Oregon Tax Law Changes and Paid Family and Medical Leave

In this article we summarize tax law changes that impact Commercial Real Estate investors as well as businesses. We conclude with an in-depth look at the changes coming to the Paid Family and Medical Leave laws that will impact a large percentage of businesses and individuals in Oregon. It is the final article detailing many of the Oregon laws that were passed in the 2019 legislature.

Corporate Tax Increase (HB 3427)

Impact: Increases taxes for companies with gross income over $1,000,000. CPA review is advised.

The Student Success Act includes a corporate tax increase of 0.57% for all income, generated in Oregon, above $1 million. (Some exemptions and reductions may apply.) The bill also reduces personal income tax rates for the lowest three tax brackets by 0.25 percent (certainly helpful if the bill ends up being referred to voters). With an upgraded revenue forecast, the bill is estimated to raise $1.3 billion per year for schools.

There are about 40,000 businesses that qualify to pay the new tax, according to information from the legislative revenue office. The Tax Foundation of Oregon has developed a calculator to help businesses with revenue over $1 million to determine the impact: https://files.taxfoundation.org/20190501152303/How-to-Calculate-Oregons-Proposed-Corporate-Activity-Tax-Under-HB-3427-Flowchart1.pdf

Property Tex Exemption for Multi-Unit Housing (SB 262)

Impact: Benefits low-income housing providers and developers.

Senate Bill 262 extends the date localities may grant a property tax exemption to affordable multi-unit rental housing (excluding land) from 2022 to 2032. After the exemption expires, qualified properties go back to being taxed at assessed value.

Paid Family and Medical Leave (HB 2005)

Impact: This bill increases employee benefits which will increase costs for businesses and consumers.

Oregon currently requires family medical leave for employers with 25 or more employees. Leave can be taken for a serious illness, care for a family member who is ill, or bonding with a new child. More than half of Oregon workers are eligible for unpaid family and medical leave benefits under the the federal Family and Medical Leave Act of 1993 (FMLA) and the Oregon Family Leave Act (OFLA). Under House Bill 2005, an insurance program is created to provide employees with a portion of their wages while on family or medical leave or military leave. Beginning January 1, 2022, benefit premiums begin to be collected and employees can begin to access paid leave January 1, 2023.

Program details:

  • Premium responsibility split 40 employer / 60 employee
  • Employers with 25 or more employees pay (40% of 1% of payroll) and employees pay (60% of 1% of payroll)
  • Employers with less than 25 employees don’t pay the “employer premium.”
  • Caps weekly benefit amount at 120% of the state’s average weekly wage. It also establishes a minimum weekly benefit amount of five percent of the state’s average weekly wage (approximately $50).
  • Allows employees to use accrued paid leave (i.e., vacation leave, sick time) in addition to receiving paid family and medical leave insurance benefits to replace wages up to 100 percent.
  • Employers with fewer than 25 employees may assign a returning employee to a different position with similar job duties, but with the same pay and benefits.
  • Prohibits reassignment/termination claims by other employee claims while an employer is accommodating a returning employee.

If you are trying to figure out how this affects you, just consider that all companies with more than 25 employees will have to comply with this law effective January 1, 2022. They will be passing this cost through to their clients.

Links to full text of legislation

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