1. (1) In addition to the modifications to federal taxable income contained in this chapter, there shall be subtracted from federal taxable income, to the extent includable in gross income for federal income tax purposes, the interest or dividends on obligations of:

   1. (a) The State of Oregon pursuant to ORS 286A.140.
   2. (b) A public body, as defined in ORS 287A.001.
2. (2) The amount subtracted under this section must be reduced by any interest on indebtedness incurred to carry the obligations or securities described in this section, and by any expenses incurred in the production of interest or dividend income described in this section.

[1987 c.293 §23b; 1989 c.988 §1; 2007 c.783 §126; 2015 c.548 §5]