Feb. 4, 2025
What happened: On Feb. 4, OBI Policy Director and Counsel Derek Sangston testified before the House Committee on Revenue in support of HB 2083, which contemplates indexing to inflation the threshold at which the highest personal income tax brackets and corporate excise tax brackets apply. Click the video to the right to watch his testimony and click the button to read his written testimony.
The underlying problem: Because Oregon does not index these tax thresholds to inflation, taxpayers experience “bracket creep,” in which the amount of income subject to taxation grows without any corresponding increase in purchasing power or market share.
What other states are doing: Of the 43 states that levy an income tax, 23 have joined the federal government by fully indexing tax brackets to inflation. Middle-income Oregonians are particularly vulnerable to “bracket creep” because the state’s top bracket kicks in at only $125,000 for single filers. California’s, by contrast, kicks in at $1 million.
Why it matters: “Bracket creep” reduces the buying power of middle-income people in Oregon, where the cost of living is already high. It also weighs on businesses, providing an incentive to invest in other states rather than in Oregon. Business investment creates jobs and generates the tax revenue needed by state and local governments.
Oregon Competitiveness Agenda: Indexing tax thresholds to inflation is a component of OBI’s Oregon Competitiveness Agenda, which recommends dozens of policies to improve the state’s competitiveness. Read more here.