On November 3, Portland area voters approved a graduated personal income tax but rejected a payroll tax that would have been imposed on area employers. The income tax will be imposed on Multnomah County residents and on nonresidents with Multnomah County-source income. Multnomah County is the county in which Portland is located.
Multnomah County Personal Income Tax
Multnomah County Ballot Measure 26-214 imposes a personal income tax on Multnomah County residents’ taxable income and on nonresidents’ taxable income derived from sources within Multnomah County, effective January 1, 2021.
- Tax Base: The tax is imposed on taxable incomes of over $125,000 (single filers) and $200,000 (joint filers).
- Tax Rate: The tax rate is 1.5 percent on taxable income above $125,000 up to $250,000 for single filers and above $200,000 up to $400,000 for joint filers. Taxable income exceeding $250,000 (single filers) and $400,000 (joint filers) will be taxed at 3 percent. Effective January 1, 2026, the base tax rate will increase to 2.3 percent and the top marginal rate to 3.8 percent. The measure permits the County Board of Commissioners to adjust the tax rate to fully fund the program.
- Administrative Rules: The measure directs the county’s financial administrator to adopt rules to implement the tax. The rules will “generally be consistent” with the rules adopted by the Oregon Department of Revenue with respect to the Oregon personal income tax.
- Payment Due Date: Payment of the tax will be due on the due date for Oregon personal income tax returns, generally April 15 of the next year.
- Coordination With Multnomah County Business Income Tax: Multnomah County currently imposes a business income tax, which applies to both incorporated and unincorporated businesses. The overlap between the new personal income tax and the business income tax is not addressed in the measure. However, the report of the county task force that proposed the tax acknowledged the need to mitigate or resolve any double taxation issues that may impact “a small subset of business owners.” The report stated that the issue would be addressed during implementation of the tax.
- New Portland Metro Business Income Tax and Personal Income Tax Also Start January 1, 2021: The new county personal income tax is in addition to the Portland Metro personal income tax and business profits (net income) tax, both of which also take effect January 1, 2021. For additional information regarding these taxes, please see our earlier article.
Rejected Portland Metro Payroll Tax
Metro Ballot Measure 26-218 would have imposed a tax on employers with more than 25 employees (other than state and local governments) of up to 0.75 percent of wages, beginning with the 2022 tax year. The tax would have funded transportation improvements. Tri-Met, the region’s public transit agency, already imposes a similar tax on area employers. The measure was overwhelmingly rejected by voters.
If you would like additional information about the new Multnomah County personal income tax, please contact one of our Oregon tax partners: John Gadon, gadonj@lanepowell.com, 503.778.2130, or Eric Kodesch, kodesche@lanepowell.com, 503.778.2107.