As explained in Dana Wilkinson’s article arguing in favor of a federal exemption for the Earned Income Credit, the federal credit, created by 26 U.S.C. §32 (1994), is a refundable tax credit provided for low income workers who have dependent children and who maintain a household. A low income taxpayer can get the credit, in the form of a check or automatic deposit into a bank account, even if the amount of the refund is larger than the amount of tax paid that year.

In Oregon we have an exemption specifically protecting the Earned Income Credit and keeping it entirely exempt from exectution by a debt collector with a judgment.  This exemption also applies to the trustee in a bankruptcy case.  It is found in ORS 18.345(n) and has no limit on the dollar amount of the credit that is protected.

With regard to the Earned Income Credit, Oregon is far more progressive than many other states.  The homestead exemption in Oregon is modest, although recently increased from $25,000 for an individual to $30,600, it is still not sufficient to protect even a small condominium unless it is heavily encumbered.  However, the need to protect the federal benefit that helps low income working people make ends meet was clear for the Oregon legislature.  State Senator Vicki Walker’s job as a bankruptcy court reporter may have played a part in getting this legislative safety net put in place.

You can visit my Oregon Exemptions website page for a detailed list of statutory exemptions in Oregon.