Oregon Payroll Tax Calculator & Employer Requirements | GoCo

Oregon payroll taxes can feel like a maze, but understanding the requirements is key to keeping your business in compliance. Employers with workers in Oregon must account for multiple tax obligations, each with specific rules and deadlines. Falling behind can lead to penalties or unexpected costs, so clarity is essential.

If you employ workers in Oregon, whether your business is headquartered in the state or operates from elsewhere, payroll tax compliance isn't optional. State and local rules outline exactly what needs to be withheld, paid, and reported. Staying on top of these obligations helps avoid disruptions to your payroll process.

Beyond state-level requirements, some Oregon cities impose additional payroll taxes. These local taxes create another layer of responsibility for employers, especially if you have employees working in places like Portland or Eugene.

Oregon Payroll Tax Overview

Oregon payroll taxes include mandatory withholdings and employer-paid contributions designed to fund state programs such as unemployment insurance, public transportation, and the workers' benefit fund. These taxes apply to wages earned by employees working within the state.

Both in-state employers and out-of-state businesses with employees in Oregon must comply with these payroll tax obligations. This includes withholding state income taxes from employees' wages and paying unemployment insurance taxes as an employer. Additionally, employers contribute to funds such as the Workers' Benefit Fund, which provides coverage for employees injured on the job.

State tax requirements are reported through Oregon's combined reporting system, which consolidates filings for state income tax withholding, unemployment insurance, and the Workers' Benefit Fund. However, some local taxes, like the Eugene Employer Payroll Tax or Portland Metro’s Supportive Housing Services tax, require separate filings and follow their own rules.

Oregon Income Tax Requirements for Employers

Oregon uses a progressive tax structure to determine state income tax rates. Employers must withhold taxes from employee wages based on income brackets set for 2025:

4.75%: Applies to income up to $4,050 for single filers or $8,100 for joint filers.
6.75%: Covers income between $4,051 and $10,100 for single filers or $8,101 and $20,200 for joint filers.
8.75%: Includes income from $10,101 to $125,000 for single filers or $20,201 to $250,000 for joint filers.
9.9%: Applies to income above $125,000 for single filers or $250,000 for joint filers.

Employers must calculate withholdings for each employee based on their specific earnings and OR-W-4 form details.

Employer Withholding Responsibilities

Every Oregon employer must withhold income tax from wages paid to employees working in the state. To ensure accuracy:

Collect OR-W-4 Forms: Require new hires and employees updating their tax information to complete and submit an OR-W-4. This form specifies allowances, filing status, and any additional withholding amounts.
Consult Withholding Tax Tables: Use the Oregon Department of Revenue’s published tables to determine exact withholding amounts.
Submit Withheld Taxes Quarterly: File withholding reports and remit taxes to the state as part of Oregon's combined payroll reporting system.

Employers must also provide W-2 forms to employees by January 31. Report employee wages and withholdings to the state by the same deadline.

County Surcharges for High Earners

Some Oregon counties, such as Multnomah County, impose additional taxes on higher-income employees. Employers need to account for these surcharges and remit them separately. Key examples include:

Multnomah County: A 1.5% tax applies to income over $125,000 for single filers or $200,000 for joint filers. An additional 1.5% applies to income exceeding $250,000 for single filers or $400,000 for joint filers.
Portland Metro SHS Tax: A 1% tax must be withheld on income above $200,000 for employees working within the Portland Metro area.

Employers filing these surcharges must submit quarterly withholding returns and an annual reconciliation with the City of Portland’s Revenue Division.

State Unemployment Insurance (SUI) and Workers' Benefit Fund

Oregon employers are required to contribute to the State Unemployment Insurance (SUI) program and the Workers' Benefit Fund (WBF), both of which provide vital support to employees and the broader workforce. These contributions come with clear rates, wage bases, and reporting responsibilities that must be followed closely to avoid penalties.

SUI Tax Details

The SUI program is fully funded by employer payments, with no deductions taken from employee wages. Contributions are calculated based on taxable wages, and rates vary depending on whether an employer is new to Oregon or has an established history.

Taxable Wage Base for 2025: Employers pay SUI taxes on the first $50,900 of each employee's wages annually.
Rates for New Employers: New businesses are assigned a standard rate of 2.4%, while new construction employers pay a higher rate of 4.0%.
Rates for Experienced Employers: Businesses with a track record in Oregon receive a rate from 0.9% to 5.4%, determined by their experience rating, which reflects unemployment claims filed against them.

Employers receive their annual rate notice each November from the Oregon Employment Department, detailing the rate applicable for the following calendar year. Appeals to assigned rates must be submitted quickly, adhering to deadlines outlined in the notice.

