Oregon has one of the more complicated payroll setups in the country. If you employ people in Oregon, here's what's on your plate beyond federal payroll taxes.
Oregon income tax withholding
Employers withhold Oregon personal income tax from employee wages based on the employee's Oregon Form OR-W-4. Oregon doesn't use the federal W-4, so collect both from new hires.
Paid Leave Oregon
For 2026, the total contribution rate is 1% of wages up to $184,500 per employee. Employees pay 60% of it through payroll deductions. Employers with 25 or more employees pay the other 40%. Smaller employers still have to withhold and remit the employee share.
Unemployment insurance
Employers pay state unemployment tax on wages up to the annual taxable wage base ($56,700 for 2026). Your rate is assigned by the Oregon Employment Department and depends on your history. New employers typically start at a standard rate.
Workers' Benefit Fund assessment
This is an hourly assessment on hours worked, split between employer and employee, that supports programs for injured workers. It's separate from your workers' compensation insurance premium.
Statewide transit tax
Employers withhold a small statewide transit tax from wages of Oregon residents and of nonresidents who work in Oregon. The rate has been the subject of recent legislation and a voter referral, so confirm the current rate with the Oregon Department of Revenue before each year.
Local transit taxes
Employers in the TriMet and Lane Transit districts owe an employer-paid local transit tax. Some Portland-area employees also have local income taxes that may be withheld.
Filing
Most of these are reported together on Oregon's combined quarterly payroll report through the state's Frances Online system, with deposits due on a schedule that depends on how much you withhold.
Want this off your desk?
We run payroll for Oregon employers and keep up with rate changes every year. See our payroll services.
This article is general information, current as of September 2026, and is not tax, legal or financial advice for your situation. Tax rules change often. Talk with us before acting on anything here.