Larry's Tax Law

Senate Bill 1507 (“SB 1507”), which aims to disconnect Oregon’s state tax laws from a few provisions of the Internal Revenue Code (the “IRC” or the “Code”), was recently passed by the Oregon Senate and the Oregon House of Representatives.  There is no sign that Governor Tina Kotek intends to veto the legislation.  Consequently,  in accordance with Section 49 of SB 1507, it will take effect on the 91st day after the date on which the 2026 regular session of the 83rd legislative assembly adjourns sine die.  If my math is accurate, SB 1507 will be effective around June 8, 2026.   

The revenue impact of SB 1507, as reported by the Oregon Legislative Revenue Office, is a savings for the state of approximately $300 million during the 2025-2027 biennium.  The question that follows is how SB 1507 creates the huge revenue savings.

As reported last week, Senate Bill 1510 (“SB 1510”) was passed by the Oregon Senate on February 24, 2026.  It was passed by the Oregon House of Representatives on March 4, 2026.  Now, it sits on Governor Tina Kotek’s desk awaiting her signature.

One of our readers asked me a simple question: “What happens next in the legislative process?”  As I commenced to answer that question, with his assistance, I quickly realized that taxpayers and tax practitioners do have something to worry about.  That worry relates to how SB 1510 was drafted. 

In accordance with Section 15b of Article V of the Oregon Constitution, after a bill passes both the House and the Senate, before it becomes law, it is presented to the Governor for action. The Governor can take one of three actions:  (i) she may sign the bill into law, (ii) she may allow a bill to become law without signature, or (iii) she may return the bill to the legislature or the Oregon Secretary of State with objections.

As reported earlier, Senate Bill 1510 (“SB 1510”), if passed and signed into law by Governor Tina Kotek, would extend the life of the Oregon state and local tax (“SALT”) workaround for eligible pass-through entities for two more tax years (i.e., through the 2027 tax year). 

SB 1510 was passed by the Oregon Senate on February 24, 2026.  That same day, it was introduced in the Oregon House of Representatives (“House”).  Yesterday, March 4, 2026, it received unanimous approval by members of the House (52 “yea” votes, with eight representatives absent).  Now, SB 1510 will be delivered to Governor Kotek for signing.  She is expected to sign SB 1510 into law.[1]

Two of our readers alerted me yesterday afternoon that Oregon lawmakers are attempting to keep the Oregon SALT workaround alive and well. 

Senate Bill 1510 (“SB 1510”) was introduced in the Oregon Senate on February 24 (hours after I put my pencil down from writing the last blog article and awaiting its publication).  The bill has been passed by the Senate and is currently waiting to be voted on by members of the House of Representatives.    

Unlike Senate Bill 211 (“SB 211”), which was introduced in the Oregon legislature during the 2025 session, SB 1510 is not a standalone bill solely focusing on extending the life of the Oregon SALT workaround.   Rather, a provision to extend the SALT workaround is sandwiched between three other provisions, namely a provision extending a property tax exemption for cargo containers, the repeal of a tribal tax exemption and a requirement that the board of tax practitioners register enrolled agents.

Background

Prior to the Tax Cuts and Jobs Act (“TCJA”), there was no direct limitation on an individual taxpayer’s deduction of his or her state and local taxes (“SALT”) on the federal individual income tax return.  Of course, for high-income taxpayers, the SALT deduction often triggered the alternative minimum tax.

The TCJA

As of 2018, the TCJA capped the SALT deduction for individuals at $10,000 per year for both single and married taxpayers filing jointly ($5,000 for married taxpayers filing separately).  Hence, the SALT cap contains an inherent “marriage penalty.” 

The OBBBA

The SALT cap, which was part of a compromise among lawmakers for an increase in the standard deduction under the TCJA, was scheduled to sunset at the end of 2025.  However, as previously reported, the One Big Beautiful Bill Act (“OBBBA”) amended and extended the SALT cap. 

The following are the key elements of the SALT cap, as extended under the OBBBA: 

1. The OBBBA amendment to the SALT cap applies to taxable years beginning after 2024.
2. The cap is now $40,000 ($20,000 in the case of a married taxpayer filing separately).  It increases by 1% each year but reverts to $10,000 ($5,000 in the case of a married taxpayer filing separately) in 2030.  The cap, as reduced in 2030 to $10,000 ($5,000 in the case of a married taxpayer filing separately), does not appear to sunset.  So, it becomes a so-called permanent provision of the Internal Revenue Code.  
3. Under the OBBBA, the cap is reduced by 30% of a taxpayer’s modified adjusted gross income to the extent it exceeds the threshold amount ($500,000 for married taxpayers filing jointly and single taxpayers, and $250,000 in the case of a married taxpayer filing separately).  However, the SALT cap cannot be reduced below $10,000 ($5,000 in the case of a married taxpayer filing separately).

