What Is the Oregon Personal Exemption Credit?
Understand how Oregon's personal exemption credit reduces your tax liability. This state tax benefit's value is tied to your income and household size.
The Oregon personal exemption credit is a nonrefundable tax benefit that directly lowers an individual’s state income tax. Unlike a deduction, which reduces the amount of income subject to tax, a credit provides a dollar-for-dollar reduction of the final tax liability. This credit is calculated based on the number of eligible exemptions a taxpayer can claim on their return. The value and availability of the credit are tied to specific income limits and eligibility rules established by the state.
Eligibility and Standard Credit Value
To claim the Oregon personal exemption credit, an individual must qualify for an exemption under IRS dependency rules, which cover the primary taxpayer, a spouse, and any qualifying children or relatives. For the 2025 tax year, the credit is valued at $256 for each qualifying person. This amount is indexed for inflation, meaning it can change in future tax years to reflect economic shifts.
A taxpayer may claim an additional exemption credit if they or their spouse has a severe disability. This also extends to having a dependent child with a disability that qualifies them for special education services. However, this enhanced credit is only available to taxpayers with a federal Adjusted Gross Income (AGI) of $100,000 or less, regardless of their filing status.
Adjusted Gross Income (AGI) Phase-Out
The value of the Oregon personal exemption credit is directly impacted by a taxpayer’s income. The credit is subject to a phase-out, meaning it is gradually reduced as a taxpayer’s Oregon AGI rises.
For individuals with a filing status of single or married filing separately, the personal exemption credit is not permitted if their federal AGI is more than $100,000. For those filing as married filing jointly, head of household, or qualifying surviving spouse, the AGI limit is higher, and the credit is disallowed if their income exceeds $200,000. Taxpayers with AGI below these amounts are eligible to claim the full credit value for each exemption. This structure ensures the tax benefit is targeted toward lower and middle-income households.
Claiming the Credit on Your Oregon Return
The process of claiming the personal exemption credit involves correctly reporting information on the Oregon individual income tax return, Form OR-40. The total number of exemptions is then entered on the designated line of the Form OR-40.
The calculation of the final credit amount is completed on a separate schedule, Schedule OR-ASC. On this schedule, the taxpayer multiplies their total number of exemptions by the standard credit amount. They must then consider their AGI to determine if the phase-out rules apply. The final, calculated credit amount from Schedule OR-ASC is then transferred to the appropriate line on Form OR-40 to reduce the total tax liability.