Certain Oregon taxpayers who receive qualifying income from a pass-through entity (PTE) may be eligible for Oregon's reduced tax rate on qualifying business income. This section is used to enter information needed to calculate the reduced tax rate and any related Oregon depreciation adjustments attributable to qualifying businesses.
Most taxpayers will not need to complete this section.
Program Entry
Oregon Return → Tax → Pass-Through Entity Income Reduced Tax Rate Schedule
What Is the Pass-Through Entity Income Reduced Tax Rate?
Oregon provides a reduced tax rate for certain qualifying income received from a pass-through entity. Eligible income may be reported from entities such as:
- Partnerships
- S Corporations
- Certain Limited Liability Companies (LLCs)
If you receive Oregon pass-through income, the entity may provide information needed to determine whether the income qualifies for the reduced tax rate.
Qualifying Business Information
The Pass-Through Entity Income Reduced Tax Rate Schedule is used to report information related to qualifying business income and any associated Oregon depreciation adjustments.
Information entered in this section is used to calculate the amount of income eligible for Oregon's reduced tax rate.
Amount of Depreciation Addition Attributable to Qualifying Businesses
Enter any Oregon depreciation addition attributable to qualifying businesses.
This amount represents depreciation adjustments that increase Oregon income for purposes of calculating the reduced tax rate.
These additions are often the result of differences between federal and Oregon depreciation rules.
Amount of Depreciation Subtraction Attributable to Qualifying Businesses
Enter any Oregon depreciation subtraction attributable to qualifying businesses.
This amount represents depreciation adjustments that decrease Oregon income for purposes of calculating the reduced tax rate.
Like the depreciation addition, these amounts are commonly reported on Oregon schedules or provided by the pass-through entity.
What Is a Pass-Through Entity (PTE)?
A pass-through entity is a business that generally does not pay income tax at the entity level. Instead, income, deductions, credits, and other tax attributes pass through to the owners and are reported on the owners' individual tax returns.
Common examples include:
- Partnerships
- S Corporations
- Certain LLCs taxed as partnerships or S corporations
Taxpayers often receive this information on a Schedule K-1 or other Oregon tax documents issued by the entity.
How Does This Affect My Return?
Completing this schedule may:
- Allow qualifying pass-through entity income to be taxed at Oregon's reduced tax rate.
- Adjust Oregon taxable income for Oregon depreciation differences.
- Change the amount of Oregon income tax owed.
Only income that meets Oregon's requirements qualifies for the reduced tax rate.
Notes
- Most taxpayers will not complete this section.
- Review any Oregon Schedule K-1 or other information statements received from a pass-through entity.
- Enter only depreciation additions and subtractions attributable to qualifying businesses.
- Keep documentation supporting all amounts entered on this schedule.
- The Pass-Through Entity Income Reduced Tax Rate is separate from Oregon's Pass-Through Entity Elective Tax (PTE-E) program, although information from the same entity may be used for both calculations.
- If you are unsure whether your income qualifies, review the information provided by the pass-through entity.