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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
Senate Bill 656
Sponsored by Senator BONHAM (at the request of Senator Noah Robinson) (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 as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Creates an income tax credit for a person who makes energy in Oregon. (Flesch Read-
ability Score: 63.4).
Creates an income tax credit for energy production in Oregon.Applies to tax years beginning
on or after January 1, 2024.
Establishes the Task Force on Free-Market Energy Production.Directs the task force to review
existing laws related to energy production in Oregon to determine how to ensure all forms of energy
production are regulated equally, based on scientific analysis of risks and rewards posed by each
form of energy production. Sunsets the task force on January 2, 2027.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to energy; creating new provisions; amending ORS 314.772 and 318.031; 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 315.
SECTION 2.(1) As used in this section:
(a) “Energy facility” includes any facility for the production of energy, including but not
limited to facilities that produce energy by using wind power, solar, landfill gas, digester gas,
waste, dedicated energy crops, renewable marine energy, nuclear energy, fossil fuels,
geothermal energy or hydroelectric power.
(b) “Energy producer” means a person that produces energy at an energy facility located
in Oregon.
(2) A taxpayer that is an energy producer shall be allowed a credit against taxes that are
otherwise due under ORS chapter 316 or, if the taxpayer is a corporation, under ORS chapter
317 or 318 for energy produced at an energy facility located in Oregon.
(3) The credit allowed under this section shall equal 50 percent of the taxes due for ac-
tivities described in subsection (2) of this section.
(4) Prior to claiming the credit allowed under this section, a taxpayer is required to re-
ceive written certification of eligibility from the Department of Revenue.
(5) The credit allowed under this section may not exceed the tax liability of the taxpayer
for the tax year.
(6) Any tax credit otherwise allowable under this section that is not used by the taxpayer
in a particular tax year may be carried forward and offset against the taxpayer’s tax liability
for the next succeeding tax year. Any credit remaining unused in the next succeeding tax
year may be carried forward and used in the second succeeding tax year, and likewise any
credit not used in that second succeeding tax year may be carried forward and used in the
third succeeding tax year but may not be carried forward for any tax year thereafter.
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.
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(7) A nonresident shall be allowed the credit under this section. The credit shall be
computed in the same manner and be subject to the same limitations as the credit granted
to a resident. However, the credit shall be prorated using the proportion provided in ORS
316.117.
(8) If a change in the taxable year of the taxpayer occurs as described in ORS 314.085,
or if the department terminates the taxpayer’s taxable year under ORS 314.440, the credit
allowed under this section shall be prorated or computed in a manner consistent with ORS
314.085.
(9) If a change in the status of a taxpayer from resident to nonresident or from nonres-
ident to resident occurs, the credit allowed under this section shall be determined in a
manner consistent with ORS 316.117.
(10) The department shall adopt rules for the purposes of this section, including policies
and procedures for certifying taxpayers as eligible for the credit allowed under this section
as required in subsection (4) of this section.
SECTION 3. ORS 314.772 is amended to read:
314.772. (1) Except as provided in ORS 314.766 (5)(b), the tax credits allowed or allowable to a
C corporation for purposes of ORS chapter 317 or 318 shall not be allowed to an S corporation. The
business tax credits allowed or allowable for purposes of ORS chapter 316 shall be allowed or are
allowable to the shareholders of the S corporation.
(2) In determining the tax imposed under ORS chapter 316, as provided under ORS 314.763, on
income of the shareholder of an S corporation, there shall be taken into account the shareholder’s
pro rata share of business tax credit (or item thereof) that would be allowed to the corporation (but
for subsection (1) of this section) or recapture or recovery thereof. The credit (or item thereof), re-
capture or recovery shall be passed through to shareholders in pro rata shares as determined in the
manner prescribed under section 1377(a) of the Internal Revenue Code.
(3) The character of any item included in a shareholder’s pro rata share under subsection (2)
of this section shall be determined as if such item were realized directly from the source from which
realized by the corporation, or incurred in the same manner as incurred by the corporation.
(4) If the shareholder is a nonresident and there is a requirement applicable for the business tax
credit that in the case of a nonresident the credit be allowed in the proportion provided in ORS
316.117, then that provision shall apply to the nonresident shareholder.
