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The Oregon Legislature approved House Bill (HB) 4002 in February 2022. The measure requires agricultural employers to pay certain workers for overtime hours worked and creates a refundable personal or corporate income tax credit for employers for a percentage of wages paid as overtime pay to agricultural workers for calendar years 2023 through 2028.
Taxpayers who apply for the tax credit will be granted an automatic filing extension. The bill also specifies the hour threshold at which overtime is paid for different years, industries, and number of employees. See the Agricultural Employer Overtime Tax Credit Tables below.
Also, Senate Bill (SB) 1524 (2022) added the provision that a three-year net operating loss carryback is allowed for eligible taxpayers.
HB 4002 tasks the Oregon Department of Revenue (DOR) with creating the refundable tax credit program with associated application process, tax forms, and apportionment criteria if all applications exceed the $55 million annual cap on the total credit approved by the Legislature.
Applications for the tax credit open January 1, 2024 and are due by January 31, 2024.
Written notice to all qualifying applicants will be provided no later than June 1, 2024. The notice will state the maximum amount of the credit the taxpayer is eligible to claim on their return.
The department hosted several listening sessions between July 11, 2022 and July 21, 2022 with representatives from different agricultural sectors and groups. Representatives from the Bureau of Labor and Industries (BOLI), Employment Department, Department of Agriculture, and Business Oregon were also at each session. The purpose of the listening sessions was for the department to better understand:
The information gathered will help the department move forward with design of the application process and determine the information employers will need to apply for the overtime wage tax credit. We appreciate the knowledge shared and are eager to continue with the implementation process.
A PDF file of the PowerPoint used during the listening sessions and a one-page summary of the information shared with participants is available in the quick links. If you need to reach out to the team, please email us.
Employers using NAICS codes 111 for crop production or 112 for animal production and aquaculture that paid overtime wages to agricultural employees working in Oregon.
Employers using multiple NAICS codes will need to allocate the employee hours attributed to each activity. The tax credit percentage will be based on the overtime wages allocated to each NAICS code.
This answer was removed due to the complexity of the issue. Please contact BOLI for questions regarding overtime hours.
This answer was removed due to the complexity of the issue. Please contact BOLI for questions regarding exempt overtime employees.
Please see BOLI's website for details for a Farm/Forest Labor Contractor and requirements to be licensed .
purposes of the tax credit, each
agricultural employer’s share of the overtime paid for actual hours worked will
be determined between the employer and the FLC. Employers will apply for the tax
credit for overtime paid
For purposes of the tax credit, each agricultural employer's share of the overtime paid for actual hours worked will be determined between the employer and the FLC. Employers applying for the tax credit will need information such as the number of employees, total hours worked, overtime hours worked, and amount of overtime wages paid.
Please visit BOLI's webpage to determine if you are considered a FLC. Employers may still apply for the tax credit for the actual overtime wages paid to their employees when the employees worked directly for the employer. The employer will need to keep appropriate records to ensure accurate information is reported when applying for the tax credit.
The bill defines FTE as 2,080 hours of one or multiple employees worked in a calendar year.
For example: 10,400 total hours worked in a calendar year ÷ 2080 hours = 5 FTE.
Yes, all hours worked by all employees exempt or not exempt are included in the calculation of FTE.
Employers need to include the out of state hours worked by all their employees when calculating the FTE. However, the bill only allows a tax credit for the agricultral overtime wages for hours worked in Oregon.
No, the bill only allows the tax credit above the threshold for the year. See the Agricultrual Employee Overtime Tax Credit Tables for the threshold that applies to you.
Please gather your records for January 1, 2023 – December 31, 2023. Even if you are a fiscal filer, you will report on information for the last calendar year. You will need the following documents and information on hand to complete the application:
If you are a pass-through entity and the credit will be passed to the owners or partners, their information can be entered in Section F of the application. You will need the following information:
No. Answer no to line 6 of Section F on the application. Then file Form OR-TFR, Transfer Notice for Certain Credits to the department within 10 days of filing your application.
Even if you are a fiscal filer, you will report on information for the last calendar year.
Example: Alpha Corp, a C Corporation, will end its fiscal year 2023 August 31, 2024. Alpha Corp will use information from January 1 – December 31, 2023 to complete the application by January 31, 2024. (See What information will I need to complete the credit application?) The department will send a notice of acknowledgement letter by June 1, 2024 with the approved credit amount. The credit amount will be claimed on Alpha Corp's 2023 income tax return when filed after August 31, 2024.
Even if you are a fiscal filer filing a short year return, you will report on information for the last calendar year.
Example: Delta Corp, a C Corporation will end its fiscal year 2023 August 31, 2024. Delta Corp will use information from January 1 – December 31, 2023 to complete the application by January 31, 2024. (See What information will I need to complete the credit application?) Delta Corp merged with Echo Corp, a C Corporation, on January 1, 2024. Delta Corp is required to file a short return for tax year 2023. All applicants will receive an automatic six-month extension to file their Oregon return. The department will send a notice of the acknowledgement letter by June 1, 2024 with the approved credit amount. Delta Corp will wait for the letter to claim the amount on the Oregon short-year return.
For general questions about the employer tax credit for agricultural worker overtime, email: Ag.Overtime@dor.oregon.gov
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