Bill Text: OR HB3373 | 2013 | Regular Session | Introduced
Bill Title: Relating to income tax deductions; prescribing an effective date; providing for revenue raising that requires approval by a three-fifths majority.
Spectrum: Committee Bill
Status: (Failed) 2013-07-08 - In committee upon adjournment. [HB3373 Detail]
Download: Oregon-2013-HB3373-Introduced.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 3616
House Bill 3373
Sponsored by COMMITTEE ON REVENUE
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
For purposes of personal income taxation, disallows use of
itemized deductions and increases amount of standard deduction.
Applies to tax years beginning on or after January 1, 2013.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to income tax deductions; creating new provisions;
amending ORS 316.117, 316.130 and 316.695; prescribing an
effective date; and providing for revenue raising that requires
approval by a three-fifths majority.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 316.695 is amended to read:
316.695. (1) In addition to the modifications to federal
taxable income contained in this chapter, there shall be added to
or subtracted from federal taxable income:
(a) If, in computing federal income tax for a taxable year, the
taxpayer deducted itemized deductions, as defined in section
63(d) of the Internal Revenue Code, the taxpayer shall add the
amount of itemized deductions deducted (the itemized deductions
less an amount, if any, by which the itemized deductions are
reduced under section 68 of the Internal Revenue Code).
(b) If, in computing federal income tax for a taxable year, the
taxpayer deducted the standard deduction, as defined in section
63(c) of the Internal Revenue Code, the taxpayer shall add the
amount of the standard deduction deducted.
(c)(A) From federal taxable income there shall be subtracted
{ - the larger of (i) the taxpayer's itemized deductions or
(ii) - } a standard deduction. Except as provided in subsection
(8) of this section, for purposes of this subparagraph, 'standard
deduction ' means the sum of the basic standard deduction and the
additional standard deduction.
(B) For purposes of subparagraph (A) of this paragraph, the
basic standard deduction is:
(i) { - $3,280 - } { + $15,000 + }, in the case of joint
return filers or a surviving spouse;
(ii) { - $1,640 - } { + $7,500 + }, in the case of an
individual who is not a married individual and is not a surviving
spouse;
(iii) { - $1,640 - } { + $7,500 + }, in the case of a
married individual who files a separate return; or
(iv) { - $2,640 - } { + $12,000 + }, in the case of a head
of household.
(C)(i) For purposes of subparagraph (A) of this paragraph for
tax years beginning on or after January 1, { - 2003 - } { +
2015 + }, the Department of Revenue shall annually recompute the
basic standard deduction for each category of return filer listed
under subparagraph (B) of this paragraph. The basic standard
deduction shall be computed by dividing the monthly averaged U.S.
City Average Consumer Price Index for the 12 consecutive months
ending August 31 of the prior calendar year by the average U.S.
City Average Consumer Price Index for the second quarter of
{ - 2002 - } { + 2014 + }, then multiplying that quotient by
the amount listed under subparagraph (B) of this paragraph for
each category of return filer.
(ii) If any change in the maximum household income determined
under this subparagraph is not a multiple of $5, the increase
shall be rounded to the next lower multiple of $5.
(iii) As used in this subparagraph, 'U.S. City Average Consumer
Price Index' means the U.S. City Average Consumer Price Index for
All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor.
(D) For purposes of subparagraph (A) of this paragraph, the
additional standard deduction is the sum of each additional
amount to which the taxpayer is entitled under subsection (7) of
this section.
(E) As used in subparagraph (B) of this paragraph, ' surviving
spouse' and 'head of household' have the meaning given those
terms in section 2 of the Internal Revenue Code.
(F) In the case of the following, the standard deduction
referred to in subparagraph (A) of this paragraph shall be zero:
{ - (i) A husband or wife filing a separate return where the
other spouse has claimed itemized deductions under subparagraph
(A) of this paragraph; - }
{ - (ii) - } { + (i) + } A nonresident alien individual;
{ - (iii) - } { + (ii) + } An individual making a return
for a period of less than 12 months on account of a change in the
individual's annual accounting period;
{ - (iv) - } { + (iii) + } An estate or trust;
{ - (v) - } { + (iv) + } A common trust fund; or
{ - (vi) - } { + (v) + } A partnership.
