About the tax
The 2017 Oregon Legislature passed House Bill (HB) 2017, which included the new statewide transit tax. Parts of HB 2017 related to the statewide transit tax were amended in the 2018 session.
On July 1, 2018, employers must start withholding the tax (one-tenth of 1 percent or .001) from:
- Wages of Oregon residents (regardless of where the work is performed).
- Wages of nonresidents who perform services in Oregon.
The statewide transit tax is calculated based on the employee’s wages as defined in ORS 316.162. Employees who aren’t subject to regular income tax withholding due to high exemptions, wages below the threshold for income tax withholding, or other factors are subject to statewide transit tax withholding.
The definition of “wages” excludes amounts paid to certain types of employees and independent contractors (ORS 316.162). Self-employment income isn’t subject to this tax.
This tax isn’t related to the Lane or TriMet transit payroll taxes. Transit payroll taxes are imposed on the employer based on the amount of payroll. The statewide transit tax is imposed on the wages of each employee, but the employer is responsible for withholding, reporting, and remitting the statewide transit tax.
Revenue from the statewide transit tax will go into the Statewide Transportation Improvement Fund to finance investments and improvements in public transportation services, except for those involving light rail.
For more information, see our frequently asked questions. Enter “statewide transit” in the search bar.
For employers
Oregon employers are responsible for:
- Withholdingthe tax from employees’ wages.
- Reportingtaxes withheld on a quarterly or annual return.
- Remittingtaxes withheld quarterly or annually.
- Reconcilingquarterly or annual reports on the annual reconciliation return.
If you don’t withhold this tax appropriately or file and pay on time, you may be subject to penalties and interest. We can assess penalties for knowingly failing to deduct and withhold the tax of $250 per employee, up to $25,000 for each tax period, in addition to other penalties and interest authorized by state law.
Oregon residents who perform services outside of Oregon can ask their out-of-state employer to withhold the tax from their wages as a courtesy—similar to income tax withholding. However, we can’t require out-of-state employers to do so, as they’re outside Oregon’s taxing jurisdiction.
Agricultural and domestic employers must file returns and make payments for this tax annually, as they do with their income tax withholding.
Returns and payments
Any tax collected must be held in trust to be remitted and reported to the Department of Revenue on or before the last day of the month following the previous calendar quarter. For example, you need to start withholding this tax on July 1, 2018, so the first quarter you’ll report and remit for is third quarter 2018. This quarter ends on September 30, 2018, which means your return and payment are due by October 31, 2018.
There is no minimum threshold for filing the statewide transit taxreturn. Even if the amount of statewide transit tax withholding is minimal, you still need to file the return and remit the amount of tax withheld each quarter (unless you’re an annual filer).
Annual filers (agricultural and domestic employers) must remit and report the statewide transit tax by the last day of the month following the end of the calendar year, or January 31.
Annual reconciliation reports are also due by January 31.
If the due date for your quarterly return and payment or annual report falls on a weekend or holiday, the due date shifts to the next business day.
Forms
Transit tax forms are available now. You won’t use the current income tax withholding forms or payment coupons for this tax.
Filing options and payments
Employers can file returns and detail reports using electronic or paper options. Filing electronic returns and detail reports will require setting up an account with the Department of Revenue. For more information on how to set up an account, please visit the Revenue Online webpage. You can pay by cash, check, money order, or EFT. Include the new payment coupon with a check or money order payment so we can ensure it’s applied appropriately.
Cash payments are only accepted at our main office at 955 Center Street NE in Salem. You can walk in and make your payment anytime during normal business hours, or you can call (503) 945-8050 to schedule an appointment.
For employees
Oregon residents working out-of-state
If you’re an Oregon resident who performs services outside of Oregon, you can ask your employer to withhold the tax from your wages as a courtesy—similar to income tax withholding. However, we can’t require out-of-state employers to do so, as they’re outside Oregon’s taxing jurisdiction. If your employer doesn’t withhold the tax for you, you’re responsible for reporting and paying the tax when you file your personal income tax return. There is no extension to the filing and payment deadline for the statewide transit tax.
If you don’t report or pay on time, you may be subject to penalties and interest. We’re still finalizing the process you’ll use to file and pay. We’ll be updating this page over the next few months as we get closer to the start date for the statewide transit tax, so please check back regularly for new information.
