State & Local Taxes
Oregon State Income Tax: 2026 Rates and Brackets
Oregon state income tax runs on four graduated brackets from 4.75% to 9.9% for the 2026 tax year, one of the highest top marginal rates in the country. The tradeoff: Oregon has no state or local sales tax. The system also carries features few other states offer, including a federal tax subtraction and the “kicker” surplus refund. Portland-area residents may owe additional local income taxes on top of the state rate.
Oregon income tax rates and brackets for 2026
Oregon taxes income at four rates, 4.75%, 6.75%, 8.75%, and 9.9%, applied progressively so each rate hits only the income inside its band. The brackets are indexed for inflation and differ for single and married-filing-jointly returns. Only taxable income above $125,000 (single) or $250,000 (joint) reaches the 9.9% top rate.
Oregon uses a graduated structure, meaning your first dollars are taxed at 4.75% and only the portion above each threshold moves up. The table below shows the 2026 brackets. Married-filing-separately follows the single columns; head-of-household follows the joint columns in most cases.
| Rate | Single / MFS taxable income | Married filing jointly / HOH |
|---|---|---|
| 4.75% | $0 to $4,350 | $0 to $8,700 |
| 6.75% | $4,350 to $10,900 | $8,700 to $21,800 |
| 8.75% | $10,900 to $125,000 | $21,800 to $250,000 |
| 9.9% | Over $125,000 | Over $250,000 |
Because the 8.75% band is wide, most middle-income Oregon filers pay a top marginal rate of 8.75%, not 9.9%. Your effective rate, total tax divided by total income, sits well below your marginal rate. For the distinction, see marginal vs effective tax rate.
The no-sales-tax tradeoff
Oregon is one of a small group of states with no statewide or local sales tax, so the high income tax rate is best read as part of a package rather than in isolation. Individual income tax supplies roughly 42% of Oregon’s combined state and local tax revenue, a heavier reliance than most states because the sales-tax leg is missing.
For a resident, this can shift the math depending on spending and earning patterns. High earners feel Oregon’s income tax more sharply, while heavy spenders may come out ahead versus a sales-tax state. Property tax is a separate item: Oregon’s effective rate on owner-occupied housing is about 0.81%, near the national middle.
If a zero-income-tax comparison matters to your situation, see states with no income tax, which covers the tradeoffs states use to replace that revenue.
The federal tax subtraction
Oregon lets residents subtract a portion of the federal income tax they paid when computing Oregon taxable income, a deduction most states do not allow. For 2026 the subtraction is capped at roughly $7,050 for single filers and $14,100 for married couples filing jointly, and it phases down as adjusted gross income rises.
The subtraction lowers the income base Oregon taxes, so it can reduce state tax owed for filers who qualify. The cap and the phaseout thresholds are adjusted periodically, and higher-AGI taxpayers may see the benefit reduced to zero. Because the amount depends on federal liability actually paid, it varies year to year with your federal return.
This is one reason Oregon’s headline 9.9% rate overstates the burden for many households. For how state and federal systems interact more broadly, see state vs federal income tax.
The Oregon kicker refund
The kicker is Oregon’s surplus-revenue credit: when actual state revenue exceeds the forecast by more than 2%, the entire surplus is returned to taxpayers. For returns filed in 2026 (tax year 2025), the kicker equals 9.863% of a filer’s 2024 Oregon tax liability, returning about $1.41 billion statewide.
The kicker arrives as a credit on your Oregon return rather than a separate check in most years, and the percentage changes each biennium based on the revenue surplus. You calculate your credit by applying the announced percentage to your prior-year tax liability before credits, using the state’s published figure.
There can be a federal wrinkle. If you itemized state income taxes on your federal return and later receive a kicker, the credit may be treated as taxable income federally in the year received, reported on Form 1099-G. In that case you generally subtract it again on the following Oregon return so it is not taxed twice by the state.
Portland-area local income taxes
Portland-metro residents may owe local income taxes layered on top of the Oregon state rate, even though Oregon has no local sales tax. Two programs drive most of this: the Metro Supportive Housing Services (SHS) tax and the Multnomah County Preschool for All (PFA) tax. Both apply only above high income thresholds, so many filers owe neither.