{ - (d) For the purposes of paragraph (c)(A) of this
subsection, the taxpayer's itemized deductions are the sum
of: - }
{ - (A) The taxpayer's itemized deductions as defined in
section 63(d) of the Internal Revenue Code (reduced, if
applicable, as described under section 68 of the Internal Revenue
Code) minus the deduction for Oregon income tax (reduced, if
applicable, by the proportion that the reduction in federal
itemized deductions resulting from section 68 of the Internal
Revenue Code bears to the amount of federal itemized deductions
as defined for purposes of section 68 of the Internal Revenue
Code); and - }
{ - (B) The amount that may be taken into account under
section 213(a) of the Internal Revenue Code, not to exceed seven
and one-half percent of the federal adjusted gross income of the
taxpayer, if the taxpayer has attained the following age before
the close of the taxable year, or, in the case of a joint return,
if either taxpayer has attained the following age before the
close of the taxable year: - }
{ - (i) For taxable years beginning on or after January 1,
1991, and before January 1, 1993, a taxpayer must attain 58 years
of age before the close of the taxable year. - }
{ - (ii) For taxable years beginning on or after January 1,
1993, and before January 1, 1995, a taxpayer must attain 59 years
of age before the close of the taxable year. - }
{ - (iii) For taxable years beginning on or after January 1,
1995, and before January 1, 1997, a taxpayer must attain 60 years
of age before the close of the taxable year. - }
{ - (iv) For taxable years beginning on or after January 1,
1997, and before January 1, 1999, a taxpayer must attain 61 years
of age before the close of the taxable year. - }
{ - (v) For taxable years beginning on or after January 1,
1999, a taxpayer must attain 62 years of age before the close of
the taxable year. - }
(2)(a) There shall be subtracted from federal taxable income
any portion of the distribution of a pension, profit-sharing,
stock bonus or other retirement plan, representing that portion
of contributions which were taxed by the State of Oregon but not
taxed by the federal government under laws in effect for tax
years beginning prior to January 1, 1969, or for any subsequent
year in which the amount that was contributed to the plan under
the Internal Revenue Code was greater than the amount allowed
under this chapter.
(b) Interest or other earnings on any excess contributions of a
pension, profit-sharing, stock bonus or other retirement plan not
permitted to be deducted under paragraph (a) of this subsection
{ - shall - } { + may + } not be added to federal taxable
income in the year earned by the plan and { - shall - }
{ + may + } not be subtracted from federal taxable income in the
year received by the taxpayer.
(3)(a) Except as provided in subsection (4) of this section,
there shall be added to federal taxable income the amount of any
federal income taxes in excess of the amount provided in
paragraphs (b) to (d) of this subsection, accrued by the taxpayer
during the taxable year as described in ORS 316.685, less the
amount of any refund of federal taxes previously accrued for
which a tax benefit was received.
(b) The limits applicable to this subsection are:
(A) $5,500, if the federal adjusted gross income of the
taxpayer for the tax year is less than $125,000, or, if reported
on a joint return, less than $250,000.
(B) $4,400, if the federal adjusted gross income of the
taxpayer for the tax year is $125,000 or more and less than
$130,000, or, if reported on a joint return, $250,000 or more and
less than $260,000.
(C) $3,300, if the federal adjusted gross income of the
taxpayer for the tax year is $130,000 or more and less than
$135,000, or, if reported on a joint return, $260,000 or more and
less than $270,000.
(D) $2,200, if the federal adjusted gross income of the
taxpayer for the tax year is $135,000 or more and less than
$140,000, or, if reported on a joint return, $270,000 or more and
less than $280,000.
(E) $1,100, if the federal adjusted gross income of the
taxpayer for the tax year is $140,000 or more and less than
$145,000, or, if reported on a joint return, $280,000 or more and
less than $290,000.
(c) If the federal adjusted gross income of the taxpayer is
$145,000 or more for the tax year, or, if reported on a joint
return, $290,000 or more, the limit is zero and the taxpayer is
not allowed a subtraction for federal income taxes under ORS
316.680 (1) for the tax year.
(d) In the case of a husband and wife filing separate tax
returns, the amount added shall be in the amount of any federal
income taxes in excess of the amount provided for individual
taxpayers under paragraphs (a) to (c) of this subsection, less
the amount of any refund of federal taxes previously accrued for
which a tax benefit was received.
(e) For purposes of this subsection, the limits applicable to a
joint return shall apply to a head of household or a surviving
spouse, as defined in section 2(a) and (b) of the Internal
Revenue Code.
(f)(A) For a calendar year beginning on or after January 1,
2008, the Department of Revenue shall make a cost-of-living
adjustment to the federal income tax threshold amounts described
in paragraphs (b) and (d) of this subsection.
