Article
New Oregon semiconductor R&D credit FAQ
July 20, 2023 · Updated Jan. 29, 2025 · Authored by Star Fischer, Tom Sanger, Travis Riley
The Oregon Legislature passed House Bill (HB) 2009 on June 24, 2023, which in part creates a refundable income and corporate excise tax credit for qualified semiconductor companies conducting qualified research activities. Governor Tina Kotek signed the bill on July 18, 2023.
This semiconductor R&D tax credit comes on the heels of the Oregon Legislature passing its own Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, which was designed to boost the state’s semiconductor industry by:
- Leveraging federal investments
- Readying land for industrial development
- Helping public universities leverage federal research grants
Prior Oregon R&D tax credit
Oregon previously had a broader R&D credit that has expired for tax years starting after 2017. Both the prior Oregon R&D credit and the newer one adopt federal R&D credit provisions, with a few modifications.
Other proposed bills would have reinstated the prior credit or allowed the credit to be claimed broadly by advanced manufacturers, but ultimately the credit was limited to semiconductor companies due to budget considerations. There’s a possibility the credit will be expanded in future legislative sessions.
What’s different about the Oregon semiconductor R&D credit?
The semiconductor R&D tax credit differs from federal R&D tax credit and the old Oregon R&D tax credit in several ways.
Highlights of the semiconductor R&D credit
The credit applies to tax years beginning on or after Jan. 1, 2024, and before Jan. 1, 2030.
It’s limited to qualified semiconductor companies conducting qualified research and basic research in Oregon in support of a trade or business directly related to semiconductors.
The applicable percentage used to calculate the credit is 15%, up from 5% on the prior credit. This 15% credit rate is among the highest in the country.
Both corporate and pass-through entity taxpayers may claim the credit, so it can be used to offset personal and corporate income taxes. The prior Oregon R&D credit was limited to corporations.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
