Transfer tax on new, used vehicles eliminated in amended Oregon transportation bill

A proposed amendment to House Bill 2025, the multibillion-dollar transportation bill to fund the Oregon Department of Transportation, cities and counties and finish major projects from a 2017 transportation package, removes a proposed transfer tax on new and used vehicles and has a one-time increase in the gas tax.

The amended version of HB 2025 was uploaded June 25. A draft revenue estimate obtained by the Statesman Journal forecasts that the legislation would bring in $11.7 billion over the next 10 years, nearly $3 billion less than the original estimate.

The Joint Committee on Transportation Reinvestment is scheduled to hold a public hearing at 3:30 p.m. on June 26 before voting on whether to send the bill to the floor

The amendment was brokered by House Speaker Julie Fahey, D-Eugene, in an attempt to garner support for the bill after some Democrats expressed concerns.

What does the latest amendment to Oregon House Bill 2025 propose?

The amendment would increase the gas tax by 12 cents a gallon on Jan. 1, 2026, bringing the Oregon gas tax to 52 cents per gallon. The original bill raised the tax by 10 cents on Jan. 1, 2026, then again by five cents on Jan. 1, 2028, before being indexed to inflation using the Consumer Price Index after 2029.

The proposal would not include a transfer tax on the sales price of vehicles. The bill currently includes a 2% tax on the sales price of all new vehicles and a 1% tax on used vehicles sold for more than $10,000.

A privilege and use tax, which are currently 0.5%, would increase to 2.25% beginning July 1, 2028, under the amendment. The privilege tax, paid by car dealers, would be expanded to also include used vehicles sold for more than $10,000. The use tax applies to vehicles purchased out of state and also would expand to used vehicles. The bill would currently increase both taxes to 1% beginning Jan. 1, 2026.

Increases to the payroll tax that funds transit would not change from the current proposal of increasing from 0.1% to 0.18% in 2026 before increasing to 0.25% in 2028 and 0.3% in 2030.

Oregon transportation bill amendment redirects some funds

The amendment would also change the distribution of some of the revenue.

Revenue from the privilege tax would be distributed as follows:

• 38% to the Great Streets Fund. The original bill specified $125 million.
• 38% to an Anchor Projects Fund for major projects. Funds would first go toward the completion of the Rose Quarter project and Abernethy Bridge project before being distributed to the Interstate 205 widening, the Newberg-Dundee Bypass and the Center Street Bridge seismic retrofit projects. The original bill specified $125 million.
• 10% to the Zero Emission Incentive Fund for vehicle rebates.
• 8% to the Connect Oregon Fund for rail, aviation and marine projects.
• 6% to the Railroad Fund for public transportation by rail.

Half of the funds from the privilege tax were previously going to the railroad fund, and the remaining 50% was split, with $12 million or 45%, whichever was larger, going to the Zero Emission Incentive Fund.

Revenue from the use tax would be distributed into the State Highway Fund, which is where revenue from the gas and use taxes and fees go, as follows:

• Up to $5 million would first go to the Wildlife-Vehicle Collision Reduction Fund. The original bill put $5 million into this fund.
• Up to $25 million would then go to the Safe Routes to School Fund. The original bill put $25 million into this fund.
• Any remaining money would be allocated as follows:
  • 50% to ODOT
  • 30% to counties
    • 1.37% or $3.5 million of that 30% to small counties
  • 20% to cities

(This story will be updated.)

Dianne Lugo contributed.

Anastasia Mason covers state government for the Statesman Journal. Reach her at acmason@statesmanjournal.com or 971-208-5615.