How Much Is Oregon State Income Tax?

Oregon’s state tax system is the personal income tax, a significant component of state revenue. The state operates under a progressive income tax structure, meaning higher income levels are taxed at higher rates. Oregon does not impose a statewide sales tax on goods and services. Understanding the elements of the Oregon income tax, including brackets, deductions, and credits, provides a clearer picture of an individual’s potential tax obligations.

Oregon’s Income Tax Brackets and Rates

Oregon utilizes a progressive income tax system with four distinct brackets, with rates ranging from 4.75% to 9.9%. For the 2024 tax year, filed in 2025, the income thresholds and corresponding rates are set.

For single filers and those married filing separately, the lowest rate of 4.75% applies to taxable income up to $4,300. The next bracket taxes income between $4,301 and $10,750 at a rate of 6.75%. Income from $10,751 to $125,000 is subject to an 8.75% rate, and any taxable income exceeding $125,000 falls into the highest bracket, taxed at 9.9%.

Married couples filing jointly and those filing as head of household benefit from wider income brackets. For these filers, the 4.75% rate applies to taxable income up to $8,600. The 6.75% rate covers income from $8,601 to $21,500. Income between $21,501 and $250,000 is taxed at 8.75%, and taxable income above $250,000 is subject to the top rate of 9.9%.

Common Deductions and Subtractions

Deductions and subtractions reduce a taxpayer’s taxable income, the amount subject to tax rates. Oregon allows taxpayers to take either a standard deduction or itemize their deductions. For the 2024 tax year, standard deduction amounts vary by filing status. Single filers and those married filing separately can claim $2,745, while married individuals filing jointly and qualifying surviving spouses have a standard deduction of $5,495. Heads of household can claim $4,420.

Oregon also provides specific subtractions from income, which are amounts taxed federally but not by Oregon, or deductions Oregon permits that are not available at the federal level. Examples include certain retirement income, such as federal pension income from service before October 1991, and interest and dividends from U.S. government obligations. Oregon does not tax Social Security benefits or Railroad Retirement Board benefits.

Key Tax Credits

Tax credits directly reduce the amount of tax owed, dollar for dollar, after the initial tax calculation. This differs from deductions, which reduce the amount of income subject to tax. Oregon offers several credits that can help lower a taxpayer’s final tax liability.

One credit is the Oregon Earned Income Tax Credit (EITC), which mirrors the federal EITC but has its own state-specific percentage. For eligible taxpayers, the Oregon EITC is 9% of their federal EITC, increasing to 12% if they have a qualifying dependent younger than three years old at the end of the tax year. Another available credit is the Working Family Household and Dependent Care Credit, which assists low- to moderate-income families with expenses for dependent care while the taxpayer is working or seeking employment. Qualifying expenses for this credit can be up to $12,000 for one dependent or $24,000 for two or more, but cannot exceed the taxpayer’s earned income.

Oregon also provides energy-related tax credits. The Oregon Residential Energy Tax Credit Program offers credits for certified energy-efficient appliances and alternative energy devices like solar and wind systems. To qualify, taxpayers must have an Oregon income tax liability, purchase and install certified devices, and be the owner or tenant of an Oregon dwelling served by the device. Unused credits may be carried forward for up to five years.

Estimating Your Oregon Tax Liability

Estimating your Oregon tax liability involves a methodical process that builds upon understanding gross income, applicable reductions, and direct tax offsets. The starting point for this estimation is your gross income, which encompasses all income earned from various sources. From this amount, you subtract any eligible deductions and subtractions specific to Oregon. These reductions lower your gross income to arrive at your Oregon taxable income.

Once Oregon taxable income is determined, apply the progressive tax brackets and rates. Each portion of your taxable income will be taxed at its corresponding marginal rate, yielding your initial tax liability. After this, subtract any qualifying tax credits. The final figure after subtracting credits represents your estimated Oregon tax liability. This process is an estimation and does not account for all individual tax situations, so professional tax advice may be beneficial for precise calculations.