Tax News

CCH (cch.taxgroup.com) reports:

  Gov. Ted Kulongoski has signed legislation that, as previously reported (TAXDAY, 2009/06/16, S.20), increases the Oregon personal income tax rate and phases out the deduction for federal income taxes paid for high-income taxpayers. The legislation also allows a subtraction from federal AGI of up to $2,400 of unemployment compensation received in the 2009 tax year. In effect, Oregon incorporates the exclusion enacted under the federal American Recovery and Reinvestment Act of 2009 (P.L. 111-5).

  For tax years beginning after 2008 and before 2012, the personal income tax rate is 10.8% on taxable income over $125,000 but not over $250,000 and 11% on taxable income over $250,000. For tax years beginning after 2011, the highest tax rate will be 9.9% on taxable income over $125,000.

  For tax years beginning after 2008, federal income taxes paid in excess of a specified limit, less refunds for which a tax benefit was received, must be added back to federal taxable income. The specified limit is reduced for high-income taxpayers to effectively phase out the amount of the federal income tax deduction allowed for Oregon personal income tax purposes.

  Applicable to the 2009 tax year, the Oregon Department of Revenue will waive any penalty or interest that would otherwise apply to taxes due if the penalty or interest is based on underpayment or underreporting that results solely from the above-described law changes.

H.B. 2649, Laws 2009, effective September 28, 2009, applicable as noted