Best Oregon Tax Deductions and Credits (2026)

Figures below are for tax year 2025 (the return filed in 2026, or on extension by 15 October 2026) unless marked otherwise. Where the Oregon Department of Revenue has published tax year 2026 amounts, they are shown too. DOR labels some 2026 figures as estimates, and so do we.

1. The kicker credit

For tax year 2025 the Oregon surplus credit, the “kicker,” is 9.863 percent of your 2024 Oregon tax liability, claimed as a credit on the 2025 Oregon return. It is not a separate check. To qualify you must have filed a 2024 Oregon return, had an Oregon tax liability for 2024, and file a 2025 Oregon return even if you have no other reason to file. DOR may apply some or all of it to state debts such as past-due tax or child support.

Whether a kicker exists in any other year depends on state revenue. Check DOR’s kicker page before filing, and see the Oregon kicker, explained for how the percentage works.

2. The federal tax liability subtraction

Oregon lets you subtract part of the federal income tax you paid. For 2025 the limit is $8,500 ($4,250 if married filing separately), based on your federal tax after credits other than the earned income tax credit. The limit shrinks as income rises and reaches zero at AGI of $145,000 for single filers and $290,000 for joint, head of household and qualifying surviving spouse filers, starting from $125,000 and $250,000. DOR’s estimate for 2026 is a limit of $8,750.

3. Oregon earned income credit

Oregon adds a refundable percentage of your federal EITC: 12 percent if your youngest dependent was under 3 at the end of the year, 9 percent otherwise (including filers with no dependents). It is figured straight from the federal credit, so a household that qualifies federally generally qualifies here too. Filers who cannot claim the federal EITC because someone in the household uses an ITIN or lacks an SSN valid for work may qualify through Schedule OR-EIC-ITIN.

4. Oregon Kids Credit

A refundable credit of up to $1,050 per dependent age five or younger at the end of 2025, for up to five dependents ($5,250). The full credit applies at qualifying income of $26,550 or less and phases out to nothing at $31,550. Married filing separately does not qualify.

5. Working family household and dependent care credit

WFHDC is a refundable credit for low- to moderate-income households that paid for dependent care so they could work or attend school. The amount depends on income, care costs, household size and the age of the youngest qualifying individual. For 2025 the larger of your federal or Oregon AGI must be at or below the limit for your household size:

You need federal Form 2441 completed first and proof of payment to your care provider. DOR can penalize a knowingly false claim by up to 25 percent of the amount claimed, so the provider details need to be right.

6. The Oregon 529 and ABLE contribution credits

Contributions to an Oregon higher education savings plan (Embark, formerly the Oregon College Savings Plan, or the MFS 529 Savings Plan) earn a refundable credit of up to $180 ($360 married filing jointly) for 2025 and $190 ($380) for 2026. The percentage of your contribution you can claim depends on AGI. Contributions to an Oregon ABLE account carry a separate credit with the same limits.

• Contributions count for the year until the date you file or the original due date, whichever is earlier. Extensions do not add time.
• Oregon does not follow the federal rule allowing 529 money for K-12 tuition. Using credited funds that way triggers a recapture.

7. The personal exemption credit

A nonrefundable credit of $256 per exemption for 2025, with DOR’s 2026 estimate at $260. It drops to zero when federal AGI is over $100,000 for single and married-filing-separately filers, or over $200,000 for everyone else. It is easy to overlook for a household just under those lines.

8. Oregon’s standard deduction, or itemizing on Schedule OR-A

Oregon’s standard deduction is far smaller than the federal one, so the itemize-or-not question comes out differently on the Oregon return. You claim whichever is larger, and Oregon’s itemized amount comes from Schedule OR-A, which can differ from your federal figure.

For 2025, filers who are 65 or older or blind add $1,200 per box checked (single or head of household) or $1,000 (other statuses).

9. Retiree subtractions: Social Security and the special medical subtraction

Oregon does not tax Social Security benefits: any amount included in federal AGI is subtracted on the Oregon return. Separately, if you or your spouse turned 66 by the end of the year and federal AGI is no more than $200,000 ($100,000 single or married filing separately), qualifying medical and dental expenses may be subtracted, excluding expenses of anyone under 66 and of dependents. The retirement tax guide covers the rest of the picture.

10. The new federal deductions, carried to Oregon

For 2025, DOR says you may claim on the Oregon return the same deductions for tip income, overtime wages and passenger vehicle loan interest that you claim federally. The Oregon return starts from federal adjusted gross income, and these federal deductions are taken after that line, so they do not carry over on their own: a full-year resident enters them as subtractions on Schedule OR-ASC (Publication OR-17 lists them under ORS 316.048). They do not help everywhere: amounts deducted this way must be added back when figuring income for the Oregon Kids Credit. The new federal senior deduction is treated differently. Oregon is disconnected from it, as our tax tips for retirees explain.

11. The political contribution credit

For 2025, a credit of up to $50 ($100 on a joint return) for cash contributions to Oregon candidates, qualified parties or certified political action committees, available when federal AGI is no more than $75,000 ($150,000 joint). Small, but frequently missed.