Oregon is one of only five states with no sales tax, but it makes up for it with some of the highest income taxes in the country. Individuals pay up to 9.9%, corporations pay 6.6% to 7.6% plus a minimum tax based on sales, and larger businesses of every type pay the Corporate Activity Tax on gross receipts. In the Portland area, city, county and Metro taxes add several more percentage points.
This guide covers Oregon's business taxes for 2026, with worked examples and comparisons with its neighbors.
Oregon business taxes at a glance
An Oregon C corporation pays 6.6% on its first $1 million of profit and 7.6% above that, with a minimum tax that rises with Oregon sales. Pass-through owners pay personal rates that reach 8.75% at just $11,400 of taxable income and 9.9% above $125,000, so most business profit is taxed at one of those two rates. Businesses with more than $1 million of Oregon receipts also pay the Corporate Activity Tax, whatever their entity type. Customers pay no sales tax. Portland-area businesses add local business income taxes of up to 5.6%. LLCs pay $100 to form and $100 a year.
Corporate excise tax
| Taxable income | Rate |
|---|---|
| $0 to $1,000,000 | 6.6% |
| Over $1,000,000 | 7.6% |
Minimum tax
| Oregon sales | Minimum tax |
|---|---|
| Less than $500,000 | $150 |
| $500,000 to $1 million | $500 |
| $1 million to $2 million | $1,000 |
| Higher brackets | Up to $100,000 for sales of $100 million or more |
- Apportionment: Single sales factor.
- Combined reporting: Required for unitary groups.
- Kicker: When revenue exceeds forecasts by 2% or more, Oregon refunds the excess. Corporate kicker revenue is directed to education rather than refunded.
- Returns: Form OR-20 is due on the 15th day of the month after the federal due date.
Corporate Activity Tax (CAT)
| Item | Detail |
|---|---|
| Registration threshold | More than $750,000 of Oregon commercial activity |
| Filing threshold | More than $1 million of Oregon commercial activity |
| Tax | $250 plus 0.57% of taxable commercial activity above $1 million |
| Subtraction | 35% of the greater of cost inputs or labor costs |
| Who pays | Corporations, LLCs, partnerships and sole proprietors |
A business with $5 million of Oregon receipts and $3 million of cost inputs subtracts $1.05 million, leaving $3.95 million of taxable activity. The CAT is $250 plus 0.57% of $2.95 million, or about $17,065.
Personal income tax and pass-through owners
| Taxable income (single, 2026, approx.) | Rate |
|---|---|
| $0 to $4,550 | 4.75% |
| $4,550 to $11,400 | 6.75% |
| $11,400 to $125,000 | 8.75% |
| Over $125,000 | 9.9% |
- Reduced rate for pass-through income: Owners of qualifying pass-through businesses with at least one employee can elect reduced rates of 7% to 9.9% on qualifying business income.
- LLC owners, partners and sole proprietors pay these rates on profit.
- S corporation shareholders pay on their share. S corporations pay the minimum tax.
- PTE election: Oregon's PTE-E election lets entities pay tax at the entity level.
Portland-area local taxes
| Tax | Rate | Applies to |
|---|---|---|
| Portland Business License Tax | 2.6% of net income | Businesses with gross receipts above $50,000 in Portland |
| Multnomah County Business Income Tax | 2% of net income | Businesses with gross receipts above $50,000 in Multnomah County |
| Metro Supportive Housing Services business tax | 1% of net income | Businesses with gross receipts above $5 million in the Metro area |
| Metro SHS personal income tax | 1% | Income above $125,000 (single) |
| Multnomah County Preschool for All tax | 1.5% to 3% | Income above $125,000 (single) |
| Portland Clean Energy Surcharge | 1% of Portland retail receipts | Large retailers with more than $1 billion of national sales |
Payroll and property taxes
- Paid Leave Oregon: 1% of wages, 60% paid by employees and 40% by employers with 25 or more employees.
- Statewide transit tax: 0.1% withheld from employee wages.