Reporting Deadlines and Filing Process

SUI contributions are reported and paid quarterly. Employers must submit detailed wage records and payment by the following deadlines:

April 30 for wages paid January through March.
July 31 for wages paid April through June.
October 31 for wages paid July through September.
January 31 for wages paid October through December.

Reports must be accurate and submitted on time to avoid penalties or interest charges.

Workers' Benefit Fund (WBF)

The Workers' Benefit Fund supports injured workers and funds workplace safety initiatives. Oregon requires both employers and employees to contribute based on hours worked, ensuring a shared responsibility, as outlined in the Workers’ Benefit Fund.

Rate for 2025: The contribution is $0.028 per hour worked, split equally between employer and employee, with each paying $0.014 per hour.
Tracking and Reporting: Employers must record the hours worked for each employee and remit contributions quarterly as part of the state's combined reporting system.

Accurate tracking is non-negotiable. Errors or missed contributions can lead to compliance reviews and additional liabilities. Regularly reviewing payroll processes helps ensure contributions are correctly calculated and reported.Oregon employers have unique payroll responsibilities, and transit payroll taxes are a significant part of the equation. These taxes directly fund public transportation systems, ensuring employees and residents have access to reliable transit services. For businesses with employees in specific regions, understanding how to calculate and file these taxes is non-negotiable.

Oregon Transit Payroll Taxes

Transit payroll taxes in Oregon apply to specific service districts, including TriMet, the Lane Transit District (LTD), and the statewide transit tax. Each district has distinct boundaries, rates, and filing requirements. Employers must know where their employees work to determine the correct taxes to pay.

Transit Taxes in Oregon Districts

TriMet Tax: The TriMet Tax applies to wages paid to employees working in the Portland metro area, which includes Multnomah, Clackamas, and Washington counties.
Lane Transit District (LTD) Tax: Employers must pay the Lane Transit District (LTD) Tax on wages earned by employees in the Eugene-Springfield area.
Statewide Transit Tax: The statewide transit tax applies to all employees working in Oregon, regardless of location.

Each tax serves a specific purpose. TriMet and LTD taxes fund local transit systems in their respective regions, while the statewide tax supports broader transportation initiatives across Oregon.

Employer Responsibilities

Employers are responsible for calculating transit payroll taxes based on the wages paid to employees working in covered areas. The 2025 rates are:

TriMet: 0.007937 of gross wages.
LTD: 0.0079 of gross wages.
Statewide Transit Tax: 0.1% of gross wages.

Accurate payroll tracking is critical when employees work across multiple locations. For employees splitting time between districts, employers must apportion wages and apply the correct rates for each district.

Filing and Payment

Transit payroll taxes must be reported and paid quarterly. The statewide transit tax is included in Oregon's combined payroll reporting, while TriMet and LTD taxes require separate filings. Employers should submit payments by the following deadlines:

April 30 for Q1.
July 31 for Q2.
October 31 for Q3.
January 31 for Q4.

Late filings or payments can result in penalties. Ensure all forms are complete and submitted to the correct agency on time.

Verifying Transit District Boundaries

Employers can use boundary maps provided by TriMet and LTD to confirm whether their business or employees are located within a transit district. These maps define the specific areas where transit payroll taxes apply. For remote or hybrid employees, review their work locations carefully to avoid errors in reporting or payments.

Accurate boundaries and payroll records help employers remain compliant and avoid unnecessary financial complications.

How to Calculate Oregon Payroll Taxes Step-by-Step

Calculating Oregon state payroll taxes for employers requires accuracy and organized steps. Each calculation depends on precise data, so double-checking every input ensures compliance and smooth payroll processing. Follow these instructions to confidently manage tax obligations.

1. Gather employee wage and withholding information

Start by compiling all necessary details for each employee:

Gross wages: Include regular pay, overtime, commissions, bonuses, and taxable fringe benefits.
Pre-tax deductions: Subtract contributions to retirement plans like 401(k)s or employee-paid health premiums.
OR-W-4 details: Reference the employee's elections for filing status, allowances, and any additional withholdings.

Ensure all information is up to date and accurate before moving to the next step.

2. Apply Oregon state income tax rates

Use Oregon's progressive income tax structure and 2025 withholding tables to determine the correct amount to withhold from wages. For employees working in Multnomah County or Portland Metro, incorporate required surcharges:

Multnomah County PFA tax: Withhold 1.5% on wages over $125,000 and 3% on income above $400,000.
Portland Metro SHS tax: Withhold 1% on income exceeding $200,000.

Verify employee work locations to ensure local taxes are applied where necessary.

3. Calculate unemployment insurance contributions

Determine the employer's SUI tax for 2025 using Oregon's taxable wage base of $50,900. Multiply this amount by the assigned rate:

New employers: Apply the standard 2.4% rate (4.0% for construction businesses).
Experienced employers: Use the rate provided in the annual notice from the Oregon Employment Department.

