Oregon Code § 315.119·Enacted ·Last updated March 01, 2026
Statute Text
On-farm processing facilities.
(1) As used in this section:
(a) Effective
property tax rate means:
(A) The ratio of
the total amount of property taxes imposed on the account that contains the
machinery and equipment for which a credit is being claimed (after application
of ORS 310.150 but prior to discount under ORS 311.505) over the assessed value
of the property tax account; and
(B) The ratio
determined under subparagraph (A) of this paragraph for the property tax year
that begins in the income tax year for which the credit is claimed.
(b) Farm
operator means a person that operates a farming business as defined in section
263A of the Internal Revenue Code.
(c) Machinery
and equipment means machinery and equipment that meets the definition of
section 1245 property in section 1245 of the Internal Revenue Code.
(d) Processing:
(A) Means any
activity that is directly related and necessary to clean, sort, grade, produce,
prepare, manufacture, handle, package, store or ship a farm crop or livestock
product after the point of harvest and before the point of sale, in a modified
state or altered form.
(B) Does not
include an activity primarily associated with the promotion or retail sale of a
product for personal or household use that is normally sold through consumer
retail distribution.
(e) Qualified
machinery and equipment means machinery and equipment used in processing that
meets the requirements of subsections (3) and (4) of this section for the tax
year.
(2) A taxpayer
who is a farm operator may claim a credit against the taxes that are otherwise
due under ORS chapter 316 or, if the taxpayer is a corporation, under ORS
chapter 317 or 318 for ad valorem property taxes paid or incurred on qualified
machinery and equipment.
(3) A credit
under this section may be claimed only if:
(a) The machinery
and equipment is owned by the farm operator or by a person who is related to
the farm operator under section 267 of the Internal Revenue Code;
(b) The machinery
and equipment is used for processing primarily occurring on land described in
subsection (4) of this section; and
(c)(A) The farm
operator has grown or raised at least one-half of the total volume of farm crop
or livestock products processed with the machinery and equipment for which the
credit is being claimed in three of the five previous income tax years; or
(B)(i) The farm
operator has grown or raised at least one-tenth of the total volume of farm
crop or livestock products processed with the machinery and equipment for which
the credit is being claimed in three of the five previous income tax years; and
(ii) The farm
operator has used the machinery and equipment to process at least one-half of
the volume of the applicable farm crop or livestock products grown or raised by
the farm operator in three of the five previous income tax years.
(4) In addition
to the requirements under subsection (3) of this section, a credit under this
section may be claimed only if:
(a) The machinery
and equipment is located on land that is specially assessed for farm use under
ORS 308A.050 to 308A.128 and the machinery and equipment is owned or otherwise
controlled by the farm operator; or
(b) The machinery
and equipment is located on land that is contiguous to land that is specially
assessed for farm use under ORS 308A.050 to 308A.128 and the machinery and
equipment is owned or otherwise controlled by the farm operator.
(5) A credit may
be claimed under this section only for qualified machinery and equipment that
was subject to assessment and property taxation for the property tax year
beginning in the income tax year for which the credit is being claimed.
(6) The amount of
the credit shall be the lesser of:
(a) The effective
property tax rate multiplied by the adjusted basis of the qualified machinery
and equipment; or
(b) $30,000.
(7) The adjusted
basis of the qualified machinery and equipment shall be the adjusted basis of
the qualified machinery and equipment for personal income or corporate excise
or income tax purposes as of the last day of the income tax year for which the
credit is being claimed, except that the adjusted basis shall be increased by
the cost of any qualified machinery and equipment that the taxpayer elected to
expense under section 179 of the Internal Revenue Code, until the qualified
machinery and equipment is fully depreciated for personal income or corporate
excise or income tax purposes. The adjusted basis shall reflect any
depreciation allowable for the current tax year. A credit under this section
may not be allowed for a tax year in which the qualified machinery and
equipment is fully depreciated for personal income or corporate excise or
income tax purposes.
(8) The credit
allowed under this section for any one tax year may not exceed the tax
liability of the taxpayer.
(9) Any tax
credit otherwise allowable under this section that is not used by the taxpayer
in a par