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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
A-Engrossed
Senate Bill 225
Ordered by the Senate March 19
Including Senate Amendments dated March 19
Sponsored by Senators MANNING JR, SOLLMAN, THATCHER; Senators FREDERICK, MEEK, PATTERSON,
PROZANSKI, REYNOLDS, SMITH DB, TAYLOR (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure. The statement includes a measure digest written in compliance with applicable readability standards.
Digest: Exempts from state income tax up to $17,500 in federal retirement pay or pension
that is received for service in the Armed Forces by a person who is 63 years of age or older.
The Act applies to tax years that start on or after January 1, 2025. The Act takes effect on
the 91st day after sine die. (Flesch Readability Score: 60.6).
[Digest: Exempts from state income tax up to $17,500 received by a person 62 years of age or
younger as retirement pay or pension for service in the Armed Forces. The Act applies to tax years that
start on or after January 1, 2025. The Act takes effect on the 91st day after sine die. (Flesch Read-
ability Score: 61.6).]
Exempts from state income tax up to $17,500 in federal retirement pay or pension received for
service in the Armed Forces of the United States for a taxpayer who is receiving federal retirement
pay or pension for service in the Armed Forces of the United States and who has [not] attained 63
years of age before the close of the taxable year [for which a return is filed].
Applies to tax years beginning on or after January 1, 2025.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to taxable income exemption for military taxpayers; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. Section 2 of this 2025 Act is added to and made a part of ORS chapter 316.
SECTION 2. (1) As used in this section, “Armed Forces of the United States” includes
the regular and reserve components of the Army, Navy, Air Force, Marine Corps, Coast
Guard and Space Force of the United States and the National Guard.
(2) There shall be subtracted from federal taxable income for a taxpayer who has attained
63 years of age before the close of the taxable year and whose federal taxable income includes
federal retirement pay or pension for service in the Armed Forces of the United States up
to $17,500 in federal retirement pay or pension received for service in the Armed Forces of
the United States.
(3) The total amount subtracted under subsection (2) of this section may not exceed the
taxpayer’s total federal retirement pay or pension received for service in the Armed Forces
of the United States included in the taxpayer’s federal taxable income for the tax year.
(4) The amount subtracted under subsection (2) of this section may not include any
amount of federal retirement pay or pension received for service in the Armed Forces of the
United States that is subtracted under ORS 316.680 (1)(e).
(5)(a) The Department of Revenue shall adjust annually the maximum dollar amount al-
lowed under subsection (2) of this section to reflect any percentage increase in the cost of
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 203 A-Eng. SB 225
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living for the previous calendar year, based on changes in the Consumer Price Index for All
Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics
of the United States Department of Labor.
(b) If the dollar amount of the increase determined under paragraph (a) of this sub-
section is not a multiple of $50, the Department of Revenue shall round the dollar amount
of the increase to the next lower multiple of $50.
(6) The department may adopt rules for carrying out the provisions of this section.
SECTION 3. Section 2 of this 2025 Act applies to tax years beginning on or after January
1, 2025.
SECTION 4. Notwithstanding sections 2 (5) and 3 of this 2025 Act, the Department of
Revenue shall first adjust the maximum dollar amount allowed under section 2 (2) of this
2025 Act for the tax year beginning on January 1, 2026.
SECTION 5.This 2025 Act takes effect on the 91st day after the date on which the 2025
regular session of the Eighty-third Legislative Assembly adjourns sine die.
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