Beginning January 1, 2020, contributions to the Oregon College Savings Plan will no longer be eligible as a subtraction from Oregon taxable income. Instead, Oregon taxpayers will be eligible to receive a tax credit for any contributions made up to a maximum $150 for single filers and $300 for joint filers.
The new tax credit will be a dollar for dollar reduction of tax rather than a reduction to taxable income as in prior years. The credit is refundable, meaning if tax is reduced to zero before use of the entire credit, the residual will be refunded.
The new tax credit provides the same maximum credit for all Oregonians; however, to maximize the credit, taxpayers must contribute more into their plans as their income increases. For example; a contributor with an adjusted gross income from $30,001 – $70,000 must contribute $300 for single filers/$600 for joint filers to receive the maximum credit while a contributor with an adjusted gross income of $100,001 - $250,000 must contribute $1,500 for single filers/$3,000 for joint filers to maximize the credit.
Contributions made before January 1, 2020 still qualify for the tax deduction, and contributions greater than the contribution limits ($2,435 single/$4,865 joint) will carry-forward for use over the following four years. Further, the new tax credit may be claimed in addition to any carried forward deductions in carry-forward years.
If you would like to know more, please feel free to contact us