Income Tax Incentives

Profiled below are some of the more significant or common incentives that offset, or provide relief, for income tax for businesses in Oregon.  

Oregon Investment Advantage

This program helps business start or locate new activities in Oregon by providing taxable income exemption for business development. Companies setting up operations in a qualifying county are eligible for a 10-year waiver on all income/excise taxes related to those operations—potentially avoiding state business tax liability for that period. The company must create at least five new full-time, year-round jobs; facility operations need to be the first of their kind in Oregon for that company and not compete within the local economy. Exemption of taxable income can be combined with an enterprise zone exemption on taxable property where available. Click here for more detailed information about Oregon Investment Advantage.

redmond's E-COMMERCE ZONE

A limited number of Oregon’s enterprise zones have received special status to further encourage electronic commerce investments, and Redmond is one of those. “Electronic commerce” is defined as engaging predominantly in transactions via the internet or an internet-based computer platform. These transactions can include taking orders, closing sales, making purchases, providing customer service or undertaking other activities that serve the business’s overall purpose, even if retail in nature.

Qualifying firms receive a credit against the firm’s annual state income or corporate excise tax liability, which equals 25% of that tax year’s investment cost in capital assets for operations related to electronic commerce. The annual maximum credit is $2 million per year. Assets must be located in the designated enterprise zone. 

Business Energy Tax Credits (BETC)

Beyond tax incentives that reward employers for making capital investments in their business and expanding employment, there are now new incentives in Oregon that target new types of investment, specifically renewable energy. The Oregon Department of Energy offers the Business Energy Tax Credit (BETC) for a wide variety of projects, directted at those who invest in energy conservation, recycling, renewable energy resources and less-polluting transportation fuels.

The traditional BETC program provides tax incentives for 35 percent of the eligible project costs or the incremental cost of the system or equipment that goes beyond standard practice. The BETC credit can be used to offset Oregon individual or corporate income or excise tax and is taken over five years (10 percent in the first and second years, and five percent each year thereafter) or carried forward for up to eight years.

In 2007, Oregon’s legislature added a 50 percent BETC for renewable energy projects; the credit is taken at 10 percent each year and also has provisions for carryover as well as a Pass-through Option for entities that don’t have an Oregon tax liability to offset. The cap on eligible costs for this new program increased to $20,000,000 (or $40,000,000 for qualified projects). Several significant advantages of the new program include: it reduces the payback timeframe for renewable energy projects, it is expanding interest in renewable energy as a viable alternative to traditional energy generation, and it is helping create economic development around energy projects throughout the state.

BETC tax credits apply to a broad range of sectors, including commercial, industrial, construction, multi-family residential, equipment manufacturers. Eligible technologies include: passive solar space heat, solar water heat, solar space heat, solar thermal electric, photovoltaics, landfill gas, wind, biomass, hydroelectric, renewable transportation fuels, geothermal electric, geothermal heat pumps, CHP/cogeneration, hydrogen, industrial waster, refueling stations, ethanol, methanol, biodiesel, fuel cells using renewable fuels.

One must apply for the BETC tax credit BEFORE starting a project. Learn more about the BETC program on Oregon’s energy website, download an application or a brochure on how this tax credit works.

This credit is available to agricultural producers and biomass collectors for the production ofr collection of biomass that is to be uesed in Oregon as biofuel or to produce biofuel.  The credit is based on the amount of biomass transferred; the credit has a provision to be transferred to an Oregon taxpayer. 

Oregon is among 20 states in the nation that offer a state tax credit for dependent care assistance provided to employees. Oregon’s tax credit permits an employer to offset 50 percent of its child care expenditures against its state tax liability. The credit allows an annual limit of $2,500 per employee. For more information on the Dependent Care Tax Credit, click here.

Created through the Small Business Job Protection Act of 1996, the Work Opportunity Tax Credit (WOTC) provides employers an incentive to hire certain target group members with barriers to employment--such as veterans, food stamp recipients, and vocational rehabilitation referrals. The Small Business and Work Opportunity Act of 2007 (P.L. 110-28) extends the WOTC through August 31, 2011. Employing qualified target group members can reduce an employer's federal income tax liability, ranging from $2400 up to $9000 as a one-time tax cedit. For more information, visit the WTOC program.

See the Property Tax Incentives page on our website for more information.  Other pages of interest include Workforce Incentives, Business Financing Solutions, and Other Incentives.