Oregon Payroll: Employer Tax and Software Guide

Oregon has no sales tax, which is the first thing anyone learns about the state, and it funds the difference through a personal income tax whose second highest rate starts at a wage almost every full-time employee clears. For an employer, that means withholding is the largest line in the calculation and the one your people will ask you about.

Around it sits a set of programs that no single registration covers. Unemployment insurance runs on one of the highest taxable wage bases in the country. Paid Leave Oregon takes 1 percent of wages with a headcount rule that counts staff in other states. There is a statewide transit tax withheld from employees, a separate transit payroll tax paid by employers in two districts, an hourly Workers Benefit Fund assessment, and, for anyone with a Portland-area address, two county-level income taxes administered by a city revenue office.

None of it is hard on its own. All of it has to be right in the same quarterly filing. This guide covers what Oregon requires from employers, the local obligations that state registration does not reach, and how 10 payroll providers price the work at 10, 25 and 50 employees.

What Oregon requires from employers

Six obligations sit on top of federal payroll, and five of them land in the same quarterly return. Registration is combined, reporting is combined, and that consolidation is genuinely helpful once you understand which pieces are inside it.

State income tax withholding

Oregon taxes wage income on four graduated rates: 4.75 percent, 6.75 percent, 8.75 percent and 9.9 percent. On the Department of Revenue rate charts published for tax year 2025, a single filer crossed into the 8.75 percent band at $11,100 of taxable income and into 9.9 percent above $125,000. Joint filers reached 8.75 percent at $22,200 and 9.9 percent above $250,000. The two lower thresholds are adjusted for inflation each year, the $125,000 and $250,000 top thresholds have not moved in years, and the four rates are set in statute.

The practical consequence is that almost every full-time Oregon employee sits in the 8.75 percent band. That is a high effective rate compared with the flat-tax states, and it is why Oregon payroll tax conversations with new hires usually start with take-home pay rather than with the employer cost.

Oregon publishes its own withholding certificate, Form OR-W-4, because federal Form W-4 allowances stopped mapping onto Oregon withholding after the 2017 federal tax act. The Oregon Withholding Tax Tables, publication 150-206-430, took effect January 1, 2026. Those tables can only be used when an employee claims the same allowances for Oregon and federal purposes; where the two differ, the employer uses the Oregon Withholding Tax Formulas, publication 150-206-436, which subtract federal tax withheld up to a cap of $8,750 and phase that cap down to zero as wages rise.

How an Oregon paycheck is actually calculated

People looking for an Oregon payroll calculator are usually trying to answer one of two questions: what a specific employee nets, or what a hire costs the company. The mechanics are the same in both directions, and they run in a fixed order.

Start with gross wages for the period. Subtract pre-tax deductions. Apply federal income tax withholding, Social Security and Medicare. Apply Oregon withholding from the tables or formulas, which subtract the Oregon standard deduction and up to $8,750 of federal tax withheld, less at higher wages, before applying the graduated rates. Withhold the statewide transit tax at 0.1 percent of wages, the employee 60 percent share of the Paid Leave contribution, and half of the Workers Benefit Fund hourly assessment. What remains is net pay.

On the employer side, add unemployment insurance tax on wages below the annual base, the employer 40 percent Paid Leave share if you have 25 or more employees, a transit district payroll tax if the work happens inside TriMet or Lane Transit District, the other half of the hourly assessment, and workers compensation premium. That employer stack, not the withholding, is the number to budget from.

Deposit schedules and the combined quarterly report

Oregon withholding deposit dates mirror federal deposit dates exactly, which spares employers a second calendar. The Department of Revenue keys the schedule to federal tax liability rather than to Oregon liability.

Reporting is where Oregon consolidates. The Oregon Quarterly Tax Report, Form OQ, carries state withholding, unemployment insurance, Paid Leave contributions, transit district tax and the Workers Benefit Fund assessment in one return, supported by Schedule B for semiweekly depositors and Form 132 for employee detail. Quarterly reports are due the last day of the month after the quarter closes. The annual reconciliation, Form OR-WR, covers withholding and the statewide transit tax and must be filed electronically.

