Personal Income Tax

ORS 316.685
Federal income tax deductions

  • accrual method of accounting required
  • adjustment for federal earned income credit


(a) The federal income tax deduction provided by ORS 316.680 (Modification of taxable income) shall be as reported on the taxpayer’s original return and shall be computed on the accrual method of accounting. Any adjustments to the federal income tax deduction now or hereafter required by Oregon law, including but not limited to the elimination of the self-employment tax, also shall be computed and eliminated according to the accrual method of accounting.


For purposes of calculating the amount of the deduction for federal income taxes provided under ORS 316.680 (Modification of taxable income), the taxpayer shall not take into account any amount of the earned income credit provided under section 32 of the Internal Revenue Code that reduced the amount of the taxpayer’s federal income tax liability for the tax year.


If refunds or additional assessments result from an adjustment whether initiated by the federal or state government or the taxpayer after the filing of the original return by the taxpayer, any additional federal taxes shall be deductible by the Oregon taxpayer under this section in the year in which the adjustment is finally determined or paid whichever is later. In the case of a refund the tax reduction shall be added to the taxpayer’s income in the year in which the refund is received.


For purposes of this chapter, federal income tax does not include the following:


Taxes, contributions or other payments paid by employees in pursuance of federal laws relating to Social Security, railroad retirement, unemployment compensation or old age benefits.


Taxes paid pursuant to the Self-Employment Contribution Act, subtitle A, chapter 2, Internal Revenue Code. [Formerly 316.072; 1987 c.293 §24; 1997 c.692 §4]

Notes of Decisions

Since the federal statute allows, at the taxpayer's election, the deferral of tax on gains realized on an involuntary conversion, and the federal regulation permits a rescission of this election, no tax would accrue for federal purposes until reinvestment was actually made or the election was rescinded. Renville v. Dept. of Rev., 5 OTR 202 (1973)

In arriving at the net operating loss under §172 of the federal Internal Revenue Code, the federal income tax deductions allowed under this section shall be included as a deduction from gross income. Bechtold v. Dept. of Rev., 5 OTR 629 (1975), aff'd273 Or 762, 543 P2d 665 (1975)

Law Review Citations

16 WLR 379 (1979)

Chapter 316

Notes of Decisions

Unless the divorce decree specifically designates that payments are for child support, payments will be treated as alimony. Henderson v. Dept. of Rev., 5 OTR 153 (1972)

The goal of this chapter is to incorporate all of the provisions of the federal Internal Revenue Code; taxable income should be adjusted whenever the result of the adjustment is to give effect to the policies or principles of the federal Internal Revenue Code, even though no express authority for the adjustment is present in the statutes. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974); Smith v. Dept. of Rev., 270 Or 456, 528 P2d 73 (1974)

By its enactment of this chapter, the legislature intended to adopt §172 of the federal Internal Revenue Code allowing for the carryback and carryforward of net operating losses. Christian v. Dept. of Rev., 269 Or 469, 526 P2d 538 (1974)

Where plaintiff failed to appeal timely as required by this section, appeal rights were not preserved so that cause could be considered on merits. Dela Rosa v. Dept. of Rev., 11 OTR 201 (1989), aff'd 313 Or 284, 832 P2d 1228 (1992)

Where taxpayers paid foreign income taxes on foreign income and claimed foreign taxes paid as federal tax credit and as state business expense deduction, taxpayers who claim federal foreign tax credit are entitled only to foreign tax deduction provided in ORS 316.690. Whipple v. Dept. of Rev., 309 Or 422, 788 P2d 994 (1990)

For purposes of claim preclusion, all issues regarding taxpayer's income tax liability for tax year constitute same claim. U.S. Bancorp v. Dept. of Revenue, 15 OTR 13 (1999)

Atty. Gen. Opinions

Political contributions as credit against Oregon tax return, (1974) Vol 37, p 159

Law Review Citations

57 OLR 309 (1978); 16 WLR 373 (1979)


Last accessed
Jun. 26, 2021