Income taxes paid to another state (ORS 316.082, 316.131) [Credit code 802]
If you pay tax to Oregon and another state on the same income, you have “mutually-taxed income.” In certain circumstances, you may be able to claim a credit on your Oregon return for income taxes paid to another state. Only take a credit for tax paid to another state if Oregon taxed the income and the other state also had a right to tax the same income.
For instance, if you live in Oregon, other states can’t tax your pension income. Only the state you live in can tax your pension income. If you pay tax to another state on your pension income, you can’t take a credit for that tax.
You can’t take a credit for paying tax you don’t owe. If you take a credit for taxes paid to another state on your Oregon return, you’ll have an addition for the itemized deduction on Schedule OR-A for the same tax. See this topic under “Additions” and the instructions for Schedule OR-A for more information.
This credit is only for state income tax. You can’t claim the credit for any city tax, county tax, school tax, sales tax, alternative minimum tax (AMT), property tax, or other state taxes that aren’t based on income.
For example, the Idaho Permanent Building Fund Tax and the Washington Business and Occupation (B & O) Tax don’t qualify because they aren’t based on income.
When can this credit be claimed?
You can claim this credit only if you pay the other state’s tax before or at the same time that you file your Oregon return. If you pay tax to another state for a prior tax year, you must amend your Oregon return for that year to claim the credit.
If Oregon and another state tax you on the same income, but in different tax years, Oregon will allow a credit for the year the tax is paid to Oregon (OAR 150-316-0090). Visit our website for more information.
If you sell your home and pay tax to Oregon and another state or country on the gain from that sale, you can claim either the credit for taxes paid to another state or the credit for mutually taxed gain on the sale of residential property. You can't claim both credits.