Unemployment insurance tax

Unemployment insurance is an employer-only cost in Oregon, and the taxable wage base is one of the highest in the country. According to the Oregon Employment Department, the base is $56,700 per employee for 2026, up from $54,300, with experienced employer rates assigned from Tax Schedule 3 and ranging from 0.9 percent to 5.4 percent.

New employers pay 2.4 percent, unchanged from the prior year, until enough history exists for experience rating. Rates for 2026 include a payroll tax offset of 0.135 percent in each calendar quarter. The high wage base changes the arithmetic of rate movement: one percentage point of rate on a $56,700 base is $567 per employee per year, several times what the same movement costs in a state with a base near the federal $7,000 floor.

Paid Leave Oregon

Paid Leave Oregon is funded by a 1 percent contribution on gross wages up to $184,500 for 2026. Large employers, meaning 25 or more employees on average, pay 40 percent of that and withhold the other 60 percent from employees. Small employers under 25 do not owe the employer share at all, but they still withhold and remit the employee portion, so a small employer remits 0.6 percent of wages while a large one remits the full 1 percent. Any employer may choose to cover more than its required share.

The headcount rule is the trap. Employer size comes from monthly employee counts across the previous calendar year, and the count includes out-of-state employees even though contributions are owed only on Oregon wages. A company with eight people in Portland and twenty in other states is a large employer for this purpose and owes the employer share on those eight. Systems that size the employer from the Oregon roster alone will under-remit quietly for a full year.

Three separate transit taxes

This is where Oregon stops resembling other states. There are three transit levies and they work in different directions, so a provider that handles one correctly is not automatically handling the others.

The statewide transit tax is withheld from wages, reaches employees who are exempt from ordinary income tax withholding, and has no minimum threshold. The district taxes are employer excise taxes on gross payroll for services performed inside the boundaries, with exemptions for federal units, public school districts, most 501(c)(3) nonprofits other than hospitals, and domestic service in a private home. Measure 120 did not pass in the May 19, 2026 primary election, so the statewide rate stays at 0.001.

Workers Benefit Fund assessment

The Workers Benefit Fund assessment is charged per hour worked rather than as a percentage of wages, which makes it the item payroll systems most often mishandle. The rate for 2026 is 1.8 cents per hour or partial hour, split evenly between employer and worker, so the employer pays 0.9 cents and withholds 0.9 cents. Employers who do not track hours use a flat rate calculation or reasonable hours worked.

It is separate from workers compensation insurance and provides no coverage; it funds return-to-work programs and benefits for permanently disabled workers. Workers compensation insurance itself is bought from a private carrier and is required from the first employee.

The local layer that state registration does not cover

Oregon has no general local income tax, but the Portland metropolitan area has two, and they are administered by the City of Portland Revenue Division rather than by any state agency. Nothing in the combined state registration touches them.

Metro Supportive Housing Services and Multnomah County Preschool for All

Both are personal income taxes on high earners with an employer withholding obligation attached. An employer with a location inside the district must withhold from employees who earn $200,000 or more in a calendar year, and employees may elect in below that level, elect out, or specify a different amount.

The Metro figures above are the amounts that applied through tax year 2025; those thresholds began indexing for inflation in tax year 2026, so confirm the current Metro exemption amounts with the Revenue Division before you set a withholding rule. The Preschool for All rate is scheduled to rise by 0.8 percent in 2027. Withholding returns are quarterly, due the last day of the month after the quarter closes, with an annual reconciliation and W-2 submission due January 31. Employers who owe both file both.

Three minimum wages that change in July

Oregon sets minimum wage by region and adjusts every July 1 rather than every January 1, which trips up any system built around a calendar-year update. The rate inside the Portland urban growth boundary is $16.80 per hour, the standard rate covering fifteen named counties plus the parts of Clackamas, Multnomah and Washington counties outside that boundary is $15.55, and eighteen nonurban counties use $14.55. The Bureau of Labor and Industries recalculates the standard rate each spring from the March to March change in the Consumer Price Index and publishes the new figures by April 30, which gives employers about two months of notice.

