Paid Leave Oregon SALT Deduction

[jahooton]

Hello,

TurboTax Deluxe desktop 2025 is not including Paid Leave Oregon withholdings/contributions on my W-2 as part of the State and Local Tax (SALT) Deduction on my federal tax return as part of my itemized deductions.  This withholding should be deductible for federal tax purposes.  Can you confirm when this bug will be corrected?

[DaveF1006]

This isn't a code bug but a categorization mismatch during your W-2 entry. When you enter your Box 14 information, TurboTax provides a dropdown menu.

1. The "Trap": If you select "OR Paid Leave" or "Other (not classified)," the software treats it as a non-deductible insurance payment.
2. The Correction: To force the software to include it in your SALT deduction, you must categorize it as "Other deductible state or local tax."

[jahooton]

@DaveF1006 yeah but the problem with selecting "Other deductible state or local tax" is the software then codes the Paid Leave Oregon contribution as deductible for both federal and Oregon state income tax purposes, which is also not correct.  Oregon has explicitly excluded Paid Leave Oregon contributions from deductible state and local income taxes for State income tax purposes.

[DaveF1006]

Yes, to prevent the disallowed deduction on your state return, you must manually add that amount back to your Oregon income.

Navigate to the Oregon State section of TurboTax.

1. Look for a screen titled "Income or Deductions to Modify" or "Oregon Additions." It should be in a screen that says "Here is the income Oregon Handles Differently." 
2. Select "Other Additions" or "Federal Itemized Deduction Adjustments."
3. Enter the amount of your Paid Leave Oregon contribution as an Addition. 
4. If this is a form, and you don't see PFML listed, there is a blank line at the bottom of the form where you enter this information. 
5. Put the addition in the oregon column but leave the federal column blank.
6. Label it "PFML Deduction Adjustment" or similar.
7. If it asks for a code, use 131. 
8. Once this is entered, it'll appear as an addition to Oregon income on line 8 of Form 1040.

[LonglostCPA]

There is no drop down menu available in box 14 for me. Is there something else I have to do to get that ?

[RogerD1]

You can go back to your W-2 entries and under Box 14 and supplemental statement you can enter a description of the box 14 item, the $ amount, and the Category box will have a drop down menu where you can select the category of the box 14 item.