Oregon Semiconductor R&D Tax Credit Glossary
This glossary provides essential definitions for navigating the Oregon Semiconductor Research and Development Tax Credit. It covers key statutes (e.g., ORS 315.518), eligibility criteria for "Qualified Semiconductor Companies," and calculation metrics like the 15% applicable percentage. The guide clarifies specific provisions for refundability rates based on employee count, carry-forward rules until 2029, and the transition from prior credit methods to the new semiconductor-specific incentives established by House Bill 2009.
| Glossary Term | Definition |
|---|---|
| Research and Development Tax Credit for Semiconductors | State tax incentive designed to encourage semiconductor research and manufacturing activities within Oregon. |
| ORS 315.518 | The specific Oregon statute outlining the rules, transferability, and limitations of the semiconductor credit. |
| Qualified Semiconductor Company | A business entity legally certified as engaged in semiconductor manufacturing or research in Oregon. |
| Qualified Research Expenses (QREs) | Allowable costs for wages, supplies, and contracts directly linked to qualified research activities. |
| Basic Research Payments | Payments made to qualified non-profit organizations or universities for original scientific investigation advancement. |
| In-House Research Expenses (Oregon) | Internal costs incurred for wages and supplies used directly in research performed by employees. |
| Contract Research Expenses (Oregon) | Portion of expenses paid to third parties for conducting qualified research on the taxpayer's behalf. |
| Corporate Excise Tax (Chapter 317) | Tax imposed on the privilege of doing business in Oregon, measured by net income. |
| Personal Income Taxes (Chapter 316) | Taxes on individual income against which pass-through entities may apply the semiconductor research credit. |
| Corporate Minimum Tax (ORS 317.090) | The minimum tax liability a corporation must pay, which credits may potentially offset. |
| Oregon Business Development Department (OBDD) | State agency responsible for certifying semiconductor companies and administering economic development programs. |
| Certification (Semiconductor Credit) | Official approval from the OBDD verifying a company's eligibility for the semiconductor tax credit. |
| Registration Form (Semiconductor Credit) | Initial documentation required to register a business as a potential claimant of the credit. |
| Annual Application (Semiconductor Credit) | Yearly submission required to claim the credit based on the prior year's research expenses. |
| Taxpayer Eligibility | Criteria determining if a taxpayer meets the statutory requirements to claim the R&D credit. |
| Tax Year Beginning On or After January 1, 2024 | The effective start date for the new semiconductor R&D tax credit regulations and provisions. |
| Tax Year Beginning Before January 1, 2030 | The sunset provision date marking the final tax year the credit is currently authorized. |
| Applicable Percentage (15%) | The statutory rate applied to qualified research expenses to calculate the base credit amount. |
| Maximum Credit Per Taxpayer ($4 million) | The upper limit of credit value a single taxpayer can claim in a specific year. |
| Total Aggregate Credit Limitation (Biennium Caps) | The total amount of credits the state will issue to all taxpayers within a biennium. |
| Oregon Laws 2023, Chapter 298 (HB 2009) | Legislation enacting the Oregon CHIPS Act and establishing the semiconductor R&D tax credit. |
| Refundable Portion of the Credit | The amount of the tax credit that can be refunded if it exceeds tax liability. |
| Non-Refundable Portion of the Credit | The segment of the credit that can only offset liability and cannot be returned as cash. |
| Oregon Employees (Fewer Than 150) | Employment tier allowing companies to claim a 75% refundability rate on excess credits. |
| Oregon Employees (150 to 499) | Employment tier allowing companies to claim a 50% refundability rate on excess credits. |
| Oregon Employees (500 to 2,999) | Employment tier allowing companies to claim a 25% refundability rate on excess credits. |
| Refundability Rate (75%) | Percentage of excess credit refundable for semiconductor companies with fewer than 150 employees. |
| Refundability Rate (50%) | Percentage of excess credit refundable for semiconductor companies with 150 to 499 employees. |
| Refundability Rate (25%) | Percentage of excess credit refundable for semiconductor companies with 500 to 2,999 employees. |
| Unused Credits (Carry Forward) | Credit amounts exceeding liability that are saved to offset taxes in future years. |
| Carry Forward Period (Until 2029 Tax Year) | The specific time duration unused semiconductor credits remain valid before expiring in 2029. |
| ORS 317.152 (Prior Qualified Research Activities Credit) | The previous statutory framework for R&D credits before the specific semiconductor provisions were enacted. |
| ORS 317.154 (Prior Alternative Credit) | An alternative calculation method for the R&D credit available under previous Oregon tax laws. |
| Oregon Sales (Prior Credit Method) | A factor used in calculating the R&D credit based on the company's sales within Oregon. |
| Fixed-Base Percentage (Prior Credit) | Historical ratio of research expenses to gross receipts used to determine the base amount. |
| Average Federal Gross Receipts (Prior Credit) | The average annual gross receipts for the four preceding years, used in base calculations. |
| Internal Revenue Code (IRC) Section 41 | Federal tax code section defining qualified research activities, adopted by reference in Oregon. |
| IRC Section 174 | Federal code dealing with the treatment and amortization of research and experimental expenditures. |
| Qualified Research Conducted in Oregon | Requirement that research activities must physically take place within Oregon to qualify for credit. |
| Four-Part Test | Standard set of criteria used to determine if an activity qualifies as valid research. |
| Process of Experimentation | Systematic trial and error process designed to evaluate alternatives and eliminate technical uncertainty. |
| Elimination of Uncertainty | The requirement that research must intend to discover information to resolve design or capability issues. |
| Technological in Nature | Research that relies on principles of physical or biological sciences, engineering, or computer science. |
| Permitted Purpose | Research intended to create a new or improved business component regarding function, performance, or quality. |
| Business Component | Any product, process, software, technique, formula, or invention held for sale or use. |
| Direct Conduct of Research | Activities involving the actual hands-on performance of laboratory or technical work. |
| Directly Supporting Research | Activities like cleaning equipment or compiling data that are immediate prerequisites for research. |
| Directly Supervising Research | Immediate management and direction of scientists or engineers conducting qualified research activities. |
| ORS 317.151 (Contribution Credit) | Credit for contributions of qualified scientific equipment to educational institutions for research purposes. |
| Charitable Contribution of Scientific Equipment | Donation of apparatus or property to higher education institutions for research or training. |