Yes, Oregon has a state income tax, and it is one of the highest rates in the country
Oregon taxes income at the state level. The state does not have a sales tax, but it makes up for that with income tax rates that range from 4.75% to 9.9% depending on how much you earn. If you live in Oregon or work there and earn money, you will owe state income tax unless you fall into a specific exemption category.
Oregon's tax brackets change each year. The rates apply to federal taxable income, which means Oregon starts with the same income figure the IRS uses, then applies its own state rates on top of federal tax. You pay both — they are separate taxes.
Key Takeaways
- Oregon has state income tax with rates from 4.75% to 9.9%, with higher earners paying the top rate.
- Oregon has no sales tax, but state income tax is the main way the state collects revenue from residents.
- You must file an Oregon tax return if you live in the state or work there, even if you do not owe tax.
- Certain types of income, like federal Social Security and some retirement distributions, may be partially or fully exempt from Oregon tax.
- Oregon offers a property tax deferral program for seniors and people with disabilities, which reduces the immediate tax burden on home ownership.
Oregon's tax brackets and rates for 2024
Oregon uses a progressive tax system, meaning the rate increases as your income increases. You do not pay the top rate on all your income — you pay the lower rate on the first portion, then the next rate on the next portion, and so on. For 2024, the brackets are:
| Income Range (Single Filers) | Tax Rate |
|---|---|
| $0 to $3,750 | 4.75% |
| $3,750 to $9,450 | 6.75% |
| $9,450 to $125,000 | 8.75% |
| Over $125,000 | 9.9% |
Married couples filing jointly have different bracket thresholds — the income ranges are roughly double those for single filers. Head of household filers have their own brackets as well. These brackets adjust annually for inflation, so the exact dollar amounts change each year. The Oregon Department of Revenue publishes updated brackets in January.
Oregon also allows a standard deduction, which reduces the income you actually pay tax on. For 2024, the standard deduction is $2,570 for single filers and $5,140 for married couples filing jointly. If your total income is below the standard deduction, you may not owe Oregon income tax, though you might still need to file.
Who has to file an Oregon tax return
You must file an Oregon return if you lived in Oregon for any part of the tax year and your income exceeds the filing threshold. The threshold is based on your filing status and type of income. Generally, if your income is above the standard deduction for your status, you file. Even if you do not owe tax, filing can be required — for example, if you had taxes withheld from paychecks or are claiming a refundable credit.
If you worked in Oregon but lived elsewhere, you may still owe Oregon tax on the income you earned in the state. Oregon taxes residents on all income from all sources, but it also taxes nonresidents on income earned within Oregon. You would file a part-year resident or nonresident return in that case.
If you moved to Oregon partway through the year, you file as a part-year resident. You report all income earned before and after the move, but only pay Oregon tax on income earned after you moved to the state (with some exceptions for specific types of income).
Income types that may be exempt or partially exempt
Federal Social Security benefits are exempt from Oregon income tax. If Social Security is your only income, you do not owe Oregon tax on it. However, if you have other income as well, the Social Security is still not taxed — only the other income is.
Certain retirement income receives partial exemption. Oregon allows a deduction of up to $27,000 per person (for 2024) for retirement income from pensions, annuities, and certain distributions from retirement accounts. This applies to people age 62 and older. The deduction is not automatic — you must claim it on your return.
Military pay for active-duty service members is exempt from Oregon tax if you are not an Oregon resident. If you are an Oregon resident on active duty, you can exclude your military pay from Oregon taxation.
Interest and dividends from certain bonds and securities may be exempt. For example, interest from U.S. Treasury securities is exempt from state tax (though still subject to federal tax).
How to file your Oregon return
You file your Oregon return using Form OR-40 (the standard individual income tax return) or Form OR-40-N (for nonresidents and part-year residents). You can file on paper by mail or electronically through the Oregon Department of Revenue website or through tax software. Most tax software packages include Oregon forms and will calculate your state tax automatically once you enter your federal information.
The filing deadline is the same as the federal deadline — typically April 15. If you file your federal return late, your Oregon return is also late. You can request an extension, which gives you until October 15 to file, but any tax owed is still due by April 15 (or you will owe interest and penalties).
If you owe Oregon tax, you can pay online through the Department of Revenue website, by mail, or through your tax software. If you are due a refund, direct deposit is the fastest way to receive it — typically two to three weeks after the Department of Revenue processes your return.
Property tax deferral for seniors and people with disabilities
Oregon offers a Property Tax Deferral Program that allows homeowners age 62 and older, or people with disabilities of any age, to defer paying property tax on their home. The deferred tax becomes a lien on the property and is paid when the home is sold or transferred. This program does not eliminate the tax — it postpones it — but it can free up cash flow for people on fixed incomes.
To use the deferral program, you must own and live in the home, have a household income below a certain threshold (which varies by county), and meet the age or disability requirement. You apply through your county assessor's office. The program is optional — you can choose to defer some years and not others.
Frequently Asked Questions
Does Oregon tax retirement income differently than wages?
Oregon taxes retirement income and wages at the same rates, but people age 62 and older can deduct up to $27,000 per person of retirement income per year. This deduction applies to pensions, annuities, and distributions from IRAs and 401(k)s. Wages do not may have access to for this deduction.
If I work in Washington but live in Oregon, do I owe Oregon tax?
Yes. Oregon taxes residents on all income from all sources, regardless of where the income is earned. You would report your Washington wages on your Oregon return. However, you may be able to claim a credit for taxes paid to Washington to avoid double taxation. Check the Oregon Department of Revenue website for the current credit rules.
What happens if I do not file an Oregon return when I should?
The Oregon Department of Revenue can assess penalties and interest on unpaid tax. If you owe tax and do not file, penalties start at 5% of the unpaid amount per month, up to 25%. Interest accrues on top of that. Filing late, even if you owe nothing, can result in a penalty if you had tax withheld or are claiming a refundable credit.
Can I deduct federal taxes paid from my Oregon income?
No. Oregon does not allow a deduction for federal income tax paid. You calculate Oregon tax based on your federal taxable income, but you cannot reduce that further by subtracting federal tax.
Does Oregon tax out-of-state income if I am a resident?
Yes. Oregon residents pay tax on all income from all sources — wages, self-employment, rental income, investment income, and income from out-of-state businesses. The only major exceptions are federal Social Security and certain types of retirement income that may have access to for the retirement income deduction.