The Oregon Legislature began its 2026 session with a busy agenda, introducing nearly 300 bills within the first week. Anthony Smith, Oregon State Director for the National Federation of Independent Business (NFIB), reported that despite hopes for a budget-focused short session, legislators are considering a wide range of proposals.
Smith noted that NFIB opposed seven bills in the initial days, expressing concern about measures that could raise costs for households and small businesses in Oregon. “With affordability top of mind for Oregon households and small businesses, it’s extremely disappointing to see so many legislative measures that would increase costs and further weaken Oregon’s already fragile economy and business climate,” Smith stated.
NFIB responded by issuing action alerts on five key issues. According to Smith, these alerts prompted hundreds of messages from NFIB members urging lawmakers to reject legislation perceived as harmful to small businesses.
One area drawing attention is federal tax conformity. Two bills under consideration address how Oregon’s state income tax code aligns with federal law. HB 4015 proposes updates to align state tax law with the Internal Revenue Code (IRC). Smith indicated NFIB would support this bill if no anti-business amendments are added.
More controversy surrounds SB 1507. Initially introduced as a sales tax measure, it has become the main vehicle for what is called a “federal disconnect.” Senate Finance and Revenue Committee Chair Anthony Broadman (D-Bend) and House Revenue Committee Chair Nancy Nathanson (D-Eugene) released their tax plan on the session’s first day. The plan disconnects from three provisions of the 2025 Federal Tax Bill (H.R. 1): a deduction for interest on car loans ($36 million), a capital gains reduction for investments in qualified small business stocks ($39 million), and full bonus depreciation ($267 million).
NFIB testified against SB 1507 during a public hearing on February 4. Smith explained that “100% bonus depreciation is a mechanism by which a business can purchase a piece of equipment or machinery and deduct the full cost of the purchase in the year it was placed in service rather than spreading that deduction out over the full depreciation schedule, which can be up to 20 years.” He argued this policy encourages investment in modern equipment but warned that disconnecting from it may result in short-term revenue increases at the expense of future budgets.
SB 1507 also includes amendments expanding Oregon’s earned income tax credit for low-income workers and introduces a new job-creation tax credit requiring businesses to apply through Business Oregon before funds run out. Smith expressed skepticism about this approach: “Small businesses aren’t going to make hiring decisions based on a temporary tax credit program that requires them to first jump through hoops and then hope for the best.”
SB 1507 is scheduled for further discussion in committee on February 9.
The legislature is also considering two identical bills—SB 1506 and HB 4027—that would increase payroll taxes split between employers and employees to fund investigations by the Bureau of Labor and Industries (BOLI). These proposed changes would affect the Workers’ Benefit Fund assessment, currently set at 1.8 cents per hour worked per employee.
Smith stated during testimony on SB 1506: “When an injured worker has a discrimination claim based on the worker’s status as an injured worker, the WBF pays BOLI to investigate the claim, but that’s where BOLI’s nexus to the WBF starts and stops.” He argued additional resources could come from existing General Fund dollars or new dedicated taxes instead of expanding use of current assessments.
He also pointed out constitutional requirements: “According to the Oregon Constitution, a bill for raising revenue must start in the Oregon House of Representatives and it must pass in both chambers of the Legislature by a three-fifths supermajority.” Smith raised concerns about using specific funds like WBF as general sources for agency funding without following proper legislative processes.
Work sessions are scheduled next week: SB 1506 will be discussed February 9 at noon by Senate Committee on Labor and Business; HB 4027 will have its public hearing later that afternoon before House Committee on Labor and Workforce Development. NFIB plans continued opposition.
