Oregon Payroll Tax Guide (2026)

Oregon has no sales tax and makes up for it in payroll: on top of 4.75 to 9.9% withholding, employers take a 0.1% transit tax from every wage dollar, split a 1% Paid Leave contribution with workers, and in Portland withhold two more local income taxes.^[6]

10 min read • Reviewed by Rajanikant Patel CPA • Verified Oct 1, 2026 • Sources: DOR, OED, IRS

Quick Facts

Oregon payroll at a glance

Oregon stacks more payroll taxes than any state nearby: income tax withholding, a statewide transit tax on every wage dollar, Paid Leave split with employees, employer paid unemployment and transit district taxes, and two Portland area local income taxes.^[6]

State income tax withholding

4.75%–9.90% ^[3]

UI taxable wage base

$56,700 per employee ^[6]

New employer UI rate

2.40% ^[6]

Experienced UI rate range

0.90%–5.40% ^[6]

Statewide transit tax, withheld from employee

0.10%, none, it applies to every dollar of wages ^[4]

Paid Leave Oregon employer share

0.40% ^[9]

Social Security wage base

$184,500 ^[2]

FUTA net rate

0.6% = $42 per employee ^[14]

State minimum wage

$15.55 per hour ^[10]

Local minimum wage ordinances

None ^[10]

UI registration trigger

Exempt salary threshold

$35,568 per year ^[11]

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What changed for Oregon payroll in 2026

Six items moved for Oregon employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.

Transit tax increase put on hold Schedule 3 and a 56,700 wage base Paid Leave cap moves to 184,500 Workers Benefit Fund cut to 1.8 cents Minimum wage steps up July 1 Metro thresholds now indexed

Skipping the statewide transit tax on employees who owe no Oregon income tax: The statewide transit tax is a separate 0.1% charge on every dollar of wages, and Oregon says explicitly that it applies even to employees who are not subject to regular income tax withholding. It has no wage cap, no exemption certificate and no bracket, so a worker who claims exempt on the OR-W-4 still has it taken out. Withhold 0.001 on all wages paid to Oregon residents wherever they work and to nonresidents for services performed in Oregon, and report it on the Form OQ.^[4]

Estimate

2026 Oregon payroll tax calculator

Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.

Oregon · 2026 rates · per employee, per calendar year

Annual gross wages ($)

Cash wages subject to payroll tax, before any withholding.

Your UI contribution rate

Your exact rate comes from Oregon Employment Department each year.

Custom UI rate (%)

FUTA basis

FUTA is 6.0% less a 5.4% credit where the state has no outstanding federal loan.

Employer pays

UI, on first $56,700–

Paid Leave Oregon employer share, on first $184,500–

TriMet transit district payroll tax, on all wages–

Lane Transit District payroll tax, on all wages–

Workers Benefit Fund assessment, employer half, on all wages–

FUTA, on first $7,000–

Social Security, 6.2%–

Medicare, 1.45%–

Employer payroll tax–

Withheld from the employee

Statewide transit tax, 0.1%, no cap–

Paid Leave Oregon employee share, 0.6%, to $184,500–

Workers Benefit Fund assessment, worker half, 0.9%, no cap–

Social Security, 6.2%–

Medicare, 1.45%–

Additional Medicare, 0.9% over $200,000–

Withheld from employee–

True cost of employment–

Employer tax as % of wages–

Total payroll tax, both sides–

State income tax withholding is not included above: it depends on the employee’s Form OR-W-4, Oregon Withholding Statement and Exemption Certificate. Oregon allowances no longer track the federal Form W-4, so most employees need a separate OR-W-4. and filing status, so it cannot be estimated from gross pay alone.

Rates & Nexus

Payroll tax rates & the nexus question

Oregon runs 9 state payroll taxes. The table below is the whole state layer for 2026.^[6]

The state payroll taxes

Tax	Paid by	2026 rate	Wage base
UI	Employer	0.90%–5.40%; 2.40% new	$56,700
Paid Leave Oregon employer share	Employer	0.40%	$184,500
TriMet transit district payroll tax	Employer	0.8237%	All wages
Lane Transit District payroll tax	Employer	0.80%	All wages
Workers Benefit Fund assessment, employer half	Employer	0.9 cents per hour worked	All wages
Statewide transit tax	Employee	0.10%	none, it applies to every dollar of wages
Paid Leave Oregon employee share	Employee	0.60%	$184,500
Workers Benefit Fund assessment, worker half	Employee	0.9 cents per hour worked	none, it is charged per hour worked rather than per dollar
Income tax withholding	Employee	4.75%–9.90%	No limit

