In July 2017, Oregon passed HB 2017 - Keep Oregon Moving - to help fund public transit projects throughout the state, and thus create jobs and boost the state economy. With this passage comes a new statewide payroll tax that goes into effect July 1, 2018.
Here are the most important takeaways:
- Every employer in Oregon must withhold 0.1% of each employee’s wages.
- There is no employer component to this tax. Only employees will have tax withheld from their paychecks.
- The tax applies to all Oregon residents - regardless of where he or she works. For example,someone working in Washington, but living back in Oregon, will pay this tax.
- The tax applies to nonresidents who perform work in Oregon. This is called mandatory proration. HB 2017 requires employers to prorate withholding of the new tax based on whether the nonresident employee is working in Oregon rather than another state. Previous to this stipulation, employers prorated withholding for nonresident employees who spent some of their work time in Oregon. This lead to overcharging.
- The Oregon Department of Revenue allows this new tax to be filed on quarterly returns.
- HB 2017 imposes a penalty of $250 (up to $25,000) per employee if the tax is not paid.
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