On July 24, 2025, Oregon Governor Tina Kotek signed into law H.B. 2271, which provides certain Oregon employers with a nonrefundable tax credit against their state unemployment insurance (SUI) tax liability for calendar year 2025. The credit amount is the lesser of $5,000 or the employer's total SUI taxes due for 2025. Tax credits less than $100 in any calendar year are not allowed.

The credit applies to employers that:

• Have a SUI tax rate in 2025 that is at least two and one-half percentage points less than in 2024
• Had an experience-based SUI tax rate for calendar year 2020
• Did not have a SUI tax rate that included in the calculation the transfer or trade for another business in calendar years beginning on or after January 1, 2021
• Filed all wage reports and paid all SUI taxes for calendar years 2024 and 2025 in a timely manner
• Have paid, or are complying with terms of payment for, all outstanding SUI-tax-related obligations as of January 1, 2025

Background

In 2021, Oregon's H.B. 3389 was enacted to mitigate the impact of elevated SUI tax rates triggered by a surge in claims during the COVID-19 pandemic. The legislation froze employers' experience ratings, which are used to calculate their tax rates, at 2020 levels for tax years 2022 through 2024. This measure, while providing relief to many, prevented some employers from benefiting from improved experience ratings that could have reduced their tax rates during this period. To address this, the tax credit under H.B. 2271 aims to compensate businesses that missed out on lower SUI tax rates due to the earlier freeze. (Staff Summary, House Committee on Revenue ; Oregon 2025 Experience Rate Changes.)

Ernst & Young LLP insights

Qualifying employers should discuss the 2025 SUI tax credit with their employment tax advisors and take the steps necessary to claim the credit with the Oregon 2025 fourth-quarter SUI tax return.