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State program

Oregon Research and Development Credit

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  • Partly refundable
  • Pre-approval required

Last reviewed November 2026

Semiconductor research only: Oregon's general research credits (former ORS 317.152 and 317.154) expired for tax years beginning on or after January 1, 2018. Since tax year 2024 Oregon has had a research credit, but only for qualified semiconductor companies. It was enacted by House Bill 2009 (2023), the Oregon CHIPS Act, at Oregon Laws 2023, chapter 298 (ORS 315.518, 315.519 and 315.522). Companion bill SB 4 (2023) created semiconductor grants and loans and did not create the tax credit. A business outside the semiconductor sector cannot claim an Oregon research credit.

At a glance

  • Jurisdiction: Oregon (OR)
  • Credit name: Research Conducted by Semiconductor Company tax credit (ORS 315.518)
  • Administering agency: The Oregon Business Development Department (Business Oregon) certifies the credit. The Oregon Department of Revenue administers the credit on the return.
  • Rate(s) and base: 15% of qualified research expenses and basic research payments for research done in Oregon above the IRC §41 base amount, computed with Oregon figures (gross receipts means Oregon sales). Alternatively, you can elect the alternative simplified credit (ASC) method at the IRC §41(c)(4) percentages: 14% of QREs above 50% of the prior three-year average, or 6% if any of the three prior years had no QREs (OAR 150-315-0195).
  • Refundable? Partly, based on Oregon employees at the close of the tax year: 75% refundable with fewer than 150 employees; 50% with 150 to fewer than 500; 25% with 500 to fewer than 3,000; not refundable with 3,000 or more. The refundable portion can also offset the corporate minimum tax.
  • Transferable? No.
  • Carryforward: The nonrefundable portion carries forward up to 5 succeeding tax years.
  • Annual cap / proration: $4 million per taxpayer per tax year. Statewide certification limits under HB 2009 §8 (Oregon Laws 2023, chapter 298, section 8, not amended through the 2026 session): $35 million for the 2023–25 biennium, $80 million for 2025–27, $90 million for 2027–29 and $50 million for fiscal year 2029–30. Business Oregon's rules (OAR 123-401-0600) turn these into annual limits: $35 million for tax year 2024, $38.25 million for 2025, $41.75 million for 2026, $44 million for 2027, $46 million for 2028 and $50 million for 2029, with unused first-year amounts rolling into the second year of a biennium. If requests exceed the limit, only the part of each certification above $200,000 is reduced, by a uniform ratio.
  • Pre-approval / application and deadline: Required. File an annual written application with Business Oregon by October 15 of the calendar year in which the tax year begins (October 15, 2026 for tax year 2026), with a $3,000 fee. Business Oregon issues certifications by November 15. The one-time registration deadline of December 1, 2023 applied only to tax year 2024.
  • Forms: Business Oregon application form. Oregon Schedule OR-RESEARCH (150-102-130), Research and Development for Semiconductor Companies Credit, filed with the Oregon return.
  • Sunset / recent changes: Applies to tax years beginning on or after January 1, 2024 and before January 1, 2030. SB 1586 (2026), which would have expanded the credit, did not pass.

What it is

The credit supports semiconductor research done in Oregon. It works like the federal credit but at 15% (or the ASC rate), is capped at $4 million per taxpayer, and is partly refundable for companies with fewer than 3,000 Oregon employees. A taxpayer must be certified by Business Oregon every year, and certifications are limited by statewide caps.

Who can claim it

  • A "qualified semiconductor company": an entity whose primary business is researching, designing, developing, fabricating, assembling, testing, packaging or validating semiconductors, or creating semiconductor manufacturing equipment, core intellectual property or electronic design automation software primarily for the semiconductor industry.
  • The research must be done in Oregon and support a trade or business directly related to semiconductors.
  • The credit is available against Oregon personal income tax (ORS chapter 316) and corporate excise or income tax (ORS chapter 317).
  • The taxpayer must hold a Business Oregon certification for the tax year.

