Multnomah County Imposes a New Local Tax

At a Glance

• Multnomah County voters approved Measure 26-214 to impose 1.5% and up to 3% tax to fund tuition-free preschool program.
• Portland Payroll Tax will be effective on January 1, 2021.
• County residents and taxable income derived within the county will be subject to this tax.
• 1.5% tax on taxable income of more than $125,000 for single filer and $200,000 for joint-filers.
• Additional 1.5% tax on taxable income of more than $250,000 single filer and $400,000 for joint filer.

Introduction

Beginning January 1, 2021, certain individuals in Multnomah county will become subject to the new Multnomah County Tax. The tax is imposed to fund a new preschool for all program, providing up to six hours per day of tuition-free, developmentally appropriate early learning.

This new tax is in addition to other existing Oregon state and local taxes imposed on businesses and individuals.

Breakdown of tax rate assignment:

• Both residents and non-residents with a taxable income of $125,000 for single filers or $200,000 for joint filers will be subject to 1.5% tax on taxable income.
• In addition, both residents and non-residents with a taxable income of $250,000 for single filers or $400,000 for joint filers will be subject to an additional 1.5% tax on taxable income.

Metro Council intends to enter into an intergovernmental agreement with the Oregon state tax agency most likely with City of Portland to collect the tax.

Next Steps

On December 10, 2020, Metro Council will hold a public meeting. It has been proposed for this tax, as well as, the Portland Local Tax (Measure 26-210) to be voluntary for employer withholding for 2021. Paylocity will attend the meeting to see if the proposal is accepted.

Paylocity is closely monitoring this new tax for additional agency guidance.  In the meantime, please review these guidelines.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.