Cecily Zamora
The Oregon tax rebate, commonly known as the kicker, is a distinctive feature of the state's tax system. It is a rebate calculated for both individuals and corporations when a revenue surplus is recorded at the end of each two-year budget cycle, which occurs in odd-numbered years. The kicker law, first enacted in 1980, is designed to keep state spending in check and prevent surpluses above a certain size. When state revenues exceed forecasts by at least 2%, the excess is returned to taxpayers, either as a credit on their personal income tax or, in the case of corporations, to the state's general fund for K-12 public education.
| Characteristics | Values |
|---|---|
| What is it? | The kicker is a rebate or credit on Oregon income tax. |
| When was it introduced? | The kicker was introduced in 1979 or 1980 and was entered into the Oregon Constitution in 2000. |
| When is it triggered? | When revenue surplus exists at the end of each biennium (i.e., every two years) and when personal income taxes and other non-corporate revenue streams come in at least 2% higher than predicted. |
| Who does it apply to? | Both individual and corporate taxpayers in the U.S. state of Oregon. |
| How is it calculated? | The rebate is calculated as the difference between the actual revenue and the forecast revenue for a given biennium, with the rebate being issued when this difference exceeds 2%. The percentage of the rebate changes from year to year. |
| Can it be donated? | Yes, taxpayers can choose to donate their kicker to the Oregon State School Fund for K-12 public education. |
| Can it be claimed if there is no filing obligation for the current year? | Yes, taxpayers who don't have a filing obligation for the current year must still file a tax return to claim their credit. |
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What You'll Learn
The Kicker Law's history and enactment
The Kicker Law in Oregon is a unique law that was first enacted by ballot measure in 1980. The law states that when there is a revenue surplus at the end of each biennium (which occurs in odd years), a rebate, or "kicker," must be issued to both individual and corporate taxpayers. This rebate is calculated when the revenue for a given biennium exceeds the forecast revenue by at least two percent, and it is then reflected in returns for odd tax years. Taxpayers typically file and receive any potential refund reflecting the kicker in even calendar years.
The history of the Kicker Law in Oregon can be traced back to the 1970s when there were rising concerns over property taxes and inflation across the country. Lawmakers drafted tax cut plans to address these concerns, including California's Proposition 13, which inspired the Oregon legislature to create their own bill aimed at limiting excessive growth. In 1979, the Oregon Legislature passed a tax relief package that included a 30% reduction in property taxes and a requirement to rebate "excessive" surpluses to taxpayers. This laid the foundation for the Kicker Law.
In 1980, the Kicker Law was officially enacted by ballot measure, and it became a part of the Oregon Constitution. This meant that voters in Oregon had approved the law and it had the force of constitutional law. The law was designed to prevent surpluses above a certain size and to complement the balanced budget amendment, which prevents deficits.
Over the years, there have been several significant moments in the enactment and evolution of the Kicker Law. In 1991 and 1993, budget problems led to the suspension of the kicker, withholding millions of dollars from taxpayers. In 1999, Measure 86 was drafted and referred to voters, who approved it with a 62% majority. This measure placed the Kicker Law into the Oregon Constitution and mandated that an emergency vote must be called to cancel the distribution of kicker checks.
In 2012, voters altered the constitution again by passing Ballot Measure 85, which permanently diverted the corporate kicker to schools, providing additional funding to K-12 education. This change ensured that any excess revenue from the corporate kicker would be returned to the state general fund for educational purposes.
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How the Kicker rebate is calculated
The Oregon 'kicker' law is a rebate calculated for both individual and corporate taxpayers in the U.S. state of Oregon when a revenue surplus exists at the end of each biennium, which occurs in odd years. The Oregon Constitution mandates that the rebate be issued when the calculated revenue for a given biennium exceeds the forecast revenue by at least two percent. This surplus is then reflected in returns for odd tax years, and taxpayers typically file and receive any potential refunds in even calendar years.
The kicker rebate for every Oregon taxpayer is 44.28% of their 2022 state taxes owed before credits were applied. This means that taxpayers with a higher state tax liability will receive a larger credit than those with little tax liability. To calculate their kicker credit, taxpayers can multiply line 22 of their 2022 Form OR-40 by 44.28%. For example, if line 22 on the 2022 Oregon return is $5,000, the kicker credit will be $2,214.
Taxpayers can also use the 'What's My Kicker?' calculator available on Revenue Online. To use the calculator, taxpayers need to enter their name, Social Security Number, and filing status for 2022 and 2023.
It is important to note that the kicker amount taxpayers receive may sometimes be less than what they have calculated. This is because Oregon can use part or all of the kicker amount to pay certain state debts.
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Eligibility for the Kicker Credit
The Oregon kicker law, enacted in 1980 and added to the state's constitution in 2000, mandates that taxpayers receive a rebate when there is a revenue surplus at the end of each biennium (which occurs in odd years). This rebate is known as the "kicker credit".
To be eligible for the Oregon kicker credit, taxpayers must meet the following requirements:
- File a 2022 Oregon state tax return.
- File a 2023 Oregon state tax return, even if not required to.
- Have tax due on the 2022 state return before any tax credits were applied.
It is important to note that some Oregon residents may not qualify for the kicker credit if they only received non-taxable income in 2022. However, individuals may qualify for the kicker credit even if they were not Oregon residents in 2022. The kicker rebate for every eligible Oregon taxpayer is 44.28% of the 2022 state taxes owed before credits were applied.
The Oregon Department of Revenue provides a "What's My Kicker?" calculator to help taxpayers determine their kicker amount. This calculator can be found on Revenue Online and requires taxpayers to enter their name, Social Security Number, and filing status for 2022 and 2023. Alternatively, taxpayers can manually calculate their kicker credit by multiplying their 2022 tax liability before any credits (line 22 on the 2022 Form OR-40) by 44.28%.
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The Kicker Law's economic impact
The Kicker Law in Oregon, enacted in 1980, mandates a tax rebate for both individuals and corporations when a revenue surplus occurs at the end of each biennium (odd years). This rebate is known as the "kicker", and it prevents surpluses from exceeding a certain size, complementing the balanced budget amendment. The economic impact of the Kicker Law is significant, with a projected $3.9 billion increase in disposable personal income in Oregon for 2024. This boost in income is expected to have a noticeable yet muted impact on the state's economy. While it may stimulate consumer spending and benefit local businesses, the one-time nature of the rebate may lead to a combination of spending and saving by taxpayers.
The Kicker Law has a direct impact on taxpayers' refunds or income tax obligations. For the 2021-23 biennium, the personal kicker is expected to result in a $3.9 billion rebate, with the exact amount certified in the fall and paid out as credits on tax returns in spring 2024. The amount each taxpayer receives is based on their tax liability, with higher earners receiving larger dollar amounts. The median taxpayer is estimated to receive a $790 credit, while those in the top 1% may get five-figure kickers, with an average of $42,000.
The Kicker Law also has implications for public spending and savings. When the rebate results in a significant payout, it reduces the resources available for policymakers to allocate to public services. This can impact various programs and projects, as well as the ability to increase savings when revenues exceed expectations. However, it is important to note that the kicker does not necessarily reduce future budget revenues as long as the economy continues to grow.
Additionally, the corporate kicker, triggered when corporate tax revenues exceed forecasts, provides additional funding to K-12 schools. This funding boost, directed to the state's general fund since 2012, enhances education resources and benefits students across Oregon.
Overall, the Kicker Law in Oregon has a substantial economic impact, affecting taxpayers' refunds, income tax obligations, consumer spending, and the state's ability to fund public services. While it provides a boost in disposable personal income, the law also influences the distribution of resources and the state's financial resilience in the face of economic uncertainties.
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The Kicker Law's political implications
Oregon's "kicker" law has significant political implications, with some praising its ability to return excess tax revenue to taxpayers, while others criticise its impact on state revenue stability and equitable distribution.
The law, which requires returning tax revenue surpluses beyond the budget to taxpayers, is popular among Oregonians, particularly those seeking tax rebates. This popularity presents a challenge for lawmakers considering reforms or amendments, as attempting to change or repeal the law could lead to political backlash. The law's popularity is also influenced by the perception that it protects taxpayers from excessive government spending.
However, critics argue that the "kicker" law disproportionately benefits high-income earners, with the richest 1% receiving significantly larger rebates than the typical Oregonian. This has led to concerns about the law's impact on income inequality and social welfare. Opponents also highlight the law's negative effect on state revenue stability, hindering Oregon's ability to invest in infrastructure and essential services and address pressing crises like wildfires.
The political implications of the "kicker" law have resulted in debates and proposals for reform. Some lawmakers have suggested suspending the law for the highest-income earners, redirecting the funds to reserves or critical one-time investments. Others have proposed constitutional amendments to reform the law, ensuring that only low- and middle-income taxpayers receive rebates or giving a flat, equal amount to all taxpayers.
Additionally, the law's impact on revenue forecasting has come under scrutiny, with state economists facing challenges in accurately predicting revenue and the potential for political consequences when forecasts fall short.
Overall, the "kicker" law's political implications centre on the balance between taxpayer rebates and the need for stable state revenues to address critical issues. The law's popularity and its impact on income distribution and revenue stability continue to shape political discussions and potential reforms in Oregon.
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Frequently asked questions
The kicker law in Oregon income tax law is a rebate calculated for both individual and corporate taxpayers when a revenue surplus exists at the end of each biennium, which occurs in odd years. The rebate is issued when the calculated revenue for a given biennium exceeds the forecast revenue by at least two percent.
The kicker law came into effect in Oregon in 1980 after being enacted by a ballot measure. It was then entered into the Oregon Constitution in 2000 with the passage of Ballot Measure 86.
Kickers can occur every two years in Oregon since the state operates on a biennial budget. However, they are more likely to occur during strong economic years when state income tax collections exceed projections by a certain percentage.
To claim your kicker refund in Oregon, you must file a personal income tax return for the corresponding year. You can determine the amount of your kicker refund using the "What's My Kicker?" calculator available on the Revenue Online website or by multiplying your previous year's tax liability before any credits by the current year's kicker percentage.
