Final answer:
True, the taxable portion of Social Security or Tier II railroad retirement benefits included in federal AGI can be subtracted for Oregon income tax purposes, potentially reducing state tax liability for retirees in Oregon.
Step-by-step explanation:
The statement is true; if any of your Social Security or Tier II railroad retirement benefits become taxable and are included in your federal Adjusted Gross Income (AGI), the taxable portion is indeed a subtraction for Oregon income tax purposes. Oregon allows taxpayers to subtract the federally taxable portion of Social Security or Tier II railroad retirement benefits, which can reduce the amount of state tax owed.
It's essential to understand that while Social Security benefits can be taxed at the federal level depending on your combined income, certain states like Oregon offer a subtraction to help lower the tax burden on retirees. However, not all states tax Social Security benefits the same way, and some states do not have an income tax at all.