The Oregon special payroll tax offset is a quarterly rate that reduces the state payroll taxes a covered Oregon employer owes, calculated as a percentage of subject wages and reported on the Oregon Combined Payroll Tax Report. For 2026, the offset rate is 0.135% (0.00135) of subject wages per quarter.1Oregon Employment Department. Current Tax and Contribution Rates It sits alongside unemployment insurance tax, withholding, and other obligations on the same quarterly filing, and employers who overlook it leave money on the table every quarter.
Who Gets the Offset
The offset applies automatically. There is no application, no negotiation, and no separate form. If you have employees in Oregon and file quarterly payroll reports, the offset is available to you, and the Oregon Employment Department publishes the rate alongside other payroll tax rates each quarter.
Because the rate can change from one quarter to the next, check the published figure before each filing rather than assuming last quarter’s number still applies. The 2025 first-quarter rate, for example, was 0.139% before settling at 0.135% for the remaining quarters of that year.
The 2026 Rate
For every quarter of 2026 published so far, the special payroll tax offset is 0.135% of subject wages.1Oregon Employment Department. Current Tax and Contribution Rates The Employment Department adjusts the rate periodically based on the state’s unemployment insurance fund needs and economic conditions.
How to Calculate the Offset
The calculation is straightforward. On the 2026 Combined Payroll Tax Report, multiply the wages in box 15a by the quarterly offset rate.2Oregon Department of Revenue. 2026 Oregon Combined Payroll Tax Report 150-211-155
Say your subject wages for the quarter total $400,000. At the 2026 rate of 0.135%, your offset is $540 ($400,000 × 0.00135). For a business with $1.2 million in annual subject wages, the offset works out to roughly $1,620 across four quarters at that rate. Not a windfall, but it compounds over years of filings.
Accuracy matters because the offset ties directly to your reported wages. If the wage figure is wrong, the offset is wrong, and the Employment Department cross-checks the numbers.
Where It Goes on Your Quarterly Return
The offset is reported on the Oregon Combined Payroll Tax Report (Form OQ, officially Form 150-211-155).2Oregon Department of Revenue. 2026 Oregon Combined Payroll Tax Report 150-211-155 This single quarterly form covers several payroll obligations at once: state income tax withholding, unemployment insurance tax, the Workers’ Benefit Fund assessment, the statewide transit tax, and Paid Leave Oregon contributions.
Filing goes through Frances Online, the Oregon Employment Department’s payroll tax portal, which replaced the older Oregon Payroll Reporting System and handles employer-side filings in one place.3Oregon Employment Department. Frances Online for Employers The system walks you through each line of the report.
Quarterly reports are due the last day of the month following the end of each calendar quarter: April 30 for Q1, July 31 for Q2, October 31 for Q3, and January 31 for Q4. Late filings can trigger penalties and interest, so set calendar reminders rather than relying on memory.
Keep the Supporting Records
Hold on to every quarterly Combined Payroll Tax Report along with the payroll records behind the numbers. For each quarter, that means wage totals, the offset rate you used, and the resulting offset amount. Oregon retention rules vary by record type, but the Department of Revenue keeps S-corporation records for six years and C-corporation records for up to ten, so matching that window with your own files is a reasonable practice.
Not a Corporate Income Tax Credit
The special payroll tax offset is separate from Oregon’s corporate excise and income tax. It does not appear on Form OR-20 (C-corporations) or Form OR-20-S (S-corporations).4Oregon Department of Revenue. Corporation Excise and Income Tax Those returns handle annual corporate tax liability. The offset lives on the quarterly payroll report and reduces payroll taxes, not income taxes.
Oregon’s minimum corporate excise tax is also unrelated. For S-corporations the minimum is $150 per year, and for C-corporations it ranges from $150 to $100,000 depending on Oregon sales volume, with no credit allowed to reduce the tax below the minimum.5Oregon State Legislature. Oregon Revised Statutes ORS 317.090 – Minimum Tax That minimum applies on the corporate return, not on the quarterly payroll report where the offset is claimed.
Likewise, the Workers’ Benefit Fund assessment appears on the same Combined Payroll Tax Report but is a separate obligation. It funds injured-worker programs, is charged per hour worked rather than as a percentage of wages, and is split evenly between employer and employee.6Oregon Department of Consumer and Business Services. Workers’ Benefit Fund It is not part of the special payroll tax offset calculation.