Oregon Payroll Taxes 2026: Complete Employer Guide

Oregon has no sales tax — and the state compensates in ways that blindside small business owners. Oregon payroll taxes stack up fast: a top income tax rate of 9.9% (among the highest in the US), plus a Statewide Transit Tax, plus potential metro-area transit levies, plus Paid Leave Oregon contributions. That's up to five separate obligations before you cut your first check.

Here's exactly what each one costs, who owes it, and how to stay square with Oregon in 2026.

Oregon's Payroll Tax Snapshot: More Complex Than It Looks

Most states hand you two or three payroll obligations. Oregon hands you five. Take a typical Portland contractor hiring his first two employees — he configures federal withholding without a hitch, then receives a surprise notice from the Oregon Department of Revenue about an unfiled Statewide Transit Tax. Never heard of it.

That story plays out constantly. The STT is the single most missed Oregon payroll tax among new employers. Here's the full picture before we break each obligation down.

Income Tax Withholding + Statewide Transit Tax: What Comes Out of Every Paycheck

Both taxes are withheld from your employees' wages. You're the collection agent for the state.

Oregon income tax withholding follows graduated brackets. For 2026, Oregon taxes wages at 4.75% up to around $18,400 for single filers, then 6.75%, then 8.75%, with the 9.9% top rate hitting above roughly $250,000. Use the employee's OR W-4 to determine the correct withholding per pay period. Before your first payroll runs, register with the Oregon Department of Revenue — you need an Oregon BIN (Business Identification Number).

The Statewide Transit Tax (STT) is where new employers get blindsided. Flat 0.1%, withheld from every dollar of Oregon wages. Zero wage cap. One penny per ten dollars earned — simple math, easy to forget entirely.

The STT applies to every Oregon employer, wherever your business is physically located. Remote employee working from Bend? STT applies. Oregon resident working for your out-of-state company? STT applies. Remit it quarterly alongside your Oregon withholding return.

Metro-Area Taxes: TriMet & Lane Transit District

Here's what most employer guides skip entirely: Oregon has two metro-specific payroll taxes that have nothing to do with income tax or the STT. They're employer-only. Your employees pay nothing.

TriMet covers the Portland metro area — Multnomah, Washington, and Clackamas counties — at approximately 0.8137% in 2026. LTD (Lane Transit District) covers the Eugene/Springfield area at approximately 0.77%, a rate comparable to TriMet. Both apply to all wages paid for work performed inside the district, and both are remitted quarterly to the Oregon Department of Revenue alongside income tax withholding.

The transit district test is geography, not your office address. If your employee works inside the TriMet district — even remotely, from their living room in Beaverton — you owe TriMet on those wages.

Paid Leave Oregon + UI/SUTA: The Employer Contribution Layer

Two more obligations — both filed with separate agencies.

Paid Leave Oregon runs at a total rate of 1% of wages in 2026, split between employer and employee. Twenty-five or more employees: you pay 40% (0.4%) and withhold 60% (0.6%) from each worker. Fewer than 25 employees: you're exempt from the employer share — but you must still withhold the employee's 0.6% and remit it. That split trips up small employers constantly. Manage contributions through Frances Online (frances.oregon.gov).

Oregon UI/SUTA is employer-only — employees never contribute. New employers pay approximately 2.4% on roughly the first $54,300 of each employee's wages (confirm the exact 2026 wage base with the Oregon Employment Department, as it adjusts annually). Established employers get experience-rated, with rates from around 0.7% to 5.4% depending on claims history.

Get Registered Before Your First Payroll

1. 1 Register with Oregon DOR for income tax withholding and STT. You'll get an Oregon BIN. See our Oregon employer registration walkthrough if you're setting up for the first time.
2. 2 Register with the Oregon Employment Department (OED) for UI/SUTA — separate account, separate filing.
3. 3 Set up Paid Leave Oregon at Frances Online (frances.oregon.gov) to report wages and remit contributions.
4. 4 Confirm TriMet or LTD liability based on where your employees physically perform their work.

Frequently Asked Questions

Does Oregon have a payroll tax for employees, or just employers?

Both. Employees have Oregon income tax and the 0.1% Statewide Transit Tax withheld from their wages, plus 60% of the Paid Leave Oregon contribution (0.6% of wages). Employers cover TriMet, LTD, and Oregon UI/SUTA entirely — employees pay nothing toward those three.

What is the Oregon Statewide Transit Tax and who has to pay it?

The STT is a 0.1% tax on all Oregon employee wages with no wage cap, withheld by the employer and remitted to Oregon DOR quarterly. It applies to every Oregon employer regardless of business location — and it's the most frequently missed tax by first-time Oregon employers.

Do small businesses with under 25 employees owe Paid Leave Oregon contributions?

Small employers under 25 employees are exempt from the employer's 40% share — but still required to withhold the employee's 60% share (0.6% of wages) and remit it through Frances Online. Skipping the withholding because you believe you're fully exempt is a common and costly error.