ORS Chapter 316 — Personal Income Tax

ORS 316.157. Credit for retirement income. (1) In the case of an eligible individual, there shall be allowed as a credit against the taxes otherwise due under this chapter for the taxable year an amount equal to the lesser of the tax liability of the taxpayer or nine percent of net pension income. (2) For purposes of this section: (a) Eligible individual means any individual who is receiving pension income and who has attained 62 years of age before the close of the taxable year. (b) Household income means the aggregate income of the taxpayer and the spouse of the taxpayer who reside in the household, that was received during the taxable year for which a credit is claimed, except that household income does not include Social Security benefits received by the taxpayer or the spouse of the taxpayer. (c) Income means adjusted gross income as defined in the federal Internal Revenue Code, as amended and in effect on December 31, 2022, even when the amendments take effect or become operative after that date, relating to the measurement of taxable income of individuals, estates and trusts, with the following modifications: (A) There shall be added to adjusted gross income the following items of otherwise exempt income: (i) The gross amount of any otherwise exempt pension less return of investment, if any. (ii) Child support received by the taxpayer. (iii) Inheritances. (iv) Gifts and grants, the sum of which are in excess of $500 per year. (v) Amounts received by a taxpayer or spouse of a taxpayer for support from a parent who is not a member of the taxpayers household. (vi) Life insurance proceeds. (vii) Accident and health insurance proceeds, except reimbursement of incurred medical expenses. (viii) Personal injury damages. (ix) Sick pay that is not included in federal adjusted gross income. (x) Strike benefits excluded from federal gross income. (xi) Workers compensation, except for reimbursement of medical expense. (xii) Military pay and benefits. (xiii) Veterans benefits. (xiv) Payments received under the federal Social Security Act that are excluded from federal gross income. (xv) Welfare payments, except as follows: (I) Payments for medical care, drugs and medical supplies, if the payments are not made directly to the welfare recipient; (II) In-home services authorized and approved by the Department of Human Services; and (III) Direct or indirect reimbursement of expenses paid or incurred for participation in work or training programs. (xvi) Nontaxable dividends. (xvii) Nontaxable interest not included in federal adjusted gross income. (xviii) Rental allowance paid to a minister that is excluded from federal gross income. (xix) Income from sources without the United States that is excluded from federal gross income. (B) Adjusted gross income shall be increased due to the disallowance of the following deductions: (i) The amount of the net loss, in excess of $1,000, from all dispositions of tangible or intangible properties. (ii) The amount of the net loss, in excess of $1,000, from the operation of a farm or farms. (iii) The amount of the net loss, in excess of $1,000, from all operations of a trade or business, profession or other activity entered into for the production or collection of income. (iv) The amount of the net loss, in excess of $1,000, from tangible or intangible property held for the production of rents, royalties or other income. (v) The amount of any net operating loss carryovers or carrybacks included in federal adjusted gross income. (vi) The amount, in excess of $5,000, of the combined deductions or other allowances for depreciation, amortization or depletion. (vii) The amount added or subtracted, as required within the context of this section, for adjustments made under ORS 316.680 (2)(d) and 316.707 to 316.737. (C) Income does not include the following: (i) Any governmental grant that must be used by the taxpayer for rehabilitation of the homestead of the taxpayer. (ii) Any refund of Oregon personal income taxes that were imposed under this chapter. (d) Net pension income means: (A) For eligible individuals filing a joint return, the lesser of the pension income of the eligible individuals received during the taxable year or the excess, if any, of $15,000 over the sum of the following amounts: (i) Any Social Security benefits received by the eligible individual, or by the spouse of the individual, during the taxable year; and (ii) The excess, if any, of household income over $30,000. (B) For an eligible individual filing a return other than a joint return, the lesser of the pension income of the eligible individual received during the taxable year or the excess, if any, of $7,500 over the sum of the following amounts: (i) Any Social Security benefits received by the eligible individual during the taxable year; and (ii) The excess, if any, of household income over $15,000. (e) Pension income means income included in Oregon taxable income from: (A) Distributions from or pursuant to an employee pension benefit plan, as defined in section 3(2) of the Employee Retirement Income Security Act of 1974, which satisfies the requirements of section 401 of the Internal Revenue Code; (B) Distributions from or pursuant to a public retirement system of this state or a political subdivision of this state, or a public retirement system created by an Act of this state or a political subdivision of this state, or the public retirement system of any other state or local government; (C) Distributions from or pursuant to a federal retirement system created by the federal government for any officer or employee of the United States, including any person retired from service in the United States Civil Service, the Armed Forces of the United States or any agency or subdivision thereof; (D) Distributions or withdrawals from or pursuant to an eligible deferred compensation plan which satisfies the requirements of section 457 of the Internal Revenue Code; (E) Distributions or withdrawals from or pursuant to an individual retirement account, annuity or trust or simplified employee pension which satisfies the requirements of section 408 of the Internal Revenue Code; and (F) Distributions or withdrawals from or pursuant to an employee annuity, including custodial accounts treated as annuities, subject to section 403 (a) or (b) of the Internal Revenue Code. (f) Social Security benefits means Social Security benefits, as defined in section 86 of the Internal Revenue Code (Title II Social Security or tier 1 railroad retirement benefits). (3) If a change in the taxable year of the eligible individual occurs as described in ORS 314.085, or if the Department of Revenue terminates the tax year of the eligible individual under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085. (4) If a change in the status of the eligible individual from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with subsection (1) of this section. [1991 c.823 5; 1997 c.839 13; 1999 c.90 12; 2001 c.660 39; 2015 c.348 19; 2015 c.480 9; 2016 c.33 22; 2017 c.315 24; 2017 c.527 22; 2018 c.101 22; 2019 c.319 23; 2021 c.456 23; 2022 c.83 23; 2023 c.171 23] Note: Section 36, chapter 913, Oregon Laws 2009, provides: Sec. 36. A credit may not be claimed under ORS 316.157 for tax years beginning on or after January 1, 2026.