Sen. Anthony Broadman, D-Bend, is a key author of SB 1507, a bill disconnecting Oregon's tax code from some federal policies.
Kristyna Wentz-Graff / OPB
With Oregon set to lose out on nearly $900 million due to congressional tax breaks, state senators offered profoundly different takes Monday on what a bill rejecting some of those breaks would mean.
For majority Democrats, Senate Bill 1507 was an opportunity to reject Trump administration policies that favor the rich. As Oregon works to fill a budget hole brought on largely by H.R 1, the so-called “One Big Beautiful Bill,” SB 1507 would help bring more than $311 million back into state accounts.
But Republicans cast the bill as a continuation of misguided policies that have ushered the state’s economy into perilous territory. At a time Gov. Tina Kotek and other top Democrats are preaching a business-friendly approach, the GOP urged opposition to a bill that would effectively raise taxes on businesses.
As usual, the majority party won out. SB 1507 passed the Senate on a 17-13 vote, with one Democrat, Sen. Mark Meek of Gladstone, joining Republicans in opposition. It now moves to the House.
By creating new tax breaks within the federal tax code, H.R. 1 wound up having a big impact in Oregon. Because the state uses a person’s federal taxable income as a starting point for what Oregonians owe in state taxes, policies that reduce that taxable income in turn lower what Oregon brings in for its general fund.
State revenue staffers say Oregon’s general fund can expect a hit of $888 million during the current two-year budget because of the federal bill. SB 1507 is an attempt to bring some of that back.
The bill would sever Oregon’s tax code from three of the breaks included in H.R. 1. One offers a tax deduction for interest paid on loans for new cars. Another creates a tax exemption for profits made from selling the stocks of some kinds of private companies. The final – and largest – is a benefit allowing businesses that make big machinery purchases from immediately claiming tax deductions for all that equipment on their taxes.
SB 1507 would send some of the new money back to Oregon taxpayers. It would increase how much lower-income Oregon taxpayers can receive in their state Earned Income Tax Credit. That would cost about $26 million in the current budget.
The bill would also create a tax credit for new jobs that businesses create in Oregon, a move expected to cost roughly $4.5 million.
In total, the bill is expected to increase tax collections by $311.6 million in the current budget. How to characterize that number was a big piece of Monday’s debate.
“You can dress it up however you want,” Senate Minority Leader Bruce Starr, R-Dundee, said on the chamber floor. “The revenue statement clearly says this is a tax increase on Oregonians.”
Sen. Bruce Starr (R-Dundee) speaks at the opening day of the legislative short session in Salem, Ore. on Feb. 2, 2026.
Saskia Hatvany / OPB
Starr and other Republicans pointed to broad opposition from business groups to the bill, arguing that functionally raising taxes on business does nothing to assist with Kotek’s stated economic development goals.
Oregon is not the only state considering opting out of tax breaks included in H.R.1, though each state has come up with its own formula for doing so. Republicans warn that any step that is viewed as unfriendly to business will hamper the state’s national reputation.
“These are small businesses in Oregon,” said state Sen. David Brock Smith, R-Port Orford. “I know the narrative here on the floor from the majority is we’re going sticking it to the evil big corporations, but it’s just not the case. It’s just not true.”
GOP senators attempted to introduce a substitute proposal on the floor that would have kept all of the federal tax breaks in Oregon’s tax code, but also expanded tax credits for low-income residents. That idea was defeated on an 18-12 party-line vote.
Democrats said SB 1507 was a way to ensure federal tax priorities that don’t make sense for Oregon are not impacting the state’s finances. They noted that broadly popular pieces of H.R. 1 – such as tax exemptions for tips and overtime pay – will still be part of the state tax code.
“We are cutting taxes for Oregonians consistent with Oregon values,” said state Sen. Anthony Broadman, D-Bend, who helped to author the proposal.
Broadman said Oregon would be joining other states in rejecting all three of the tax breaks included in SB 1507, and so would not be less competitive in attracting new investment.
Others cast the question in broader political terms.
“This body must be the backstop against an increasingly hostile federal administration that doesn’t care about raising prices on everyday people to pay for tax cuts for wealthy corporations,” said state Sen. Wlnsvey Campos, D-Aloha.
Some Democrats suggested that the bill before them didn’t go far enough. A coalition of progressive groups have pushed the Legislature to sever the state’s tax code from provisions that lower taxes for multi-national corporations – a step the liberal Oregon Center for Public Policy suggests could bring in nearly $190 million in the current budget.
“We can help preserve enormous multinational tax breaks or we can fight to sustain services that everyday Oregonians need,” said state Sen. Jeff Golden, D-Ashland. “We can’t do both.”
As in the Senate, Democrats hold a supermajority of seats in the Oregon House of Representatives. SB 1507 is not expected to face a serious challenge in that chamber.
