Impact of Final Tax Reform Bill on Oregon Real Estate

Although Oregon isn’t often included in references to high tax states, we are not far from the top of the list.  Oregon ranks #7 in highest average income taxes paid per state.  With the reduction of state and local tax deductions (SALT) on your federal income tax return down to a maximum deduction of $10,000, higher tax states like Oregon are more greatly impacted by the tax reform bill passed in December.  It’s kind of a double whammy for Oregonians.  We can deduct less of what we pay in local taxes, which makes our federal income tax bill greater, which in turn makes our state income tax higher (because state income taxes are determined off of our federal income tax return).

There are so many reasons people decide where they are going to live.  Employment is a major factor.  As is quality of life, weather, and of course,  affordability. A question that has continued to pop into my mind since the passing of the final tax bill is whether or how much the tax reform will impact migration out of Oregon and into neighboring Washington….particularly moves from Portland to Vancouver.  The lack of income taxes in Washington has been an influential consideration for many people in deciding between Portland and Vancouver.  People can work in Portland, enjoy the robust arts, cultural, culinary scene in Portland, and as long as they’re willing to suffer the commute back across the river, live in Vancouver to avoid paying the substantial Oregon income taxes.  By the way, they can also do all of their shopping in Portland, to avoid the sales tax imposed in Washington.

Will the final federal tax reform bill tilt the scales further in that northerly migration? I suspect for some it will. Especially those who do not need to physically be at work in Portland, but can work remotely from home.

Posted on January 22, 2018 at 8:58 pm
Katie Sengstake | Category: Uncategorized

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