Portland Preschool for All Tax: Thresholds, Withholding, and Estimated Payments

The Preschool for All tax is a Multnomah County personal income tax that funds tuition-free preschool for three- and four-year-olds in the county. Single filers pay 1.5% on Oregon taxable income above $125,000 and 3% on income above $250,000; joint filers pay 1.5% above $200,000 and 3% above $400,000. County residents owe it on all their Oregon taxable income, and nonresidents owe it on income earned from Multnomah County sources.¹

Who Owes the Tax

Residency drives everything. If you live in Multnomah County, every dollar of your Oregon taxable income counts, no matter where you earned it. If you live outside the county but work inside it, only the income you earned from county sources is taxable. A commuter who drives in from Washington County for a Portland job owes PFA tax on the wages earned while working inside county lines.¹

Part-year residents get a split treatment. For the months you lived in the county, all your income from every source counts. For the months you lived elsewhere, only Multnomah County-sourced income counts. If you moved in or out mid-year, you file Form MC-40-NP rather than the standard Form MC-40.²

The tax base is your Oregon taxable income, not federal adjusted gross income. That matters because anything Oregon doesn’t tax stays out of the PFA calculation too.

Thresholds and Rates

The tax only applies to income above set floors, and it only applies to the portion above those floors. Your first $125,000 (single) or $200,000 (joint) is never taxed.

Single or married filing separately: 1.5% on Oregon taxable income above $125,000, plus an additional 1.5% (3% total) on income above $250,000.
Joint filers, head of household, or qualifying surviving spouse: 1.5% on Oregon taxable income above $200,000, plus an additional 1.5% (3% total) on income above $400,000.

A single filer earning $175,000 pays 1.5% on the $50,000 above the threshold, which comes to $750. A single filer earning $300,000 pays 1.5% on the $125,000 between $125,000 and $250,000 ($1,875), plus 3% on the $50,000 above $250,000 ($1,500), for a total of $3,375.¹

Rates Rise in 2027

Starting January 1, 2027, both brackets go up by 0.8 percentage points. The lower rate rises from 1.5% to 2.3%, and the upper rate rises from 3% to 3.8%. For tax year 2026, the current rates still apply.¹

One boundary worth flagging: if you file a PFA return, you almost certainly also owe the Metro Supportive Housing Services tax, a separate 1% tax with the same thresholds. It’s a different return with its own calculation, though both are administered by Portland’s Revenue Division.³

Income That Isn’t Counted

Because PFA piggybacks on Oregon taxable income, Oregon’s exclusions carry through. Two matter most for high-income retirees:

Social Security benefits. Oregon does not tax Social Security, so it is not subject to PFA tax.
PERS retirement income. Oregon law prohibits local governments from taxing Public Employees Retirement System benefits, so PERS income is excluded from PFA entirely.

A retiree whose total federal income crosses $125,000 may fall well below that line once Social Security and PERS come out.¹

How Withholding Works

Employers with workers in Multnomah County must withhold PFA tax for any employee earning $200,000 or more during the calendar year, whether that employee lives inside the county or commutes in. This mandatory withholding rule comes from County Code Section 11.534.⁴

Below $200,000, withholding is voluntary, but employers must let employees opt in. Employees use the Metro and Multnomah County Opt Form to turn withholding on or off based on their situation. Even above $200,000, an employee who expects to owe no PFA tax can file the opt form to turn mandatory withholding off, and the employer must honor the election.¹

Whatever an employer does or fails to do, the individual taxpayer still owes the full tax at filing time.

When You Need Estimated Payments

If you expect to owe more than $1,000 in PFA tax for the year and don’t have enough withheld, you likely need quarterly estimated payments. This situation is common for self-employed workers, business owners, and people with significant investment income.

Missing required estimated payments doesn’t trigger a flat penalty, but interest accrues on the underpayment. The interest rate for the period running April 16, 2026 through April 15, 2027 is 8% per year, or roughly 0.667% per month.⁵

If you work for an employer who withholds the tax and you have no other income pushing you above the threshold, you probably don’t need to make estimated payments. If you have a side business, rental income, or large capital gains, run the numbers early so you aren’t surprised in April.

Filing and Paying

PFA returns are due April 15, or the next business day when that date falls on a weekend or holiday. Same deadline as federal and Oregon state returns.⁶

Which form you file depends on where you lived. Full-year county residents use Form MC-40. Part-year residents and nonresidents use Form MC-40-NP. These are separate from the Metro SHS forms (MET-40 and MET-40-NP), though both sets live on the City of Portland Revenue Division site.⁷

To fill out the form, you need your Oregon state return (for your Oregon taxable income figure), your W-2s and 1099s showing any PFA withholding, and your Social Security number. If more than one employer withheld PFA tax, add the amounts across all W-2s to get your total credit.

You can file electronically through the Portland Revenue Online (PRO) portal or mail a paper return. The portal accepts ACH transfers with no fee and Visa, Mastercard, or Discover with a 2.45% convenience fee. Paper filers should include a check or money order and make sure the envelope is postmarked by the deadline.⁸

What Happens If You File or Pay Late

The Revenue Division assesses late filing and late payment penalties separately, and both can hit if you miss the deadline without an extension.

Late filing penalty: 5% of the unpaid tax (minimum $5) if you don’t file by the original due date and haven’t filed an extension.
Late payment penalty: 5% of the unpaid tax (minimum $5) if you don’t pay by the original due date, even if you filed an extension to submit the return later.
Chronic non-filing: if you fail to file or pay for three or more consecutive tax years, the penalty jumps to 100% of the unpaid tax for all of those years.

Interest also accrues on any unpaid balance at 8% annually (0.667% monthly) for the April 16, 2026 through April 15, 2027 period.²⁵

The three-year rule is the one that stings. Someone who didn’t know they owed the tax and ignored notices can end up owing double the original amount. If you recently moved to the county and aren’t sure whether you should have filed in prior years, dealing with it quickly is worth the trouble.

If You Disagree With an Assessment

If you receive a notice adjusting your tax or denying a refund, you have 30 days to file a written protest with the Revenue Division explaining why you disagree and attaching supporting documents. If the Division’s review ends with a Final Determination you still disagree with, you can appeal to the Revenue Division Appeals Board, whose decision ends the administrative process.⁹

Separately, the Division can waive penalties for circumstances beyond your control, such as serious illness, a death in the immediate family, destruction of records by fire or disaster, or reliance on incorrect written guidance from a Division employee. A waiver request has to be in writing within 30 days of the penalty notice. Hiring a tax preparer who missed the deadline doesn’t qualify on its own, and neither does inability to pay.

1
Multnomah County. Multnomah County Preschool For All Personal Income Tax
2
City of Portland. Personal Income Tax Filing and Payment Information
3
Oregon Metro. Income Tax Information
4
Multnomah County. Multnomah County Code Chapter 11 – Revenue and Taxation
5
City of Portland. Tax Administration Policy – Personal Income Tax Interest Rates on Tax Due and Refunds
6
City of Portland. Tax Return Due Dates
7
City of Portland. File Your Personal Tax Returns
8
City of Portland. Pay Your Personal Tax
9
City of Portland. Your Right to Appeal