House revenue panel advances two-year extension of Oregon’s SALT workaround, SB 111A

The House Committee on Revenue voted Friday, June 20, 2025, to send Senate Bill 111A to the House floor with a “do pass” recommendation after adopting an amendment that narrows the bill’s changes.

The bill would extend Oregon’s business alternative income tax — the state’s SALT (state and local tax) workaround for pass-through entities — for two additional tax years ('26 and '27) and permit certain overpayments to be carried forward. Lawmakers adopted a dash-a8 amendment that removes an expansion to allow trusts to participate and drops a proposed individual-member opt-out; committee members then moved the bill as amended to the floor with a due-pass recommendation.

Senate Bill 111A would continue Oregon’s program that lets pass-through entities (such as S corporations and partnerships) pay a tax at the entity level, with individual owners receiving a credit for that tax on their Oregon returns. The mechanism was designed in response to federal changes limiting the deductibility of state and local taxes at the federal level, and Oregon’s existing program is scheduled to sunset at the end of tax year 2025.

Kyle, a Legislative Revenue Office staff member who presented the measure to the committee, said the A-version of the bill would have extended the program by two years and added three changes: allowing overpayments to be carried forward, permitting trusts to be members of pass-through entities that participate in the program, and creating an individual-member opt-out. Kyle told the committee the dash-a8 amendment dated June 19, 2025, retains the two-year extension and the overpayment carryover but removes the trust expansion and the opt-out. That change reduced the bill’s estimated fiscal impact; Kyle said the A-version carried an estimated fiscal impact of about $1 million per biennium, while the dash-a8 amendment produced a “minimal” fiscal effect.

Derek Sangston, policy director and counsel for Oregon Business and Industry, urged support for the broader version that would include trusts and the member opt-out, saying the measure could help industries that operate across state lines. “This tax change could be very meaningful to make Oregon’s construction, manufacturing, and agricultural industries more competitive,” Sangston said. He cited job losses in recent months, saying Oregon’s manufacturing sector lost more than 6,000 jobs between May 2024 and May 2025 and construction lost nearly 5,000 over the same period.

Megan Denison of the Oregon Department of Revenue told the committee the department is monitoring federal tax legislation that could affect the deductibility of the elective tax and acknowledged uncertainty about federal outcomes before the end of the legislative session. “We just wanted to come in and acknowledge the uncertainty of the deductibility for the elective tax in the future at the federal level,” Denison said; she said the department may return in February with more clarity once federal legislation is settled.

Committee action came by voice vote. Vice Chair Walters moved to adopt the dash-a8 amendment dated 06/19/25; the motion passed. Walters then moved that SB 111A, as amended, be referred to the House floor with a due-pass recommendation; that motion also passed. Representative Smith volunteered to carry the bill on the floor.

Discussion in the committee distinguished between the bill’s policy changes, the fiscal estimates attached to different versions of the amendment, and administrative implications: Denison confirmed that implementing the base elective-tax rules is routine for the department, while adding trusts and member opt-outs would introduce additional complexity. No roll-call vote tallies were recorded in the public hearing transcript.

The committee closed the public hearing and work session on SB 111A with instructions to proceed to the House floor. The Department of Revenue warned that the bill’s practical effect at the federal level depends on pending federal tax decisions, and staff indicated they would provide updates when federal outcomes are clearer.