Miles Consulting continues to help clients in many states, so this week we dedicate some blog time to Oregon. (Photo credit – M. Miles at Mulnomah Falls, OR.)
Business Climate:
Oregon is one of the few states without sales or use tax. However, they make up for it by being the third highest in the nation for personal income taxes. Yet, Oregon ranks 12 out of 50 states with the most favorable tax climate. The unemployment rate in Oregon was 6.9 percent in March compared to the national rate at 6.7 percent. Major Oregon industries include advanced manufacturing, clean technology, forestry/wood products, high technology, outdoor gear and activewear. (Oregon is home to Nike, Columbia Sportswear, and Adidas)
Oregon has one of the most aggressive renewable energy policies in the nation. The state’s standard requires that electric utilities must meet at least 25% of their Oregon load with renewable energy by the year 2025. Virtually all of Oregon’s electric load growth must come from new renewable energy. The standard also provides a goal that at least 1/3 of these targets be met by resources smaller than 25 megawatts in size. Solar energy counts double towards meeting the targets.
Taxes:
Oregon is one of just five states without a sales or use tax. (The other states are Alaska, Montana, New Hampshire, and Delaware.) Personal income tax rates in Oregon range from 5 percent to 9.9 percent. In comparison, New York ranges from 1 to 8.82 percent and; California ranges 1 to 13.3 percent. Oregon collects a corporate income/excise tax of 6.600 to 7.600 percent based on gross taxable income.
In addition, Oregon imposes property taxes on its residents. Property tax rates vary by county. In 2014, a home valued at about $260,000 costs the homeowner about $2,241 in property taxes. That’s about .87 percent based on the home’s assessed market value. http://www.tax-rates.org As a result, ranks Oregon 15th in line for the highest property tax rate.
Oregon has two types of corporate taxes: excise and income. Excise is the most common, and most corporations do not qualify for Oregon’s income tax. Excise tax is a tax for the privilege of carrying on or doing business in the state, and it is measured by net income. All corporations doing business in the state must file an excise tax return and pay the minimum excise tax, which starts at $150. Income tax is for corporations not carrying on or doing business in Oregon, but with income from an Oregon source. If a company has tangible, intangible, or other assets being used in Oregon, any income received is Oregon source income. Also, if a corporation is a member of an affiliated group of corporations that filed a consolidated federal return, it must file an Oregon return based on that federal return.
Tax Credits & Incentives:
Oregon has many of tax credits and incentives to help attract business. Here is a list and a brief description of a few that might be of most interest:
Enterprise Zones – In exchange for locating or expanding in an enterprise zone, businesses receive exemptions from local property taxes on new plant and equipment for at least three years (but up to five years) in the standard program.
Strategic Investment Program – The Strategic Investment Program exempts a portion of very large capital investments from property taxes for 15 years. The program is available statewide.
The Oregon Investment Advantage – This program helps businesses start or locate in a number of Oregon counties by providing a multi-year, income tax deduction (on new business operations) potentially eliminating state business tax liability during an eight- or nine-year period after operations begin.
Employer-provided Dependent Care Tax Credit—A 50% income tax credit for the annual cost of assisting employees with childcare and similar needs.
Research Tax Credits—Corporate income tax credit for qualified research and basic research conducted each year in Oregon, as a state-level extension to the federal R&D tax credits.
Energy Conservation Tax Credit—Transferable income tax credit based on 35% of the business investment to achieve substantial energy efficiencies. Two programs: Small Premium Projects (under $20,000) and Competitively Selected Projects (more than $20,000).
Rural Renewable Energy Development Zones—A three- to five- year exemption from property taxes on new investments in wind energy farms, biofuel production facilities and other eligible projects in a designated county.
State Energy Loan Program (SELP)—for renewable energy, including manufacturing facilities. Loans range from 5 to 20 years and $20,000 to $20 million, depending on the borrower’s need and financial situation. The Oregon Department of Energy finances these low-interest loans through the issuance of state general obligation bonds.
There are a many more credits and incentives in Oregon, especially in clean energy. If you would like any more information about any of the taxes or credits and incentives described please contact us.
Random Oregon Facts:
- The Oregon State Flag is the only state flag displaying different images on each side.
- Oregon’s deepest gorge is the Hell’s Canyon – 7,900 feet. It’s located between Oregon and Idaho on the Snake River.
- Oregon and New Jersey are the only states without self-serve gas stations.
- Oregon has more ghost towns than any other state.
- Eugene was the first city to have one-way streets.
- Famous people born in Oregon: Sally Struthers, River Phoenix, Austin O’Brien, Ty Burrell
