An Overview of Oregon State Taxes
Everyone in the United States is required to pay state and federal taxes. The tax laws that apply to individuals vary from state to state. Oregon has a few unique tax considerations, which you’ll need to consider if you’re looking to relocate to the Beaver State.
One of the most appealing tax benefits Oregon offers is no tax applied to the sale of goods or services. Another appealing benefit is Oregon’s marijuana tax program. In 2019, the Oregon Legislature passed House Bill 2098, which changed the classification of marijuana products that would be subject to the state’s recreational marijuana tax.
In order to avoid legal or financial trouble, it’s important to understand how federal taxation works in Oregon. Find more information on taxes specific to Oregon state below.
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Oregon Income Tax
While some states don’t impose an income tax on residents, Oregon does. The state uses a bracketed system that is updated yearly to reflect changes in the cost of living and inflation.
The marginal rates (tax rates progressively applied to an individual’s income as it increases) only apply to a person’s earnings within their applicable marginal tax bracket, which is based on filing type. The tax bracket an Oregon resident falls under is determined by the last dollar earned in a tax period. Typically, those filing jointly will have a wider tax bracket than those filing separately.
Oregon’s income tax brackets break down differently depending on whether you are filing single or married. What you owe in income taxes is based on your earnings during that year.
Single Filing 2019 –
- $0 to $3,449.99: 5%
- $3,450 to $8,699.99: 7%
- $8,700 to $124,999.99: 9%
- $125,000.00 and up: 9.90%
Married Filing Jointly 2019
- $0 to $6,899.99: 5%
- $6,900 to $17,399.99: 7%
- $17,400 to $249,999.99: 9%
- $250,000.00 and up: 9.90%
For married couples and registered domestic partners, use this tax calculator to determine what your personal income taxes might look like in Oregon.
When you’re filing as married or registered domestic partners, note that the tax brackets are doubled.
A registered domestic partnership is defined as a civil contract between same-sex couples that allows them to receive the same tax benefits as a married couple. On the other hand, unregistered domestic partnerships are not recognized as married individuals for tax purposes.
Does Oregon Have a Sales Tax?
Oregon does not have a tax on general sales or transactions.
To make up for the lack of revenue from sales tax, certain purchases made outside of Oregon have a special tax applied to them. For example, there is a vehicle use tax on vehicles purchased outside of Oregon that the purchaser must pay before the vehicle can be titled and registered in the state. Similarly, the Oregon Business Registry Resale Certificate is applied to goods purchased outside of the state to be resold in-state.
When it comes to online retailers, the U.S. Supreme Court instituted a rule (referred to as the Wayfair decision) that allows a state to collect sales tax from taxpayers who live outside of Oregon and make purchases online. This rule does not impact purchases made by Oregon residents, as they are not required to pay sales tax.
Oregon Property Taxes
Property taxes are one of the biggest sources of revenue in Oregon. Taxes are determined by a county assessment and taxation office’s valuation of the property through an appraisal. This is done by January 1 of each year.
Property taxes are determined at a rate per $1,000 of assessed value. Oregon property tax is set by county. “The total amount of tax placed on a property is computed by multiplying the property’s assessed value by the combined tax rates of all the districts in which the property is located and then adding any assessments.”
Property that can be taxed includes any privately owned land, buildings, and fixed machinery or equipment, as well as manufactured homes and personal property used for business purposes. Property taxes are not imposed on furnishings, personal belongings, vehicles, business inventories (including crops or orchards), and other types of intangible properties.
In Oregon, personal property — tangible or intangible — is required to be valued at 100% of its market value. Intangible properties are not taxable, but tangible property may or may not be. Non-taxable personal properties include inventories that are for sale on behalf of a business, or farm equipment or machinery.
In the event that the taxable personal property is valued at less than $17,000, the tax assessment for that year may be canceled, but a return must be filed by March 15.
If you are unable to pay property taxes in Oregon, you may be eligible for the state’s Senior and Disabled Deferral Program. Certain disabled individuals and senior citizens can borrow money from the state to pay for these taxes as long as the requirements are met.
House Bill 2587 “allows homes with certain reverse mortgages to qualify for the Senior and Disabled Deferral Program starting January 1, 2020. If you entered into a reverse mortgage on or after July 1, 2011, and before January 1, 2017, and have equity in your home of at least 40% as of the date of your deferral application, you may qualify for deferral.”
Oregon Estate Taxes
Unlike inheritance tax, which is paid once a beneficiary inherits assets, estate taxes are calculated and taken out of a deceased person’s assets before being distributed to any beneficiaries. In other words, the estate is responsible for the taxes — not the beneficiary.
In Oregon, whether the estate or inheritance tax is imposed depends on the date of death. Deaths that occurred prior to January 1, 2012, are subject to the inheritance tax. Inheritors must submit the Form IT-1, Oregon Inheritance Tax Return. Deaths that occurred on or after January 1, 2012, are subject to the estate transfer tax and require benefiting parties to submit the Form OR-706, Oregon Estate Transfer Tax Return.
Estate transfer taxes are imposed when assets are transferred to heirs or beneficiaries. Returns and payments are due nine months after the date of death. Exemptions include estates valued at less than $1 million. If the value of the estate is more than $1 million, a portion of the estate will be taxed. The Oregon estate tax is set at a graduated rate, starting at 10% and capping at 16%.
Other Taxes in Oregon
Oregon has other taxes that are unique to the state, including the marijuana tax program. As mentioned previously, House Bill 2098 changed the classification of categories of marijuana items. Licensed retailers are required to charge a 17% tax on recreational marijuana sales. In certain cases, an additional 3% may be taxes based on Oregon localities.
Additionally, it should be noted that congressional changes to national taxing affect the way Oregon’s tax system works. Because Oregon follows the federal definition of taxable income, changes to federal tax law directly impact Oregon’s tax code, too.
Tips for Filing Taxes in Oregon
Tax returns must be filed by April 15 with the financial information from the previous calendar year. If you’re unsure of where to start, Oregon provides tools for tax filers that make it easy to calculate withholding, calculate your deferral payoff, or file a return online.
Before you file your taxes, have all of the relevant forms ready, including 1099s, W-2s, and interest statements from your bank. As an Oregon resident, you can feel confident in using this guide to help you prepare for filing your taxes.
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This post was updated January 28, 2020. It was originally published January 9, 2020.