The Oregon Department of Revenue (DOR) has issued new guidance to help taxpayers correctly claim the Oregon Kids Credit when filing their tax year 2025 Oregon personal income tax return.
This update addresses a calculation error that affected a limited number of early-filed electronic returns during the start of the 2025 tax filing season.
What Happened?
During preparation for the 2026 filing season, incorrect information was provided in:
- Oregon tax form instructions, and
- Guidance shared with tax preparation software partners
As a result:
- A small number of taxpayers who were not eligible for the Oregon Kids Credit calculated and claimed the credit, and
- A small number of eligible taxpayers claimed a credit amount that was too high
The Department of Revenue identified the issue shortly after electronic filing opened.
How Many Taxpayers Are Affected?
- As of January 30, 2026, approximately 135,000 tax year 2025 returns had been processed
- Fewer than 500 returns were impacted by this issue
- While that number may increase slightly until all tax software providers update their systems, DOR expects the total number of affected returns to remain low
Do I Need to Take Action?
No.
If you have already filed your return and believe you may be affected:
- Do not file an amended return
- No action is required from you
The Oregon Department of Revenue is automatically correcting affected returns.
What to Expect
- If your return is adjusted, you will receive a notice by mail
- You will also see the adjustment in your Revenue Online account
- Your refund may be lower than originally expected
The department understands this may be frustrating and has apologized for the error, particularly given the importance of this credit to low-income families.
What Caused the Error?
The issue relates to how new federal income tax deductions affect eligibility for the Oregon Kids Credit.
Specifically, the error involved deductions for:
- Overtime wages
- Tips
- New car loan interest
These deductions impact a taxpayer’s Modified Adjusted Gross Income (MAGI), which is used to determine eligibility for the Oregon Kids Credit.
The deductions were introduced under House Resolution 1, also known as the One Big Beautiful Bill, which was passed by Congress and signed into law after the 2025 Oregon Legislative session ended. These federal changes were incorporated quickly into Oregon’s systems, and the error was identified within days of the filing season opening.
What Is Being Fixed?
The Department of Revenue is actively correcting the issue by:
- Updating online tax form instructions
- Working directly with commercial tax software providers so they can update their systems
Should I Wait to File?
Our software has corrected the calculation for the credit, so you do not need to wait to file your 2025 Oregon state return.
About the Oregon Kids Credit
The Oregon Kids Credit is a refundable tax credit for low-income individuals and families with young children.
Credit Amounts
-
Full credit:
- $1,050 per child
- Up to five dependent children
- Children must be under age 6 at the end of the tax year
- Available to taxpayers with MAGI of $26,550 or less
-
Partial credit:
- Available for taxpayers with MAGI up to $31,550
Get Help or Learn More
- Frequently asked questions are available on the Department of Revenue’s website
- The FAQ page will be updated as tax software providers complete their fixes
Oregon Contact Information
- Phone: 503‑947‑0350
- Email: questions.dor@dor.oregon.gov