Oregon's nonrefundable exemption credit: a closer look

PolicyEngine computes the program's impact on Oregon and individual households.

Oregon’s nonrefundable exemption credit was created in 1983 to replace the personal exemption deduction. Since 1987, the state has indexed the credit to inflation. As a nonrefundable credit, its value is capped at one’s tax liability. Single and married filing separately statuses can claim the credit if their income does not exceed $100,000. For other statuses, the income cap is $200,000. In the 2022 tax year, eligible filers could claim a $219 credit for themselves, their spouse, and any dependents in the household. They can also claim additional exemptions if the filer or their spouse is severely disabled, or if they have a disabled child.

Using PolicyEngine, we can compute the exemption credit’s impact on the state of Oregon and individual households.

The exemption credit for a family of four (married with two children) is shown above. Making under $200,000 provides a credit of $876 ($219 * 4). To see how to define a household, check out our post on the Oregon Earned Income Tax Credit.

Due to the credit’s non-refundability, the value phases in. The household would have to earn $21,000 to see the full value of the credit.

Select “compute the impact of policy reforms,” then “States.”

Enter “Oregon” for your state, then click through “taxes,” “income,” and “credits.”

Then, select “Exemption,” followed by “Oregon exemption amount.”

Enter 0 for the amount. You can also name your policy in the top right (“Repealing Oregon’s exemption credit” in this example).

Then, press the arrows next to the “against” tab, followed by setting the reform to “in Oregon.”

Select “Calculate economic impact” and choose which metric you would like to view (budgetary impact below)

We estimate that Oregon’s exemption credit cost $645.5 million in 2022, reduced poverty 0%, and increased the average household’s net income by $365. As a comparison, Oregon estimates that the credit cost about $650 million in 2021.¹

To compute other elements of Oregon’s income tax, visit policyengine.org.

kevin foster
Researcher at PolicyEngine

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