Oregon Tax Guide 2026

State income tax — top rate triggers at low threshold

2026 single brackets (Or. Rev. Stat. §316.037, estimated): • 4.75% — first $4,300 • 6.75% — to $10,750 • 8.75% — to $125,000 • 9.9% — over $125,000 MFJ thresholds double for the bottom brackets but top bracket triggers at $250,000 (limited marriage relief at the top). The 9.9% top rate applies to a relatively wide swath of Oregon professionals — anyone earning over $125,000 single. This is one of the highest top marginal rates in the US, paired with no sales tax to balance the revenue mix. Oregon conforms to federal QBI §199A — subtraction allowed (with state-specific limitations on some industries). No preferential capital gains rate. Standard deduction small relative to federal ($2,745 single).

Portland Metro overlays — the locals that compound

Portland-area residents face TWO meaningful local income taxes on top of the 9.9% state rate: 1. Metro Supportive Housing Services Tax (Metro Code 7.05, voter-approved 2020, effective 2021): • 1% on Oregon-source income above $125,000 single / $200,000 joint • Applies to residents of the Portland Metro service area (Multnomah, Washington, Clackamas counties — generally) • Funds homelessness services 2. Multnomah County Preschool for All (PFA) Tax (Mult. Co. Code §11.220, voter-approved 2020, effective 2021): • 1.5% on Oregon-source income above $125,000 single / $200,000 joint • Additional 1.5% on amounts above $250,000 single / $400,000 joint = up to 3% combined PFA rate at high income • Applies only to Multnomah County residents (largely Portland city) • Funds free preschool for 3- and 4-year-olds For a Portland (Multnomah) resident earning $400,000 single in 2026: • State (9.9% on income over $125k): ~$31,500 • Metro Housing (1% on income over $125k): ~$2,750 • Multnomah PFA (1.5% on $125k–$250k, 3% above): ~$6,375 • Combined Oregon/local on the $275k above $125k: ~$40,625 → effective ~14.8% on each dollar above $125k Notably the Metro and PFA taxes are administered separately from state Form OR-40 — additional forms (METRO-OPT, PFA forms) required.

No sales tax — constitutional norm

Oregon does not impose a state sales tax. Multiple voter initiatives proposing a sales tax (1985, 1993) have been resoundingly defeated. The cultural and political resistance to a sales tax is among the strongest in the US. Limited local taxes do exist: • Ashland — 5% prepared food and beverage tax (city-specific) • Yachats — 5% prepared food tax • Portland — Arts Tax: $35/year per adult Portland resident with income above the federal poverty level (Portland City Code 5.73 — not income-tiered) Vehicle excise tax: 0.5% on new vehicles purchased in Oregon (Or. Rev. Stat. §320.405). 0.5% statewide bicycle tax on retail purchases over $200. No Oregon Wayfair-style economic nexus for sales tax (because no sales tax). Use tax on out-of-state purchases technically requires self-reporting on items used in Oregon but enforcement is minimal.

Corporate Activity Tax (CAT) — the gross-receipts levy

Oregon CAT (Or. Rev. Stat. §317A, enacted 2019, effective 2020): tax on commercial activity attributable to Oregon. Applies to ALL business entity types (C-corps, S-corps, LLCs, partnerships, sole proprietors) doing business in Oregon. Structure: • First $1,000,000 of Oregon commercial activity: EXCLUDED • $250 minimum tax (if commercial activity > $750,000 but ≤ $1M) • 0.57% of Oregon commercial activity > $1M • Subtraction: 35% of GREATER of (a) cost inputs or (b) labor costs, attributable to Oregon In effect, a service business with $5M Oregon commercial activity and $3M of Oregon labor costs: Commercial activity over $1M: $4M Less 35% × $3M labor: $1.05M Taxable: $4M − $1.05M = $2.95M CAT: $2.95M × 0.57% = $16,815 + $250 = $17,065 Funds K-12 education through the Student Success Fund. Filing on Form OR-CAT, due April 15.

PTET (Pass-Through Entity Election)

Oregon PTET (Or. Rev. Stat. §314.778, enacted 2021): S-corps and partnerships elect to pay state tax at the top individual rate (9.9%) at the entity level. Owners receive a REFUNDABLE Oregon tax credit equal to distributive share. Election: made on Form OR-PTE-V annually by the original return due date. Annual and irrevocable for the year. Importantly, Oregon PTET does NOT cover the Metro Housing or Multnomah PFA local taxes — those remain at individual level for Portland-area owners. Federal SALT benefit: 37% × full state liability paid via PTET. For a $300k Eugene-based S-corp owner: PTET $29,700 × 37% = $10,989 federal savings. For Portland-resident high earners, PTET handles the 9.9% state layer but the 4% combined local Portland tax (1% Metro + 3% Multnomah at top) still hits at individual level — accept this as a meaningful residual SALT burden.

