The Oregon Department of Revenue building in Salem on Thursday, Feb. 13, 2025. (Photo by Alan Cohen/Oregon Capital Chronicle)
Oregon lawmakers will consider nearly doubling funding for a program that provides free tax preparation to low-income families, which participating organizations say is stretched to its limits.
The Legislature created the Tax Infrastructure Grant Program in 2022 to help low-income Oregonians claim the tax credits they earned and work past barriers like limited English proficiency. More than a dozen participating organizations across the state receive funding from the Department of Human Services through this program to provide low-income families with free tax preparation year-round, but department spokesman Jake Sunderland said most need additional funding to keep up with the demand for their services.
A bipartisan group of lawmakers introduced House Bill 2991 to increase the program’s funding from $8 million to $14 million per two-year budget cycle, as demand for free tax preparation rises.
Current grantees include Oregon State University, Oregon Legal Aid Services, tribes and nonprofits that serve immigrants and farmworkers. Most are staffed with volunteers and interns and offer one-on-one tax assistance in person. The program also funds universities and high schools to train students on tax preparation and provide hands-on experience serving low-income communities.
Free tax preparation funded by the Tax Infrastructure Grant Program complements the perks of Direct File Oregon, a program created last year for eligible taxpayers to file online for free, according to Daniel Hauser, deputy director of the Oregon Center for Public Policy. However, people with language barriers or limited access to the internet may need in-person attention that they can’t get with these programs, he said.
More than 14,000 taxpayers filed through the program in 2024 and they had an average gross income of $27,818, according to a report from DHS. 15% of them had never filed taxes or had done so intermittently in the previous five years.
In 2021, the most recent year with data, 75.2% of eligible taxpayers in Oregon claimed the federal Earned Income Tax Credit, a rate lower than any other state except Alaska and Washington, D.C. Reaching 90% would require about 60,000 more eligible taxpayers to file and claim the credit each year, according to the report.
Eligible taxpayers in Oregon that don’t claim tax credits are mostly single with no dependents, work part-time and live outside of the Portland area, according to the report. They are also more likely to get significant amounts of withholding refunded once they file.
To qualify for the federal EITC and the Oregon Earned Income Credit, last year single taxpayers without children must have earned less than $18,591. Single filers with one child could have earned up to $49,084, those with two children $55,768 and those with three or more children $59,899. Married couples filing jointly have slightly higher minimums to qualify.
Limited coverage in rural areas
Most participating organizations are in urban areas and the coast, leaving eastern Oregon with few accessible and affordable tax preparers.
To qualify for grant funding, tax preparers must go through “strict training and security protocols,” Sunderland said.
“Rural communities often have fewer professionals able to support this work,” he said.
However, if the Legislature approves additional funding for the program, it will be able to open new sites in rural counties — which have the highest rates of taxpayers eligible for tax credits — and expand the capacity of the existing organizations throughout the state, Sunderland said.
Return on investment
In 2022, the most recent year with data, $460 million was awarded through the EITC to 218,000 Oregon taxpayers, representing an average of approximately $2,100 per claimant.
For people like Brandy Nelson-Chalmers, a 52-year-old waitress from Coos Bay, this money can make a big difference. She received $3,995 in tax credits in 2023 after filing with Moneywise, a tax preparer organization funded by the Tax Infrastructure Grant Program.
Nelson-Chalmers needed in-person help to file taxes and described the process as “quite easy” and straightforward. She is using the money for repairs and other household costs.
“I plan on fixing my doorway because it’s rotting out,” she said.
Although Nelson-Chalmers filed every year, the program serves others with backlogs of several years without filing. In some cases, families who haven’t filed taxes in a few years end up receiving thousands of dollars in refunds for prior years once they have help filing taxes, Hauser said.
Low-income Oregonians could get almost $100 million more per year from the EITC alone if all eligible taxpayers filed, the Oregon Center for Public Policy estimates. More money in the hands of Oregonians would lead to higher spending at local businesses and a stronger Oregon economy, Hauser said.
The money that goes into the Oregon economy in tax credits through the program is “well in excess” of the cost, making it highly efficient, Hauser said.
Additional funding for the Tax Infrastructure Grant Program is not the only proposal this session that tackles tax credits and tax preparation. Lawmakers are considering a bill that would double the Oregon EIC amount starting next year, also sponsored by members of both parties.
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