This program helps companies start or locate new operations in Oregon, by potentially exempting the taxable income from a certified facility on state personal or corporate tax returns for at least eight years starting 24 months after the start of new operations. In addition to being located in an eligible county, the facility needs to be on an industrially zoned site or inside the urban growth boundary of a city with less than 15,000 in population. The business firm must create five or more new full-time, year-round jobs at the facility. At the time of application for preliminary certification with Business Oregon, the facility's operations may not compete for sales or resources with existing employers in the local economy, and they need to be unlike any other that the company has in Oregon.
The-oregon-Investment-AdvantageStandard Enterprise Zone property tax abatement:
This program offers immediate, upfront savings on new investments in one of nearly 63 rural and urban areas. Manufacturing, processing, storage, data centers, distribution, call centers, and corporate headquarters are all examples of eligible activities. Qualified new buildings, additions, modifications, machinery and equipment at the authorized site in the zone are 100 percent exempt from property tax assessment, if employment increases by the greater of 10 percent or at least one new, full-time job. The initial exemption lasts for the first three years after the construction/installation of qualified property. A local agreement may extend the abatement up to a total of five consecutive years, with the requirement in most cases that average annual "compensation" (with benefits) for all new employees equals or exceeds 150 percent of the most recent county average annual wage and possibly other mutually agreed upon requirements.
Long-term Rural Enterprise Zone incentives:
The long-term zone program extends property tax abatement for 7-15 years, compared to standard three to five years. It is available in most of Oregon’s 50 rural enterprise zones, depending on county economics. Any type of business activity is eligible, but these incentives depend on local approval, and the certified facility needs to satisfy certain criteria, which vary based on location. Annual employee “compensation” (with benefits) must also stay at or above 150 percent of county average wage, as achieved by the fifth year of operations.
In addition, pursuant to local certification, the governor may approve tax credits equal to 62.5 percent of gross payroll for use against state corporate income tax liabilities relating to the facility, over and above a minimum annual tax payment equal to an amount ranging from $100,000 up to $1 million. The corporate taxpayer must own the certified facility and may claim credits over a five- to 15-year period, as set by the governor, starting by the fourth year after operations have commenced, provided the facility satisfies the criteria described above. Unused credit amounts have a carry-forward period of five additional years.
Construction-in-Process property tax abatement:
An annual filing with the county assessor can exempt non-utility business facilities from property taxes for up to two years, while the facility is under construction and not in use on January 1 of the assessment year. This exemption is generally available for manufacturing projects anywhere in the state, including heavy machinery and equipment located at the unoccupied facility on January 1, and it can cover all qualified property in the process of construction or installation as part of any authorized enterprise zone project.
Strategic Investment Program (SIP) property tax abatement:
The Strategic Investment Program (SIP) exempts a portion of large capital investments from property taxes. The program is available statewide for projects developed by "traded-sector" businesses.
For 15 years, SIP exempts all of the investment in excess of $25 million in rural areas, or $100 million in urban areas from property taxes. The benefiting business firm must pay an annual community service fee equal to 25 percent of the abated taxes, up to a maximum of $500,000 (rural) or $2,000,000 (urban) per year. The Oregon Business Development Commission makes final determination of SIP tax treatment, either pursuant to project-specific agreement with county (and city) government(s), or directly for property located in a designated Strategic Investment Zone (SIZ). Local additional requirements may be specified in an agreement or pre-established as part of an SIZ.
State income/corporate excise tax credits:
Oregon has a number of credits that directly offset business income and corporate excise tax liabilities, based on certain capital or operating expenses or special actions, including those for energy efficiency and biomass collection/use. Explained below are the credits that can be most useful in general for new developments.
- Electronic Commerce Enterprise Zone tax credit - Qualifying businesses in 10 zones can generate a credit up to $2 million per year, in addition to property tax savings (for which personal property equipment and machinery used in e-commerce also more readily qualifies for standard enterprise zone exemption). This income tax credit equals 25 percent of each year's capitalized investment in assets that serve e-commerce operations inside the enterprise zone. Unused credit amounts have a carry-forward period of five additional years.
- Dependent Care tax credit - This credit is the lesser of 50 percent of each year's direct assistance costs or $2,500 per employee, plus 50 percent of expenses for information and referral services, as paid for by the employer. Expenses for any certified company program can generate these credits in lieu of a business deduction, if an employee contribution to the program were otherwise eligible under federal personal income tax deduction/credit. Unused credit amounts have a carry-forward period of five additional years.
- Research tax credit - Credits equal 5 percent of the excess of in-state qualified research expenses over a base amount for the taxable year, consistent with the federal R&D corporate income tax credit. The annual maximum credit is $2 million per corporate taxpayer. Unused credit amounts have a carry-forward period of five additional years.
With respect to the above tax incentives, always consult with a tax adviser. In addition, grant awards and other forms of financial, work force, and infrastructure assistance may be available at the state, regional or local level.
Other Oregon programs
Industrial development revenue bonds/express bonds:
These are tax-exempt bonds issued by the state of Oregon. They provide long-term financing for land, buildings, and equipment.
Brownfields Redevelopment Fund:
Direct loan and grant program to conduct environmental actions on brownfields.
The Oregon Production Investment Fund rebates 20 percent of Oregon-based production expenses and 10 percent of wages paid. The Greenlight Labor Rebate offers qualifying productions an additional cash payment of up to 6.2 percent of Oregon payroll for productions that spend more than $1 million.
Oregon State Contact:
775 Summer Street N.E.
Salem, OR 97301-1280
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.