Only include wages up to the taxable wage base in the calculation.

4. Account for Paid Leave Oregon contributions

Calculate Paid Leave Oregon contributions by applying the 1% total rate to gross wages. Split the contributions as follows:

Employer share: 40% of the total (0.4%).
Employee share: 60% of the total (0.6%).

Smaller employers with fewer than 25 employees are exempt from the employer portion but must still deduct and remit the employee share.

5. Add transit payroll taxes

Determine the applicable transit payroll taxes based on employee work locations:

TriMet tax: 0.007937 of gross wages for employees in the Portland metro area.
Lane Transit District tax: 0.0079 of gross wages for employees in Eugene-Springfield.
Statewide transit tax: 0.1% of gross wages for all employees working in Oregon.

For employees with work across multiple locations, allocate wages proportionally and apply the correct tax rates.

6. Deduct Workers' Benefit Fund contributions

Calculate Workers' Benefit Fund contributions based on total hours worked. The 2025 rate is $0.028 per hour, split equally:

Employer share: $0.014 per hour.
Employee share: $0.014 per hour.

Track all hours worked, including salaried employee hours, to ensure contributions are accurate.

7. Sum taxes and determine net pay

Add employer-paid taxes like SUI, transit taxes, and Paid Leave Oregon contributions. Combine employee withholdings for income tax, Paid Leave Oregon, transit taxes, and Workers' Benefit Fund contributions. Subtract withholdings from gross wages to calculate net pay.

Review calculations for errors before finalizing payroll. Regular audits of your payroll system can help catch discrepancies early and maintain compliance.

Filing and Payment Schedules for Oregon Employers

Oregon payroll tax deadlines must be met consistently to avoid penalties and late fees. Employers are required to follow specific schedules based on the type of tax and reporting method. Clear planning and organized payroll systems make compliance manageable.

Quarterly vs. Annual Deadlines

Oregon payroll taxes are primarily reported quarterly. Employers use the Oregon Quarterly Tax Report (OQ) to file state income tax withholdings, SUI contributions, and Workers' Benefit Fund payments. Additionally, transit payroll taxes like TriMet or Lane Transit may require separate filings.

Quarterly reporting deadlines:
Q1 (January–March): Due April 30.
Q2 (April–June): Due July 31.
Q3 (July–September): Due October 31.
Q4 (October–December): Due January 31 of the following year.

For taxes like the statewide transit tax, employers may also need to complete an annual reconciliation to confirm the accuracy of quarterly payments.

Combined Reporting and Required Forms

Oregon simplifies tax filing through Frances Online, an electronic system for combined payroll tax reporting. Employers can file and pay multiple taxes in one submission, including:

State income tax withholdings.
SUI contributions.
Workers' Benefit Fund contributions.
Statewide transit tax.

The OQ form is the primary document for quarterly reporting. Employers must also submit Form 132, which details employee wages, and Schedule B, required for semi-weekly withholding payment reports. Electronic filing through Frances Online ensures faster processing and fewer errors.

Key Filing Dates for 2025

Quarterly tax reports follow fixed annual deadlines unless the due date falls on a weekend or holiday. If this happens, the deadline shifts to the next business day. Employers should also track the following:

Withholding payment frequency: Monthly or semi-weekly, based on the employer's assigned deposit schedule.
Quarterly returns: Due at the end of the month following each quarter.
Annual reconciliation and W-2 submissions: Due January 31 for the prior year.

Local payroll taxes, such as TriMet or Lane Transit, follow the same quarterly deadlines but may involve additional forms or processes. Businesses operating in these regions must confirm all reporting requirements to ensure compliance.

Frequently Asked Questions

Oregon payroll tax requirements often lead to confusion for employers, especially with the multiple obligations at both the state and local levels. Below are clear, straightforward answers to common questions about payroll taxes for businesses with employees in Oregon.

What payroll taxes do employers pay in Oregon?

Employers with workers in Oregon are required to pay several specific taxes:

State Unemployment Insurance (SUI): Fully employer-funded and calculated on the first $50,900 of each employee's wages in 2025.
Paid Leave Oregon contributions: Businesses with 25 or more employees contribute 40% of the total 1% rate, while smaller employers are exempt from the employer portion but still handle payroll deductions for employees.
Transit payroll taxes: These apply in designated districts like TriMet (Portland area), Lane Transit (Eugene-Springfield), and statewide, depending on work locations.
Workers' Benefit Fund (WBF): Contributions of $0.014 per hour worked are required from both employers and employees.

Each of these taxes serves a specific purpose, from funding unemployment benefits to supporting transit systems or workplace safety.

Which portion of payroll taxes falls on the employer?

