Oregon property tax exemption for qualified food machinery and equipment

Qualified machinery and equipment placed in service in Oregon during the 2020 calendar year may be eligible for a five-year property tax exemption applicable to tax years beginning on or after July 1, 2021.

Real and personal property used in business — including machinery, equipment, and other tangible items — is generally subject to tax in Oregon, unless otherwise exempt by law. However, to encourage expansion of the food processing industry in the state, the Oregon legislature passed a five-year property tax exemption in 2005 for qualified machinery and equipment.

Which types of machinery and equipment qualify for exemption?

Qualified machinery and equipment includes newly acquired real or personal property used to process the following:

• Fresh fruit
• Vegetables
• Nuts
• Legumes
• Grains
• Bakery products
• Dairy products
• Eggs
• Seafood

Producers of alcoholic beverages and marijuana products aren’t eligible for the exemption.

Bakery producers, in addition, must have a wholesale license from the Oregon State Department of Agriculture (ODA) to qualify. Machinery and equipment used to process grains or bakery products must have a total initial investment cost of at least $100,000.

What determines if equipment is newly acquired or placed in service?

Newly acquired means new or used machinery and equipment that was first purchased or leased by a food processor within the 24 months prior to placing it in service. Property must have been placed in service during 2020 to qualify for an exemption in the tax year beginning July 1, 2021.

Placed in service means the equipment was fully available and operational for its intended commercial use. Property that was being installed or tested during the period doesn’t qualify.

How to apply for Oregon property tax exemption

Food processors seeking the exemption must first submit a list of qualifying machinery and equipment on the Oregon Food Processor Certification of Qualified Machinery and Equipment form.

After receiving the request, the ODA’s Food and Safety Division will schedule a site visit with the food processor. Inspectors will determine which machinery and equipment qualifies for the exemption and provide written approval or denial of the request.

Deadlines for exemption claims

Property tax exemption claims were originally due to the Oregon Department of Revenue on or before March 1 of each year.

If a claim is filed late — between March 2 and Dec. 31 — a filing fee applies equal to the greater of $200 or one tenth of 1% of the real market value of the exemption. Claims filed after Dec. 31 won’t be processed.

Tax already paid on property otherwise subject to the exemption must be refunded upon notice from the appropriate tax collector, whether it’s the Oregon Department of Revenue or the individual county.