Article | by Chris Walker, CPA

Governor Tina Kotek signed Senate Bill 1510 on March 31, 2026, extending Oregon’s Pass-Through Entity Elective (PTE-E) Tax program through tax years beginning before January 1, 2028. The extension provides qualifying passthrough entities two additional years to take advantage of a program to pay Oregon income tax at the entity level and be able to fully deduct the tax paid for federal tax purposes. The individual owners receive a credit for the PTE-E tax paid by the passthrough entity.

That context matters now more than ever. The One Big Beautiful Bill Act (OBBBA) of 2025 raised the individual SALT deduction cap from $10,000 to $40,000 for tax years beginning after December 31, 2024, but the higher cap phases out for individuals with modified adjusted gross income exceeding $500,000 and reverts to $10,000 in 2030. For high-income business owners subject to the phaseout, the PTE-E election may continue to offer meaningful advantages since entity-level deductions are not subject to the cap or the income-based phaseout.

Participation requires that all owners of the entity be individuals subject to Oregon personal income tax, or pass-through entities owned entirely by such individuals. The election is made annually by filing Form OR-21 electronically by the return due date, including extensions. The elective tax is calculated at 9% on the first $250,000 of eligible income and 9.9% on eligible amounts above that threshold. Only Oregon source income is included in the eligible income, non-Oregon source income does not qualify. For 2026, the Department of Revenue is allowing the first and second quarter estimated payments to be made together by June 15 without penalty.

If you have questions about the PTE-E extension, contact your Geffen Mesher advisor.

About Geffen Mesher: Geffen Mesher, a Portland-based accounting firm, focuses on providing ongoing financial strategy, accounting and tax advisory services for businesses and individuals. We serve numerous industries and create solutions that help our diverse clientele plan and build their financial futures wisely. Learn more at gmco.com.