Legislative Revenue Office outlines means‑tested retirement income credit set for review (HB 2,098)

The House Committee on Revenue opened and closed a public hearing on House Bill 2,098, a six‑year sunset extension for the certain retirement income tax credit. Legislative Revenue Office analyst Kyle Easton provided the committee with background on the credit’s design, eligibility limits and recent use trends.

Easton said the credit is available to taxpayers aged 62 or older and equals 9% of qualified pension income, which can include 401(k), 457 plans, IRAs, employer pensions and federal, state or local public retirement. Eligibility is means‑tested: Easton summarized the social‑security and household income thresholds in statute — social security benefits must be at or below $7,500 for single filers and $15,000 for joint filers, and household income plus social security must be at or below $22,500 (single) or $45,000 (joint). The LRO presentation included examples showing how the credit phases up and then phases out as income increases and how social‑security income affects the credit’s value.

Easton traced the credit’s history back to legislation in 1991 and explained that subsequent court decisions and law changes — including the Oregon Supreme Court’s 1998 Vogel decision affecting how PERS and federal retirement income are treated — altered the credit’s usage. He said the number of taxpayers claiming the credit declined from roughly 5,500 in 2013 to about 4,300 most recently, and recent inflationary boosts to Social Security pushed estimated cost from about $600,000 in 2022 to roughly $400,000 in 2023 and lower going forward.

Representative Reschke summarized the committee takeaway: uses of the credit are waning because the statute’s income thresholds are not indexed to inflation. LRO told the committee the credit’s cost would decline if extended without policy changes.

No witnesses were registered to testify on HB 2,098 and the committee closed the hearing.