Changes to Oregon Individual Income Tax Deductions for 2013 and 2014

The Oregon Legislature did not pass any big tax bills this session, but they did limit a favorite deduction for Oregon baby boomers. They also added an income limit for claiming the political contribution credit.

The Oregon Special Medical Deduction for taxpayers over 62 will be more limited starting in 2013. While Federal law only allows deduction of these expenses to the extent they exceed 10% of adjusted gross income (AGI), up until now, seniors have been allowed to deduct all qualified health care expenses for their entire household on their Oregon return. Beginning this year in Oregon, only health care costs for the specific individual who is 62 or over qualify for this deduction.   This means you must track your medical costs for household members who are 62 or better separately from those who are younger than 62.  Be aware that your tax preparer will be asking you for this information!  (Turning 62 in 2013? All of your 2013 medical expenses are eligible for the deduction, even those you incurred before your birthday.)

The legislature tried to eliminate this deduction entirely and failed this session, but stay tuned for future changes to this benefit. A recent AARP survey found that even seniors support limiting or eliminating this deduction. The Oregon government realizes that with health care costs growing and the population aging, it is losing a lot of potential tax revenue to this deduction.

The Oregon Political Contribution credit is a direct credit against tax – better than a deduction.  Donations to any political organization have been allowed as a $100 credit for married couples and a $50 credit for individual filers.  The credit is still allowed in 2013, but beginning in 2014 the credit is limited based on your adjusted gross income (AGI).  The credit is eliminated for married filers with AGI over $200,000 and single filers with AGI over $100,000.

The political credit had been set to sunset at the end of 2013, but now is extended until 2019.

Author: Jo Hardy, CPA, Senior Tax Manager

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