Oregon Subtractions from Income
Oregon Income Tax Refund Included in Federal Income
Enter your Oregon state income tax refund from federal Form 1040, line 10. Do not include local, county, or other states’ tax refunds.
Federal Pension Income
You may be able to subtract some or all of your taxable federal pension included in 2011 federal income. This includes benefits paid to the retiree or the beneficiary. The subtraction amount is based on the number of months of federal service before and after October 1, 1991:
- If all your months of federal service were before October 1, 1991, subtract 100 percent of the taxable amount of federal pension income you reported on your federal return.
- If you have no months of service before October 1, 1991, you cannot subtract any federal pension
- If your service was both before and after October 1, 1991, subtract a percentage of the taxable federal pension income you reported on your federal return.
To determine your percentage, divide the months of service before October 1, 1991, by the total months of service. Round to three places (example: .4576 = 45.8 percent). Once you have determined the percentage, it will remain the same each year. Write the percentage on line 17a. If you have two federal pensions, write the second percentage on line 17b and enter your total subtraction amount on line 17. Figure the percentage for each pension separately.
Interest and Dividends From U.S. Government
Enter the interest and dividends from the U.S. government that you included on your federal return. Include U.S. government interest and dividends you received through partnerships or grantor trusts. See line 18 to subtract U.S. government interest in IRA or Keogh distributions. Do not include interest on federal tax refunds in the subtraction.
- You can subtract interest from U.S. Series EE, I, or HH bonds and Treasury bills or notes.
- You can subtract interest and dividends paid to you by organizations that invest in U.S. government securities. The payer may have given the percentage of interest and dividends from U.S. government securities on your Form 1099.
- If you reported interest or dividends of your minor child on your federal return, you can subtract any U.S. government interest included.
- You must reduce U.S. government interest and dividends by any interest expense relating to U.S. government obligations deducted on your federal Schedule A.
Note: When you sell or dispose of a U.S. government obligation, you must include any gain or loss in Oregon income.
Other Oregon Subtractions From Income (also see Schedule OR-ASC, Adjustments)
529 Oregon College Savings Plan
You can subtract up to $4,240 for joint returns or up to $2,120 for all other returns for contributions made to a 529 Oregon College Savings Network account in 2011. If you contribute more than your limit, you can carry forward the remaining contribution not subtracted over the next four years. Keep a copy of your account statement with your tax records. For more information, please click here.
Are you an enrolled member of a federally recognized American Indian tribe? You may be able to subtract all or part of your income if all of the following are true:
- You are an enrolled member of a federally recognized American Indian tribe, and
- Your income was from sources within federally recognized Indian country in Oregon, and
- You lived in federally recognized Indian country in Oregon when the income was earned.
You must attach a completed copy of your Exempt Income Schedule for Enrolled Members of a Federally Recognized American Indian Tribe to your return. Download the schedule from the Oregon state website or contact them to order it.
Military Active Duty Pay
If you included U.S. military active duty pay in your federal taxable income, you may qualify for a subtraction on your Oregon return. You can subtract all active duty pay earned outside Oregon during the year plus up to $6,000 active duty pay earned in Oregon.
Note: Your total subtraction cannot be more than your total taxable active duty pay income. Guard and reserve annual training is considered active duty. Weekend drills and training are considered active duty.
Oregon National Guard and Reserve Pay Subtraction
The following will help determine if you can claim this subtraction:
- Were you a member of the Oregon National Guard or reserves at any time during the year?
- Were you required to be away from home overnight for at least three weeks consecutively?
If you said yes to BOTH of these questions, you can subtract all of the Oregon National Guard or reserve pay you earned while you met the above qualifications.
Oregon Lottery Winnings
Although Oregon does not tax Oregon Lottery winnings of $600 or less per ticket, the federal government does. Oregon Lottery includes Powerball tickets you purchased in Oregon. You can subtract the following winnings included in your federal income from Oregon income:
- Winnings of $600 or less from each single ticket or play, and
- Annual payments from tickets bought before 1998.
Note: Do not subtract any other type of winnings such as winnings from tribal gaming centers.
There are additional 'Subtractions from Income' that apply to only a few people and are not explained fully in this article. These subtractions are listed in our program on the Subtractions from Income screen under Other Subtractions. For full explanations of these items, please see Subtractions by clicking here.