Oregon lawmakers adjust tax exemptions for first-time home buyer savings accounts

Senate Bill 893, introduced in the Oregon State Legislature on January 21, 2025, aims to enhance tax benefits for first-time home buyers by increasing the limits on subtractions from federal taxable income and exemptions related to home buyer savings accounts. The bill proposes to double the current limits, allowing taxpayers filing jointly to subtract up to $20,000 from their taxable income, while single filers could subtract up to $10,000, provided their federal adjusted gross income is below $149,000.

Key provisions of the bill include a tiered structure for income limits, which gradually decreases the allowable subtraction as income rises, ultimately phasing out the benefit for those earning $187,000 or more. Additionally, the bill mandates that the Oregon Department of Revenue adjust these limits annually based on the U.S. City Average Consumer Price Index, ensuring that the benefits keep pace with inflation.

The legislation has sparked discussions among lawmakers regarding its potential impact on housing affordability and economic growth in Oregon. Proponents argue that the increased tax benefits will encourage home ownership among younger residents and low-to-middle-income families, addressing the state's ongoing housing crisis. Critics, however, express concerns that the bill may disproportionately benefit higher-income earners who are already in a better position to purchase homes, potentially exacerbating existing inequalities in the housing market.

As the bill progresses through the legislative process, its implications could be significant for Oregon's housing landscape. Experts suggest that if passed, SB 893 could stimulate the housing market by making it easier for first-time buyers to enter, but they caution that careful monitoring will be necessary to ensure that the benefits are equitably distributed. The next steps for the bill include committee reviews and potential amendments before it can be voted on by the full legislature.