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flag Oregon faces an $888M federal tax cut impact, risking a $373M budget gap despite reserves.

flag Oregon lawmakers are assessing the impact of federal H.R.1, which could cost the state $888 million in lost revenue over two years due to federal tax cuts on tips and overtime. flag Since 1997, Oregon automatically aligns its taxes with federal changes, worsening a projected $372.7 million budget gap. flag The state has set aside $472 million to cushion the blow, but a $373 million shortfall remains. flag Options under consideration include decoupling from federal tax changes, cutting spending, raising taxes, or using reserve funds, which require broad legislative support. flag A special session may be needed before the 2026 short session to act, though Governor Kotek has not yet committed.

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