Withholding Taxes: Oregon
Federal law and guidance on this subject should be reviewed together with this section.
Author: Alice Gilman
- Wages paid to Oregon residents who work in and outside the state are subject to withholding. An employee is an Oregon resident for income tax purposes if certain criteria are met. Oregon income tax must also be withheld from wages paid to Oregon nonresident employees for services performed in the state. In addition, Oregon employers are required to withhold a 0.1% Public Transportation Payroll Tax from the wages of Oregon residents who work inside or outside of Oregon and nonresidents for work performed in Oregon. See Withholding on Residents, Nonresidents and Expatriates.
- Oregon employers determine withholding using federal Form W-4 and Form OR-W-4. Employees who have a 2019 or earlier version of federal Form W-4 on file for Oregon and federal withholding purposes and submit a 2020 or later version of federal Form W-4 to change their federal withholding must complete a new Form OR-W-4 for Oregon withholding. Employers are required to withhold Oregon state income tax at the flat rate in effect when employees do not submit either form and until they do submit one of the forms. See Employee Withholding Forms.
- Employers may withhold on supplemental wage payments, such as bonuses, as if the payments were a regular wage payment or at a flat rate. See Supplemental Wages.
- Each year employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee from whom any amount of Oregon income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form W-2 Reporting Requirements.
- Oregon employers are required to notify all employees annually about both the Oregon and federal Earned Income Tax Credit (EITC) with each employee's annual Form W-2. See Earned Income Tax Credit Notices.
- Employers are required to keep certain records of wages paid and taxes withheld. See Recordkeeping Requirements.
- Employers are subject to penalties for failing to file information returns or for filing them incorrectly or inaccurately. See Penalties.
- Localities including Canby, Sandy and Wilsonville have requirements pertaining to income tax withholding. See Local Requirements.