According to the Bureau of Labor and Industries, tip credits are illegal in Oregon, so a server in Portland receives $16.80 in cash wages before any tips. That is a structural cost difference against neighbouring states and it removes the tip credit reconciliation that occupies so much restaurant payroll elsewhere, which is worth knowing before you compare against tipped minimum wage rules in other jurisdictions.

Sick time, pay frequency and final paychecks

Oregon sick time accrues at one hour per 30 hours worked, capped at 40 hours a year. Employers with 10 or more employees statewide must pay for it, and the threshold drops to six employees if the business has a location in Portland. Smaller employers provide the same accrual unpaid. Employees can generally begin using accrued time after 90 days.

On pay frequency, Oregon requires a regular established payday with no more than 35 days between paydays under ORS 652.120, measured from the start date as well. Monthly payroll is legal here, which is not true in every state, and an itemized wage statement goes out with every paycheck.

The Bureau of Labor and Industries enforces these deadlines under ORS 652.140, and the penalty for willful failure under ORS 652.150 is eight times the regular hourly rate for each day wages go unpaid, up to 30 days. A $30 an hour employee left unpaid for two weeks generates a penalty in the thousands, which is why the next-business-day rule after a termination deserves a written process rather than good intentions.

Registration and new hire reporting

A Combined Employer Registration opens the Department of Revenue and Employment Department accounts together, covering withholding, statewide transit tax, unemployment insurance, Paid Leave and, where applicable, the transit district tax. Employers in the Metro or Multnomah County districts register separately with the City of Portland Revenue Division.

New and rehired employees go to the Oregon Department of Justice Division of Child Support within 20 days of the hire date. That deadline sits alongside the new hire report requirements every employer already handles federally, and missing it is one of the cheapest mistakes to avoid.

10 payroll providers for Oregon employers compared

Every provider below files the Oregon combined quarterly report. The differences that matter here are whether the platform withholds and files the two Portland-area local taxes, how it handles the Paid Leave employer size test, and whether a hire across the Washington border carries a surcharge.

OnPay

One plan at $49 per month plus $6 per employee, with every feature included and no tiers to climb. Tax filing covers all 50 states with no multi-state surcharge, and year-end W-2 and 1099 filing sits in the base price rather than being billed separately. For an Oregon employer the appeal is that local tax filing is not a paid upgrade, which matters the moment someone in the company crosses $200,000.

Gusto

The most common first payroll purchase for US small businesses. Tax filing is automatic, the interface is pleasant, and pricing is published. Simple runs $49 per month plus $6 per employee following a base increase in March 2026.

The catch for Oregon employers is sharper than in most states: Simple covers single-state payroll only, and the Portland labour market crosses into Washington constantly. One hire in Vancouver moves you to Plus at $80 plus $12 per employee, so model that number before you sign.

Patriot Software

The cheapest legitimate full-service payroll available. Full Service is $37 per month plus $5 per employee and includes federal, state and local tax filing plus new hire reporting. Basic is $17 plus $4 if you file taxes yourself, which for an Oregon employer means preparing Form OQ, Schedule B, Form 132 and any Portland local returns by hand.

Additional state filings cost $12 per month each. For a single-site Oregon business with no cross-border staff, the total cost is hard to beat and the feature gap is mostly in HR tooling rather than in tax accuracy.

SurePayroll

Owned by Paychex and aimed at very small employers and household employers. Full Service is $29 per month plus $7 per employee, with a flat $9.99 monthly multi-state fee regardless of how many states are involved. For an Oregon business with a few people across the Columbia River, that flat structure beats per-state pricing. Local tax filing is treated as an add-on, which is a real gap inside the Portland districts.

QuickBooks Workforce Payroll

Formerly QuickBooks Payroll, now renamed. Core is $50 per month plus $6.50 per employee. The reason to pick it has always been the same: if your books already live in QuickBooks Online, payroll entries reach the general ledger without an export step. Local tax support is tier-dependent, so Portland-area employers should confirm coverage before committing. Per-employee pricing rose across all tiers on July 1, 2026.

ADP RUN

ADP processes payroll for roughly one in six American workers and has the deepest tax compliance engine in the category. For an Oregon employer the practical argument is jurisdictional: a July minimum wage change, an annual Paid Leave rate reset and two county-level income taxes are exactly the kind of moving parts a large platform absorbs as routine.

