Senate committee adopts amendment to extend Oregon business alternative income tax, allows member opt-out option

The Senate Committee on Finance and Revenue on June 9 adopted the dash 7 amendment to Senate Bill 111 and moved the measure to the Senate floor with a due-pass recommendation.

The bill would extend Oregon’s business alternative income tax (BAIT) for additional tax years and change who may participate. Committee staff summarized the measure as “a bill related to an extension of Oregon’s business alternative income tax,” explaining the tax is a state workaround to the federal SALT limitation and “would allow overpayments to be carried over to the following year.”

The dash 6 amendment proposed a two-year extension of BAIT to include tax years 2026 and 2027 and to allow trusts to be members of pass-through entities electing into the tax. The dash 7 amendment adopted by the committee includes those provisions and adds language permitting one or more individual members of a pass-through entity to opt out of participating in BAIT while other members remain in, changing the current all-or-nothing participation rule.

Committee discussion centered on fiscal consequences. Committee staff said fiscal paperwork and a revenue impact estimate were prepared; the fiscal documents reference a funding plan that would be covered in end-of-session reconciliation (House Bill 5006). The chair said he wanted to extend the tax but expressed concern about ensuring available funds to pay any fiscal cost.

Vice Chair McLean moved adoption of the dash 7 amendment. The committee adopted the amendment, then Vice Chair McLean moved Senate Bill 111, as amended, to the floor with a due-pass recommendation and to rescind the subsequent referral to the Joint Committee on Tax Expenditures. The committee voiced approval and indicated Senator Meek would carry the bill on the floor.

No public testimony was recorded for this work session. The committee closed its work session on SB 111 and proceeded to the next agenda item.