How Much Taxes Are Deducted From a Paycheck in Oregon?

Payroll deductions are amounts subtracted from an employee’s gross wages, resulting in the net pay received. These subtractions encompass various taxes and contributions that fund government programs and employee benefits. Each paycheck reflects these deductions, providing a clear picture of how earnings are allocated. This helps individuals understand their true take-home pay and plan accordingly.

Federal Payroll Deductions

Federal payroll deductions include federal income tax and Federal Insurance Contributions Act (FICA) taxes, which are standard nationwide. Federal income tax withholding is determined by information on IRS Form W-4, the Employee’s Withholding Certificate. This form guides employers on how much tax to deduct based on an employee’s filing status, multiple jobs, dependents, or other adjustments. The goal is to align withholding with an individual’s estimated annual tax liability, considering gross wages and potential standard deductions.

FICA taxes contribute to Social Security and Medicare programs. For 2025, the Social Security tax rate is 6.2% for employees, applied to wages up to an annual limit of $176,100. Earnings above this wage base are not subject to Social Security tax. The Medicare tax rate is 1.45% for employees, with no wage base limit, so it applies to all covered earnings.

An additional Medicare tax of 0.9% applies to wages exceeding certain thresholds for higher earners. This additional tax applies to individual filers earning over $200,000, or married couples filing jointly with income above $250,000. Employers must withhold this additional amount once an employee’s wages surpass the $200,000 threshold within a calendar year, regardless of filing status.

Oregon Payroll Deductions

In addition to federal deductions, employees in Oregon have state-specific payroll deductions. Oregon state income tax is withheld from paychecks to cover an individual’s anticipated state tax liability. The amount withheld is influenced by Oregon Form OR-W-4, which employees complete to indicate their marital status, withholding allowances, and any additional withholding.

Oregon operates under a progressive income tax system, where rates increase as taxable income rises. For 2025, Oregon’s state income tax rates range from 4.75% to 9.9%. State withholding also considers Oregon’s standard deduction amounts, which for 2025 are $2,835 for single filers claiming less than three exemptions, and $5,670 for single filers claiming three or more exemptions or for married filers.

Another mandatory deduction is the Oregon Statewide Transit Tax, which funds public transportation improvements. This tax is 0.1% (or 0.001) of wages for 2025. It applies to all Oregon residents’ wages, regardless of where work is performed, and to nonresidents performing services within Oregon.

Oregon also requires contributions for its Paid Family and Medical Leave (PFML) program, known as Paid Leave Oregon. For 2025, the total contribution rate is 1% of an employee’s wages, up to the federal Social Security taxable wage maximum ($176,100). Employees contribute 60% of this rate, while employers cover the remaining 40%. This program provides wage replacement benefits for employees needing time off for qualifying family, medical, or safe leave reasons.

Factors Influencing Withholding

Several factors influence the amount of taxes withheld from a paycheck. An individual’s gross pay, including salary, hourly wages, and bonuses, impacts the amount of taxable income. Higher gross pay generally results in larger tax withholdings, as more income becomes subject to applicable tax rates.

Pre-tax deductions also play a role in reducing the amount of income subject to withholding. Contributions to retirement accounts, such as 401(k)s, and payments for health insurance premiums, Flexible Spending Accounts (FSAs), or Health Savings Accounts (HSAs) are subtracted from gross pay before taxes are calculated. This reduces taxable income, which lowers the amount of federal and state income tax withheld.

The frequency of pay periods, whether weekly, bi-weekly, semi-monthly, or monthly, influences the per-pay-period withholding amount. While total annual tax liability remains consistent, the distribution of withholdings across paychecks varies. For instance, a bi-weekly pay schedule results in 26 paychecks per year, dividing the annual withholding amount into 26 smaller increments compared to a monthly schedule with 12 increments. This affects employee cash flow, even if the total annual amount withheld is the same.

Understanding Your Paystub and W-2

A paystub displays gross pay, the total earnings before any deductions. It then itemizes various deductions, including federal income tax (FIT), Social Security and Medicare taxes (FICA), and state income tax (SIT). Oregon-specific deductions like the Statewide Transit Tax and Paid Leave Oregon contributions are also listed.

After all deductions, the paystub shows the net pay, the amount deposited into the employee’s account. Regularly reviewing a paystub helps ensure correct amounts are withheld and earnings are accurately reported.

The annual W-2 form, issued by employers, summarizes an employee’s wages and withheld taxes for the calendar year. Box 1 reports taxable federal wages, while Boxes 2, 3, and 5 show federal income tax withheld, Social Security wages, and Medicare wages, respectively. Boxes 4 and 6 detail the Social Security and Medicare taxes withheld. State and local wages and taxes withheld are reported in separate boxes, such as Boxes 16 and 17, providing a comprehensive overview for tax filing.

Adjusting Your Withholding

Individuals can adjust their federal income tax withholding by submitting a new Form W-4, Employee’s Withholding Certificate, to their employer. Oregon state income tax withholding can be modified by completing a new Oregon Form OR-W-4. These forms allow employees to update personal and financial information that affects tax calculations.

Common reasons for adjusting withholding include life changes, such as marriage, divorce, a new child, or a new job. Income changes, like a substantial raise or a second job, also prompt a review of withholding to avoid under- or over-payment of taxes. Adjustments can also be made if an individual consistently owes a large amount of tax or receives a very large refund when filing their annual tax return.

The process for making these changes involves contacting an employer’s human resources department or accessing their online payroll portal. Submitting a new W-4 or OR-W-4 form instructs the employer to modify future payroll deductions. Changes to withholding affect subsequent paychecks and are forward-looking adjustments, not retroactive.