After the SALT cap was introduced as part of the TCJA, the Internal Revenue Service announced in IRS Notice 2020-75, with respect to pass-through entities (LLCs or other entities taxed as partnerships or S corporations), that, if state law allows or requires the entity itself to pay state and local taxes (which normally pass through and are paid by the ultimate owners of the entity), the entity will not be subject to the $10,000 SALT cap.  As a consequence, many state legislatures passed so-called SALT cap workarounds for pass-through entities.  Oregon was among those states.

In this last installment of our multi-part series on the One Big Beautiful Bill Act (the “OBBBA”), my colleague, George Bonini, and I discuss three provisions of the OBBBA that impact many businesses, particularly those in manufacturing and capital-intensive industries.

Bonus Depreciation

As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), businesses were permitted to immediately deduct (or expense) 100% of the cost of certain qualifying property placed into service during the taxable year instead of depreciating the property over several years. The deduction, commonly referred to as bonus depreciation, was scheduled to phase down by 20% each year starting in 2023 and be fully eliminated by the end of 2026. 

The concept of bonus depreciation is not new to our tax laws.  Various iterations of the concept have been in the Internal Revenue Code (“Code”) for decades.  In general, the impetus for bonus depreciation is twofold, namely: (i) to stimulate business investment in qualified property such as machinery and equipment; and (ii) to enhance the cash flow of businesses, allowing greater investment in operations, including expanding the workforce. 

Under Code Section 168(k), to qualify for the TCJA’s bonus depreciation, property acquired by the taxpayer must constitute “Qualified Property.”  Subject to specified exceptions, Qualified Property under the TCJA includes property that the Code assigns a depreciation recovery period of 20 years or less.

In this eighth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss provisions of the Act that impact the taxation of worker moving expenses.^[1]

Background

Historically, provided certain requirements were satisfied, Code Section 217 allowed a deduction for moving expenses paid or incurred by an employee or self-employed person in connection with his or her work.  For this purpose, moving expenses are generally defined as reasonable expenses incurred in moving household and personal effects and travel costs (excluding meals). 

The requirements for the deduction are straightforward but stringent.

In this fourth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), Steve Nofziger and I discuss a provision of the Act that impacts pass-through business entities and their owners, Code Section 199A.[1]

Background

Code Section 199A, commonly referred to as the Qualified Business Income (“QBI”) deduction, was enacted during President Trump’s first term in office as part of the Tax Cuts and Jobs Act (“TCJA”).  As you may recall, the TCJA changed the C corporation tax rate landscape that came with a top tax rate of 35% to a flat rate structure pegged at 21%.  Meanwhile, pass-through entities (S corporations, partnerships and sole proprietorships), which are predominately owned by individuals, were left with a graduated tax rate structure that quickly rises to a rate of 37%.  

To create more of an even playing field between pass-through entities and C corporations, the TCJA created a new deduction for pass-through entities with the enactment of Code Section 199A.  This provision allows owners of certain pass-through entities a 20% deduction of “qualified business income” (“QBI”).

Like many provisions of the TCJA, Code Section 199A was scheduled to sunset at the end of 2025.  The Act, signed into law by President Trump on July 4, 2025, made Code Section 199A a so-called permanent provision.  It also made several changes to its deduction framework.

In this third installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss a provision of the Act that may not impact a large segment of the population, but which is interesting and worthy of coverage.

Section 70114 of the Act only impacts gamblers.  It amends Code Section 165(d). 

Background

Over the years, I authored numerous articles about the taxation of gambling.  In 1987, I authored a lengthy law review article, The Evolution of the Phrase Trade or Business: Flint v. Stone Trace Company to Commissioner v. Groetzinger – An Analysis with Respect to the Full-Time Gambler and the Investor, 23 Gonzaga Law Review 513 (1987/1988).   In that article, I examined, in part, whether a full-time gambler, for tax purposes, is in the trade or business of gambling.  If the answer to that question is yes, two results follow (one result that is good and one result that is not so good):  (1) the gambler is able to deduct under Section 162 of the Code all of the ordinary, necessary and reasonable expenses incurred in carrying on the business; and (2) the net income of the gambler, if any, is subject to self-employment tax under Section 1401 of the Code. 

In 2014, on this blog, I provided a discussion about the taxation of a full-time gambler.  In that article, I provided some updates and additional insights on that topic.   

A brief overview of the applicable law is necessary for this discussion.  Code Section 162(a) generally allows a deduction for "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business".  Code Section 165(d), originally enacted as Section 23(g) of the Revenue Act of 1934, however, provides that "[l]osses from wagering transactions shall be allowed only to the extent of the gains from such transactions."

On July 1, 2025, the One Big Beautiful Bill Act, H.R.1 – 199^th Congress (2025-2026) (the “Act”) was passed in the U.S. Senate (“Senate”).  On July 3, 2025, it was passed in the U.S. House of Representatives (“House”) and presented to President Trump to be signed into law.  On July 4, 2025, the President signed the Act into law.

I intend to present several installments on my blog featuring some of the most important tax provisions of the Act, allowing us to break down these provisions in detail.  This first installment is a continuation of my coverage of the SALT deduction provision of the Act.