Disconnecting Oregon’s Tax Code Would Hurt Working Families

By Matt Bunch, For The Sandy Standard

There’s been a lot of talk in Salem lately about “disconnecting” Oregon’s tax code from the federal system. On the surface, it may sound like a harmless policy debate. But under the hood, it’s a move that would quietly take money out of the pockets of working Oregonians and reduce tax breaks for the very people already struggling to get by.

One bill, HB 4015, brings this issue into focus but the larger conversation is about whether Oregon should abandon key parts of the federal tax reforms from the Tax Cuts and Jobs Act (HR1), also known by some as the “big beautiful bill.” That historic package offered meaningful relief to working-class Americans, including tax breaks for tips and overtime pay — the extra earnings that help families put food on the table, pay rent, and cover childcare or medical expenses.

By “disconnecting” from the federal tax code, Oregon would strip away these benefits at the state level. That means while the federal government may choose not to tax certain kinds of income, like hard-earned overtime or tips, Oregon would still collect state income tax on it. The result? You’d owe more, just for working harder.

Who Gets Hurt?

It’s not CEOs or lobbyists who are hurt by this. It’s servers, bartenders, mechanics, caregivers, farm workers, and parents picking up extra shifts to make ends meet. It’s small business employees clocking overtime in busy seasons. These are the people who will feel the hit if Oregon walks away from these federal tax protections.

Instead of rewarding hustle and hard work, disconnecting from federal tax policy punishes it. And in a time when inflation, housing costs, and basic expenses are already crushing families, that’s exactly the wrong move.

A Blow to Local Businesses

This policy doesn’t just hurt workers – it hurts employers, too. Small businesses already face rising costs and staffing challenges. Disconnecting from the federal code creates confusion, inconsistency, and added administrative burdens for payroll and HR systems, especially for businesses that operate across multiple states.

And when employees see less take-home pay because the state is taxing what the feds don’t, it becomes even harder to retain talent or staff up during peak demand.

Just Because It’s Legal Doesn’t Mean It’s Right

Some lawmakers and bureaucrats will argue that the legislature has the authority to “decouple” Oregon from federal tax law — and they’re right, legally. But that doesn’t make it fair, smart, or what the people want. Oregonians didn’t ask for this. In fact, many support syncing with federal reforms because they provide simple, transparent, and meaningful tax relief to those who need it most.

We Should Be Helping, Not Hurting

The bottom line is this: Oregon should be making it easier for families and businesses to survive and thrive, not inventing new ways to collect more taxes from people who can least afford it.

Rejecting tax breaks for tips and overtime is not just bad policy, it’s a betrayal of working people. Disconnecting from the federal tax code might be convenient for state bean counters, but for the people doing real work, it’s just another hit to the wallet.

Now is the time for leaders to stand up and say no. Let’s protect the tax relief working Oregonians have earned, not take it away when they need it most.