How Much Tax Is Taken Out of My Paycheck in Oregon?

Understanding paycheck deductions is key for managing personal finances. For Oregon residents, this involves navigating both federal and state-specific withholdings. This article clarifies the different taxes and contributions taken from your earnings, providing insight into how your take-home pay is determined.

Federal Payroll Taxes

Federal payroll taxes fund national programs and services. These include federal income tax and contributions to Social Security and Medicare, known as FICA taxes.

Federal income tax withholding is determined by an employee’s gross income, filing status, and information on their Form W-4. The federal income tax system uses a progressive structure, meaning different portions of income are taxed at increasing rates. This ensures higher earners pay a larger percentage of their income in taxes, but only the income within a specific bracket is subject to that bracket’s rate.

FICA taxes fund Social Security and Medicare programs. Social Security tax supports retirement, disability, and survivor benefits. Medicare tax contributes to health insurance for individuals typically aged 65 or older. For 2024, the Social Security tax rate is 6.2% for employees and employers, applied to wages up to an annual limit of $168,600. Earnings above this limit are not subject to Social Security tax.

The Medicare tax rate is 1.45% for employees and employers, with no wage base limit. An additional Medicare tax of 0.9% applies to wages exceeding $200,000.

Oregon State Payroll Taxes

Oregon residents have state-specific taxes and contributions deducted from their paychecks. These withholdings fund local government, public transit, and paid leave programs.

Oregon’s state income tax is withheld from wages, based on an individual’s income, filing status, and their Oregon Form OR-W-4. Oregon employs a progressive income tax system with multiple tax brackets, where tax rates increase as income rises, ranging from 4.75% to 9.9%.

The Oregon Statewide Transit Tax (STT) funds public transportation. This is a flat percentage of gross wages, applied without an income cap.

Paid Family and Medical Leave (PFML) contributions provide paid time off for qualifying family, medical, or safe leave. For 2024, the total contribution rate for Paid Leave Oregon is 1% of an employee’s wages, up to the federal Social Security taxable wage maximum. Employees pay 60% of the rate, and employers contribute the remaining 40%.

Factors Influencing Withholding

Personal and financial decisions influence the amount of tax withheld from a paycheck. Adjustments to these factors can alter an individual’s take-home pay.

The federal Form W-4 and Oregon Form OR-W-4 are tools employees use to communicate withholding preferences to employers. Information on these forms, such as filing status and additional withholding, dictates how much federal and state income tax is deducted. These forms are for withholding purposes only and do not determine an individual’s final tax liability, which is calculated when tax returns are filed.

Certain pre-tax deductions reduce an employee’s taxable income. Contributions to retirement accounts like a 401(k) or 403(b), and pre-tax health insurance premiums, are examples. These deductions are subtracted from gross pay before income taxes are calculated.

Other deductions on a pay stub include health savings accounts (HSAs), flexible spending accounts (FSAs), or union dues. HSAs and FSAs also reduce taxable income, but others, like wage garnishments, do not affect taxable income for withholding.

Interpreting Your Pay Stub

A pay stub provides a detailed breakdown of earnings and deductions. It includes sections such as “Gross Pay,” which is total earnings before deductions, and “Net Pay,” the amount received after all deductions.

The “Taxes” or “Deductions” section lists specific withholdings. Federal tax abbreviations include “FIT,” “Fed Tax,” or “FWT” for Federal Income Tax; “SS” or “OASDI” for Social Security; and “Med” or “HI” for Medicare. Oregon-specific deductions include “OR FIT” or “OR Tax” for state income tax, “OR STT” for Statewide Transit Tax, and “OR PFML” or “PFML” for Paid Family and Medical Leave contributions.

Pay stubs display “Year-to-Date” (YTD) figures, which are cumulative totals of earnings and deductions from the beginning of the calendar year. If questions arise about specific entries or calculations, the payroll or human resources team can provide clarification.