Oregon State Tax Guide

Oregon State Tax Guide

Oregon has four marginal tax brackets, ranging from 4.75% (the lowest Oregon tax bracket) to 9.9% (the highest Oregon tax bracket). Each marginal rate only applies to earnings within the applicable marginal tax bracket
. Oregon is one of the few states that allow a portion of your federal income tax to be deducted as well. The amount that can be deducted varies based on your income and phases out entirely for high income earners. In other words, those with incomes over a certain limit are not eligible for this deduction. Some Oregon citizens might be eligible for deferral of property taxes on their residences.

In recent decades, income inequality has climbed to historic levels. Not coincidentally, business taxation has declined and tax rates for the superrich have collapsed. Keep in mind that this estimator assumes all income is from wages, assumes the standard deduction, and does not account for tax credits.

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The top 10% of taxpayers in income paid roughly half of Oregon’s personal income tax, while the bottom half of taxpayers in income paid 9% of the total income tax. Oregon residents and nonresidents who earn income in Oregon pay personal income tax. After deductions and credits, the average effective tax rate is about 6.4% of adjusted gross income. Since 1993, the income tax brackets have been indexed to changes in the Consumer Price Index. The current standard deduction is $4,840 on joint returns, $2,420 on single and married filing separate returns, and $3,895 for a head of household return. Blind or elderly taxpayers and persons over the age of 65, will receive an additional $1,200 standard deduction on a single return and an additional $1,000 per eligible person on a joint return.

• ​Your
  income may be exempt from Oregon withholding for a variety of reasons.
• Benefits of e-Filing your Oregon tax return include instant submission, error checking, and faster refund response times.
• If you’re an Oregon resident and you purchase a new vehicle from a seller outside of the state, you may be exempt from paying the other state’s sales tax.
• The tax must be paid before the vehicle can be titled and registered in Oregon.
• Your W-2 will indicate that this tax has been withheld in the local tax section under the name “MULT”.
• ​Your marital status determines which set of tax brackets you’ll use when you file your return.

During the 2019 Legislative Session, the Legislature passed HB 3427, referred to as the Student Success Act, which created a Corporate Activity Tax (CAT) dedicated to education funding. The CAT is imposed on all business types, including partnerships and sole proprietorships, and is based on a business’s Oregon commercial activity. The tax is $250 plus .057% of taxable commercial activity greater how much is oregon income tax than $1 million. Taxpayers are allowed a subtraction equal to 35% of the greater of cost inputs or labor costs. General contractors who incur labor costs for single-family residential construction located in Oregon qualify for an exclusion equal to 15% of the labor costs paid to subcontractors. Some items, such as the wholesale and retail sale of groceries and motor fuel, are exempt from the tax.

How will I know how much tax has been withheld from my pay?

Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A.

These state income tax rates apply to income earned in 2023, which is reported on tax returns filed in 2024. For states with progressive tax systems, note that the dollar amounts in the income brackets apply to single filers; in many states, the income brackets double for joint returns. And, as is the case for federal returns, the amount you’ll pay to your state is also a function of your filing status, whether you have dependents, and whether you qualify for tax deductions and credits. When you consider not just income taxes, but all the taxes collected by state and local governments, the tax structure turns upside-down. While the personal income tax is based on a taxpayer’s ability to pay, Oregonians pay other taxes not connected to how much someone can afford to pay.