The cost is opacity. ADP does not publish RUN pricing; third-party estimates put Essential near $79 per month plus $4 per employee, but every quote is individual. Contracts typically run a year with automatic renewal and a 30 to 60 day cancellation window.

Paychex Flex

Paychex competes with ADP on the same terms: a service relationship rather than a software subscription, with a named contact at higher tiers. Pricing is quote-only at most tiers, and quarterly administrative charges appear regularly in customer reports. Worth a quote if you would rather call a person about a Multnomah County withholding election than read a city ordinance.

Paylocity

Paylocity sits between small-business payroll and full HCM, aimed at companies that have outgrown basic payroll but do not want enterprise complexity. It publishes detailed per-state tax facts including Oregon, and leave accrual tracking is native, which suits the sick time accrual rule. Pricing is quote-based and implementation is a project rather than a signup.

Rippling

Rippling sells a unified employee record where payroll, HR and IT provisioning share one data model. The core platform is $35 per month plus $8 per employee, with payroll as a separate module. Because address changes propagate from the HR record into tax resolution, it handles the case where an employee moves between the Portland urban growth boundary and a standard-rate county without anyone remembering to update a wage floor.

Justworks

Two products under one name. Payroll is $50 per month plus $8 per employee and is straightforward software. PEO Basic at $79 per employee per month is a co-employment arrangement giving a small Oregon business access to benefits priced off a much larger risk pool, which is the actual reason most companies buy it.

What each provider actually costs an Oregon employer

The table below models published rates at three headcounts, plus what happens when a second state enters the picture. That last column deserves more weight in Oregon than almost anywhere else, because the Portland metro labour market spans a state line and a single Vancouver hire changes which provider wins.

Two patterns stand out. Patriot stays cheapest at every headcount, and at 50 employees it costs less than several competitors do at 25. But the second-state column reorders things: Gusto Simple is competitive until one Washington hire forces the Plus tier, at which point a 25-person payroll goes from $199 to $380 per month.

Software price is also not the whole Oregon number. A Portland employer with a $2 million annual payroll owes roughly $16,500 a year in TriMet transit tax alone, before unemployment insurance, the employer Paid Leave share and the hourly assessment. Those are statutory costs no provider changes, but they dwarf the gap between the cheapest and most expensive subscription on this table.

Choosing a payroll provider for Oregon

Four questions separate providers that will work here from providers that will quietly generate correction notices.

One item sits outside the payroll engine entirely. Every Oregon new hire needs a federal I-9 and W-4, an Oregon Form OR-W-4 that nobody is required to hand them, a local tax election if they work in the Portland districts, and a new hire report filed within 20 days.

Before you choose

FirstHR does not process payroll, calculate pay, file payroll taxes, move money, or administer benefits.

Every provider above does something we do not, and if running payroll is the problem in front of you, one of them is the answer.

What we handle is the layer that feeds payroll: onboarding workflows, e-signatures on I-9s and offer letters, employee records, and HR document management for small US teams at flat, predictable pricing. If the recurring problem is that the OR-W-4 never got offered, the local tax election is unsigned, and nobody is sure whether the 20-day new hire report went out, that is a document collection failure rather than a payroll processing failure, and it is the kind of gap we built for.

Frequently Asked Questions

What are the Oregon payroll taxes an employer has to handle?

Six state items on top of federal: graduated income tax withholding, employer-paid unemployment insurance on the first $56,700 of wages, Paid Leave contributions at 1 percent to $184,500, the 0.1 percent statewide transit tax withheld from employees, a TriMet or Lane Transit District payroll tax if the work happens inside those boundaries, and the hourly Workers Benefit Fund assessment.

What is the Oregon income tax rate for payroll withholding?

Four graduated rates: 4.75, 6.75, 8.75 and 9.9 percent. On the Department of Revenue rate charts for tax year 2025, a single filer reached 8.75 percent at $11,100 of taxable income and 9.9 percent above $125,000; joint filers reached 8.75 percent at $22,200 and 9.9 percent above $250,000. The two lower thresholds are adjusted for inflation each year, the top thresholds have held steady, and the rates are statutory.

