How Much Income Tax Will I Pay in Oregon?

Oregon’s state income tax system forms a significant part of the state’s revenue. This tax is applied to individual income, and understanding its structure, rates, deductions, and credits is important for determining one’s tax liability. Oregon’s tax rules and provisions differ from federal guidelines, influencing the final amount owed.

Understanding Oregon’s Income Tax Structure

Oregon operates a progressive income tax system, where higher taxable income is subject to increasingly higher tax rates. This structure aims to collect a greater percentage of income from higher earners.

Oregon’s taxable income generally begins with federal adjusted gross income (AGI), which then undergoes state-specific modifications. These modifications involve both additions and subtractions to the federal AGI to arrive at the Oregon taxable income. A notable subtraction unique to Oregon is a deduction for federal tax liability, which can reduce the income subject to state tax.

Taxpayers must also consider their filing status (e.g., single, married filing jointly, or head of household), as this directly influences applicable tax brackets and standard deduction amounts. While Oregon generally requires using the same filing status as the federal return, exceptions exist, particularly for married couples where one spouse is a nonresident.

Oregon Income Tax Rates and Brackets

For the 2024 tax year, Oregon’s income tax system features four distinct tax brackets with rates ranging from 4.75% to 9.9%. For single filers and those married filing separately, the 2024 tax rates are: 4.75% on income up to $4,300; $204 plus 6.75% on income between $4,301 and $10,750; $639 plus 8.75% on income between $10,751 and $125,000; and $10,636 plus 9.9% on income over $125,000. For those filing jointly, as head of household, or as a qualifying surviving spouse, the brackets are wider: 4.75% on income up to $8,600; $409 plus 6.75% on income between $8,601 and $21,500; $1,280 plus 8.75% on income between $21,501 and $250,000; and $21,274 plus 9.9% on income over $250,000. These rates apply to taxable income after all applicable deductions have been accounted for.

Key Deductions and Credits

Taxpayers in Oregon have several options to reduce their taxable income or direct tax liability through deductions and credits. The standard deduction for the 2024 tax year is $2,745 for single filers and those married filing separately, $5,495 for married filing jointly or qualifying surviving spouse, and $4,420 for head of household. An additional standard deduction of $1,200 for single filers and $1,000 per qualifying person for joint filers is available for those who are blind or aged 65 or older.

Alternatively, taxpayers can choose to itemize deductions if their eligible expenses exceed the standard deduction amount. Oregon’s itemized deductions largely mirror federal guidelines, with a key distinction: state and local income taxes are not deductible on the Oregon return. It is possible to claim the standard deduction on a federal return while itemizing on the Oregon return, as the state’s standard deduction amounts are typically lower than federal ones.

Several credits are also available to reduce the tax owed. The Oregon Earned Income Credit (EIC) is available to those who qualify for the federal EITC, calculated as 9% of the federal credit, or 12% if there is a qualifying dependent under the age of three. The Oregon Kids Credit is a refundable credit for families with dependent children aged zero to five, offering up to $1,000 per child for those with an adjusted gross income of $25,750 or less, phasing out at $30,750. Additionally, the Working Family Household and Dependent Care Credit assists low-to-moderate income families with expenses for dependent care while working or seeking employment.

Calculating Your Oregon Income Tax

Estimating your Oregon income tax begins with your gross income. From this, you determine your federal adjusted gross income (AGI), which serves as the starting point for Oregon’s tax calculations. Oregon then requires specific adjustments, including additions and subtractions, to arrive at your Oregon taxable income.

A significant subtraction is the federal tax liability deduction, which can be up to $8,250 for taxpayers with an AGI under $125,000. Once your Oregon taxable income is determined, you apply the appropriate tax rates based on your filing status and the income brackets for the 2024 tax year. This calculation yields your preliminary tax liability before credits. Finally, any applicable tax credits, such as the Oregon Earned Income Credit or the Oregon Kids Credit, are subtracted from this preliminary amount to arrive at your net Oregon income tax liability.