Oregon taxpayers will see a $5.61 billion 鈥渒icker鈥� refund next year, by far the largest amount ever returned under the state鈥檚 unique law.
State economists confirmed the eye-popping payment on Wednesday during their release of the latest quarterly state revenue forecast to lawmakers. With tax receipts for the 2021-23 budget cycle now set in stone, so is the amount heading out the doors once taxpayers file next year. 鈥淭his one isn鈥檛 just bigger [than the previous record kicker],鈥� state Rep. Nancy Nathanson, a Eugene Democrat and chair of the House Revenue Committee, said in a morning hearing. 鈥淚t鈥檚 multiple or a few times bigger.鈥�
First enacted in 1979, the 鈥渒icker鈥� law was designed as a way to wrangle state spending. Whenever actual revenues from personal income taxes and other non-corporate sources come in at least 2% higher than the forecasted amount used in developing a two-year state budget, taxpayers get all the excess cash back in the form of a credit on any taxes paid in the previous year rather than a check.
The former record amount returned to taxpayers, $1.9 billion, came last year. Now the state is set to send back nearly three times as much, after-tax receipts shattered economists鈥� expectations.
the state鈥檚 Office of Economic Analysis, the median Oregon taxpayer 鈥� with an income between $35,000 and $40,000 鈥� will receive an estimated $980 back, though higher-income earners will get far more. The top 1% of earners, who because of Oregon鈥檚 progressive income tax system pay more in taxes, could get a credit of more than $44,000.
鈥淭he higher-income filers had a lot more liability in 2022 than lower-income filers,鈥� said Mark McMullen, the state economist. Taxpayers will be refunded around 45% of the personal income taxes they paid in 2022, McMullen said, though the actual percentage won鈥檛 be certified until October.
Kicker payments in Oregon have become the norm. In the 22 bienniums since the law was enacted, the refund has been triggered 13 times 鈥� including in bienniums.
Part of the size of next year鈥檚 kicker comes from the pandemic, which economists believed would hamper Oregon鈥檚 economy and tax revenues for a longer period of time. When income taxes and other funding sources instead bounced back quickly 鈥� particularly as high-income earners elected to pay off taxes owed from investment income 鈥� the estimates used to build the 2021-23 state budget turned out to be dramatically off base.
Oregon is also going to see a corporate kicker, triggered when business taxes come in higher than expected. Unlike the other refund, though, that law will send $1.8 billion not to taxpayers, but to K-12 education.
