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Stimulus checks do figure into Oregon taxes

I was told by my wife that Oregon requires you to pay state income tax on the government stimulus check we all received. Can you tell me whether this is true? With the COVID-19 thing going on you would think that Oregon would not tax this check, as most people are having a hard time just surviving.

— Jim P., Medford

Sorry, Jim, but your wife is correct. Oregonians may have felt optimistic after the Internal Revenue Service announced last May that stimulus payments “will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 tax return next year.”

The IRS also announced that the payments would not affect income for purposes of determining eligibility for federal government assistance or benefit programs.

But when it comes to Oregon taxes, you’ll feel a little stimulus sting. Why? According to a report issued by the state’s legislative revenue office last May, Oregon has a “rolling reconnect” to federal law which indirectly effects taxpayers. The CARES Act recovery rebates figure into this because they are advance payments of a federal refundable tax credit for 2020.

According to the report, “For many taxpayers the rebate will result in greater Oregon tax liability through a reduction in their federal tax subtraction.”

The report also included a table with examples of the potential tax liability impact resulting from the recovery rebate and how it impacts the federal tax subtraction. Its estimate showed that a married couple with two children filing jointly that received a $3,400 recovery rebate would shoulder an increased tax liability of $298.

Send questions to “Since You Asked,” Mail Tribune Newsroom, P.O. Box 1108, Medford, OR 97501; or by email to youasked@rosebudmedia.com. We’re sorry, but the volume of questions received prevents us from answering all of them.