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Oregon Institutes Statewide Transit Tax

With the passing of House Bill 2017 (“HB 2017”), Oregon has enacted a new statewide transit payroll tax. This tax is effective July 1, 2018, and applies to pay periods beginning on or after July 1, 2018.

The transit tax requires employers to withhold an additional one-tenth of a percent (.001) on wages of Oregon residents and nonresidents who perform services in the state of Oregon. All employees are subject to the statewide transit tax withholding regardless of possible income tax withholding exemptions. Even though this new transit tax is imposed on the wages of each employee, the employer is responsible for withholding, reporting and remitting this tax.

The first quarterly report is due by October 31, 2018, unless the person is an annual filer, in which case the first report is due by January 31, 2019. Quarterly filers are also required to file an annual reconciliation by January 31 of each year.

There is not a minimum threshold requirement for reporting. If an employer does not withhold the tax for the employee, that employee is responsible for reporting and paying the tax when he/she files an Oregon personal income tax return. In addition, there is no extension for the filing and payment of the statewide transit tax. For more information, visit www.oregon.gov.

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Gary Bingel's expertise focuses on state and local income taxation, and sales and use tax consulting. He has significant experience serving clients in the manufacturing, retail, pharmaceutical, biotechnology, technology and service industries.

David R. Venanzi, Jr. is a senior accountant in the State and Local Tax Group, providing income tax and sales and use tax consulting.