Oregon takes a significant bite out of a paycheck, mostly through state income tax that runs from 4.75% to 9.9% depending on what you earn. On top of that, every worker pays about 0.7% of wages in combined statewide payroll deductions, and residents or workers in the Portland metro area can owe several more local income taxes. How much Oregon takes out for taxes on your specific paycheck depends on your income, where you live, your filing status, and the credits and deductions you qualify for.
Oregon State Income Tax Brackets
Oregon uses four progressive tax brackets. Each portion of your income is taxed at the rate for that bracket, not your entire paycheck at your top rate.1Oregon State Legislature. Oregon Revised Statutes 316.037 – Imposition and Rate of Tax The thresholds for the lower brackets are adjusted for inflation each year, while the top bracket has stayed fixed.
For single filers:
- 4.75% on the first $4,300 of taxable income
- 6.75% on income from $4,300 to $10,750
- 8.75% on income from $10,750 to $125,000
- 9.9% on income over $125,000
For married couples filing jointly or head-of-household filers:
- 4.75% on the first $8,600 of taxable income
- 6.75% on income from $8,600 to $21,500
- 8.75% on income from $21,500 to $250,000
- 9.9% on income over $250,000
That top 9.9% rate is one of the highest state income tax rates in the country.2Oregon Department of Revenue. 2024 Tax Rate Charts Because the 8.75% bracket covers such a wide span of income, most middle-income Oregon workers end up with an effective state tax rate somewhere in the 7% to 9% range before deductions and credits.
Deductions and Credits That Lower What You Actually Owe
Your paycheck withholding reflects the headline brackets, but your actual Oregon tax bill is softened by several items that most workers qualify for.
Standard Deduction
For 2026, Oregon’s standard deduction is $2,910 for single filers and $5,820 for married couples filing jointly.3Oregon Department of Revenue. Oregon Withholding Tax Formulas 2026 If you itemize on your federal return, Oregon generally follows that same choice because it starts from federal taxable income before applying its own modifications.4Oregon State Legislature. Oregon Revised Statute Chapter 316 – Personal Income Tax
Federal Tax Subtraction
Oregon lets you subtract the federal income tax you paid from your Oregon taxable income, which most states don’t allow. For 2026, the maximum subtraction is $8,750.3Oregon Department of Revenue. Oregon Withholding Tax Formulas 2026 You get the full amount if you’re a single filer under $125,000 or a joint filer under $250,000. It phases down and disappears at $145,000 single or $290,000 joint. Missing this subtraction is one of the most common mistakes in estimating an Oregon tax bill.
Personal Exemption Credit
This credit comes directly off your tax, not your taxable income. For 2026, it’s $263 for each qualifying exemption on your return, including yourself, your spouse on a joint return, and your dependents. The credit is available to single filers with adjusted gross income up to $100,000 and joint filers up to $200,000.5Oregon Department of Revenue. Tax Benefits for Families
Oregon Kids Credit
If you have children ages five and under, you may qualify for a refundable credit of up to $1,050 per child, covering as many as five children. The full credit requires modified adjusted gross income of $26,550 or less, and it phases out completely at $31,550. Because it’s refundable, families who owe little or no tax still receive the balance as a payment.5Oregon Department of Revenue. Tax Benefits for Families
Statewide Payroll Deductions on Every Paycheck
Beyond income tax withholding, three small statewide items come out of Oregon paychecks. None is huge on its own, but together they add roughly 0.7% to what the state takes.
Statewide Transit Tax
Every Oregon worker pays 0.1% of gross wages to the Statewide Transit Tax. Residents owe it regardless of where they work, and nonresidents owe it on wages earned in Oregon.6Oregon Department of Revenue. Statewide Transit Tax On a $60,000 salary, that’s $60 a year, withheld each pay period.
Paid Leave Oregon
The state’s paid family and medical leave program collects a total 1% of gross wages up to $184,500 for 2026.7Paid Leave Oregon. Employers Overview Employees pay 60% of that, or 0.6% of wages, while employers cover the rest.8Oregon State Legislature. Oregon Revised Statute Chapter 657B – Family and Medical Leave Insurance On $60,000, your share is $360 per year.
Workers’ Benefit Fund
This fund is paid by both employers and employees at a combined 1.8 cents per hour worked in 2026, with employers required to cover at least half.9Oregon DCBS. Workers’ Compensation and Workers’ Benefit Fund 2026 At a full-time 2,080 hours a year, the maximum employee share is about $18.72. Many employers absorb the whole thing.
Portland Metro and Local Income Taxes
If you live or work in the Portland area, several local income taxes stack on top of the state rate. Most are not automatically withheld by employers, so people often don’t realize they owe them until they file.
Metro Supportive Housing Services Tax
The Metro SHS tax funds homelessness programs across Clackamas, Multnomah, and Washington counties. It applies at 1% on taxable income above the exemption threshold. For 2026, the inflation-adjusted thresholds are $128,000 for single filers and $205,000 for joint filers.10Portland.gov. Personal Income Tax Filing and Payment Information A single filer earning $150,000 would owe 1% only on the $22,000 above the threshold, or $220.
Multnomah County Preschool for All Tax
Multnomah County residents owe an additional income tax with two tiers:11Multnomah County. Multnomah County Preschool for All Personal Income Tax
- 1.5% on individual income over $125,000 (joint income over $200,000)
- 3% on individual income over $250,000 (joint income over $400,000)
A single Multnomah County resident earning $300,000 would owe 1.5% on the income between $125,000 and $250,000 ($1,875) and 3% on the $50,000 above $250,000 ($1,500), for a $3,375 Preschool for All bill. Combined with the SHS tax and state income tax, higher earners in Multnomah County face marginal rates well above 12%.
Portland Arts Tax
Portland residents 18 and older owe a flat $35 Arts Tax each year if they earn at least $1,000 in annual income and live in a household above the federal poverty level.12Portland.gov. Arts Tax Filing and Payment Information It doesn’t scale with income, it’s filed separately from your state return, and missing it triggers late fees.
A Rough Picture of What Comes Out
Put the pieces together on a $60,000 salary for a single filer with no dependents outside Portland. State income tax withholding on that income lands in the 8.75% bracket at the top, with the standard deduction and federal tax subtraction pulling the effective rate down to roughly 7% to 8% once the return is filed. Add 0.1% for the Statewide Transit Tax and 0.6% for Paid Leave Oregon, and the state side of your paycheck is losing somewhere around 8% to 9% overall.
A Multnomah County resident at $150,000 is looking at the same state components, plus a slice of the Metro SHS tax on income over $128,000, plus the Preschool for All tax on income over $125,000, plus the $35 Arts Tax at year end. That’s why the Portland-area numbers climb so quickly past the state baseline.
Retirement Income and the Sales Tax Trade-Off
Social Security benefits are fully exempt from Oregon income tax; any Social Security included in your federal adjusted gross income is subtracted on your Oregon return.13Oregon.gov. Publication OR-PIT-VET – Personal Income Tax Items of Interest to Oregon Veterans Pensions, IRA withdrawals, and 401(k) distributions are taxed at the same bracket rates as wages, though retirees 62 and older may qualify for a retirement income credit that phases out at $15,000 of household income (single) or $30,000 (joint), with Social Security not counted toward those limits.14Oregon Secretary of State. Retirement Income Credit
One thing Oregon does not take: sales tax. The state has no general sales or use tax, so the dollars that survive the income and payroll deductions keep their full purchasing power at the register.15Oregon Department of Revenue. Sales Tax in Oregon That design choice is why the income-tax rates run as high as they do: Oregon funds itself from what you earn rather than what you spend.