(B) The cost-of-living adjustment for a calendar year is the
percentage by which the monthly averaged U.S. City Average
Consumer Price Index for the 12 consecutive months ending August
31 of the prior calendar year exceeds the monthly averaged index
for the period beginning September 1, 2005, and ending August 31,
2006.
(C) As used in this paragraph, 'U.S. City Average Consumer
Price Index' means the U.S. City Average Consumer Price Index for
All Urban Consumers (All Items) as published by the Bureau of
Labor Statistics of the United States Department of Labor.
(D) If any adjustment determined under subparagraph (B) of this
paragraph is not a multiple of $50, the adjustment shall be
rounded to the next lower multiple of $50.
(E) The adjustment shall apply to all tax years beginning in
the calendar year for which the adjustment is made.
(4)(a) In addition to the adjustments required by ORS 316.130,
a full-year nonresident individual shall add to taxable income a
proportion of any accrued federal income taxes as computed under
ORS 316.685 in excess of the amount provided in subsection (3) of
this section in the proportion provided in ORS 316.117.
(b) In the case of a husband and wife filing separate tax
returns, the amount added under this subsection shall be computed
in a manner consistent with the computation of the amount to be
added in the case of a husband and wife filing separate returns
under subsection (3) of this section. The method of computation
shall be determined by the Department of Revenue by rule.
(5) Subsections (3)(d) and (4)(b) of this section
{ - shall - } { + may + } not apply to married individuals
living apart as defined in section 7703(b) of the Internal
Revenue Code.
(6)(a) For tax years beginning on or after January 1, 1981, and
prior to January 1, 1983, income or loss taken into account in
determining federal taxable income by a shareholder of an S
corporation pursuant to sections 1373 to 1375 of the Internal
Revenue Code shall be adjusted for purposes of determining Oregon
taxable income, to the extent that as income or loss of the S
corporation, they were required to be adjusted under the
provisions of ORS chapter 317.
(b) For tax years beginning on or after January 1, 1983, items
of income, loss or deduction taken into account in determining
federal taxable income by a shareholder of an S corporation
pursuant to sections 1366 to 1368 of the Internal Revenue Code
shall be adjusted for purposes of determining Oregon taxable
income, to the extent that as items of income, loss or deduction
of the shareholder the items are required to be adjusted under
the provisions of this chapter.
(c) The tax years referred to in paragraphs (a) and (b) of this
subsection are those of the S corporation.
(d) As used in paragraph (a) of this subsection, an S
corporation refers to an electing small business corporation.
(7)(a) The taxpayer shall be entitled to an additional amount,
as referred to in subsection (1)(c)(A) and (D) of this section,
of $1,000:
(A) For the taxpayer if the taxpayer has attained age 65 before
the close of the taxpayer's taxable year; and
(B) For the spouse of the taxpayer if the spouse has attained
age 65 before the close of the taxable year and an additional
exemption is allowable to the taxpayer for such spouse for
federal income tax purposes under section 151(b) of the Internal
Revenue Code.
(b) The taxpayer shall be entitled to an additional amount, as
referred to in subsection (1)(c)(A) and (D) of this section, of
$1,000:
(A) For the taxpayer if the taxpayer is blind at the close of
the taxable year; and
(B) For the spouse of the taxpayer if the spouse is blind as of
the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse for federal income tax
purposes under section 151(b) of the Internal Revenue Code. For
purposes of this subparagraph, if the spouse dies during the
taxable year, the determination of whether such spouse is blind
shall be made immediately prior to death.
(c) In the case of an individual who is not married and is not
a surviving spouse, paragraphs (a) and (b) of this subsection
shall be applied by substituting '$1,200' for '$1,000. '
(d) For purposes of this subsection, an individual is blind
only if the individual's central visual acuity does not exceed
20/200 in the better eye with correcting lenses, or if the
individual's visual acuity is greater than 20/200 but is
accompanied by a limitation in the fields of vision such that the
widest diameter of the visual field subtends an angle no greater
than 20 degrees.
(8) In the case of an individual with respect to whom a
deduction under section 151 of the Internal Revenue Code is
allowable for federal income tax purposes to another taxpayer for
a taxable year beginning in the calendar year in which the
individual's taxable year begins, the basic standard deduction
(referred to in subsection (1)(c)(B) of this section) applicable
to such individual for such individual's taxable year shall equal
the lesser of:
(a) The amount allowed to the individual under section 63(c)(5)
of the Internal Revenue Code for federal income tax purposes for
the tax year for which the deduction is being claimed; or
(b) The amount determined under subsection (1)(c)(B) of this
section.
