What you need to know for 2025 tax brackets
Learn how 2025 tax brackets work and what they mean for your income tax this season.
Some Oregonians who filed their taxes early may receive less than they thought as the Oregon Department of Revenue announced approximately 500 taxpayers will have their refund adjusted after receiving the state’s Kids Credit in error.
The agency provided incorrect instructions for tax forms and with tax preparation software partners at the start of the 2026 tax season regarding how to claim the Oregon Kids Credit.
“As a result, a small number of taxpayers who are not eligible for the Oregon Kids Credit calculated and claimed the Oregon Kids Credit on their returns,” the Department of Revenue said in a release. “An additional small number of taxpayers who are eligible to claim the Oregon Kids Credit claimed too large of a credit.”
Here’s what to know about the error and how it’s being corrected.
How many 2025 tax returns were impacted by the error?
Since the 2026 tax season opened on Jan. 26, the agency said it has processed about 135,000 returns, and the new federal deductions impacted fewer than 500 of those returns, according to the agency.
While the department expects that number to grow as the correction is updated across all filing systems, the agency anticipates that the total number of affected returns will remain low.
“Our IT team will work through the weekend to update our systems to make sure taxpayers don’t face delays because of this error,” DOR Chief Information Officer Jon Dolan said. “We expect Direct File Oregon to be accurately filing returns for Oregon Kids’ Credit claimants by early next week.”
The department recommends that taxpayers who plan to try to claim the Oregon Kids Credit wait to file until Direct File Oregon, or the tax filing software they use, has been fully updated.
What happens to Oregonians who may have received the tax credit in error?
The Department of Revenue is automatically adjusting any returns affected by the error.
Any Oregon taxpayer who may have received the Kids Credit or too large of a credit as a result of the error does not need to take any action. They will be notified of the adjustment by mail, as well as through their Revenue Online account.
“We will make the correction to their return, but we also want to manage taxpayers’ expectations,” Department of Revenue Director David Gerstenfeld said. “Unfortunately, their refund may be less than they anticipated. We know that a difference of even $100 can be very impactful for low-income families with young children, and we sincerely apologize for the error.”
How can Oregonians correctly claim the Oregon Kids’ Credit?
Oregon taxpayers claiming the Oregon Kids Credit are now offered a new form of assistance by the Oregon Department of Revenue to ensure they claim the correct credit amount when they electronically file their tax year 2025 return.
What is the Oregon Kids’ Credit?
The Oregon Kids Credit is a refundable credit for low-income families with young dependent children.
The full credit offers $1,050 per child, up to five children, on a modified adjusted gross income of $26,550 or less. A partial credit is also available for families with a modified adjusted gross income of up to $31,550.
What was the error?
To qualify for the Kids Credit, Oregonians must meet the requirements for their modified adjusted gross income.
The error stemmed from how new federal deductions created under House Resolution 1, known as the One Big Beautiful Bill, for overtime pay, tips, and new car loan interest are calculated when determining Oregon taxpayers’ modified adjusted gross income.
According to the agency, the federal legislation made major changes to tax law that were quickly incorporated into Department of Revenue forms, instructions and processes. Incorrect instructions were provided on forms for the federal deductions, creating an error in calculating the modified adjusted gross income.
Where can Oregonians go if they have questions about the Kids Credit?
For any questions regarding the Oregon Kids’ Credit, Oregonians can visit the department’s website at www.oregon.gov/dor/programs/individuals/Pages/okc-faq.aspx.
Taxpayers can also call 503-947-0350 or email questions.dor@dor.oregon.gov.
Ginnie Sandoval is the Oregon Connect reporter for the Statesman Journal. Sandoval can be reached at GSandoval@statesmanjournal.com or on X at @GinnieSandoval.