How it is calculated

  1. Determine Oregon QREs and basic research payments under IRC §41 and Treasury regulations, modified by ORS 315.518 and DOR rules.
  2. Regular method: 15% of the excess over the §41 base amount, using Oregon gross receipts (total Oregon sales).
  3. ASC election: 14% of Oregon QREs above 50% of the prior three-year average (6% of current QREs if any prior year had none). You elect and revoke under Treas. Reg. §1.41-9(b), substituting Schedule OR-RESEARCH for Form 6765.
  4. The credit is limited to the lesser of the amount Business Oregon certified and $4 million.
  5. Apply the refundability percentage for your Oregon employee count at year-end. The refundable part is paid as a refund after tax. The nonrefundable part offsets regular tax (not the minimum tax) and carries forward for up to 5 years.
  6. You cannot deduct expenses equal to the credit claimed (ORS 315.518(8)).

How to claim it

  1. By October 15 of the year the tax year begins, apply to Business Oregon with:
    • the application form and the $3,000 fee
    • a description of how you qualify as a semiconductor company
    • a description of the planned R&D and how it supports a semiconductor business, with an attestation
    • expected Oregon QREs and basic research payments, based on documented internal projections
    • QREs from the three preceding tax years
    • the credit amount you are seeking
    • a signature by an authorized officer
  2. Receive the certification, issued by November 15. Certification does not guarantee the full amount. The credit you claim depends on the Oregon expenses you actually incur and can be audited by DOR.
  3. File Schedule OR-RESEARCH with the Oregon return. The schedule warns that the credit may be denied if it is not included. Enter the refundable portion as a refundable credit and the nonrefundable portion as a carryforward credit.

Recent changes

  • HB 2009 (2023), Oregon Laws 2023 ch. 298: created the credit for tax years 2024–2029.
  • HB 2095 (2025), Oregon Laws 2025 ch. 434: deleted the statement in ORS 315.518(2) that IRC §41(c)(4) does not apply, confirming the alternative simplified credit election. Effective on the 91st day after the 2025 session adjourned.
  • OAR 150-315-0195 (DOR, effective January 1, 2025): allows the ASC election and sets rules for the refundable and nonrefundable portions.
  • OAR chapter 123, division 401 (Business Oregon): sets the October 15 application deadline, $3,000 fee, November 15 certification date, annual limits and the proration method.
  • Certifications: for tax year 2024, 20 taxpayers were certified for $32.9 million with no cap reduction. For tax year 2025, 33 taxpayers were certified for $40.3 million, with a $14.1 million reduction because requests exceeded the cap (Legislative Revenue Office, February 2026).
  • SB 1586 (2026 session): would have extended the credit to alternative energy production and biotechnology companies and changed refundability and certification. It died in the Senate Finance and Revenue Committee when the 2026 session adjourned.

Likely examiner questions

These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Oregon and other locations, how Oregon amounts reconcile to federal Form 6765, the Oregon credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Oregon tax.

  • What is the company's primary business, and how does it meet the definition of a qualified semiconductor company?
  • How does the claimed research support a trade or business directly related to semiconductors?
  • Can you provide the Business Oregon certification, and does the claimed credit stay within the certified amount and the $4 million cap?
  • Do actual Oregon QREs support the amount certified from projections?
  • How was the Oregon employee count at year-end determined for the refundable percentage?
  • For the regular method: how were Oregon gross receipts and the fixed-base percentage computed? For the ASC: what were the prior three years of Oregon QREs?
  • Was the deduction reduced by the amount of the credit?

Common weak spots

  • Companies outside the semiconductor sector, or supply-chain businesses whose primary business does not meet the statutory definition.
  • Missing the October 15 application deadline. There is no certification without a timely application.
  • Employee counts taken at the wrong date, or including non-Oregon employees.
  • Claiming more than the certified amount after proration.
  • Not filing Schedule OR-RESEARCH.

Next steps

Important

This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.

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