Employers are responsible for paying certain taxes entirely and sharing others with employees:

Employer-only taxes: SUI contributions and transit payroll taxes in applicable districts.
Shared taxes: Employers pay part of Paid Leave Oregon contributions (40% for large employers) and an equal share of WBF contributions ($0.014 per hour).

Careful calculation and recordkeeping are necessary to ensure accurate payments.

Are local taxes automatically withheld?

Local taxes in Oregon, such as transit payroll taxes or county income surcharges, are not automatically withheld. Employers must actively confirm whether their business or employees work in areas covered by these obligations.

For example:

Transit taxes: TriMet and Lane Transit payroll taxes depend on whether employees work within those districts.
Income surcharges: Multnomah County and Portland Metro apply additional taxes to higher-wage employees working in those jurisdictions.

Proactively reviewing employee work locations ensures compliance with local tax rules.

Does Oregon take state taxes out of every paycheck?

Employers are required to withhold Oregon state income tax from every paycheck for employees subject to Oregon taxation. The amount is determined using the employee's OR-W-4 form and the state's withholding tables.

Employers should review OR-W-4 submissions annually and apply updates to avoid errors in withholding.

Do remote workers impact Oregon payroll taxes?

Remote employees working in Oregon create additional payroll tax considerations. Employers must withhold Oregon state income tax and calculate applicable local taxes, such as transit payroll taxes, based on the employee's work location.

For remote employees working outside of Oregon, businesses need to evaluate tax nexus rules to determine if Oregon payroll taxes still apply. Keeping detailed records of employee locations helps avoid misreporting.

What happens if payroll taxes are filed late?

Late payroll tax filings lead to penalties and interest charges. Oregon enforces specific consequences for missed deadlines:

SUI reports: Employers face a $10 penalty for each late report, with interest accruing daily on unpaid amounts.
WBF contributions: Late payments may trigger additional fees and compliance reviews.
Transit payroll taxes: Penalties vary by district, such as TriMet or Lane Transit, and may include fines for incomplete or missed filings.

Timely submissions and accurate filings through Oregon's Frances Online system can help businesses avoid these costly penalties.

Tips for Staying Compliant

Staying compliant with Oregon state payroll taxes for employers means taking deliberate steps to align your processes with state requirements. A missed deadline or outdated rate can cost your business time and money. Focused preparation ensures accuracy and keeps you on track throughout the year.

Use Automated Filing Reminders

Payroll deadlines arrive quickly, especially for quarterly filings. Set up automated reminders to flag due dates for Oregon's income tax withholding, unemployment insurance, and transit payroll taxes.

Schedule alerts a week before deadlines like April 30, July 31, October 31, and January 31 for quarterly reports.
Check the calendar for any holidays that may shift due dates to the next business day.
Pair reminders with internal reviews to verify required forms and payments are ready to go.

Consistent reminders reduce the risk of late filings and keep your payroll on schedule.

Monitor Annual Rate Updates

Oregon adjusts payroll tax rates and thresholds every year. Employers must stay informed to avoid withholding inaccuracies or underpayment.

Review unemployment insurance rate notices from the Oregon Employment Department in November. If needed, submit an appeal promptly.
Update payroll systems each January with the latest income tax brackets, transit district rates, and Workers' Benefit Fund contributions.
Keep a record of all new rates, including the taxable wage base for unemployment insurance.

Proactive updates ensure your payroll calculations remain accurate and compliant.

Maintain Documentation for Adjustments or Exemptions

Employers claiming reduced rates or exemptions must keep detailed records to substantiate eligibility. Oregon agencies may request documentation during audits or compliance checks.

Save payroll records showing hours worked, wages paid, and deductions applied. Retain these records for at least four years.
For reduced transit payroll tax rates, maintain documentation proving eligibility, such as employee headcount records or annual payroll totals.
Organize state correspondence, including SUI rate notices and OR-W-4 forms, for quick reference during reviews.

Well-maintained records streamline responses to state inquiries and reduce the risk of disputes.

Simplify Payroll Calculations with Integrated Payroll Systems

Manually calculating Oregon payroll taxes can lead to errors, especially when tax rates or employee locations vary. Integrated payroll systems help by automating calculations and syncing data with state-specific requirements.

Apply updated income tax withholding tables and transit payroll rates directly to employee paychecks.
Allocate wages across multiple districts when employees work in more than one location.
Generate reports pre-formatted for state filings, including quarterly returns like Form OQ.

Automated systems reduce manual work and improve the accuracy of payroll processing.

Navigating Oregon payroll taxes can feel overwhelming, but with the right tools and knowledge, you can maintain compliance and avoid costly mistakes. We're here to support you every step of the way, from calculating withholdings to filing quarterly returns. Book a demo today to see how our integrated payroll solutions can simplify your Oregon payroll process and give you peace of mind.