Oregon Tax Tables 2024 Tax Rates and Thresholds in Oregon

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. CAT is imposed at 0.57% of taxable commercial activity in excess of $1 million, plus a flat tax of $250 (H.B. 3427, §65(1)). The tax is imposed on the person with the taxable commercial activity (i.e., the seller) (H.B. 2164, §52, amending H.B. 3427, §63).

Employment and Payroll Taxes

• Small businesses located in Oregon do not need to collect sales tax on goods and services they sell directly to customers.
• If you are unable to do so, attach an explanation to your tax return.
• It is based on the corporation’s Oregon sales, and different tax rates apply depending on the level of sales.
• He files his original return on extension on May 3 and elects to use the reduced tax rate.
• If you don’t think you’ll be able to file your taxes by the deadline, you can request an extension, which will give you until the given deadline to file your return.
• The federal corporate tax’s brackets differ from the personal income tax in that the brackets are not completely progressive (the last tax bracket is not the highest).
• The Oregon Corporate Activity Tax (CAT) is a relatively new tax implemented in 2020, designed to provide funding for public education in the state.

She files an amended return on November 2 and makes the election. The election will be denied because she is filing her amended return after the original due date and she didn’t file on extension. Among the most important steps of small business tax prep is collecting pertinent financial information. Having the following documents available (as applicable) will help to make filing your taxes less time-consuming. Oregon small business owners are required to pay various types of taxes to the IRS and state authorities. Although the tax rate is less than 1%, taxpayers with significant oregon income tax activities in Oregon could face a substantial CAT liability and, thus, may need to evaluate the tax’s impact over the course of 2020.

What is qualifying business income?

Be sure to collect a new W-9 from each independent contractor annually, as their business information may have changed. Also, if you use the internet and/or cable, include this with your home office documentation. The Corporate Activity Tax applies to businesses that earn $750,000 or more in annual gross income. Oregon had about 75,000 taxpayers in the state’s top income tax bracket in 2020, https://www.bookstime.com/ according to state data, triple the number in 2010. Small businesses located in Oregon do not need to collect sales tax on goods and services they sell directly to customers. Employers in Oregon are required to withhold state income taxes from employee wages and submit the withheld amounts to the state.

• However, you would only pay 24% of your taxable income on the income  that falls in the higher tax bracket.
• It is your responsibility to research the programs and see which ones can be of the most benefit to you.
• Pass-throughs also have the option to elect PTE-E tax treatment.
• This is because only payments on the loan interest are tax-deductible.
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• The personal income tax is the largest source ofstate tax revenue, expected to account for 82% of thestate’s General Fund for the 2023–25 biennium.

What is the tax structure of an LLC in Oregon?

To determine the amount that has to be paid in this type of situation, you would take your ratio of sales that are based out of Oregon to other sales and apply the ratio to what is known as consolidated federal income. The amount that you are left with is what you must include as taxable income for state purposes. Although hiring a tax preparer is never required, in most cases, a small business needs professional accounting help to make sure their taxes are done correctly. You can face serious consequences, such as penalties, fines, and falling out of good standing with the state if you make errors on your tax returns. As of 2024, the Oregon business tax rate is 6.6% on taxable income of $1 million or less. When you track your business expenses, you may have spent more than the standard deduction, which means you’ll be able to lower your taxable income (and possibly your tax bill) even more than if you took the standard deduction.

​You can drop off your tax form and make non-cash payments in person at our main office in Salem or at one of our regional field offices in Bend, Eugene, Gresham, Medford, or Portland. Even if you receive an extension, you must pay your taxes by the original deadline to ensure that you don’t incur penalties. To get through the rigors of tax season, CPAs depend on their tax preparation software. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.

The election will be allowed, and his amended return will be what are retained earnings treated as the original return. Your profit and loss (P&L) statement, also called the income statement, summarizes your revenue and business expenses throughout the tax year. Your P&L will include much of the information you’ll need during your business tax prep. If your small business works with independent contractors, you must file Form 1099-NEC for each non-employee whom you have paid at least $600 for services performed. If the independent contractor also provided supplies/materials/goods to your business, include those on the 1099-NEC.

LLCs

Every employer must also register for a business identification number (BIN) as part of the reporting process. Oregon employers use the Combined Payroll Tax Reporting System to report and pay their payroll taxes. Employers who pay employees that work in Oregon must report and pay Oregon payroll taxes. To avoid confusion, keep in mind that the Oregon Department of Revenue’s website uses the terms “payroll tax” and “withholding tax” interchangeably. The Oregon small business taxes your company will owe depends on its structure, location, and business activities. If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses.