Oregon tax guide
Oregon operates a progressive income tax system that funds state services through four distinct brackets, capping at 9.90%. As the fifth-highest tax state, the tax burden is considerable, especially for middle-to-high income earners. However, the state provides unique relief by allowing taxpayers to deduct federal income taxes paid from their state taxable income.
Key tax highlights
Payroll
- Oregon imposes a progressive income tax structure organized into four distinct tax brackets.
- The state's top marginal tax rate of 9.90% is among the highest in the country.
- Employers in Oregon are required to withhold state income tax based on graduated rates ranging from 4.75% to 9.90%.
Local taxes
- The Portland Metro area imposes additional local income taxes for supportive housing and preschool programs, ranging between 2.5% and 4% for certain income levels.
- Residents living within the city of Eugene are subject to a local income tax of 0.44%.
Deductions
- Oregon uniquely allows taxpayers to deduct a portion of their federal income tax paid from their state taxable income, which can help offset the high marginal rates.
- Standard deductions and exemptions are adjusted annually for inflation to assist in tax planning for Oregon residents.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in Oregon yields about $55,349 after all deductions (73.8% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $4,056 | $3,825 | $38,299 | 76.6% |
| $75,000 | $7,670 | $6,243 | $5,738 | $55,349 | 73.8% |
| $100,000 | $13,170 | $8,431 | $7,650 | $70,749 | 70.8% |
| $150,000 | $24,734 | $13,094 | $11,475 | $100,698 | 67.1% |
Neighboring states
How Oregon compares with border states on income tax. At a $75,000 salary, a Oregon worker pays $6,243 in state tax annually.
| State | Tax type | Top rate |
|---|---|---|
| Nevada | no tax | No state income tax |
| Washington | no tax | No state income tax |
| Idaho | flat tax | 5.30% |
| California | high tax | 13.30% |
Cities with local taxes
These Oregon city pages factor local taxes into the take-home estimate. A city like Portland Metro adds an extra local deduction on top of statewide withholding.
| City | Local rate |
|---|---|
| Portland Metro | 2.5%-4% |
| Eugene | 0.44% |
Tax tips for Oregon
- Review your paystub to ensure your withholding accounts for both state income tax and any applicable local Portland or Eugene taxes.
- Track your federal income tax payments carefully, as you will need this data to maximize the federal tax deduction on your Oregon state return.
- If you live in the Portland Metro area, evaluate how the additional 2.5% to 4% local tax impacts your monthly budget versus living in a non-taxed municipality.
- Monitor updates to the Oregon tax brackets, as they are adjusted annually for inflation to mitigate bracket creep.
Did you know?
- •Oregon is one of the few states that permits the deduction of federal income tax payments from state taxable income.
- •Oregon's 9.90% top marginal rate consistently ranks it among the top five highest state income tax rates in the United States.
Filing guidance
When filing in Oregon, use Form OR-40 to report your income. Ensure you correctly apply the federal tax deduction by referencing your federal adjusted gross income and federal tax liability from your Form 1040. If you reside in the Portland Metro area, you must also complete the appropriate local tax forms associated with the supportive housing and preschool programs to avoid underpayment penalties.
Relocation context
Comparing Oregon with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.