Republicans launch referendum after Gov. Tina Kotek signs tax bill

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centraloregondaily.com · Dianne Lugo, Salem Statesman Journal · September 5, 2026

Oregon limits Trump tax bill; referendum begins | Oregon / Northwest | centraloregondaily.com

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# Oregon / Northwest

Rep. Ed Diehl, R-Scio, speaks about Senate Bill 1599 on Feb. 26 at the Oregon State Capitol.

Abigail Dollins / Statesman Jour

Oregon will partially disconnect from tax breaks in President Donald Trump's Big, Beautiful Bill after Gov. Tina Kotek signed Senate Bill 1507 into law on April 9. Republicans have already launched a referendum effort to send the bill to voters.

Lawmakers passed SB 1507 during the 2026 legislative session. The bill disconnects Oregon's state tax code from two changes and partially from a third, which is expected to generate more than $342 million in revenue.

Specifically, the bill decouples the state's tax code from a new federal deduction for vehicle loan interest and the qualified small business stock exclusion. It partially disconnects from the "bonus depreciation" deduction, meaning businesses will no longer be able to deduct the full cost of machinery and equipment in the first year.

The bill expands the state's Earned Income Tax Credit, raising the credit from 9% to 14% for individuals and from 12% to 17% for families. SB1507 also created a new tax credit for businesses that create new jobs in the state. The credit would be limited to 10 per taxpayer per year and would equal $1,000 for each net new job created by the taxpayer.

An amendment in Kotek's House Bill 4084 limited which businesses would qualify for the new credit to jobs in a "qualified industry,” meaning businesses that operate in these sectors: advanced manufacturing, bioscience and biotechnology, clean technology, food and beverage processing, forestry and wood products, high technology, outdoor gear and apparel.

Lawmakers and Kotek said passing the bill prevented significant cuts across agencies.

"The federal tax changes enacted last year under President Trump's H.R. 1 have significant consequences for Oregon's ability to pay for essential services," Kotek wrote in her SB1507 signing letter on April 9. "Having Oregon magnify that damage by automatically copying every new tax break in H.R. 1 is neither fair nor responsible."

Kotek also called for "needed adjustments."

The bill "could affect Oregon's economic competitiveness," Kotek wrote.

"These changes have unique impact on small businesses and start-ups companies," Kotek said. "I take these potential effects seriously."

Kotek said she would work with members of her new Prosperity Council to propose legislation for the 2027 legislative session to address the qualified small business stock exemption specifically, as well as other proposals for "sustained and increased investment" in the state.

During debate on the floor, Rep. Ed Diehl, R-Scio, announced his intent to immediately refer provisions of the bill to voters. He successfully led the effort to refer a gas tax and other transportation cost hikes to the ballot in 2025, gathering hundreds of thousands of signatures in 38 days.

"Oregonians are taxed enough already. This $300 million tax increase hurts small businesses and working families at a time when we must make Oregon more affordable, not more expensive," Diehl said in a statement. "SB 1507 denies businesses key federal tax relief on equipment investments. Instead of supporting job creators, it protects government spending at the expense of Oregonians."

Diehl said he was partnering with Rep. Dwayne Yunker, R-Grants Pass, and No Tax Oregon to launch "No Tax Clawback." Diehl and Yunker are chief petitioners in the No Tax Clawback Referendum to send SB1507 to voters. The referendum would target the auto loan interest payment deduction and the accelerated business depreciation deductions, they said.

The Oregon Secretary of State's office confirmed it had received the referendum petition filing.

If Diehl, Yunker and No Tax Oregon are successful, it's unclear what would become of the tax expansion and new tax credit. The bill funded the changes with some of the revenue generated from disconnecting from the tax breaks.

"As we've seen with the ODOT budget process over the last year and a half, the Legislature is not serious about considering any proposals that don't involve taxing Oregonians until voters force them to the table," said Nick Stark, executive director of the Oregon Freedom Coalition and the third chief petitioner.

"Our expectation is that the Legislature will take a second look at the budget once the referendum is successful and find a solution that is reasonable, scales back wasteful spending, and doesn't reach back into taxpayers' pockets," Stark added.

Petitioners will have until June 4, 90 days after the legislative session ended, to collect more than 78,000 signatures. They could not begin collecting signatures until after Kotek signed the bill into law.

A signing event will take place later in April, No Tax Oregon announced.

Dianne Lugo covers the Oregon Legislature and equity issues. Reach her at dlugo@statesmanjournal.com on X @DianneLugo or Bluesky @diannelugo.bsky.social

This article originally appeared on Salem Statesman Journal: Republicans launch referendum after Gov. Tina Kotek signs tax bill

Reporting by Dianne Lugo, Salem Statesman Journal / Salem Statesman Journal

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