Feb. 4, 2026
Today’s revenue forecast represents a significant improvement over the previous forecast, in December 2025. General fund revenue is up by nearly $121 million, and the state economist now anticipates an ending balance of $198 million. The state economist also expects revenue to grow steadily well into the future, increasing by double-digit percentages for the next four biennia. General fund revenue during the 2033-35 biennium is expected to exceed revenue during the current biennium by a stunning 67%.
Given the state’s strong and improving outlook, there is absolutely no need to raise taxes on hard-working Oregonians or increase the tax burden shouldered by struggling Oregon businesses. Yet proposals under consideration this session would do just that, including those contained in an amendment to SB 1507 that would selectively strike at small businesses, decouple Oregon from the federal tax code and prevent Oregonians from fully realizing the benefits contained in H.R. 1. All of these proposed changes would increase the tax burden for Oregonians and state businesses, but one would be particularly harmful. It targets bonus depreciation, an important tool that encourages investment in equipment and improves efficiency and competitiveness.
Bonus depreciation, in simplest terms, allows businesses to immediately deduct the cost of equipment and machinery. They otherwise would deduct the cost over a longer period. The change, in other words, is simply one of timing rather than net revenue for the state.
But that timing is critical to businesses. Bonus depreciation provides the near-term cash businesses need to operate, to hire employees and even to buy the very equipment subject to depreciation. By disconnecting from the federal tax code for this purpose, the Legislature would prevent many businesses from making investments that would improve their efficiency and competitiveness. And for businesses that operate in multiple states, it would push those investments – and the jobs that come with them – out of Oregon.
“We need to have up-to-date machinery and equipment in order to be competitive with other companies located in states and other countries,” said Patrick Duffy, president of American Machine & Gear in Portland. “If we aren’t buying new equipment, we will have worn-out, old-fashioned equipment and we won’t be as competitive. That means that we can’t pay people as much money, and the people who sell machinery and equipment in Oregon won’t sell as much either.”
“At a time when states are actively recruiting and competing for capital, jobs and R&D activity, policy alignment with the federal tax code provides predictability and keeps Oregon competitive,” said Brandon Rogers, CEO of Eugene-based PakTech. “Moving in the opposite direction sends, yet again, another negative signal to companies making long-term investment decisions.”
“Food companies are critical to Oregon’s economic prosperity. We provide jobs in all 36 Oregon counties,” said Dave Dillon, president of Food Northwest. “Providing a competitive tax environment for our businesses is important. Bonus depreciation is often a key factor in investment decisions because the return on that investment can take months or years to materialize. Tax competitiveness not only matters for our businesses, but also the family farms that supply our businesses with quality, locally grown products.”
“Agriculture is an extremely capital-intensive business,” said Greg Addington, executive director of the Oregon Farm Bureau. “Bonus depreciation and expensing for machinery and equipment are not loopholes; they are timing tools that help producers manage cash flow and reinvest in safer, more efficient equipment. With markets at multi-year lows, input costs high, and regulatory burdens continuing to grow, taking this tool away would make it even harder for Oregon’s family farmers and ranchers to stay viable.”
“Disconnecting Oregon from federal tax definitions is short-sighted and a step in the wrong direction,” said OBI President and CEO Angela Wilhelms. “We’ve been asking leaders to ‘do no more harm’ to the state’s economy and its competitiveness. Disconnecting would simply dig our economic hole deeper, increasing costs for businesses and creating a more complex tax compliance environment for individuals and businesses. Maintaining bonus depreciation is particularly important to Oregon’s manufacturing sector, which has been losing jobs in recent years.”
Only 26% of Oregon voters responding to a January OBI poll said the state is heading in the right direction, and 73% rate the state’s current economic conditions as poor. Further increasing the tax burden for individuals and struggling businesses will not improve these conditions. And today’s revenue forecast indicates that there is no reason to do so.