Property tax — Measure 5/50 caps

Oregon property tax is constrained by Measure 5 (Or. Const. Art. XI §11b, 1990) and Measure 50 (Or. Const. Art. XI §11, 1997): • Measure 5: Total real-property tax bill cannot exceed 1.5% of real market value (RMV) — combining ALL levies • Measure 50: Assessed value can grow only 3% per year, regardless of market appreciation; baseline 'maximum assessed value' (MAV) set in 1997 Result: effective property tax rates have compressed materially over time as market values outpace MAV growth. Statewide effective ~0.86%. Multnomah County (Portland) ~1.00%, Washington (Beaverton/Hillsboro) ~1.00%, Lane (Eugene) ~0.99%, Clackamas ~1.01%, Deschutes (Bend) ~0.76%. Senior/Disabled Citizens Property Tax Deferral (Or. Rev. Stat. §311.666): state pays property tax for qualifying seniors; lien recorded against property.

Self-employed considerations

LLC formation: $100 (Oregon Secretary of State). Annual Renewal: $100 (above-average annual cost). Oregon Paid Leave (Or. Rev. Stat. ch. 657B): 1% combined contribution (0.4% employer + 0.6% employee) on wages up to $176,100 (2026 SS base). Benefits launched September 2023. Unemployment: 0.9%–5.4% on first $50,900 wage base 2026 (Oregon has a high taxable wage base relative to most states). For Portland-area self-employed at high income, the combined burden is among the highest in the US. A $200k Multnomah-resident consultant pays: • Federal SE + ordinary: ~37% effective at top • Oregon state: ~9.9% on income over $125k • Multnomah PFA: 1.5% on $75k = ~$1,125 • Metro Housing: 1% on $75k = ~$750 • Oregon Paid Leave: 0.6% on $176k = ~$1,057 • CAT (if Schedule C revenue > $1M): 0.57% on gross above $1M For non-Portland Oregon (Eugene, Bend, Salem, Medford), the burden drops materially — no Metro/PFA — to roughly the 9.9% state + federal.

Worked example: Eleanor Park, Multnomah County (Portland) family law attorney (single, sole proprietor, 2026)

Eleanor's solo law practice net income: $310,000 in 2026. She lives in Portland (Multnomah County). She owns her $625,000 Portland home.

Federal: SE tax + ordinary federal — skipped. Oregon state income tax: Federal AGI: ~$310,000 less ½ SE tax (~$17,300) = $292,700 Less standard deduction $2,745: $289,955 Apply 2026 brackets: ~$26,500 Oregon state tax (top 9.9% bracket from $125k onward) Metro Supportive Housing Services Tax: Oregon-source income over $125k: $292,700 − $125,000 = $167,700 Tax: $167,700 × 1% = $1,677 Multnomah County PFA Tax: Income $125k–$250k: $125,000 × 1.5% = $1,875 Income above $250k: $42,700 × 3% = $1,281 Total PFA: $3,156 Oregon CAT (Eleanor's gross billings likely $350k, under $1M threshold): $0 Oregon Paid Leave (sole proprietor opting in or not — assume opted in): ~$1,057 max contribution Property tax on $625k Portland home at ~1.0% effective: ~$6,250/yr Total Oregon + Portland local income/leave: ~$32,400 annual. No sales tax on Eleanor's personal spending — material offset vs WA/CA equivalents. If Eleanor elects S-corp and PTET: Reasonable comp ~$200k W-2 + $110k distribution S-corp elects PTET on full $310k at 9.9% = $30,690 paid at entity level (federally deductible) Federal benefit: 37% × $30,690 = $11,355 Oregon refundable PTET credit washes Eleanor's state liability Metro and PFA still owed personally on $310k (assume all flows through): ~$4,833 Net: PTET saves ~$11k federal/year — strongly worth electing at her income.

Statute references

• Personal income tax brackets — Or. Rev. Stat. §316.037
• Pass-Through Entity Tax (PTET) — Or. Rev. Stat. §314.778
• Corporate Activity Tax (CAT) — Or. Rev. Stat. Chapter 317A
• Corporate excise tax — Or. Rev. Stat. §317.061
• Metro Supportive Housing Services Tax — Metro Code Chapter 7.05
• Multnomah Preschool for All Tax — Mult. Co. Code §11.220
• Property tax 1.5% RMV cap (Measure 5) — Or. Const. Art. XI §11b
• 3% MAV growth cap (Measure 50) — Or. Const. Art. XI §11
• Oregon Paid Leave — Or. Rev. Stat. ch. 657B

Related pages

• PTET Analyzer →
• State Tax Comparison →
• Multi-State Tax Guide →