Tax Schedule 3 is in effect for 2026. Oregon selects one of its self balancing schedules each year based on the trust fund balance, and Schedule 3 produces experience rates from 0.9% to 5.4% with a 2.4% rate for employers without enough history. A Special Payroll Tax Offset of 0.135% per quarter is carved out of the unemployment rate you already pay and diverted to other state funds, so it is not an extra charge on top of your rate.^[6]

Supplemental wages have their own rate. Bonuses, commissions and other supplemental payments are withheld at 8.00% when paid separately from regular wages. That is a state rate only; federal supplemental withholding is a separate 22% layer.^[3]

Who has to register

Register before you issue any paycheck. You sign up through the Oregon Department of Revenue, using Revenue Online or a Combined Employer’s Registration, and receive an eight digit Business Identification Number in the format 01234567-8. That single BIN covers withholding, unemployment, transit and Paid Leave reporting on one combined return.^[6] Income tax withholding is administered separately by Oregon Department of Revenue, so most employers end up with two state account numbers, not one.

Multistate and remote employees

When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.

1. Localisation of service→
2. Base of operations→
3. Place of direction & control→
4. Employee’s residence

One remote employee is usually enough. A single person working from home in Oregon generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.

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Compliance

Registration & return filing

Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.^[6]

How to register

Cross the wage threshold→
Frances Online→
Receive account number→
File & deposit online

Deposit schedule

Oregon withholding deposits mirror your federal schedule. If your federal liability is under $2,500 for the quarter you may pay with the quarterly report. A look back liability of $50,000 or less puts you on monthly deposits due the 15th of the following month, above $50,000 you deposit semiweekly, and $100,000 of liability in a single pay period is due within one banking day. If you pay your federal taxes electronically you must also pay Oregon combined payroll taxes electronically.^[3]

Returns, reports & due dates

Form	What it is	Due
Form OQ, Oregon Quarterly Tax Report, with Form 132 Employee Detail Report	Quarterly unemployment return	April 30, July 31, October 31, January 31
Form OQ, Oregon Quarterly Tax Report, with Form 132 Employee Detail Report, Schedule B…	Income tax withholding returns	Oregon withholding deposits mirror your federal schedule. If your fede
Annual reconciliation	Year-end withholding reconciliation	January 31
Form 941	Federal quarterly return	Last day of the month after quarter end
Form 940	Federal unemployment, annual	January 31
New hire report	Report of newly hired employees	Within 20 days of start date

Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.^[6]

Pricing

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Setup fee

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Every payroll run

each pay cycle

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Off-cycle payroll

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billed
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Year-end filings

W-2s, 1099s & more

billed
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All you actually pay

Per employee, per pay run

$6 /emp

Plus a flat $40 minimum per pay run. That’s the whole bill.

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Wage Base

Subject wages vs. exempt payments

Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.^[6]

Subject wages

Salaries, hourly pay, overtime and piece rates
Commissions, bonuses and incentive pay
Most cash tips reported by the employee
Vacation, holiday and paid sick leave when taken as wages
Severance and payments in lieu of notice
The cash value of meals and lodging provided as compensation
Employer contributions to a non-qualified deferred compensation plan
Wages subject to the employee-paid contributions listed above

Not subject

Reimbursements of genuine business expenses under an accountable plan
Employer contributions to a qualified retirement plan
Employer-paid premiums for accident and health insurance
Most third-party sick pay after the sixth calendar month
Payments to a genuine independent contractor
Workers compensation benefits

The wage base is per employer, per year, not per job. If you hire someone in August who already earned $56,700 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.

Reference

Glossary of key terms

Taxable wage base: The slice of each employee’s annual pay that unemployment tax is calculated on. In Oregon that is $56,700 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
Statewide transit tax: An employee-funded contribution withheld from pay at 0.10%. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
Experience rating: The method Oregon Employment Department uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
New employer rate: The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
Form OR-W-4, Oregon Withholding Statement and Exemption Certificate. Oregon allowances no longer track the federal Form W-4, so most employees need a separate OR-W-4.: The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Oregon Department of Revenue.
Reserve account: The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
Successor employer: A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
Localisation of service: The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
FUTA credit reduction: A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
Supplemental wages: Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Local withholding: Income or occupational tax levied by a city, county or school district and withheld by the employer alongside state tax. It is assessed separately from the state layer.

Federal, State & Local

Oregon payroll tax, layer by layer

Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.

