Does Oregon follow the federal no-tax-on-tips and overtime deductions?
CONFORMS
Oregon follows the federal deductions, so qualified tips and overtime are deductible for state income tax as well as federal, subject to the details and years in the state's own guidance below. You still claim the federal deduction on Schedule 1-A first.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Oregon position |
|---|---|
| Federal tips deduction (IRC §224) | Conforms |
| Federal overtime deduction (IRC §225) | Conforms |
What the state itself says
- Official source
- Oregon Department of Revenue, "2025 Publication OR-40-FY, Oregon Income Tax Full-Year Resident Forms and Instructions" (150-101-040-1)
- Tax years covered
- 2025; conformity continues for 2026+ (see note).
Oregon has a rolling tie to the federal definition of taxable income and starts from federal taxable income, so the deductions flow through automatically. In 2026, SB 1507 (Or. Laws 2026, ch. 142) disconnected Oregon only from the vehicle-loan-interest deduction, the QSBS exclusion, and bonus depreciation for TY2026+ — tips and overtime were NOT disconnected (per DOR's official "2026 Summary of Legislation" page).
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.