City of Portland Business License Tax: Rate, Exemption, and Filing

The Portland Business License Tax is a 2.6% tax on the net income your business earns from activity inside the city. Every person or entity doing business in Portland must register with the Revenue Division and file an annual return, no matter the legal structure.¹ Businesses with $75,000 or less in gross receipts from all sources are exempt for tax year 2026, and that threshold rises to $100,000 for tax years beginning on or after January 1, 2027.² The return is filed jointly with the Multnomah County Business Income Tax and is due the 15th day of the fourth month after your tax year closes.³

Who Has to Pay

Portland defines “doing business” broadly. Any activity pursued for profit or gain triggers the tax, whether you operate as a corporation, LLC, partnership, or sole proprietor.¹ Selling goods, performing services, consulting, freelancing, and managing rental properties all count. You don’t need a storefront or a permanent office in the city. If you perform work for clients inside Portland, you owe the tax on the income attributable to that work.

Businesses located outside Portland still have obligations if their activity inside the city goes beyond the protections of federal Public Law 86-272.⁴ One clear exclusion: wages you earn as an employee. If someone else issues you a W-2 for the work, that income isn’t subject to the business license tax.¹

How the 2.6% Is Calculated

Net income for Portland purposes starts with the figure you’d report to Oregon for state income or corporate excise tax, before any allocation for out-of-state operations and before deducting net operating loss carryforwards or carrybacks.¹ You then apply Portland’s apportionment rules to determine how much of that income the city can tax.

If your business operates entirely within Portland, all of your net income is taxable by the city. If you also operate outside the city and have nexus elsewhere, you apportion using a single sales factor. Sales of tangible goods count as Portland sales when the product is delivered to a buyer within the city, regardless of where it shipped from.⁴ Some industries use specialized apportionment methods under Oregon’s administrative rules, but single-factor sales is the default.

The Gross Receipts Exemption

The $75,000 (for 2026) and $100,000 (from 2027) thresholds measure gross receipts from all sources, inside and outside Portland, not net income. That means total revenue before any expenses. If you’re under the limit, you don’t owe the tax.²

Other exempt categories include corporations exempt from the Oregon Corporation Excise Tax and trusts exempt from federal income tax under Internal Revenue Code Section 501. If those entities earn unrelated business income, however, they owe the tax on that income alone.²

Being exempt doesn’t mean you can ignore the Revenue Division. You should still file so your account stays in good standing. Skip it, and the system generates delinquency notices or estimated assessments that take more effort to clean up than filing in the first place.

Registering Your Business

You must register with the Revenue Division within 60 days of starting business activity in the city.³ Registration is handled through Portland Revenue Online. You’ll need your tax identification number: an employer identification number, or your Social Security number if you’re a sole proprietor.⁵

The start date you report should reflect when you first conducted business in Portland, not the date you incorporated or filed with the state. You’ll also provide your legal business name as it appears in your Secretary of State or federal records, your physical business location, and a six-digit North American Industry Classification System code identifying your industry.

Filing and Paying the Combined Return

Portland and Multnomah County jointly administer their business taxes. You file one combined return covering the city’s 2.6% Business License Tax and the county’s 2% Business Income Tax.³ Most filers submit through Portland Revenue Online, which calculates the amount owed and provides immediate confirmation. Printable PDF forms are available if you prefer paper.⁶

The due date matches your federal return: the 15th day of the fourth month after your tax year closes, which is April 15 for calendar-year filers. For more time, submit a Request for Extension (Form EXT) by the original due date, or file a timely federal extension. Either gives you an additional six months. An extension to file is not an extension to pay, though. All taxes owed are still due by the original deadline.⁷

Quarterly Estimated Payments

If you expect your Portland business tax liability to reach $1,000 or more for the year, quarterly estimated payments are required.⁸ For a calendar-year taxpayer, the schedule is:

At least 25% of estimated tax by April 15
At least 25% by June 15
At least 25% by September 15
The remaining balance by December 15

Underpaying or skipping an installment triggers interest on the shortfall, calculated from each quarterly due date through the original due date of the annual return. This catches many business owners off guard: they file a correct annual return and still owe interest because they didn’t pay enough during the year.

Penalties and Interest for Late Filing

Late penalties stack quickly. File or pay less than four months after the due date, and the penalty is 5% of your total tax liability, with a $5 minimum. Four months or more late, an additional 20% kicks in, bringing the total to 25% of the tax owed.⁹ These can compound: filing late after the original due date and again after an extended due date can each trigger up to 25%.¹⁰

Interest runs separately at 0.833% per month (10% per year), calculated from the original due date through the 15th of the month after payment is received.¹¹ On a $5,000 tax bill, that’s roughly $42 per month in interest alone, on top of any penalties. An extension protects you from late-filing penalties but does nothing to stop interest if you haven’t paid in full by the original deadline.

Other Local Taxes on the Same Return

The Business License Tax isn’t the only local tax hitting your bottom line. The Multnomah County Business Income Tax adds 2% on net income, reported on the same combined return.³ Together with Portland’s 2.6%, the combined local rate reaches 4.6% of apportioned net income before any state tax.

Larger businesses face another layer. Metro’s Supportive Housing Services program imposes a 1% business income tax on net income for businesses whose gross receipts everywhere exceed $5 million.¹² The Revenue Division collects this tax on Metro’s behalf as part of the same filing process. For businesses crossing the $5 million gross receipts mark, the combined local rate climbs to 5.6% of net income.

1
Portland.gov. Chapter 7.02 Business License Law
2
Portland.gov. Portland City Code 7.02.400 – Exemptions
3
Portland.gov. Business Tax Filing and Payment Information
4
Portland.gov. Portland City Code 7.02.611 – Apportionment of Income
5
Portland.gov. Register for a Revenue Division Tax Account
6
Portland.gov. Revenue Division Business Tax Forms
7
Portland.gov. File Your Business Tax Returns
8
Portland.gov. Chapter 7.02 Business License Law – Section 7.02.520
9
Portland.gov. Portland City Code 7.02.700 – Penalties
10
Portland.gov. Penalty Assessment
11
Portland.gov. Chapter 7.02 Business License Law – Section 7.02.710
12
Metro. Pay My Supportive Housing Services Taxes