The Billups Company CPA's, Inc.

Oregon Measure 66 was the companion measure to Measure 67,(discussed here), both of which passed in the January 26^th Special Election. While 67 focused on corporations, Measure 66 has three provisions that affect individual taxpayers. The first two provisions target “the rich” with tax increases and the third affects Oregonians receiving unemployment compensation.

New marginal tax rates. The top individual marginal tax rate for Oregon has long been 9%. Measure 66 increases that marginal rate to 10.8% on taxable income above $250,000 for joint filers and $125,000 for single filers. Income above $500,000 for joint filers and $250,000 for single filers will be taxed at 11%. These new rates are applied retroactively to the 2009 tax year and also apply to 2010 and 2011. After 2011, the top marginal rate declines to 9.9% for taxable income above $250,000, ($125,000 for single filers).

Federal Income Tax Subtraction.  Oregon law allows taxpayers to deduct up to $5,850 of their 2009 federal income tax liability in order to calculate Oregon taxable income. Adding insult to the injury created by the new marginal tax rates, Measure 66 phases out this deduction for “rich” taxpayers with adjusted gross incomes between $250,000 and $290,000 for joint filers and $125,000 to $145,000 for singles. Taxpayers with incomes above $290,000, ($145,000 for single filers), get no deduction for the federal taxes they pay.

The net effect of these two provision, (besides stimulating a lot of calls to CPA’s from high income clients, to ask about the wisdom of moving to Vancouver or Las Vegas), is the creation of six new tax brackets for Oregon taxpayers.

Unemployment Compensation. Federal tax law exempts the first $2,400 of unemployment compensation received in 2009. Measure 66 connects Oregon law to the federal provision and allows the same exemption of unemployment compensation for Oregon taxes.

Source:  Oregon Department of Revenue.