Oregon Senate Passes Bill to Disconnect State Tax Code from Federal Cuts

Measure aims to shield $311 million in revenue for key services like healthcare and education

Published on Feb. 17, 2026

Got story updates? Submit your updates here. ›

The Oregon Senate has passed a bill that partially disconnects the state's tax regime from the federal tax code, in order to avoid a budget gap created by the latest round of Trump-era tax cuts. The bill eliminates some of the federal tax cuts, replaces them with new state-level credits aimed at working families and job creation, and is expected to preserve $311 million in revenue for critical state services.

Why it matters

Oregon's state tax rates automatically track the federal tax code, so the recent federal tax cuts would have created a substantial budget shortfall for the state. This bill allows Oregon to maintain funding for important public services like healthcare, education, and public safety, while also providing targeted tax relief to working families and incentivizing job growth.

The details

Senate Bill 1507 eliminates several Republican tax credits at the state level, including a deduction for interest on new vehicle purchases and an exclusion for gains from small business stock sales. It also bars businesses from bonus depreciation starting in 2026. In exchange, the bill expands the state's Earned Income Tax Credit and creates a new $25 million 'Jobs Tax Credit' for businesses that increase well-paying jobs.

  • The Oregon Senate passed SB 1507 on Monday, February 17, 2026.
  • The bill now goes to the Oregon House for consideration.

The players

Anthony Broadman

A Democratic state senator from Bend, Oregon and chair of the Senate Finance and Revenue Committee.

Kayse Jama

The Democratic Senate Majority Leader representing east Multnomah County.

Mark Meek

A Democratic state senator from Oregon City who joined Republicans in voting against SB 1507.

Got photos? Submit your photos here. ›

What they’re saying

“For Oregon to prosper despite the reckless economic and budget policies of the Trump administration, we have to both support our communities and grow Oregon's economy. This measure achieves both purposes.”

— Anthony Broadman, State Senator, Chair of Senate Finance and Revenue Committee (kgw.com)

“When I meet with my constituents, they don't ask for more corporate tax giveaways or loopholes. They are asking me to make sure they can access affordable health care and that their children can access quality K-12 education.”

— Kayse Jama, Senate Majority Leader (kgw.com)

What’s next

The bill now heads to the Oregon House for consideration after passing the Senate.

The takeaway

This bill allows Oregon to maintain critical funding for public services like healthcare and education, while providing targeted tax relief to working families and incentivizing job growth - a pragmatic approach to navigating the impact of federal tax cuts on the state budget.