Qualifying child of taxpayer

# (1)

As used in this section:

# (a)

“Dependent” means an individual who is under the age of six years at the close of the tax year and who is a dependent of a taxpayer as described in section 152(a) of the Internal Revenue Code, determined without regard to section 152(b)(3) of the Internal Revenue Code.

# (b)

“Qualifying child” has the meaning given that term in section 152(c) of the Internal Revenue Code.

# (c)

“Qualifying income limit” means:

(A) For a taxpayer other than a taxpayer described in subparagraph (B) of this paragraph, adjusted gross income, as defined in section 62 of the Internal Revenue Code, as modified using Oregon subtractions and additions, but with the sum of the following added back:

(i) Losses of the taxpayer, to the extent that those losses exceed $20,000; and

(ii) Foreign earned income, as defined in section 911 of the Internal Revenue Code, that is excluded from adjusted gross income.

(B) For a nonresident or part-year resident, the greater of the amount determined under subparagraph (A) of this paragraph, or adjusted gross income, as defined in section 62 of the Internal Revenue Code.

# (2)

A taxpayer shall be allowed a credit against the tax otherwise due under ORS chapter 316 for the tax year, with an amount allowed for each dependent of the taxpayer who is a qualifying child with respect to the taxpayer, not to exceed five properly claimed dependents per tax return. The credit shall be allowed as provided in subsections (3) and (4) of this section. A taxpayer may claim a credit under this section using an individual taxpayer identification number and may claim it for dependents using individual taxpayer identification numbers.

# (3)

The credit under this section:

# (a)

Shall be in an amount of $1,000 per dependent of the taxpayer, but, if the taxpayer has a qualifying income limit in excess of $25,000, regardless of the type of income tax return filed by the taxpayer, the total amount of the credit shall be reduced as provided in subsection (4) of this section.

# (b)

May not be claimed if the percentage calculated in subsection (4) of this section is greater than or equal to 100 percent.

# (c)

May not be claimed by a married taxpayer who files a separate return.

# (4)

If a reduction under subsection (3) of this section is required, the amount by which the credit shall be reduced is computed by multiplying the amount otherwise available under subsection (3) of this section by a percentage. The percentage is computed by dividing, by 5,000, the amount by which the taxpayer’s qualifying income limit exceeds $25,000.

# (5)

# (a)

For tax years beginning in each calendar year, the Department of Revenue shall adjust the dollar amounts of the credit and of the income threshold set forth in subsections (3) and (4) of this section by multiplying each dollar amount by the cost-of-living adjustment for the calendar year.

# (b)

For purposes of paragraph (a) of this subsection, the cost-of-living adjustment for any calendar year is the percentage (if any) by which the monthly averaged U.S. City Average Consumer Price Index for the 12 consecutive months ending August 31 of the prior calendar year exceeds the monthly averaged index for the second quarter of the calendar year 2022.

# (c)

As used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of Labor Statistics of the United States Department of Labor.

# (d)

If any increase determined under paragraph (a) of this subsection is not a multiple of $50, the increase shall be rounded to the next lower multiple of $50.

# (6)

# (a)

If the amount allowable as a credit under this section, when added to the sum of the amounts allowable as payment of tax under ORS 316.187 or 316.583, other tax prepayment amounts and other refundable credit amounts, exceeds the taxes imposed by ORS chapters 314 and 316 for the tax year after application of any nonrefundable credits allowable for purposes of ORS chapter 316 for the tax year, the amount of the excess shall be refunded to the taxpayer as provided in ORS 316.502.

# (b)

The credit under this section shall be computed after the allowance of any other credit or offset against tax liability.

# (7)

A nonresident or part-year resident shall be allowed the credit under this section in the same manner and, aside from the taxpayer’s applicable qualifying income limit, subject to the same limitations as a resident. However, the credit shall be prorated using the proportion provided in ORS 316.117.

# (8)

If a change in the tax year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer’s tax year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085.

# (9)

If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117.

# (10)

Refunds attributable to the child tax credit allowed under this section do not bear interest.