SALEM — The Oregon Legislature is moving to wipe out more than $300 million in state taxes triggered by federal stimulus payments, but it could take several months for 900,000 taxpayers to get all the money back.

Congress authorized $1,800 in coronavirus relief payments in two installments last year and approved another $1,400 earlier this month. The aid comes in the form of a federal tax rebate, which isn’t taxable.

Oregon is one of just six states that allow residents to subtract their federal taxes from their state tax liability. That’s usually a tax break, but the stimulus payments produced the opposite effect: Lower federal taxes meant Oregonians had less to subtract from their state tax obligation.

On average, that created a $333 tax hit for Oregonians who received stimulus payments. The actual amount varies considerably based on individual circumstances, but even some lower-income households could end up owing a few hundred dollars.

The issue has been clear to lawmakers since last May, at least, when the Legislative Revenue Office wrote a report on the effects of the federal stimulus program. But lawmakers are just now taking it up.

Rep. Nancy Nathanson, D-Eugene, chairs the House Committee on Revenue. She said the Legislature focused initially on immediate pandemic aid and concluded that addressing the taxes generated by 2020 stimulus payments would be too challenging during last year’s special sessions. She said a rushed fix would have introduced a risk of mistakes or backlogged payments.

“After further evaluation, making a change to Oregon tax law is the surest way to offset the indirect impact that the federal tax credit has on Oregon taxpayers,” Nathanson wrote in an email. “I’m hopeful that this is a starting point toward a bipartisan solution to streamline tax relief for the coming year.”

An amendment to House Bill 2433 proposed on Monday, March 29, would wipe out the entire Oregon tax obligation created by the stimulus payments. Some taxpayers who owed no federal taxes at all could also benefit with lower state taxes.

Lawmakers in both parties have signaled support for addressing the stimulus tax issue. It may not be easy, though.

Changes in Oregon tax law don’t take effect until 90 days after the Legislature convenes, long after the tax deadline for filing 2020 taxes (the deadline is May 17 this year, following federal and state postponements.)

At a House committee hearing on March 29, representatives from the Oregon Department of Revenue testified that any change could take months to implement. That means Oregonians will have to wait an extended period to get repaid for taxes generated by 2020′s stimulus payments, including the stimulus money Congress approved last December.

Legislators and administrators hashed out various options for implementing the change at the March 29 hearing. Oregon could send out refund checks, enable people to file amended tax returns, or simply allow them to claim a credit when they file their 2021 taxes next year.

Rep. Greg Smith, R-Heppner, urged lawmakers to do more than refund the tax money — he suggested the Legislature should provide “some serious cash” to help get the stimulus tax rebate out the door.

“We have to be cognizant of the fact that the Department of Revenue is up to its elbows right now,” Smith said. “We are going to have to make sure we put resources behind it.”