The table below summarizes the 2026 local personal income taxes for the Portland area. Beginning in tax year 2026, the SHS thresholds are indexed for inflation, and the estimated-payment filing threshold for these programs rose to $5,000.
| Local tax | Rate | Applies to 2026 income above |
|---|---|---|
| Metro SHS | 1% | $128,000 single / $205,000 joint |
| Multnomah PFA (tier 1) | 1.5% | $125,000 single / $200,000 joint |
| Multnomah PFA (tier 2) | additional 1.5% | $250,000 single / $400,000 joint |
| Portland Arts Tax | $35 flat | Income above the federal poverty level, per resident |
Liability depends on where you live and where you earn. Metro SHS covers parts of Multnomah, Washington, and Clackamas counties; PFA applies to Multnomah County. A Washington resident who works in Portland can still face these local taxes on Oregon-source income, so cross-border commuters should confirm their exposure. High earners in these districts can pay a combined state-plus-local marginal rate well above 9.9%.
Oregon residency and who pays
Oregon taxes full-year residents on all income and taxes part-year and nonresidents only on Oregon-source income. Residency turns on domicile and physical presence, generally 200 days or more in Oregon in a year for the statutory-resident test. The distinction determines which income Oregon can reach and which return form you file.
Full-year residents file Form OR-40 and report worldwide income, with a credit available for taxes paid to other states to limit double taxation. Part-year residents file OR-40-P and nonresidents file OR-40-N, both apportioning income to Oregon. If you moved during 2026 or earn income in multiple states, the sourcing rules and the other-state credit determine your final Oregon bill, and outcomes vary by facts.
Filers who owe more than $1,000 at the state level generally must make quarterly estimated payments to avoid an underpayment charge. See estimated tax payments for the federal mechanics, which Oregon broadly parallels.
How Oregon compares
Oregon’s 9.9% top rate is among the highest state income tax rates, but the no-sales-tax structure and the federal subtraction change the real comparison. A California resident faces a higher top rate but also pays sales tax; a resident of a no-tax state trades the income tax for other levies. See California state income tax for a direct high-rate comparison.
The practical takeaway: Oregon’s burden depends heavily on income level, spending habits, and Portland-area residency. Two households with identical incomes can owe very different amounts depending on where in the state they live and whether they qualify for the federal subtraction.
Frequently asked questions
What is Oregon’s income tax rate for 2026?
Oregon has four graduated income tax rates for 2026: 4.75%, 6.75%, 8.75%, and 9.9%. The top 9.9% rate applies only to taxable income above $125,000 for single filers and $250,000 for joint filers. Most middle-income residents pay a top marginal rate of 8.75%, and the effective rate on total income is lower still.
Does Oregon have a sales tax?
No. Oregon is one of a handful of states with no statewide or local sales tax. To offset that missing revenue, Oregon relies more heavily on income tax, which supplies roughly 42% of combined state and local tax revenue. Property tax rates are near the national middle at about 0.81% of home value.
How does the Oregon federal tax subtraction work?
Oregon lets residents subtract part of the federal income tax they paid when figuring Oregon taxable income. For 2026 the subtraction is capped near $7,050 (single) and $14,100 (joint) and phases down as adjusted gross income rises. Higher earners may see little or no benefit. The exact amount depends on federal tax actually paid.
How much is the Oregon kicker in 2026?
For 2025 returns filed in 2026, the kicker equals 9.863% of your 2024 Oregon tax liability before credits, returning about $1.41 billion statewide. It arrives as a credit on your Oregon return. The percentage changes each biennium based on the size of the state revenue surplus, so it is not a fixed amount.
Do I have to pay Portland income taxes?
Only if you live in or earn income in the covered districts above the thresholds. The Metro Supportive Housing Services tax is 1% on income above $128,000 (single) or $205,000 (joint), and the Multnomah Preschool for All tax starts at 1.5% above $125,000 (single) or $200,000 (joint). Many filers owe neither because of the high thresholds.
Who counts as an Oregon resident for tax purposes?
Full-year residents are domiciled in Oregon or maintain a permanent home there and spend 200 days or more in the state during the year. They pay Oregon tax on all income. Part-year residents and nonresidents pay only on Oregon-source income. A credit for taxes paid to other states may apply, and residency outcomes depend on specific facts.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.