Oregon Gov. Kate Brown has signed the biennial tax credit bill creating two new credits and amending and extending existing corporate excise (income) and personal income tax credits. Also, the existing biomass tax credit for biofuels from most sources will now sunset on January 1, 2018 (previously, January 1, 2022). Finally, the disallowance of credits against the corporate minimum tax is made permanent by removing the sunset.
Rural Medical Provider Tax Credit
Amending the rural medical provider tax credit, the bill states that existing credits may not be claimed for tax years after January 1, 2022. However, taxpayers who meet the revised eligibility requirements between January 1, 2021, and January 1, 2022, may claim the credit for any tax year beginning before January 1, 2031. Eligible taxpayers may not claim the credit for more than a total of 10 tax years that begin on or after January 1, 2018.
Beginning January 1, 2018, the credit is available to eligible individuals who:
- are licensed to practice medicine;
- practice medicine for at least 20 hours a week; and
- have adjusted gross income not in excess of $300,000.
Nonresidents may claim the credit. In addition, the income limitation does not apply to a physician who:
- practices as a general surgeon;
- specializes in obstetrics; or
- is in family or general practice and provides obstetrical services.
Bovine Manure Tax Credit
An income tax credit is created for taxpayers that produce or collect bovine manure in Oregon that is used, in Oregon, as biofuel or to produce biofuel. Taxpayers can take the bovine manure tax credit against corporate excise (income) taxes and personal income taxes between January 1, 2018, and January 1, 2022. The amount of the credit will be calculated at a rate of $3.50 per wet ton.
The credit claimed in a tax year may not exceed the tax liability of the taxpayer. Further, the state will limit the total amount of bovine manure tax credits that are available for taxpayers each year. Total credits claimed may not exceed $5 million.
In addition, the tax credit can be carried forward for up to four tax years. Taxpayers will also be able to transfer the tax credits.
Employee Training Tax Credit
The bill also creates a credit for taxpayers:
- located in a “qualifying county”; and
- who establish and implement an employee training program with a local community college.
Taxpayers can take a credit equal to 12% of the taxpayer’s expenses paid to create the employee training program. While the employee training tax credit may not exceed the tax liability of the taxpayer for the tax year, taxpayers can carry forward credits for three years.
A “qualifying county” means a county:
- with a population greater than 60,000 but less than 80,000;
- located outside the Portland Metropolitan Area Regional Urban Growth Boundary;
- has an annual economic development budget of $500,000 or greater;
- an unemployment rate at least 1.5% greater than the state’s unemployment rate;
- has an agreement with an institute of higher education to coordinate efforts to promote enterprise throughout the county;
- is the site of a base or installation of the U.S. Armed Forces that employs at least 750 civilian and military personnel; and
- has access to adequate Internet service.
Finally, the bill makes amendments to the enterprise zone program for rural enterprise zones and urban enterprise zones located inside a metropolitan area of fewer than 400,000 residents. For these zones, the agreement must require that the firm pay all new employees at an average rate of at least 150% of the county average annual wage.
However, if the enterprise zone is located in a “qualified rural county,” the firm must annually pay all new employees at an average rate of at least 130% of the county average annual wage for each tax year during the exemption period. A “qualified rural county” includes a county:
- located outside all metropolitan areas; and
- where the total property taxes imposed by all taxing districts within the county are equal to or greater than 1.3% of the total assessed value of all taxable property located in the county.
The credits extended include: reservation enterprise zones (January 1, 2028), affordable housing lenders (January 1, 2026), and the fish screening credit (January 1, 2024).
H.B. 2066, Laws 2017, effective on 91st day following adjournment sine die