- TriMet and Lane transit payroll taxes: Employer payroll taxes of about 0.8% in the Portland and Eugene areas.
- Unemployment insurance: Employers pay on a wage base above $50,000, one of the highest in the country.
- Property tax: Limited by Measures 5 and 50. Business personal property is taxed, with an exemption for property worth less than about $20,000.
Forming a business in Oregon: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $100 | $100 |
| Annual report | $100 | $100 |
| Minimum tax | Only if taxed as a corporation | $150 to $100,000 based on sales |
| Registered agent | Required | Required |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Taxable income | $500,000 |
| Oregon corporate excise tax at 6.6% | $33,000 |
| Federal tax at 21% on $467,000 | $98,070 |
| Total income tax | $131,070 (26.2%) |
A Portland corporation would also pay about $23,000 in city and county business income taxes. For a single LLC owner with $150,000 of Oregon taxable income, state tax is about $13,094. At $75,000 it is about $6,244. These are among the highest state tax bills for pass-through owners in the country.
How Oregon compares with its neighbors
| State | Corporate rate | Top personal rate | State sales tax |
|---|---|---|---|
| Oregon | 6.6% to 7.6% plus CAT | 9.9% | None |
| Washington | B&O gross receipts tax | None on wages | 6.5% |
| California | 8.84% | 13.3% | 7.25% |
| Idaho | 5.3% | 5.3% | 6% |
| Nevada | None (Commerce Tax) | None | 6.85% |
The Portland-Vancouver metro area straddles Oregon and Washington. Many people live in Vancouver, Washington, to avoid Oregon income tax and shop in Portland to avoid Washington sales tax. Businesses that sell to consumers often locate in Oregon, while high earners often live in Washington. Nonresidents who work in Oregon still pay Oregon tax on those wages.
Choosing an entity in Oregon
- LLC: $100 a year; owners pay up to 9.9%, or reduced rates under the pass-through election.
- S corporation: Same personal rates, federal payroll savings and the minimum tax.
- C corporation: 6.6% to 7.6% plus 21% federally. Because Oregon's corporate rate is lower than its top personal rate, a C corporation that retains earnings can save state tax.
All entity types pay the CAT once Oregon receipts exceed $1 million.
Tax planning tips for Oregon businesses
Consider the reduced pass-through rate. Owners of businesses that employ at least one person who isn't an owner can elect lower rates on qualifying business income. The savings can be significant at higher incomes.
Track cost inputs for the CAT. The 35% subtraction for cost inputs or labor costs can cut the CAT substantially. Keep detailed records of both so you can claim the larger.
Plan location within the Portland area. Locating outside Portland and Multnomah County avoids up to 4.6% of local business income taxes, and outside the Metro district avoids Metro taxes.
Recent changes for 2025 and 2026
- CAT continues, with ongoing rule updates.
- Paid Leave Oregon contributions at 1% of wages.
- Kicker refunds issued for tax year 2024, with corporate kicker funds directed to schools.
- Transportation funding debates in 2025 considered payroll and gas tax increases.
Is Oregon a good state for business?
Advantages
- No sales tax
- Strong technology, apparel and outdoor industries
- Reduced rates for qualifying pass-through income
- Access to West Coast markets and ports
Drawbacks
- Top personal rate of 9.9% applies at $125,000
- Corporate Activity Tax on gross receipts for all entity types
- High local business taxes in Portland
- High unemployment insurance wage base
Compliance checklist
- File Articles of Organization or Incorporation with the Secretary of State.
- Register with the Department of Revenue for withholding, transit taxes and income tax.
- Register for the CAT once Oregon commercial activity exceeds $750,000.
- Register for unemployment insurance and Paid Leave Oregon if you hire.
- Register with the Portland Revenue Division if you do business in Portland or Multnomah County.
- File the annual report and Form OR-20, OR-20-S or OR-65 each year.
Compare Oregon with its neighbors below or estimate your taxes in the United States calculator. See Corporation taxes for more.