Layer 1: Federal

Tax	Rate	2026 base
Social Security	6.2% each side	$184,500
Medicare	1.45% each side	No limit
Additional Medicare	0.9% employee only	Over $200,000
FUTA, standard	0.6% net	$7,000
Federal income tax	Per Form W-4	No limit

Oregon has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.^[14]

Layer 2: State

Tax	Rate	2026 base
UI, new employer	2.40%	$56,700
UI, experienced	0.90%–5.40%	$56,700
Paid Leave Oregon employer share	0.40%	$184,500
TriMet transit district payroll tax	0.8237%	All wages
Lane Transit District payroll tax	0.80%	All wages
Workers Benefit Fund assessment, employer half	0.9 cents per hour worked	All wages
Statewide transit tax, employee	0.10%	No limit
Paid Leave Oregon employee share, employee	0.60%	$184,500
Workers Benefit Fund assessment, worker half, employee	0.9 cents per hour worked	No limit
Income tax, standard	4.75%–9.90%	No limit
Income tax, supplemental	8.00%	No limit

Layer 3, county & city: a real third layer

Two Portland area personal income taxes are collected through payroll. Metro’s Supportive Housing Services tax is 1% on taxable income above $125,000 for a single filer and $200,000 for joint filers, and starting in 2026 those exemption thresholds are adjusted annually for inflation. Multnomah County’s Preschool for All tax is 1.5% above the same thresholds plus another 1.5% above $250,000 single and $400,000 joint, so the top marginal withholding is 3%. Withholding is mandatory for any employee earning $200,000 or more in the calendar year, and optional below that if the employee asks in writing. Employers file quarterly returns and an annual reconciliation with the City of Portland Revenue Division.^[13]

The state minimum wage is $15.55 an hour, effective 2026-07-01. The tipped cash wage is $15.55. No local ordinance sets a higher floor. Oregon sets three regional rates in state law rather than leaving minimum wages to cities. From July 1, 2026 the Portland metro rate is $16.80, the standard rate is $15.55 and the nonurban counties rate is $14.55. Tip credits are illegal in Oregon, so a tipped worker gets the full applicable rate in cash and keeps tips on top of it. Oregon adjusts all three regional rates for inflation every July 1, so the next step takes effect July 1, 2027.^[10]

Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.^[11]

FAQ

Oregon payroll FAQs

State income tax withholding at 4.75 to 9.9%, the 0.1% statewide transit tax withheld from every wage dollar, Paid Leave Oregon at 1% split 40% employer and 60% employee up to $184,500, unemployment insurance at 0.9 to 5.4% on the first $56,700, and the Workers Benefit Fund assessment of 1.8 cents per hour split evenly. In the Portland area add the 0.8237% TriMet employer tax and withholding for the Metro and Multnomah County income taxes, and around Eugene add the 0.80% Lane Transit District employer tax.

No. House Bill 3991 was set to raise the statewide transit tax rate beginning January 1, 2026, but the increase has been delayed pending a vote by Oregon voters in November 2026. The Oregon Employment Department instructs employers to continue withholding at one tenth of 1%, or 0.001, on all wages.

The total contribution for 2026 is 1% of gross wages up to $184,500 per employee. Employees pay 60% of that, which is 0.6%, and employers with 25 or more employees pay the other 40%, which is 0.4%. Employers with fewer than 25 employees do not owe the employer share but still have to withhold and remit the employee share.

Withholding is mandatory for any employee who earns $200,000 or more during the calendar year, and optional below that if the employee requests it in writing. Metro’s Supportive Housing Services tax is 1% above $125,000 single and $200,000 joint, with those thresholds indexed for inflation starting in 2026. Multnomah County’s Preschool for All tax is 1.5% above the same thresholds and another 1.5% above $250,000 single and $400,000 joint.

From July 1, 2026 the Portland metro rate is $16.80 an hour, the standard rate is $15.55 and the nonurban counties rate is $14.55. Tip credits are illegal in Oregon, so tipped employees receive the full applicable rate in cash and keep their tips on top. The rates are adjusted for inflation every July 1, with the next step on July 1, 2027.

It is 0.135% per quarter that is taken out of the unemployment insurance tax you already pay and redirected to other state funds. It is not an additional assessment stacked on top of your assigned rate, so your total unemployment cost is still your assigned rate on the first $56,700 of each employee’s wages.

$56,700 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.

$15.55 an hour. No local ordinance sets a higher rate. The tipped cash wage is $15.55.

April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.

Verification

Sources & methodology

Methodology: every rate, threshold and due date on this page was taken from the administering agency’s own published material for the 2026 tax year, checked on Oct 1, 2026. Where a federal figure applies it comes from the IRS, SSA or US Department of Labor. 3 data points on this page could not be confirmed against a primary source and are either omitted or marked as not published, rather than estimated. Rates change, and some change mid-year, so confirm against your own rate notice before running a payroll.

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