Payroll tax in Oregon: What employers need to know [2023]

Whether hiring an Oregon resident or a nonresident who works within state boundaries, it’s crucial to know your payroll tax requirements. But this can get tricky. You have to comply with federal tax requirements for Medicare and Social Security, but you also have to withhold state income taxes and contributions to Oregonian social service programs—like taxes to fund transit systems and a new paid family leave scheme.

If you want the low-down on which payroll taxes Oregon businesses need to file, how much they need to contribute, and how to them, read our guide below. 

The 5 Oregon state payroll taxes

The Oregon Department of Revenue (DOR) administers the state's payroll taxes, which requires employers to withhold a portion of Oregon employee wages to cover their tax liability. The state has a progressive income tax, where higher earners pay a higher tax rate, which applies to both Oregon residents and nonresidents working at an Oregon-based company. Employees who either live or work beyond Oregon state lines may be entitled to a credit on mutually taxed income. 

Learn more about Oregon's employer taxes below. 

State unemployment insurance tax

Oregon’s Employment Department administers taxpayer-funded Unemployment Insurance (UI), which provides temporary payments to Oregonians who lost their job or earnings for reasons out of their personal control. These payroll taxes are provisioned by the State Unemployment Tax Act (SUTA) and placed in a UI Trust Fund with the US Department of Treasury. New employers pay a base rate of 2.4%.

Keep in mind that this state-run unemployment fund is separate from requirements under the Federal Unemployment Tax Act (FUTA). But Oregon employers who pay out their state UI can get up to a 5.4% tax credit on federal unemployment taxes. 

State income tax

Oregon levies a gradual personal income tax according to an employee’s taxable income, which employers withhold from wages. The rate schedule is in the table below:

Rates differ for those who file jointly with a partner, as qualified widows or widowers, or as heads of households, and for part-year Oregon residents or for nonresidents who work in Oregon. Flat taxes ranges from $192 to $21,305, and taxes on excess income range from 4.75% to 9.9%.

Consult Oregon's individual income tax guide, Publication OR-17, to learn how to determine and calculate an individual's income tax rate and withholdings.

Taxpayers who live or work in Multnomah County (which houses Portland) and make more than $125,000 annually have to pay an additional personal income tax, currently starting at $225 and rising to $9,375 for higher incomes, to fund preschool programs. 

Transit Tax

Unique to Oregon are transit taxes, where employers withhold a small portion of employee wages to help fund Portland’s TriMet transit system and the Lane Transit District, which serves Eugene and the rest of Oregon’s Lane County. Employers who pay wages in areas that serve these metro areas are responsible for paying the tax. As of 2025, employers in the TriMet district pay a transit tax rate of 0.8137% of employee wages and employers in the Lane Transit District pay 0.79%. 

Additionally, all employers of Oregon residents or nonresidents who work in Oregon have to withhold an additional 0.1% of employee wages for a Statewide Transit Tax scheme. 

Workers' compensation insurance

Oregon state law requires most employers to provide workers' compensation insurance to cover expenses for employees who suffer work-related injuries or illnesses. Employers can get coverage through any third-party insurance agency licensed to offer workers’ compensation coverage in Oregon. 

While the coverage itself isn’t a payroll tax, employers need to pay a Workers’ Benefit Fund (WBF) assessment. This is currently set at 2 cents per hour worked per employee. 

Paid Leave Oregon

Oregon recently implemented a new paid leave program that, as of September 2023, allows employees to take up to 12 weeks of paid annual leave. Employers with 25 or more employees contribute 1% of gross wages up to $132,900 to fund this benefit, with employers withholding 40% of that contribution and employees paying the remaining 60%. Small businesses with less than 25 employees can make optional contributions. 

Navigating Oregon’s niche local tax schemes may sound complicated. Luckily, Rippling’s payroll compliance software is here to help. 

Rippling automatically calculates your taxes and submits your tax forms and employer withholdings on your company’s behalf. The powerful solution handles taxes at the federal and Oregon state and local levels to monitor compliance and prevent infractions. What’s more, Rippling’s PEO can register and maintain your state tax accounts for you, automating even more of the payroll tax process.

Payroll tax due dates in Oregon

According to the Oregon DOR, all state payroll taxes are due on the same dates as federal tax returns administered by the IRS, which are typically filed quarterly on the last day of April, July, October, and January every calendar year. This includes Oregon income tax withholdings, unemployment contributions, Workers’ Benefit Fund assessment payments, and transit taxes. 

How to submit payroll taxes in Oregon

Once you know which payroll taxes employers are on the hook for and when those taxes are due, the next step is paying them. The first step is creating a Revenue Online account through the state government website, where you can register for a Business Identification Number (BIN), view your tax account, and make tax payments. You also need to submit a Combined Employer’s Registration form before running payroll for the first time. 

Once you have a handle on the paperwork, you can use the Frances Online e-filing system for employers, where you can submit ACH payments, monitor account info, and submit appeals. You can also order quarterly payroll tax reports from the Oregon Employment Department in Salem to file payroll taxes manually. You can also pay by phone at 800-356-4222. You can also visit the Employment Department for a full list of payroll tax forms.

Rippling’s full-service payroll software

If you’re looking for the easiest stay on top of Oregon’s tax requirements, Rippling’s payroll software can automatically calculate and file federal, state, and local taxes while managing compliance. 

Frequently Asked Questions about Oregon Employer Payroll Taxes

Are there local tax laws in Oregon?

Yes. In addition to federal tax requirements, Oregon employers have to withhold state personal income taxes, unemployment insurance, workers’ compensation, transit taxes, and paid leave. The state income tax is levied at a progressive rate and all payroll tax filings are due quarterly. 

Can your tax returns be audited in Oregon?

Yes, Oregon law permits the Employment Department to audit payroll taxes to ensure compliance. An auditor can check whether taxable wages were accurately calculated and review both federal and state returns. It typically covers three to seven years. 

What employee information do employers need to file payroll taxes?

To file payroll taxes in Oregon, the DOR needs the following information for each employee:

• Social Security Number
• First initial
• Last name
• Total hours worked
• State income tax withholding
• State Transit Tax (STT) subject wages
• STT withholding
• UI subject wages
• Paid Leave subject to wages

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for, tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.