Oregon Subtractions from Income
Oregon Income Tax Refund Included in Federal Income - (code 325)
Oregon allows a subtraction for Oregon state income tax refunds included in federal income. Oregon does not allow a subtraction for any other state income tax refund.
Federal Pension Income (code 307)
You may be able to subtract some or all of your taxable federal pension included in federal income. This includes benefits paid to the retiree or the beneficiary. It does not include disability payments if you have not attained the minimum retirement age. 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% 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 or points earned. Round the percentage to three places (example: .4576 = 45.8 percent). Once you have determined the percentage, it will remain the same each year. 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 (code 315)
Did you include any interest or dividends from U.S. bonds and notes in your federal income? If so, you may subtract this income on your Oregon return. Common examples of U.S. government interest include savings bond and Treasury bill interest.
You may also subtract U.S. government interest (called state exempt-interest dividends) from regulated investment companies and pools of assets managed by a fiduciary. These include, but are not limited to, banks, savings associations, or credit unions. To qualify, the regulated investment company or pool of assets must invest in U.S. government securities. These securities must be tax-exempt for Oregon. The subtraction is limited to your share of the amount of interest actually earned from the qualifying U.S. government securities.
You cannot subtract amounts when the U.S. government only guarantees the security. If you receive distributions from a retirement plan, you may not subtract pension income received from funds invested in U.S. government securities.
Part-year residents and nonresidents. You may claim the subtraction only for interest and dividends you included as income taxable by Oregon. Any gain recognized for federal tax purposes on the sale of U.S. bonds and notes is also taxable by Oregon
Other Oregon Subtractions From Income (also see Schedule OR-ASC, Adjustments)
529 Oregon College Savings Plan - (code 324)
You can subtract contributions you made to an Oregon 529 College Savings Network account during the tax year of up to $4,600 if you file a joint return ($2300 for all others). These state-sponsored plans qualify for special tax status as qualified tuition program under Internet Revenue Code Section 529.
You can subtract your contribution if you made it before the date you file your tax return or before the due date of your return, without extensions, whichever is earlier.
If you have a 529 College Savings Network in another state and you roll it into an Oregon 529 College Savings Network, the rollover qualifies as a new contribution for purposes of the subtraction.
American Indian - (code 300)
Are you an American Indian? If so, you might not have to pay Oregon income tax on your income. You may be able to subtract all or part of your income if all the following are true:
1. You are an enrolled member of a federally recognized American Indian tribe, and
2. Your income was from sources within federally recognized Indian country in Oregon, and
3. You lived in federally recognized Indian country in Oregon when the income was earned.
“Indian country” is defined as any land within a current federal Indian reservation boundary and other lands held in trust by the United States government for a tribe.
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 - (code 319)
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 - (code 319)
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 - (code 322)
Oregon will not tax your winnings from an Oregon Lottery ticket or play that results in winnings of $600 or less. Individual Oregon Lottery winnings of more than $600 per ticket or play are taxed by Oregon and are not eligible for the subtraction.
“Oregon Lottery” means all games offered by the Oregon State Lottery commission and purchased in Oregon, including games jointly administered by Oregon and other states (such as Powerball). Oregon Lottery does not include gambling winnings from other sources, such as tribal gaming centers.
Winnings over $600 from a single ticket or play are fully taxable and may be reported by Oregon Lottery on Form W-2G. Lottery winnings that are more than $5,000 will have eight percent withheld for Oregon taxes. If state income tax was not withheld from your gambling winnings of $5,000 or more, you should consider making estimated tax payments or increasing your withholding. To increase your Oregon withholding, file a separate Form W-4 with your employer. Write “For Oregon only” on the form.
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.