Some states use the stimulus payments when figuring certain deductions from taxable income. Oregon is one state that does that.
The state of Oregon does not tax the stimulus payments or rebate credits directly. Oregon reduces your taxable income by your federal tax liability. But they make adjustments to that reduction. Your stimulus payment(s) and the recovery rebate (if you did not receive your full payments) are subtractions to your federal tax liability number on your Oregon state return Line 10 of Form 40). So, the reduction to taxable income is less which equates to a higher taxable Oregon income.
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