Portland City Imposes a New Payroll Tax

At a Glance

• Portland voters approved Measure 26-210 to impose 1% tax to fund mental healthcare, case management, job training and other services for people experiencing or at risk of being homeless.
• Portland Payroll Tax will be effective on January 1, 2021.
• Residents and businesses in Clackamas, Multnomah and Washington counties will be subject to this tax.
• 1% tax on taxable income of more than $125,000 for individuals and $200,000 for joint-filers.
• 1% tax on businesses with gross receipts over $5 million per year.

Introduction

Beginning January 1, 2021 certain businesses and individuals in Washington, Clackamas and Multnomah counties, the Metro will become subject to the Portland Payroll Tax. The tax is imposed to fund services, including health care, case management, job training and rent assistance, for people experiencing or on the brink of homelessness. This new tax is in addition to other existing Oregon state and local taxes imposed on businesses and individuals.

Breakdown of tax rate assignment:

• Businesses with gross receipts over $5 million per year will be subject to pay 1% tax on their profits earned in the metro area.
• Both residents and nonresidents with taxable income $200,000 for joint filers or $125,000 for single filers will be subject to 1% of 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

At this time, 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.