Taxes for Oregon Construction Contractors: Kicker Refunds, PTE Tax Extension, and City Incentive Programs

Do you have construction projects in Oregon, Multnomah County, the City of Portland, or METRO districts? 


Shareholders of construction businesses located in Oregon, or with construction projects located in Oregon and file as a flow-through entity can expect to receive a kicker refund with this year’s tax filing of 44%. The $5.6 billion Oregon state officials estimate would be the biggest kicker rebate in state history, nearly 3 times the size of the previous biggest prior kicker. Oregon taxpayers receive a kicker credit when state revenue exceeds what state economists forecast two years earlier by 2% or more. No other state has a similar law. 


On July 27, 2023, Oregon Governor Tina Kotek signed into law House Bill 2083, which will extend Oregon’s PTE Tax election through the end of 2025. Despite the Federal state and local tax (SALT)-cap enacted under the Tax Cuts and Jobs Act (TCJA), which is scheduled to sunset at the end of 2025 and was originally enacted under Oregon 2021 Senate Bill 727, the state’s PTE Tax election was only available for the 2022 and 2023 tax years. However, under this legislation, the state’s PTE Tax election will now be an option for taxpayers for the remaining period of the Federal SALT-cap.


In 2023 Multnomah County voters voted down Measure 26-338 , which would have been the first capital gains tax imposed by a U.S. County. After regional tax increases intended to combat homelessness and pay for preschool for all the county’s top earners would have paid the second highest total state and local income tax rate in the nation, exceeded only by New York City. Businesses operating within the district, and with apportioned income within the jurisdiction have commented on the policy makers continued increases in taxes and business vacancies in the area.


Portland City Council adopted the Downtown Business Incentive (DBI) credit program on September 14, 2023 (Ordinance 191451). 

The Downtown Business Incentive credit program is a $25 million temporary nonrefundable tax credit designed to incentivize commercial lease signings and lease renewals that will contribute significantly to the recovery and revitalization of Portland’s central city. This program will retain and support future investments from a variety of central city tenants that drive job creation, pay taxes, and generate economic activity throughout the City’s core.

An analysis conducted by EcoNorthwest demonstrated that four sub-districts were hardest hit in terms of reduced employment and foot traffic. The four sub-districts identified for this credit program are: Lower Albina, Lloyd, Downtown, Old Town/Chinatown.


Watch for more changes in the Oregon and City tax landscape as the Tax Cuts and Jobs Act continues to phase out, and the results of the development credits is realized.