(5) As used in this section, “business tax credit” means the following credits: ORS 315.104
(forestation and reforestation), ORS 315.124 (small forest option), ORS 315.133 (agricultural overtime
pay), ORS 315.138 (fish screening, by-pass devices, fishways), ORS 315.141 (biomass production for
biofuel), ORS 315.156 (crop gleaning), ORS 315.164 and 315.169 (agriculture workforce housing), ORS
315.176 (bovine manure), ORS 315.204 (dependent care assistance), ORS 315.208 (dependent care fa-
cilities), ORS 315.213 (contributions for child care), ORS 315.237 (employee and dependent scholar-
ships), ORS 315.271 (individual development accounts), ORS 315.283 (affordable housing sales), ORS
315.304 (pollution control facility), ORS 315.326 (renewable energy development contributions), ORS
315.331 (energy conservation projects), ORS 315.336 (transportation projects), ORS 315.341
(renewable energy resource equipment manufacturing facilities), ORS 315.354 and 469B.151 (energy
conservation facilities), ORS 315.506 (tribal taxes on reservation enterprise zones and reservation
partnership zones), ORS 315.507 (electronic commerce), ORS 315.514 (film production development
contributions), ORS 315.518 (semiconductors), ORS 315.523 (employee training programs), ORS
315.533 (low income community jobs initiative), ORS 315.593 (short line railroads), ORS 315.640
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(university venture development funds), ORS 315.643 (Opportunity Grant Fund contributions), ORS
315.675 (Trust for Cultural Development Account contributions), ORS 317.097 (loans for affordable
housing), ORS 317.124 (long term enterprise zone facilities), ORS 317.147 (loans for agriculture
workforce housing), ORS 317.152 (qualified research expenses) and ORS 317.154 (alternative qualified
research expenses) and section 9, chapter 774, Oregon Laws 2013 (alternative fuel vehicle contribu-
tions), and section 2 of this 2025 Act (energy production).
SECTION 4. ORS 318.031 is amended to read:
318.031. It being the intention of the Legislative Assembly that this chapter and ORS chapter
317 shall be administered as uniformly as possible (allowance being made for the difference in im-
position of the taxes), ORS 305.140 and 305.150, ORS chapter 314 and the following sections are in-
corporated into and made a part of this chapter: ORS 315.104, 315.124, 315.133, 315.141, 315.156,
315.176, 315.204, 315.208, 315.213, 315.283, 315.304, 315.326, 315.331, 315.336, 315.506, 315.507, 315.523,
315.533, 315.593 and 315.643 and section 2 of this 2025 Act (all only to the extent applicable to a
corporation) and ORS chapter 317.
SECTION 5.Section 2 of this 2025 Act applies to tax years beginning on or after January
1, 2024.
SECTION 6.(1) The Task Force on Free-Market Energy Production is established.
(2) The task force consists of 13 members appointed as follows:
(a) The President of the Senate, in consultation with the Senate Minority Leader, shall
appoint two voting members who are members of the public. The two members appointed
under this paragraph may not be from the same political party.
(b) The Speaker of the House, in consultation with the House Minority Leader, shall ap-
point two voting members who are members of the public. The two members appointed under
this paragraph may not be from the same political party.
(c) The Governor shall appoint five voting members.
(d) The following shall serve as ex officio, nonvoting members:
(A) One commissioner of the Public Utility Commission or the commissioner’s designee;
(B) The Director of the State Department of Energy or the director’s designee;
(C) The Director of the Department of Environmental Quality or the director’s designee;
and
(D) The Director of the Department of Land Conservation and Development or the
director’sdesignee.
(3) All voting members of the task force must be familiar with energy production regu-
lation in Oregon. The total of the voting membership of the task force must reflect the ge-
ographic diversity of this state.
(4) The task force shall review existing laws related to energy production in Oregon to
determine how to modify the laws to ensure that all forms of energy production are regu-
lated equally, based on a scientific analysis of the risks and rewards posed by each form of
energyproduction.
(5) A majority of the voting members of the task force constitutes a quorum for the
transaction of business.
(6) Official action by the task force requires the approval of a majority of the voting
members of the task force.
(7) The task force shall elect one of its members to serve as chairperson.
(8) If there is a vacancy for any cause, the appointing authority shall make an appoint-
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ment to become immediately effective.
(9) The task force shall meet at times and places specified by the call of the chairperson
or of a majority of the voting members of the task force.
(10) The task force may adopt rules necessary for the operation of the task force.
(11) The task force shall submit a report in the manner provided by ORS 192.245, and
may include recommendations for legislation, to an interim committee of the Legislative
Assembly related to energy no later than September 15, 2026.
(12) The Legislative Policy and Research Office shall provide staff support to the task
force.
(13) Members of the task force who are not members of the Legislative Assembly are not
entitled to compensation or reimbursement for expenses and serve as volunteers on the task
force.
(14) All agencies of state government, as defined in ORS 174.111, are directed to assist
the task force in the performance of the duties of the task force and, to the extent permitted
by laws relating to confidentiality, to furnish information and advice the members of the task
force consider necessary to perform their duties.
SECTION 7. Section 6 of this 2025 Act is repealed on January 2, 2027.
SECTION 8.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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