SECTION 2. ORS 316.117 is amended to read:
316.117. (1) Except as provided under subsection (2) of this
section, the proportion for making a proration for nonresident
taxpayers of the standard deduction { - or itemized
deductions - } , the personal exemption credits and any accrued
federal or foreign income taxes, or for part-year resident
taxpayers of the amount of the tax, between Oregon source income
and income from all other sources is the federal adjusted gross
income of the taxpayer from Oregon sources divided by the
taxpayer's federal adjusted gross income from all sources. If the
numerator of the fraction described in this subsection is greater
than the denominator, the proportion of 100 percent shall be used
in the proration required by this section. As used in this
subsection, 'federal adjusted gross income' means the federal
adjusted gross income of the taxpayer with the additions,
subtractions and other modifications to federal taxable income
that relate to adjusted gross income for personal income tax
purposes.
(2) For part-year resident trusts, the proration made under
this section shall be made by reference to the taxable income of
the fiduciary.
SECTION 3. ORS 316.130 is amended to read:
316.130. (1) The taxable income for a full-year nonresident
individual is adjusted gross income attributable to sources
within this state determined under ORS 316.127, with the
modifications (except those provided under subsection (2) of this
section) as otherwise provided under this chapter and other laws
of this state applicable to personal income taxation, less the
deductions allowed under subsection (2) of this section.
(2)(a) A full-year nonresident individual shall be allowed the
deduction for a standard deduction { - or itemized
deductions - } allowable to a resident under ORS 316.695 (1) in
the proportion provided in ORS 316.117.
(b) A full-year nonresident individual shall be allowed to
deduct the amount of any accrued federal income taxes and foreign
country income taxes as provided in ORS 316.690 in the proportion
provided in ORS 316.117.
(c)(A) A full-year nonresident individual shall be allowed to
deduct the amount of any alimony or separate maintenance payments
paid during such individual's taxable year in the proportion
provided in ORS 316.117 except that in determining the proportion
the taxpayer's adjusted gross income shall not include a
deduction for alimony. For purposes of this paragraph, 'alimony
or separate maintenance payment' has the meaning given the phrase
in section 215 of the Internal Revenue Code.
(B) No deduction shall be allowed under this paragraph if the
alimony or separate maintenance payment is not includable in the
gross income of the nonresident individual for federal income tax
purposes under section 682 of the Internal Revenue Code.
(3)(a) A full-year nonresident who is a self-employed
individual shall be allowed to deduct that individual's
contributions to a qualified plan, deductible on that
individual's federal income tax return pursuant to section 401 of
the Internal Revenue Code, in the proportion that the
individual's earned income from Oregon sources bears to the
individual's earned income from all sources. 'Earned income' has
the meaning given in section 401(c)(2) of the Internal Revenue
Code. If the numerator of the fraction described in this
paragraph is greater than the denominator, the proration of 100
percent shall be used.
(b) A full-year nonresident shall be allowed to deduct that
individual's qualified retirement contributions, deductible on
that individual's federal income tax return pursuant to section
219 of the Internal Revenue Code, in the proportion that the
individual's compensation from Oregon sources bears to the
individual's compensation from all sources. 'Compensation' has
the meaning given in section 219(f)(1) of the Internal Revenue
Code.
(c) A full-year nonresident individual shall be allowed to
deduct the aggregate amounts paid in cash to a medical savings
account, deductible on the individual's federal income tax return
pursuant to section 220 of the Internal Revenue Code, in the
proportion that the individual's compensation from Oregon sources
bears to the individual's compensation from all sources.
Distributions from a medical savings account, if excluded from
income for federal income tax purposes, shall be excluded for
Oregon income tax purposes. Distributions from a medical savings
account, if included in income for federal tax purposes, shall be
included in income for Oregon tax purposes to the extent that an
exclusion has been allowed for contributions to the medical
savings account for Oregon tax purposes in a previous year.
SECTION 4. { + The amendments to ORS 316.117, 316.130 and
316.695 by sections 1 to 3 of this 2013 Act apply to tax years
beginning on or after January 1, 2013. + }
SECTION 5. { + This 2013 Act takes effect on the 91st day
after the date on which the 2013 regular session of the
Seventy-seventh Legislative Assembly adjourns sine die. + }
----------
