise due under this chapter shall be allowed for quali-
fied research expenses that exceed 10 percent of Oregon sales.
(2) For purposes of this section:
(a) “Oregon sales” shall be computed using the laws and administrative rules for calculating the
numerator of the Oregon sales factor under ORS 314.665.
(b) “Qualified research” has the meaning given the term under section 41(d) of the Internal Re-
venue Code and shall consist only of research conducted in Oregon.
(3) The credit under this section is equal to five percent of the amount by which the qualified
research expenses exceed 10 percent of Oregon sales.
(4) The credit under this section [ shall] may not exceed $10,000 times the number of percentage
points by which the qualifying research expenses exceed 10 percent of Oregon sales.
(5) The maximum credit under this section may not exceed [ $1 million] $2 million.
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HB 2117
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(6) A deduction may not be taken for the portion of expenses or payments, otherwise allowable
as a deduction, that is equal to the amount of the credit claimed under this section.
(7) Any tax credit that is otherwise allowable under this section and that is not used by the
taxpayer in that year may be carried forward and offset against the taxpayer’s tax liability for the
next succeeding tax year. Any credit remaining unused in such 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, 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 succeeding tax year, but may not be carried forward for any tax year
thereafter.
SECTION 7.
ORS 317.850 is amended to read:
317.850. (1) The net revenue from the tax imposed by this chapter, after deduction of refunds,
shall be paid over to the State Treasurer and held in the General Fund as miscellaneous receipts
available generally to meet any expense or obligation of the State of Oregon lawfully incurred.
(2) A working balance of unreceipted revenue from the tax imposed by this chapter may be re-
tained for the payment of refunds, but such working balance may not at the close of any fiscal year
exceed the sum of $500,000.
(3) Moneys are continuously appropriated to the Department of Revenue to make:
(a) The refunds authorized under subsection (2) of this section;
(b) The refund payments in excess of tax liability authorized under ORS 315.133; [and]
(c) The refund payments in excess of tax liability authorized under ORS 315.519[ .]; and
(d) The refund payments in excess of tax liability authorized under section 2 of this 2025
Act.
SECTION 8.
Section 6, chapter 911, Oregon Laws 1989, as amended by section 14, chapter 746,
Oregon Laws 1995, section 1, chapter 548, Oregon Laws 2001, section 15, chapter 739, Oregon Laws
2003, section 86, chapter 94, Oregon Laws 2005, and section 7, chapter 730, Oregon Laws 2011, is
amended to read:
Sec. 6. ORS 317.152 [ to], 317.153 and 317.154 apply to amounts paid or incurred in tax years
beginning on or after January 1, 1989, and before January 1, 2018 , or in tax years beginning on
or after January 1, 2025, and before January 1, 2031 .
SECTION 9. Sections 2 to 4 of this 2025 Act and the amendments to ORS 317.152, 317.154
and 317.850 by sections 5 to 7 of this 2025 Act apply to tax years beginning on or after Jan-
uary 1, 2025, and before January 1, 2031.
SECTION 10. This 2025 Act takes effect on the 91st day after the date on which the 2025
regular session of the Eighty-third Legislative Assembly adjourns sine die.
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