| 2007 Personal Income Tax Changes |
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Federal Law
Oregon is tied to the December 31, 2006 federal definition of taxable income with two exceptions:
- Federal Subsidies for Prescription Drug Plans, and
- Qualified Domestic Production Activity Income.
These items are additions on the Oregon return.
Changes affecting Forms 40S, 40, 40N, and 40P:
Subtractions
Military active duty pay. The subtraction for military active duty pay earned in Oregon increased to $6,000 beginning with tax year 2007.
The subtraction for Oregon National Guard members and reservists also changed. The new law removes the requirement that Oregon National Guard members and reservists change status from Title 32 to Title 10. The active duty pay exemption is modified to allow Oregon National Guard members and reservists to subtract their compensation, death benefits, and qualified benefits when they are stationed in Oregon and away from home for three of more consecutive weeks. These changes apply to tax years 2001 and forward. Oregon National Guard and reserve members seeking a refund for tax years 2001-2004, must file an amended return no later than June 30, 2008. For more information, see the publication Military Personnel Filing Information.
TRICARE Military Health System subtraction. A new subtraction is available to health care providers participating in TRICARE military health system. The subtraction is for all amounts received from the TRICARE system in the first two years of the provider's participation in the program. Health care providers must be certified by The Office of Rural Health.
Individual Development Accounts (IDA). The definition of account holder is expanded; the law now allows children 12 years and older to participate in the program. In addition, account holders must be residents of Oregon. Eligible uses of IDA money has expanded to include improvements to make or keep the primary dwelling habitable, accessible, or visit-able for the account holder or household member, or for education or training required to obtain or maintain a job, or start or maintain a business. For additional information see Individual Development Accounts.
Subtraction for certain mobile home park residents. A new law requires landlords who close a mobile home park to pay tenants certain sums of money. The payments received by the mobile home park tenants are exempt from Oregon income. If the payment is included in federal income, the amount of the payment can be subtracted from Oregon income.
New schedules are available to identify Oregon items that need to be reported on your return.
Form 40 filers will use Schedule OR-A when claiming more than one of the following on the return:
- Other additions
- Other subtractions
- Credit for income taxes paid to another state
- Other credits
Identify the code and amount for each item you are claiming. If you are not claiming more than one of each item, do not use this form; instead identify the item on your return.
Form 40N and 40P filers will use Schedule OR-A when claiming more than one of the following on the return:
- Federal adjustments to income
- Other additions
- Other subtractions
- Other deductions and modifications
- Credit for income taxes paid to another state
- Other credits
Identify the code and amount for each item you are claiming. If you are not claiming more than one of each item, do not use this form; instead identify the item on your return.
Credits
New credit:
Mobile Home Park Closure Credit. Were you required to move out of a mobile home park because the park closed or was scheduled to close? If so and you moved out of the park in 2007, you may qualify for a credit. This is different from the credit that was available for 2006 and does not require you to move your mobile home. Additional information on how to qualify can be found on Schedule MPC.
Changes to existing credits:
Exemption credit. Your exemption credit is now reduced if your federal adjusted gross income is over the threshold for your filling status. See the instructions in the Full year tax booklet or Part year/nonresident tax booklet.
Biofuel consumer credit. A new credit is available for consumers of qualifying biofuels. This credit is for:
- costs paid to purchase biofuel for your Oregon registered vehicle that is either 99% biodiesel or 85% ethanol or methanol; or
- costs paid to purchase forest, rangeland or agriculture waste of residue that is converted to biofuel pellets; or
- costs paid to purchase fuel for primary home space heating that is at least 20% biodiesel.
Biomass production/collection credit. A new credit is available for the production or collection of biomass transferred to an Oregon biofuels producer.
Business energy credit. Beginning in 2007, certain facilities using or producing renewable energy resources are allowed a tax credit of 50% of eligible project costs.
Also beginning in 2007 an additional $3,000 credit is allowed to homebuilders for installing renewable energy systems and building high-performance homes.
Residential energy tax credit. This credit has been expanded to allow a credit for each construction or installation of an alternative energy device in the same dwelling. A credit is now allowed for wind electric systems and wood stoves.
Working Family Child Care Credit. This credit is modified to allow the credit when a taxpayer's spouse is disabled and the disability prevents the spouse from providing child care, being employed, seeking employment, attending school, and caring for themself. Oregon Form WFC-DP, Verification of Disabled Parent or Guardian for Oregon Working Family Child Care Credit, must be filled out by their physician and attached to the return.
- When claiming this credit, please allow additional time for processing. To make processing quicker, fill out Schedule WFC completely and send with your return.
- Keep copies of cancelled checks, or duplicate checks along with bank statements, or money order stubs, and detailed receipts signed by the childcare provider at the time of payment.
- Receipts need to show: child's full name, dates care was provided, amount, childcare provider's name, address, and telephone number, childcare provider's tax identification number, method of payment, and date payment was made.
- Earned income floor increased to $7,500.
- Investment income ceiling increased to $2,950.
Miscellaneous Changes
- Maximum federal tax subtraction that can be claimed has increased to $5,500 ($2,750 for persons married filing separately).
- Interest rate for interest periods beginning on or after January 1, 2007 is 9 percent. The interest rate remains unchanged for 2008.
- Standard deduction amounts for 2007 have changed.
- Married filing joint changed to $3,650
- Single changed to $1,825
- Married filing separately changed to $1,825
- Head of household changed to $2,940
- Qualifying widow(er) changed to $3,650
- Claimed as a dependent on someone else's return is $850
Charitable checkoffs. You can now donate all of part of your refund to the Oregon Historical Society. You may also donate all or part of your refund to a total of 12 charities listed on your return and two additional charities from our list in the instructions.
New electronic payment option. In addition to paying by check or money order, or with your credit card, you may now pay your taxes with an electronic payment from your checking or savings account.
Choose this payment method to make an electronic payment from your checking or savings account. There is no fee to use this payment option. This payment option is a service provided by U.S. Bank, but you do not need to have an account with them. You may use this option to pay the following:
Personal income taxes
- Current year taxes due
- Amended return taxes due
- Quarterly estimated payments
- Assessments or deficiencies
Common questions about electronic payments from checking or savings account
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