8 things to know about Oregons tax system Oregon Center for Public Policy

Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections). The rates range between 4.75% and 9.90%, with the tax you pay based on your taxable income. The corporate excise and income tax is the secondlargest source of state tax revenue. This isexpected unearned revenue to account for 11% of the state’s GeneralFund for the 2023–25 biennium. The corporate taxrates are 6.6% and 7.6% of taxable business income. Being in a state with low or no income tax can be a major financial advantage, but it’s important to look at the full picture when deciding where you might save the most money.

Oregon Property Tax

Oregon’s state and local governments receiverevenue from numerous sources, including federaltransfer payments; tuition, hospital and othercharges; Lottery revenue; and taxes. Of all thesesources, half the state’s total revenue is fromtaxation. Personal income tax and corporate excisetax are the most significant components of the stateGeneral Fund, and property tax is the most significantlocal tax in Oregon. These three taxes representabout 80% of all state and local taxes. As of 2020,the new corporate activity tax also startedproviding additional funding for K-12 education.

The corporate income tax has weakened, despite strong corporate profits

• If the Oregon legislature wants to cut taxes in Oregon, a simple majority will suffice.
• Corporate income tax rates differ from state to state and can have a significant effect on where businesses choose to set up shop.
• You can deduct the amount of these expenses that exceeds 7.5% of your federal adjusted gross income (AGI).
• Blind or elderly taxpayers, 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.
• In addition to the federal estate tax, with a top rate of 40 percent, 12 states and DC impose additional estate taxes, while six states levy inheritance taxes.
• If you want to cut taxes in Oregon, a simple majority of the Oregon legislature suffices.
• Oregon assesses an estate tax for deaths on or after January 2012.

The typical Oregon homeowner pays $3,479 a year in property taxes. While sales taxes often go overlooked in budgeting, they can accumulate significantly over time. Keep in mind that states with no or lower sales tax may have higher rates in other forms of tax to make up the difference.

• A tax credit allows taxpayers to reduce the amount of taxes they are required to pay.
• Oregon state tax can’t get any better when it comes to purchasing goods and services.
• This means that taxpayers do not have to pay taxes on this income.
• Tax systems differ, with some states applying a flat tax rate to all residents, while others use progressive rates that increase as income rises.
• That rate stays in place until a couple reaches $250,000 of taxable income.
• The current standard deduction for tax year 2024 is $5,495 on joint returns, $2,745 on single and married filing separate returns, and $4,420 for a head of household return.
• Oregon estate tax is tiered, with the tax rate increasing in line with the estate’s value.

How the new federal tax law impacts Oregon is still unclear

Corporate income tax rates differ from state to state and can have a significant effect on where businesses choose to set up shop. These taxes play a part in the overall ecosystem of a state’s economy. You can save time and money by electronically filing your Oregon income tax directly with the .

TURBOTAX DESKTOP DISCLAIMERS

But if you want to raise tax rates on the rich and big corporations to fund schools or other essential services, then you need three-fifths of each chamber of the legislature to agree. In other words, a minority of lawmakers — more easily captured by special interests — can block the will of the majority. The personal income tax is the largest source ofstate tax revenue, expected to account for 82% of thestate’s General Fund for the 2023–25 biennium. Oregon’staxable income is closely connected to federaltaxable income.

Income

To help offset high state income taxes, Oregon taxpayers can deduct up to $6,100 of Federal income tax from their Oregon taxable income. In the mid-1970s, corporations contributed almost 19 percent of all income taxes collected by the state of Oregon. In the last budget period, corporations paid less than 7 percent, forcing working families and individual Oregonians to pick up the slack. Today, the Oregon Lottery — in effect a tax paid mainly by the poor and people with gambling addictions — brings in more revenue to state coffers than the corporate income tax.

The impact of sales taxes on your wallet

If you were Black, mixed-race, Hawaiian, or Chinese, you had to pay a tax not Food Truck Accounting levied on white Oregonians. If you couldn’t afford it, you paid it off by performing road work. From Jesus to Adam Smith, there is wide agreement that a fair tax system is one based on the ability to pay — one that asks proportionately more of a rich person than of a poor person.

Corporations’ share of all income taxes has shrunk over the last four decades

• While these rates represent the maximum you might pay based on your earning bracket, the effective rate, after accounting for various deductions and credits, could ultimately be lower.
• Oregon has a graduated state individual income tax ranging from 4.75% to 9.9%, according to the Tax Foundation.
• It’s also important to remember federal estate tax also applies if your estate is above a certain threshold ($13.61 million in 2024 for individuals).
• If you were Black, mixed-race, Hawaiian, or Chinese, you had to pay a tax not levied on white Oregonians.
• Making sense of the tax landscape means comparing more than just one type of tax rate.
• Additionally, heirs could face big tax bills in Oregon since there is a state estate tax, but estates worth less than $1 million aren’t taxed.
• If approved for the program, you will borrow money from the State of Oregon to pay your county property taxes.

Oregon also collects a fiduciary income tax on the income of all trusts and estates. Property subject to taxation includes all privately owned real property (land, buildings, and fixed machinery and equipment) and personal property used in a business. The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site.

They are backed by successful founders like Balaji Srinivasan, Biz Stone(Twitter) and others. It’s up to us to oregon income tax push for the changes needed to make it work better for everyone. To mark Tax Day, we share eight things to know about Oregon’s tax system. Kiplinger is part of Future plc, an international media group and leading digital publisher. A .gov website belongs to an official government organization in the United States. She has nearly a decade of experience writing and producing content across a range of different sectors.