Is Form OR-W-4 required for Oregon employees?

It is not mandatory, but it is the right default. Oregon publishes its own certificate because federal W-4 allowances stopped mapping onto Oregon withholding after the 2017 federal tax act. Without one, withholding comes off the federal form. The standard tables only apply where Oregon and federal allowances match; otherwise the employer uses the withholding formulas publication.

What is the Oregon unemployment insurance wage base and rate?

$56,700 per employee for 2026, up from $54,300, and the tax is paid entirely by the employer. Experienced employer rates come from Tax Schedule 3 and range from 0.9 to 5.4 percent, with new employers at 2.4 percent. Rates include a payroll tax offset of 0.135 percent in each calendar quarter.

How do Paid Leave Oregon contributions work?

One percent of gross wages up to $184,500, with employers of 25 or more paying 40 percent and employees paying 60 percent. Employers averaging fewer than 25 employees owe no employer share but still withhold and remit the employee portion. Size is calculated from monthly counts over the prior calendar year and includes out-of-state staff.

What is the Oregon statewide transit tax?

A 0.1 percent tax withheld from employee wages, applying to Oregon residents wherever they work and to nonresidents performing services in Oregon. It reaches employees who are exempt from ordinary withholding and has no minimum threshold. Measure 120 did not pass in the May 19, 2026 primary election, so the rate stays at 0.001.

Which Oregon employers owe TriMet or Lane Transit District payroll tax?

Any employer paying wages for services performed inside the district boundaries. TriMet covers the Portland metro area across parts of Multnomah, Washington and Clackamas counties; Lane Transit District covers the Eugene and Springfield urban area. Both are employer-paid on gross payroll: 0.8237 percent for TriMet and 0.80 percent for Lane Transit District.

What is the Workers Benefit Fund assessment?

An hourly assessment of 1.8 cents per hour or partial hour worked for 2026, split evenly so the employer pays 0.9 cents and withholds 0.9 cents from the worker. It is separate from workers compensation premium and provides no coverage. Employers who do not track hours use a flat rate calculation or reasonable hours worked.

What is the Oregon minimum wage?

Three regional rates that change every July 1: $16.80 inside the Portland urban growth boundary, $15.55 standard, and $14.55 in the eighteen nonurban counties, recalculated each spring from the March to March change in the Consumer Price Index. Tip credits are illegal in Oregon, so tipped employees receive the full applicable cash minimum before tips.

How often must Oregon employees be paid?

Employers must establish a regular payday and paydays may not be more than 35 days apart under ORS 652.120, measured from the start date as well. Monthly payroll is therefore legal in Oregon, unlike in several other states, and an itemized wage statement must accompany every paycheck.

What is the final paycheck deadline in Oregon?

End of the next business day for a firing or layoff. On the last working day for an employee who quits with at least 48 hours notice, or the next business day if that falls on a weekend or holiday. Within five business days or the next regular payday, whichever comes first, for a quit without notice. Penalty wages run to eight times the hourly rate per day, up to 30 days.

Do Portland-area employers have extra income taxes to withhold?

Yes. Metro Supportive Housing Services is 1 percent above $125,000 single and $200,000 joint, and Multnomah County Preschool for All is 1.5 percent above the same thresholds plus another 1.5 percent above $250,000 and $400,000. Employers with a location in the district withhold from anyone earning $200,000 or more, subject to employee elections.

How do I register a business for Oregon payroll taxes?

A Combined Employer Registration opens the Department of Revenue and Employment Department accounts in one application, covering withholding, statewide transit tax, unemployment insurance, Paid Leave and transit district tax. The Portland local taxes require separate registration with the City of Portland Revenue Division, and workers compensation is bought from a private carrier from the first employee.

How much does payroll software cost for an Oregon small business?

At 10 employees, published July 2026 rates run roughly $87 for Patriot Full Service, $99 for SurePayroll, $109 for OnPay or Gusto Simple, $115 for QuickBooks Core, and $130 for Justworks Payroll. At 50 employees the same plans land between $287 and $450. Compare on local tax filing and second-state pricing rather than on base fee alone.