Imposes personal income tax at flat rate if a taxpayer has an adjusted gross income below threshold amount.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
Senate Bill 63
Sponsored by Senator HAYDEN (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 imposes a flat rate income tax. (Flesch Readability Score: 66.1).
Imposes personal income tax at flat rate if a taxpayer has an adjusted gross income below
threshold amount. Applies to tax years beginning on or after January 1, 2026.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to personal income tax rates; creating new provisions; amending ORS 316.037, 316.122 and
316.362; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 316.037 is amended to read:
316.037. (1)(a) Except as provided in subsection (2) of this section, a tax is imposed for each
taxable year on the entire taxable income of every resident of this state. The amount of the tax shall
be determined in accordance with the following table:
_______________________________________________________________________________________
If taxable income is:The tax is:
Not over $2,000 4.75% of
taxable
income
Over $2,000 but not
over $5,000 $95 plus 6.75%
of the excess
over $2,000
Over $5,000 but not
over $125,000 $298 plus 8.75%
of the excess
over $5,000
Over $125,000 $10,798 plus 9.9%
of the excess
over $125,000
_______________________________________________________________________________________
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 3017
SB 63
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
(b) For tax years beginning in each calendar year, the Department of Revenue shall adopt a
table that shall apply in lieu of the table contained in paragraph (a) of this subsection, as follows:
(A) Except as provided in subparagraph (D) of this paragraph, the minimum and maximum dollar
amounts for each bracket for which a tax is imposed shall be increased by the cost-of-living adjust-
ment for the calendar year.
(B) The rate applicable to any rate bracket as adjusted under subparagraph (A) of this para-
graph may not be changed.
(C) The amounts setting forth the tax, to the extent necessary to reflect the adjustments in the
rate brackets, shall be adjusted.
(D) The rate brackets applicable to taxable income in excess of $125,000 may not be adjusted.
(c) For purposes of paragraph (b) of this subsection, the cost-of-living adjustment for any calen-
dar year is the percentage (if any) by which the monthly averaged U.S. City Average Consumer
Price Index for the 12 consecutive months ending August 31 of the prior calendar year exceeds the
monthly averaged index for the second quarter of the calendar year 1992.
(d) As used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City
Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor.
(e) If any increase determined under paragraph (b) of this subsection is not a multiple of $50,
the increase shall be rounded to the next lower multiple of $50.
(2) The rate of tax imposed under this chapter shall be four percent of taxable income,
if the taxpayer’s adjusted gross income does not exceed $100,000 if reported on a joint return
or $50,000 for all other types of returns.
[(2)] (3) A tax is imposed for each taxable year upon the entire taxable income of every part-year
resident of this state. The amount of the tax shall be computed under subsection (1) or (2) of this
section as if the part-year resident were a full-year resident and shall be multiplied by the ratio
provided under ORS 316.117 to determine the tax on income derived from sources within this state.
[(3)] (4) A tax is imposed for each taxable year on the taxable income of every full-year non-
resident that is derived from sources within this state. The amount of the tax shall be determined
in accordance with [ the table set forth in subsection (1) ] subsection (1) or (2) of this section.
SECTION 2.
ORS 316.122 is amended to read:
316.122. (1) If the federal taxable income of spouses in a marriage (one being a part-year resident
and the other a nonresident) is determined on a joint federal return, their taxable income in this
state shall be separately determined, unless they elect to file a joint return, in which case their tax
on their joint income shall be determined in this state pursuant to ORS 316.037 [ (3)] (4).
(2) If the federal taxable income of spouses in a marriage (one being a full-year resident and the
other a part-year resident) is determined on a joint federal return, their taxable income in this state
shall be separately determined, unless they elect to file a joint return, in which case their tax on
their joint income shall be determined in this state pursuant to ORS 316.037 [ (2)] (3).
(3) If the federal taxable income of spouses in a marriage (one being a full-year resident and the
other a nonresident) is determined on a joint federal return, their taxable income in the state shall
be separately determined, unless they elect to file a joint return, in which case their tax on their
joint income shall be determined in this state pursuant to ORS 316.037 [ (3)] (4).
(4) For purposes of computing the tax of spouses under this section, if one of the spouses is a
full-year resident individual, then as used in ORS 316.037 [ (2) or (3) ] (3) or (4) , that spouse’s taxable
[2]
SB 63
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
income derived from Oregon sources is that spouse’s entire federal taxable income, defined in the
laws of the United States, with the modifications, additions and subtractions provided in this chapter
and other laws of this state applicable to personal income taxation.
(5) The provisions of ORS 316.367 with respect to joint returns apply if both spouses are part-
year residents or full-year nonresidents.
SECTION 3.
ORS 316.362 is amended to read:
316.362. (1) An income tax return with respect to the tax imposed by this chapter shall be made
by the following:
(a) Every resident individual:
(A) Who is required to file a federal income tax return for the taxable year; or
(B) Who has gross income greater than the sum of:
(i) The basic standard deduction allowed under ORS 316.695 (1)(c)(B);
(ii) Any additional standard deduction allowed to the taxpayer under ORS 316.695 (7); and
(iii) An amount equal to the income equivalent of one personal exemption credit under ORS
316.085 (3)(b) if unmarried, or equal to the income equivalent of two personal exemption credits un-
der ORS 316.085 (3)(b) if married.
(b) Every nonresident individual who has federal gross income from sources in this state of more
than the basic standard deduction allowed under ORS 316.695 (1)(c)(B).
(c) Every resident estate or trust that is required to file a federal income tax return.
(d) Every nonresident estate that has federal gross income of $600 or more for the taxable year
from sources within this state.
(e) Every nonresident trust that for the taxable year has from sources within this state any
taxable income, or gross income of $600 or more regardless of the amount of taxable income.
(2) Nothing contained in this section shall preclude the Department of Revenue from requiring
any individual, estate or trust to file a return when, in the judgment of the department, a return
should be filed.
(3) For purposes of this section, the income equivalent of a personal exemption credit under ORS
316.085 (3)(b) shall be determined as follows:
(a) Divide the personal exemption credit amount by the rate applicable to the lowest income
bracket under ORS 316.037.
(b) If the resulting quotient is less than the maximum amount of income subject to the rate used
in paragraph (a) of this subsection, the quotient is the income equivalent.
(c) If the resulting quotient is more than the maximum amount of income subject to the rate
used in paragraph (a) of this subsection:
(A) Multiply the maximum amount of income subject to the rate used in paragraph (a) of this
subsection by the rate used in paragraph (a) of this subsection.
(B) Determine the difference between the product calculated under subparagraph (A) of this
paragraph and the personal exemption credit amount.
(C) Divide the difference determined in subparagraph (B) of this paragraph by the rate applica-
ble to the income bracket that is the next succeeding the lowest income bracket under ORS 316.037
(1).
(D) Add the quotient determined in subparagraph (C) of this paragraph to the maximum amount
of income subject to the rate used in paragraph (a) of this subsection. The sum is the income
equivalent.
SECTION 4.
The amendments to ORS 316.037, 316.122 and 316.362 by sections 1 to 3 of this
[3]
SB 63
1
2
3
4
2025 Act apply to tax years beginning on or after January 1, 2026.
SECTION 5.
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.
[4]